##### Table of Contents



---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549




---



FORM 10-Q

|           |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|(MARK ONE)
|           |  |                                                                                        
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |  |                                                                                        
|           |  | FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2003                                       

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  |  |                                                                                         
|  |  | FOR THE TRANSITION PERIOD FROM TO                                                       

COMMISSION FILE NUMBER: 1-16057

SYBRON DENTAL SPECIALTIES, INC.

(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|DELAWARE                        |  | 33-0920985         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

1717 WEST COLLINS AVENUE, ORANGE, CALIFORNIA 92867
(Address of principal executive offices) (Zip Code)

(714) 516-7400
(Registrants Telephone Number, Including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes x     No o

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes x     No o

At February 4, 2004, there were 38,412,775 shares of the Registrants
Common Stock outstanding.



---

---





---

TABLE OF CONTENTS



|                               |                                                                                               |                                                                                   |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION
|                               | ITEM 1. Financial Statements                                                                 
|                               |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS                                            
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                      
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
|                               |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                  
|                               |                                                                                               | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                   
|                               | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | ITEM 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                               | ITEM 4. Controls and Procedures                                                              
|PART II - OTHER INFORMATION   
|                               | ITEM 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                     
|EXHIBIT INDEX                 
|EXHIBIT 31.1                  
|EXHIBIT 31.2                  
|EXHIBIT 32                    



---



##### Table of Contents



SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

|              |         |                       |                                                                                                                                |    |  |    |      |  | 
|------------- | ------- | --------------------- | ------------------------------------------------------------------------------------------------------------------------------ | -- |  | -- | ---- |  | 
|              |         |                       |                                                                                                                                |    |  |    | PAGE
|              |         |                       |                                                                                                                                |    |  |    |     
|PART I -      |         | FINANCIAL INFORMATION |                                                                                                                                |    |  |   
|              | Item 1. |                       | Financial Statements (unaudited)                                                                                               |    |  | 3  |     
|              |         |                       | Condensed Consolidated Balance Sheets, December 31, 2003 and September 30, 2003                                                |    |  | 3  |     
|              |         |                       | Condensed Consolidated Statements of Income for the three months ended December 31, 2003 and 2002                              |    |  | 4  |     
|              |         |                       | Condensed
Consolidated Statement of Stockholders Equity and Comprehensive Income for the three months ended December 31, 2003 |    |  | 5  |     
|              |         |                       | Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2003 and 2002                          |    |  | 6  |     
|              |         |                       | Notes to Unaudited Condensed Consolidated Financial Statements                                                                 |    |  | 7  |     
|              | Item 2. |                       | Managements Discussion and Analysis of Financial Condition and Results of Operations                                          |    |  | 18 |     
|              | Item 3. |                       | Quantitative and Qualitative Disclosures about Market Risk                                                                     |    |  | 27 |     
|              | Item 4. |                       | Controls and Procedures                                                                                                        |    |  | 29 |     
|PART II -     |         | OTHER INFORMATION     |                                                                                                                                |    |  |   
|              | Item 6. |                       | Exhibits and Reports on Form 8-K                                                                                               |    |  | 29 |     
|Signature     |         |                       |                                                                                                                                | 30 | 
|Exhibit Index |         |                       |                                                                                                                                | 31 | 

2



---



##### Table of Contents






PART I - FINANCIAL INFORMATION




ITEM 1.Financial Statements




SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |         |         | 
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------- | ------------------------------ | ------- | ------------- | ------- | ------- | ------- | 
|                                       |                                                                                                                                                                                |                                            |         | December 31,                   |         | September 30,
|                                       |                                                                                                                                                                                |                                            |         | 2003                           |         | 2003         
|                                       |                                                                                                                                                                                |                                            |         |                                |         |              
|                                       |                                                                                                                                                                                |                                            |         | (in thousands except share and
|                                       |                                                                                                                                                                                |                                            |         | per share amounts)            
|ASSETS                                 |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|Current assets:                        |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       | Cash and cash equivalents                                                                                                                                                      |                                            | $       | 23,047                         |         |               | $       | 22,868  |        
|                                       | Accounts receivable, net                                                                                                                                                       |                                            |         | 86,638                         |         |               |         | 103,565 |        
|                                       | Inventories                                                                                                                                                                    |                                            |         | 85,407                         |         |               |         | 84,239  |        
|                                       | Deferred income taxes                                                                                                                                                          |                                            |         | 4,530                          |         |               |         | 4,896   |        
|                                       | Prepaid expenses and other current assets                                                                                                                                      |                                            |         | 12,390                         |         |               |         | 11,624  |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       |                                                                                                                                                                                | Total current assets                       |         |                                | 212,012 |               |         |         | 227,192 | 
|Property, plant and equipment, net     |                                                                                                                                                                                |                                            | 81,292  |                                |         |               | 80,750  |        
|Goodwill                               |                                                                                                                                                                                |                                            | 260,974 |                                |         |               | 258,590 |        
|Intangible assets, net                 |                                                                                                                                                                                |                                            | 16,388  |                                |         |               | 16,455  |        
|Other assets                           |                                                                                                                                                                                |                                            | 28,412  |                                |         |               | 28,672  |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       | Total assets                                                                                                                                                                   |                                            | $       | 599,078                        |         |               | $       | 611,659 |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY   |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|Current liabilities:                   |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       | Accounts payable                                                                                                                                                               |                                            | $       | 15,455                         |         |               | $       | 19,620  |        
|                                       | Current portion of long-term debt                                                                                                                                              |                                            |         | 4,508                          |         |               |         | 3,714   |        
|                                       | Income taxes payable                                                                                                                                                           |                                            |         | 15,904                         |         |               |         | 16,274  |        
|                                       | Accrued payroll and employee benefits                                                                                                                                          |                                            |         | 22,660                         |         |               |         | 28,712  |        
|                                       | Restructuring reserve                                                                                                                                                          |                                            |         | 1,463                          |         |               |         | 1,486   |        
|                                       | Accrued rebates                                                                                                                                                                |                                            |         | 11,712                         |         |               |         | 9,872   |        
|                                       | Accrued interest                                                                                                                                                               |                                            |         | 731                            |         |               |         | 3,901   |        
|                                       | Other current liabilities                                                                                                                                                      |                                            |         | 8,406                          |         |               |         | 10,917  |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       |                                                                                                                                                                                | Total current liabilities                  |         |                                | 80,839  |               |         |         | 94,496  | 
|Long-term debt                         |                                                                                                                                                                                |                                            | 104,438 |                                |         |               | 124,008 |        
|Senior subordinated notes              |                                                                                                                                                                                |                                            | 150,000 |                                |         |               | 150,000 |        
|Deferred income taxes                  |                                                                                                                                                                                |                                            | 11,709  |                                |         |               | 13,748  |        
|Other liabilities                      |                                                                                                                                                                                |                                            | 28,058  |                                |         |               | 21,422  |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       |                                                                                                                                                                                | Total liabilities                          |         |                                | 375,044 |               |         |         | 403,674 | 
|Commitments and contingent liabilities |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|Subsequent event                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|Stockholders equity:                  |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       | Preferred stock, $.01 par value; authorized 20,000,000 shares, no shares
outstanding                                                                                           |                                            |         |                               |         |               |         |        |        
|                                       | Common stock, $.01 par value; authorized 250,000,000 shares,
38,387,634 and 38,285,224 shares issued and outstanding at December 31, 2003
and September 30, 2003, respectively |                                            |         | 384                            |         |               |         | 383     |        
|                                       | Additional paid-in capital                                                                                                                                                     |                                            |         | 76,875                         |         |               |         | 74,934  |        
|                                       | Retained earnings                                                                                                                                                              |                                            |         | 137,993                        |         |               |         | 126,044 |        
|                                       | Accumulated other comprehensive income                                                                                                                                         |                                            |         | 8,782                          |         |               |         | 6,624   |        
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       |                                                                                                                                                                                | Total stockholders equity                 |         |                                | 224,034 |               |         |         | 207,985 | 
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |        
|                                       |                                                                                                                                                                                | Total liabilities and stockholders equity |         | $                              | 599,078 |               |         | $       | 611,659 | 
|                                       |                                                                                                                                                                                |                                            |         |                                |         |               |         |         |        

See accompanying notes to unaudited condensed consolidated financial statements.

3



---



##### Table of Contents






SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)

|                                             |                                                    |            |         |                                         |        |      |         |        |        | 
|-------------------------------------------- | -------------------------------------------------- | ---------- | ------- | --------------------------------------- | ------ | ---- | ------- | ------ | ------ | 
|                                             |                                                    |            |         | Three Months Ended                     
|                                             |                                                    |            |         | December 31,                           
|                                             |                                                    |            |         |                                        
|                                             |                                                    |            |         | 2003                                    |        | 2002
|                                             |                                                    |            |         |                                         |        |     
|                                             |                                                    |            |         | (in thousands except per share amounts)
|Net sales                                    |                                                    | $          | 131,857 |                                         |        | $    | 120,149 |       
|Cost of sales                                |                                                    |            | 59,899  |                                         |        |      | 55,574  |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|Gross profit                                 |                                                    |            | 71,958  |                                         |        |      | 64,575  |       
|Selling, general and administrative expenses |                                                    |            | 48,193  |                                         |        |      | 42,714  |       
|Amortization of intangible assets            |                                                    |            | 309     |                                         |        |      | 404     |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|                                             | Total selling, general and administrative expenses |            |         | 48,502                                  |        |      |         | 43,118 |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|Operating income                             |                                                    |            | 23,456  |                                         |        |      | 21,457  |       
|Other expense:                               |                                                    |            |         |                                         |        |      |         |       
|                                             | Interest expense                                   |            |         | (5,160                                  | )      |      |         | (5,576 | )     
|                                             | Amortization of deferred financing fees            |            |         | (407                                    | )      |      |         | (421   | )     
|                                             | Other, net                                         |            |         | (54                                     | )      |      |         | (33    | )     
|                                             |                                                    |            |         |                                         |        |      |         |       
|Income before income taxes                   |                                                    |            | 17,835  |                                         |        |      | 15,427  |       
|Income taxes                                 |                                                    |            | 5,886   |                                         |        |      | 5,862   |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|                                             |                                                    | Net income |         | $                                       | 11,949 |      |         | $      | 9,565  | 
|                                             |                                                    |            |         |                                         |        |      |         |       
|Basic earnings per share                     |                                                    | $          | 0.31    |                                         |        | $    | 0.25    |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|Diluted earnings per share                   |                                                    | $          | 0.30    |                                         |        | $    | 0.25    |       
|                                             |                                                    |            |         |                                         |        |      |         |       
|Weighted average shares outstanding:         |                                                    |            |         |                                         |        |      |         |       
|                                             |                                                    | Basic      |         |                                         | 38,310 |      |         |        | 37,990 | 
|                                             |                                                    |            |         |                                         |        |      |         |       
|                                             |                                                    | Diluted    |         |                                         | 39,897 |      |         |        | 38,259 | 
|                                             |                                                    |            |         |                                         |        |      |         |       

See accompanying notes to unaudited condensed consolidated financial statements.

4



---



##### Table of Contents






SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003
(UNAUDITED)

|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |        |  
|----------------------------------------------------- | ----------------------------------------- |  | ----------------------------------- | - | --------- | - | ------- | - | ----------- | - | ---------- | - | ------------- | - | ------------- | ------ | ------------- | - | ----- | ------ | ----- | - | ------- | ------ | - | - | ------ | ------ | -
|                                                      |                                           |  | Common Stock                        |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |      
|                                                      |                                           |  |                                     |   |           |   |         |   | Accumulated |   |            |   |               |   |               |        |              
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   | Additional |   |               |   |               |        | Other         |   | Total |        | Total
|                                                      |                                           |  | Number of                           |   |           |   |         |   | Paid-in     |   | Retained   |   | Comprehensive |   | Stockholders |        | Comprehensive
|                                                      |                                           |  | Shares                              |   | Par Value |   | Capital |   | Earnings    |   | Income     |   | Equity        |   | Income       
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |              
|                                                      |                                           |  | (in thousands except share amounts)
|Balance at September 30,
2003                         |                                           |  | 38,285,224                          |   |           | $ | 383     |   |             | $ | 74,934     |   |               | $ | 126,044       |        |               | $ | 6,624 |        |       | $ | 207,985 |        |   |   |        |       
|Comprehensive income:                                 |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |       
|                                                      | Net income                                |  |                                     |  |           |   |         |  |             |   |            |  |               |   |               | 11,949 |               |   |       |       |       |   |         | 11,949 |   |   | $      | 11,949 |  
|                                                      | Translation adjustment                    |  |                                     |  |           |   |         |  |             |   |            |  |               |   |               |       |               |   |       | 3,504  |       |   |         | 3,504  |   |   |        | 3,504  |  
|                                                      | Unrealized loss on
derivative instruments |  |                                     |  |           |   |         |  |             |   |            |  |               |   |               |       |               |   |       | (1,346 | )     |   |         | (1,346 | ) |   |        | (1,346 | )
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |       
|Total comprehensive income                            |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   | $ | 14,107 |       
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |       
|Issuance of common stock
from stock options exercised |                                           |  | 76,019                              |   |           |   | 1       |   |             |   | 1,141      |   |               |   |              |        |               |   |      |        |       |   | 1,142   |        |   |   |        |       
|Income tax benefit from stock
options exercised       |                                           |  |                                     |   |           |   |         |   |             |   | 278        |   |               |   |              |        |               |   |      |        |       |   | 278     |        |   |   |        |       
|Issuance of common stock
from ESP plan                |                                           |  | 26,391                              |   |           |   |        |   |             |   | 522        |   |               |   |              |        |               |   |      |        |       |   | 522     |        |   |   |        |       
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |       
|Balance at December 31, 2003                          |                                           |  | 38,387,634                          |   |           | $ | 384     |   |             | $ | 76,875     |   |               | $ | 137,993       |        |               | $ | 8,782 |        |       | $ | 224,034 |        |   |   |        |       
|                                                      |                                           |  |                                     |   |           |   |         |   |             |   |            |   |               |   |               |        |               |   |       |        |       |   |         |        |   |   |        |       

See accompanying notes to unaudited condensed consolidated financial statements.

5



---



##### Table of Contents






SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |         |        |         |        | 
|------------------------------------------------------------ | --------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------- | ----------------------------------------- | ------ | ------------------------------- | ------ | ------- | ------ | ------- | ------ | 
|                                                             |                                                                                   |                                                                  |                                       |                                           |        | Three Months Ended December 31,
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                
|                                                             |                                                                                   |                                                                  |                                       |                                           |        | 2003                            |        | 2002   
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             |                                                                                   |                                                                  |                                       |                                           |        | (in thousands)                 
|Cash flows from operating activities:                        |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             | Net income                                                                        |                                                                  | $                                     | 11,949                                    |        |                                 | $      | 9,565   |       
|                                                             | Adjustments to reconcile net income to net cash provided
by operating activities: |                                                                  |                                       |                                           |        |                                 |        |         |       
|                                                             |                                                                                   | Depreciation                                                     |                                       |                                           | 3,355  |                                 |        |         | 2,851  |        
|                                                             |                                                                                   | Amortization of intangible assets                                |                                       |                                           | 309    |                                 |        |         | 404    |        
|                                                             |                                                                                   | Amortization of deferred financing fees                          |                                       |                                           | 407    |                                 |        |         | 421    |        
|                                                             |                                                                                   | Loss (gain) on sales of property, plant and equipment            |                                       |                                           | (5     | )                               |        |         | 206    |        
|                                                             |                                                                                   | Provision for losses on doubtful receivables                     |                                       |                                           | 197    |                                 |        |         | 209    |        
|                                                             |                                                                                   | Inventory provisions                                             |                                       |                                           | 1,069  |                                 |        |         | 1,082  |        
|                                                             |                                                                                   | Deferred income taxes                                            |                                       |                                           | (1,673 | )                               |        |         | (2,612 | )      
|                                                             |                                                                                   | Tax benefit from issuance of stock under employee stock plan     |                                       |                                           | 278    |                                 |        |         |       |        
|                                                             | Changes in assets and liabilities, net of effects of businesses acquired:         |                                                                  |                                       |                                           |        |                                 |        |         |       
|                                                             |                                                                                   | (Increase)/decrease in accounts receivable                       |                                       |                                           | 16,757 |                                 |        |         | (254   | )      
|                                                             |                                                                                   | (Increase)/decrease in inventories                               |                                       |                                           | (1,910 | )                               |        |         | 1,888  |        
|                                                             |                                                                                   | (Increase)/decrease in prepaid expenses and other current assets |                                       |                                           | (766   | )                               |        |         | 671    |        
|                                                             |                                                                                   | Decrease in accounts payable                                     |                                       |                                           | (4,165 | )                               |        |         | (2,082 | )      
|                                                             |                                                                                   | Increase/(decrease) in income taxes payable                      |                                       |                                           | (370   | )                               |        |         | 3,111  |        
|                                                             |                                                                                   | Increase/(decrease) in accrued payroll and employee benefits     |                                       |                                           | (6,052 | )                               |        |         | 1,875  |        
|                                                             |                                                                                   | Increase in accrued rebates                                      |                                       |                                           | 1,840  |                                 |        |         | 2,802  |        
|                                                             |                                                                                   | Decrease in restructuring reserve                                |                                       |                                           | (23    | )                               |        |         | (581   | )      
|                                                             |                                                                                   | Decrease in accrued interest                                     |                                       |                                           | (3,170 | )                               |        |         | (3,245 | )      
|                                                             |                                                                                   | Increase/(decrease) in other current liabilities                 |                                       |                                           | (2,511 | )                               |        |         | 842    |        
|                                                             |                                                                                   | Net change in other assets and liabilities                       |                                       |                                           | 4,790  |                                 |        |         | 4,942  |        
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             |                                                                                   |                                                                  |                                       | Net cash provided by operating activities |        |                                 | 20,306 |         |        |         | 22,095 | 
|Cash flows from investing activities:                        |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             | Capital expenditures                                                              |                                                                  |                                       | (2,679                                    | )      |                                 |        | (730    | )     
|                                                             | Proceeds from sales of property, plant, and equipment                             |                                                                  |                                       | 118                                       |        |                                 |        | 6       |       
|                                                             | Payments for intangibles                                                          |                                                                  |                                       | (232                                      | )      |                                 |        | (364    | )     
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             |                                                                                   |                                                                  | Net cash used in investing activities |                                           |        | (2,793                          | )      |         |        | (1,088  | )     
|Cash flows from financing activities:                        |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             | Proceeds from credit facility                                                     |                                                                  |                                       | 33,500                                    |        |                                 |        | 36,500  |       
|                                                             | Principal payments on credit facility                                             |                                                                  |                                       | (51,210                                   | )      |                                 |        | (45,387 | )     
|                                                             | Proceeds from long-term debt                                                      |                                                                  |                                       | 818                                       |        |                                 |        | 846     |       
|                                                             | Principal payments on long-term debt                                              |                                                                  |                                       | (2,030                                    | )      |                                 |        | (1,866  | )     
|                                                             | Payment of deferred financing fees                                                |                                                                  |                                       |                                          |        |                                 |        | (473    | )     
|                                                             | Cash received from exercise of stock options                                      |                                                                  |                                       | 1,142                                     |        |                                 |        | 44      |       
|                                                             | Cash received from ESP plan                                                       |                                                                  |                                       | 522                                       |        |                                 |        |        |       
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             |                                                                                   |                                                                  | Net cash used in financing activities |                                           |        | (17,258                         | )      |         |        | (10,336 | )     
|Effect of exchange rate changes on cash and cash equivalents |                                                                                   |                                                                  | (76                                   | )                                         |        |                                 | (1,570 | )      
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|Net increase in cash and cash equivalents                    |                                                                                   |                                                                  | 179                                   |                                           |        |                                 | 9,101  |        
|Cash and cash equivalents at beginning of period             |                                                                                   |                                                                  | 22,868                                |                                           |        |                                 | 12,652 |        
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|Cash and cash equivalents at end of period                   |                                                                                   | $                                                                | 23,047                                |                                           |        | $                               | 21,753 |        
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |         |       
|Supplemental cash flow information:                          |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |        
|                                                             | Cash paid during the period for interest                                          |                                                                  | $                                     | 8,434                                     |        |                                 | $      | 9,257   |       
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |         |       
|                                                             | Cash paid during the period for income taxes                                      |                                                                  | $                                     | 4,906                                     |        |                                 | $      | 2,774   |       
|                                                             |                                                                                   |                                                                  |                                       |                                           |        |                                 |        |         |       

See accompanying notes to unaudited condensed consolidated financial statements.

6



---



##### Table of Contents






SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

1. OVERVIEW AND BASIS OF PRESENTATION

Sybron Dental Specialties, Inc. (SDS or the Company) was incorporated
in Delaware on July 17, 2000. At the time of its incorporation the Company was
a wholly-owned subsidiary of Sybron International Corporation, which is now
known as Apogent Technologies Inc. (Apogent). The Company was created to
effect the spin-off by Apogent of its dental business. As a part of the
spin-off, which occurred on December 11, 2000, Apogent transferred to SDS,
along with certain other assets, all of the capital stock of Sybron Dental
Management, Inc. (SDM), which owned, directly or indirectly, the stock or
other equity interest in the subsidiaries that held substantially all of the
assets and liabilities of Apogents then dental business. Apogent then
distributed to its shareholders, by means of pro rata distribution, all of the
Companys outstanding common stock together with related preferred stock
purchase rights (the spin-off). As a result, SDS became an independent,
publicly traded company.

The unaudited condensed consolidated financial statements reflect the
operations of SDS and its wholly owned subsidiaries and affiliates. The
Companys fiscal year ends on September 30. All significant intercompany
balances and transactions have been eliminated in consolidation. The quarters
ended December 31, 2003 and 2002 refer to the first quarters of fiscal years
2004 and 2003, respectively. The Company has reclassified certain prior year
data to conform to the 2004 presentation.

In the opinion of management, all adjustments, which are necessary for a
fair presentation of the results for the interim periods presented, have been
included. All such adjustments were of a normal recurring nature. The results
for the period ended December 31, 2003 are not necessarily indicative of the
results to be expected for the full year. The condensed consolidated financial
statements have been prepared in accordance with the instructions to Form 10-Q
and do not include all of the information and note disclosures required by
accounting principles generally accepted in the United States of America. This
information should only be read in conjunction with the Companys Annual Report
on Form 10-K for the fiscal year ended September 30, 2003.

2. INVENTORIES

Inventories at December 31, 2003 and September 30, 2003 are presented
below.

|                           |  |              |        |               |  |   |        |  
|-------------------------- |  | ------------ | ------ | ------------- |  | - | ------ | -
|                           |  | December 31, |        | September 30,
|                           |  | 2003         |        | 2003         
|                           |  |              |        |              
|Raw materials and supplies |  | $            | 21,362 |               |  | $ | 21,851 |  
|Work in process            |  |              | 17,546 |               |  |   | 19,211 |  
|Finished goods             |  |              | 51,608 |               |  |   | 47,544 |  
|Inventory reserves         |  |              | (5,109 | )             |  |   | (4,367 | )
|                           |  |              |        |               |  |   |        |  
|                           |  | $            | 85,407 |               |  | $ | 84,239 |  
|                           |  |              |        |               |  |   |        |  

3. GOODWILL AND INTANGIBLE ASSETS, NET

Intangible assets are recorded at cost and are amortized using the
straight-line method, over their estimated useful lives. The following table
details the balances of the intangible assets as of December 31, 2003:

|                                               |                         |   |                |        |              |   |              |        |  |   |       |        | 
|---------------------------------------------- | ----------------------- | - | -------------- | ------ | ------------ | - | ------------ | ------ |  | - | ----- | ------ | 
|                                               |                         |   | Gross Carrying |        | Accumulated  |   | Net Carrying
|                                               |                         |   | Amount         |        | Amortization |   | Amount      
|                                               |                         |   |                |        |              |   |             
|Intangibles Assets Subject To Amortization     |                         |   |                |        |              |   |              |        |  |   |       |       
|Proprietary technology                         |                         | $ | 15,669         |        |              | $ | 9,370        |        |  | $ | 6,299 |       
|Other                                          |                         |   | 15,274         |        |              |   | 14,896       |        |  |   | 378   |       
|                                               |                         |   |                |        |              |   |              |        |  |   |       |       
|                                               | Total                   |   | $              | 30,943 |              |   | $            | 24,266 |  |   |       | 6,677  | 
|                                               |                         |   |                |        |              |   |              |        |  |   |       |       
|Intangibles Assets Not Subject To Amortization |                         |   |                |        |              |   |              |        |  |   |       |       
|Trademarks                                     |                         |   |                |        |              |   |              |        |  |   | 9,711 |       
|                                               |                         |   |                |        |              |   |              |        |  |   |       |       
|                                               | Total Intangible Assets |   |                |        |              |   |              |        |  |   | $     | 16,388 | 
|                                               |                         |   |                |        |              |   |              |        |  |   |       |       

7



---



##### Table of Contents



The following table represents the estimated amortization (calculated as
of December 31, 2003) for each of the five twelve-month periods indicated:

|                                  |  |      |     |      |  |      |     |      |  |      |     |  |  |   |     |  |  |   |     | 
|--------------------------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | ---- | --- |  |  | - | --- |  |  | - | --- | 
|                                  |  | 2004 |     | 2005 |  | 2006 |     | 2007 |  | 2008
|                                  |  |      |     |      |  |      |     |      |  |     
|Amortization of intangible assets |  | $    | 939 |      |  | $    | 758 |      |  | $    | 635 |  |  | $ | 600 |  |  | $ | 574 | 

In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and
Other Intangible Assets, which requires the Company to perform an assessment
at least annually (or whenever events or changes in circumstances indicate that
the carrying value may not be recoverable), of whether there is an indication
that goodwill or non-amortizing intangible assets were impaired as of the date
of the last assessment. To accomplish this, the Company identified its
reporting units and determined the carrying value of each reporting unit by
assigning the assets and liabilities, including the existing goodwill and
intangible assets, to those reporting units as of October 1, 2003. The Company
then determined the fair value of each reporting unit and compared it to the
carrying amount of the reporting unit. The Company has determined that there
was no goodwill or non-amortizing intangible asset impairment as of October 1,
2003.

4. EMPLOYEE BENEFIT PLANS

Pension and Other Postretirement Benefits:The Company participates in
various defined benefit pension plans covering substantially all of its U.S.
and Canadian employees. The benefits are generally based on various formulas,
the principal factors of which are years of service and compensation. Plan
assets are invested primarily in U.S. stocks, bonds and international stocks.
In addition to the defined benefit plans, the Company provides certain health
care benefits for certain U.S. employees, which are funded as costs are
incurred. Eligible salaried employees who reached age 55 prior to January 1,
1996 became eligible for postretirement health care benefits only if they reach
retirement age while working for SDS. However, under the current collective
bargaining agreement between Kerr Corporation and the United Auto Workers, the
bargaining unit employees qualify for postretirement health care benefits. The
Company accrues, as current costs, the future lifetime retirement benefits for
qualifying active employees. The postretirement health care plans currently
follow a policy instituted by the predecessor of Apogent in 1986 where the
Companys contributions were frozen at the levels equal to the Corporations
contributions on December 31, 1988, except where collective bargaining
agreements prohibited such a freeze.

The following table provides the components of net periodic benefit cost:

|                                   |  |                    |       |                    |  |      |      |      |  |                      |     |  |  |   |     | 
|---------------------------------- |  | ------------------ | ----- | ------------------ |  | ---- | ---- | ---- |  | -------------------- | --- |  |  | - | --- | 
|                                   |  |                    |       |                    |  |      |      |      |  | Other Postretirement
|                                   |  | Pension Benefits   |       | Benefits          
|                                   |  |                    |       |                   
|                                   |  | Three Months Ended |       | Three Months Ended
|                                   |  | December 31,       |       | December 31,      
|                                   |  |                    |       |                   
|                                   |  | 2003               |       | 2002               |  | 2003 |      | 2002
|                                   |  |                    |       |                    |  |      |      |     
|Service cost                       |  | $                  | 985   |                    |  | $    | 786  |      |  | $                    | 119 |  |  | $ | 73  | 
|Interest cost                      |  |                    | 820   |                    |  |      | 726  |      |  |                      | 205 |  |  |   | 171 | 
|Expected return on plan assets     |  |                    | (948  | )                  |  |      | (768 | )    |  |                      |    |  |  |   |    | 
|Amortization of prior service cost |  |                    | 24    |                    |  |      | 25   |      |  |                      |    |  |  |   |    | 
|Amortization of actuarial loss     |  |                    | 302   |                    |  |      | 173  |      |  |                      | 121 |  |  |   | 65  | 
|                                   |  |                    |       |                    |  |      |      |      |  |                      |     |  |  |   |     | 
|Net periodic benefit cost          |  | $                  | 1,183 |                    |  | $    | 942  |      |  | $                    | 445 |  |  | $ | 309 | 
|                                   |  |                    |       |                    |  |      |      |      |  |                      |     |  |  |   |     | 

The Company is currently assessing the effects of the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (the Act). The
accumulated benefit obligation and the net periodic benefit cost do not reflect
the effects of the Act. Specific authoritative guidance on accounting for the
federal subsidy is pending. The issued guidance could require the Company to
change previously reported information.

The Companys funding policy is to generally make annual contributions in
excess of both the minimum required contributions required by applicable
regulations and the amount needed in order to avoid any Pension Benefit
Guarantee Corporation (PBGC) variable premium payments, and to not have any
additional minimum liability under SFAS No. 87, Employers Accounting for
Pensions. The calculations required to determine the amount of the annual
contributions are typically performed in the third quarter of each fiscal year.
The current fiscal years contributions have not yet been calculated.

5. RESTRUCTURING CHARGES

8



---



##### Table of Contents



In September 2002, the Company recorded a restructuring charge of
approximately $3,666 ($2,353 after tax). The charge is primarily composed of
severance and termination costs associated with the 71 employees whose
employment the Company has either terminated or plans to terminate as a result
of the consolidation of several of the Companys European facilities into its
Hawe Neos facility in Switzerland. Of the $3,666 in restructuring charges,
approximately $3,064 requires settlement in cash related to severance and
contractual obligations, $300 requires settlement in cash for tax liabilities
included in income taxes payable and the balance of approximately $302 relates
to non-cash charges. The Company expects to complete the balance of the 2002
restructuring plan by the end of fiscal 2004.

The 2002 restructuring charge activity since September 30, 2002 and its
components are as follows:

|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |             |     |  |  |   |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|---------------------------- |  | --------- | ----- | -------- |  | ----- | --- | --------- |  | --------- | - | ----- |  | ----------- | --- | ----- |  | ----------- | --- |  |  | - | --- |  |  | - | --- |  |  | - | --- |  |  | - | ----- | 
|                             |  |           |       |          |  | Lease |     | Shut-Down |  | Inventory |   | Fixed |  |             |     |       |  | Contractual |     |  |  |   |     |  |  |  
|                             |  | Severance |       | Payments |  | Costs |     | Write-Off |  | Assets    |   | Tax   |  | Obligations |     | Other |  | Total      
|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |            
|                             |  | (a)       |       | (b)      |  | (b)   |     | (c)       |  | (c)       |   | (d)   |  | (e)         |     |       |  |             |     |  |  |  
|2002 Restructuring Charge    |  | $         | 2,347 |          |  | $     | 332 |           |  | $         |  |       |  | $           | 106 |       |  | $           | 196 |  |  | $ | 300 |  |  | $ | 229 |  |  | $ | 156 |  |  | $ | 3,666 | 
|Fiscal 2002 Non-Cash Charges |  |           | 70    |          |  |       |    |           |  |           |  |       |  |             |    |       |  |             |    |  |  |   |    |  |  |   |    |  |  |   | 43  |  |  |   | 113   | 
|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |             |     |  |  |   |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|September 30, 2002 Balance   |  |           | 2,277 |          |  |       | 332 |           |  |           |  |       |  |             | 106 |       |  |             | 196 |  |  |   | 300 |  |  |   | 229 |  |  |   | 113 |  |  |   | 3,553 | 
|Fiscal 2003 Cash Payments    |  |           | 1,761 |          |  |       | 278 |           |  |           |  |       |  |             |    |       |  |             |    |  |  |   |    |  |  |   | 229 |  |  |   | 80  |  |  |   | 2,348 | 
|Fiscal 2003 Non-Cash Charges |  |           |      |          |  |       |    |           |  |           |  |       |  |             | 106 |       |  |             | 196 |  |  |   |    |  |  |   |    |  |  |   |    |  |  |   | 302   | 
|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |             |     |  |  |   |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|September 30, 2003 Balance   |  |           | 516   |          |  |       | 54  |           |  |           |  |       |  |             |    |       |  |             |    |  |  |   | 300 |  |  |   |    |  |  |   | 33  |  |  |   | 903   | 
|Fiscal 2004 Cash Payments    |  |           | 24    |          |  |       |    |           |  |           |  |       |  |             |    |       |  |             |    |  |  |   |    |  |  |   |    |  |  |   |    |  |  |   | 24    | 
|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |             |     |  |  |   |     |  |  |   |     |  |  |   |     |  |  |   |       | 
|December 31, 2003 Balance    |  | $         | 492   |          |  | $     | 54  |           |  | $         |  |       |  | $           |    |       |  | $           |    |  |  | $ | 300 |  |  | $ |    |  |  | $ | 33  |  |  | $ | 879   | 
|                             |  |           |       |          |  |       |     |           |  |           |   |       |  |             |     |       |  |             |     |  |  |   |     |  |  |   |     |  |  |   |     |  |  |   |       | 



---

|(a) |  | The amount primarily represents the charges for severance and termination
costs associated with the 71 employees primarily located at several
facilities throughout Europe whose employment the Company has either
terminated or plans to terminate as a result of the 2002 European
restructuring plan.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Amount represents lease payments and shutdown costs on exited facilities.                                                                                                                                                                                                                               
|   
|(c) |  | Amount represents write-offs of inventory and fixed assets associated
with discontinued product lines.                                                                                                                                                                                                  
|   
|(d) |  | Amount represents $300 for tax liabilities included in income taxes
payable.                                                                                                                                                                                                                            
|   
|(e) |  | Amount represents certain contractual obligations.                                                                                                                                                                                                                                                      

In June 1998, SDS recorded a restructuring charge of approximately $14,600
(approximately $10,700 after tax) for the rationalization of certain acquired
companies, combination of certain duplicate production facilities, movement of
certain customer service and marketing functions, and the exiting of several
product lines.

The 1998 restructuring charge activity since June 30, 1998 and its
components are as follows:

|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|------------------------------------------------- |  | --------- | ----- | -------- |  | ----- | --- | --------- |  | --------- | --- | ----- |  | ----------- | ----- | ----- |  | ----------- | ----- |  |  | - | --- |  |  | - | --- |  |  | - | ----- | - |  | - | ------ | -
|                                                  |  |           |       |          |  | Lease |     | Shut-Down |  | Inventory |     | Fixed |  |             |       |       |  | Contractual |       |  |  |   |     |  |  |  
|                                                  |  | Severance |       | Payments |  | Costs |     | Write-Off |  | Assets    |     | Tax   |  | Obligations |       | Other |  | Total      
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |            
|                                                  |  | (a)       |       | (b)      |  | (b)   |     | (c)       |  | (c)       |     | (d)   |  | (e)         |       |       |  |             |       |  |  |  
|1998 Restructuring Charge                         |  | $         | 4,300 |          |  | $     | 300 |           |  | $         | 400 |       |  | $           | 4,600 |       |  | $           | 1,300 |  |  | $ | 700 |  |  | $ | 900 |  |  | $ | 2,100 |   |  | $ | 14,600 |  
|Fiscal 1998 Cash Payments                         |  |           | 1,800 |          |  |       |    |           |  |           | 100 |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   | 300 |  |  |   | 1,400 |   |  |   | 3,600  |  
|Fiscal 1998 Non-Cash Charges                      |  |           |      |          |  |       |    |           |  |           |    |       |  |             | 4,600 |       |  |             | 1,300 |  |  |   |    |  |  |   |    |  |  |   |      |   |  |   | 5,900  |  
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|September 30, 1998 Balance                        |  |           | 2,500 |          |  |       | 300 |           |  |           | 300 |       |  |             |      |       |  |             |      |  |  |   | 700 |  |  |   | 600 |  |  |   | 700   |   |  |   | 5,100  |  
|Fiscal 1999 Cash Payments                         |  |           | 1,300 |          |  |       | 300 |           |  |           | 300 |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   | 300 |  |  |   | 400   |   |  |   | 2,600  |  
|Adjustments(a)                                    |  |           | 1,200 |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   |    |  |  |   |      |   |  |   | 1,200  |  
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|September 30, 1999 Balance                        |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   | 700 |  |  |   | 300 |  |  |   | 300   |   |  |   | 1,300  |  
|Fiscal 2000 Cash Payments                         |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   | 300 |  |  |   | 100   |   |  |   | 400    |  
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|September 30, 2000 and
September 30, 2001 Balance |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   | 700 |  |  |   |    |  |  |   | 200   |   |  |   | 900    |  
|Fiscal 2002 Cash Payments                         |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   |    |  |  |   | 16    |   |  |   | 16     |  
|Fiscal 2002 Non-Cash Payments                     |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   |    |  |  |   | 7     |   |  |   | 7      |  
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|September 30, 2002 Balance                        |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   | 700 |  |  |   |    |  |  |   | 177   |   |  |   | 877    |  
|Fiscal 2003 Non-Cash Payments                     |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   |    |  |  |   | (6    | ) |  |   | (6     | )
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|September 30, 2003 Balance                        |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   | 700 |  |  |   |    |  |  |   | 183   |   |  |   | 883    |  
|Fiscal 2004 Non-Cash Payments                     |  |           |      |          |  |       |    |           |  |           |    |       |  |             |      |       |  |             |      |  |  |   |    |  |  |   |    |  |  |   | (1    | ) |  |   | (1     | )
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  
|December 31, 2003 Balance                         |  | $         |      |          |  | $     |    |           |  | $         |    |       |  | $           |      |       |  | $           |      |  |  | $ | 700 |  |  | $ |    |  |  | $ | 184   |   |  | $ | 884    |  
|                                                  |  |           |       |          |  |       |     |           |  |           |     |       |  |             |       |       |  |             |       |  |  |   |     |  |  |   |     |  |  |   |       |   |  |   |        |  



---

|(a) |  | The amount primarily represents severance and termination costs related
to the 154 employees whose employment was terminated as a result of the
1998 restructuring plan. An adjustment of approximately $1,200 was made in
fiscal 1999 to adjust the accrual primarily representing over accruals for
anticipated costs associated with outplacement services, accrued fringe
benefits, and
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9



---



##### Table of Contents



|    |  | severance associated with employees who were previously notified of
termination and subsequently filled other company positions.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Amount represents lease payments and shutdown costs on exited facilities.                                                       
|   
|(c) |  | Amount represents write-offs of inventory and fixed assets associated
with discontinued product lines.                          
|   
|(d) |  | The charge of $700 represents a statutory tax relating to assets
transferred from an exited sales facility in Switzerland.      
|   
|(e) |  | Amount represents certain contractual obligations.                                                                              

6. SEGMENT INFORMATION

The Company is a global manufacturer and marketer of a broad range of
consumable dental products and related small equipment, and a manufacturer and
distributor of products for use in infection prevention in both the medical and
dental markets. The Companys subsidiaries operate in two business segments:
Professional Dental and Orthodontics.

The following table presents the results of operations for these business
segments for the quarters ended December 31:

|     |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |        |         |         | 
|---- | -------------------------------------------- | ----------------- | -------------- | ------ | ------------ | ------ | ------------ | ------ | ------------ | ------ | --------- | - | ------ | ------ | - | ------ | ------- | ------- | 
|     |                                              |                   |                |        | Professional |        |              |        |              |        |           |   |        |        |   |        |        
|     |                                              |                   |                |        | Dental       |        | Orthodontics |        | Eliminations |        | Total SDS
|     |                                              |                   |                |        |              |        |              |        |              |        |          
|2003 |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |       
|     | Revenues:                                    |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |        |        
|     |                                              | External customer |                | $      | 71,444       |        |              | $      | 60,413       |        |           | $ |       |        |   | $      | 131,857 |        
|     |                                              | Intersegment      |                |        | 1,117        |        |              |        | 957          |        |           |   | (2,074 | )      |   |        |        |        
|     |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |       
|     |                                              |                   | Total revenues |        | $            | 72,561 |              |        | $            | 61,370 |           |   | $      | (2,074 | ) |        | $       | 131,857 | 
|     |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |        |         |        
|     | Gross profit                                 |                   | $              | 38,123 |              |        | $            | 33,835 |              |        | $         |  |        |        | $ | 71,958 |        
|     | Selling, general and administrative expenses |                   |                | 26,527 |              |        |              | 21,975 |              |        |           |  |        |        |   | 48,502 |        
|     | Operating income                             |                   |                | 11,596 |              |        |              | 11,860 |              |        |           |  |        |        |   | 23,456 |        
|2002 |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |       
|     | Revenues:                                    |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |        |        
|     |                                              | External customer |                | $      | 70,928       |        |              | $      | 49,221       |        |           | $ |       |        |   | $      | 120,149 |        
|     |                                              | Intersegment      |                |        | 1,927        |        |              |        | 2,624        |        |           |   | (4,551 | )      |   |        |        |        
|     |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |       
|     |                                              |                   | Total revenues |        | $            | 72,855 |              |        | $            | 51,845 |           |   | $      | (4,551 | ) |        | $       | 120,149 | 
|     |                                              |                   |                |        |              |        |              |        |              |        |           |   |        |        |   |        |         |        
|     | Gross profit                                 |                   | $              | 38,403 |              |        | $            | 26,172 |              |        | $         |  |        |        | $ | 64,575 |        
|     | Selling, general and administrative expenses |                   |                | 24,629 |              |        |              | 18,489 |              |        |           |  |        |        |   | 43,118 |        
|     | Operating income                             |                   |                | 13,774 |              |        |              | 7,683  |              |        |           |  |        |        |   | 21,457 |        

The following table presents the segment assets as of December 31, 2003
compared to the prior fiscal year end:

|                   |  |              |         |              |  |              |         |           |  |  |   |  |  |  |         | 
|------------------ |  | ------------ | ------- | ------------ |  | ------------ | ------- | --------- |  |  | - |  |  |  | ------- | 
|                   |  | Professional |         |              |  |              |         |           |  |  |   |  |  | 
|                   |  | Dental       |         | Orthodontics |  | Eliminations |         | Total SDS
|                   |  |              |         |              |  |              |         |          
|December 31, 2003  |  |              | 436,209 |              |  |              | 162,869 |           |  |  |  |  |  |  | 599,078 | 
|September 30, 2003 |  |              | 431,212 |              |  |              | 180,447 |           |  |  |  |  |  |  | 611,659 | 

7. EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income available
to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflect the potential
dilutive effect, calculated using the treasury stock method, of additional
common shares that are issuable upon exercise of outstanding stock options as
follows:

|                                            |  |                    |        |      |  |  |        | 
|------------------------------------------- |  | ------------------ | ------ | ---- |  |  | ------ | 
|                                            |  | Three Months Ended
|                                            |  | December 31,      
|                                            |  |                   
|                                            |  | 2003               |        | 2002
|                                            |  |                    |        |     
|Basic shares outstanding (weighted average) |  |                    | 38,310 |      |  |  | 37,990 | 
|Effect of dilutive securities               |  |                    | 1,587  |      |  |  | 269    | 
|                                            |  |                    |        |      |  |  |        | 
|Diluted shares outstanding                  |  |                    | 39,897 |      |  |  | 38,259 | 
|                                            |  |                    |        |      |  |  |        | 

10



---



##### Table of Contents



Options outstanding during the three months ended December 31, 2002 to
purchase approximately 3,908 shares of common stock were not included in the
computation of dilutive securities because inclusion would be anti-dilutive. No
options to purchase shares of common stock were excluded from the computation
of dilutive securities during the three months ended December 31, 2003.

8. STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation using the intrinsic
value method in accordance with Accounting Principles Board Opinion (APB) No.
25, Accounting for Stock Issued to Employees, and related interpretations.

As required under Statement of Financial Accounting Standards No. 123
(SFAS No. 123), Accounting for Stock-Based Compensation, as amended, the pro
forma effects of stock-based compensation on net income and net earnings per
common share have been estimated as of the date of grant using the
Black-Scholes option-pricing model.

The Black-Scholes option-pricing model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are
fully transferable and negotiable in a free trading market. In addition, option
valuation models require the input of highly subjective assumptions, including
the expected stock price volatility. Because the Companys options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in the opinion of management, the existing models do not
necessarily provide a reliable single measure of the fair value of its options.
The Black-Scholes weighted average fair value of stock options granted during
the three months ended December 31, 2002 was $4.41. No stock options were
granted during the three months ended December 31, 2003. The weighted average
estimated fair value of purchase rights pursuant to the Employee Stock Purchase
Plan (the ESPP) during the three months ended December 31, 2003, the initial
purchase pursuant to the ESPP, was $4.91.

For purposes of pro forma disclosures, the estimated fair value of each
option is assumed to be amortized to expense over its vesting period. The pro
forma effects of recognizing compensation expense under the fair value method
on net income and net earnings per common share were as follows:

|                                                                                                                                            |                       |   |                    |      |      |   |       |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ------------------ | ---- | ---- | - | ----- | ---- | 
|                                                                                                                                            |                       |   | Three Months      
|                                                                                                                                            |                       |   | Ended December 31,
|                                                                                                                                            |                       |   |                   
|                                                                                                                                            |                       |   | 2003               |      | 2002
|                                                                                                                                            |                       |   |                    |      |     
|Net income, as reported                                                                                                                     |                       | $ | 11,949             |      |      | $ | 9,565 |     
|Deduct: Total stock-based employee
compensation expense determined under fair
value based method for all awards, net of
related tax effects |                       |   | 947                |      |      |   | 642   |     
|                                                                                                                                            |                       |   |                    |      |      |   |       |     
|Pro forma net income:                                                                                                                       |                       | $ | 11,002             |      |      | $ | 8,923 |     
|                                                                                                                                            |                       |   |                    |      |      |   |       |     
|Earnings per share:                                                                                                                         |                       |   |                    |      |      |   |       |     
|                                                                                                                                            | Basic - as reported   |   | $                  | 0.31 |      |   | $     | 0.25 | 
|                                                                                                                                            |                       |   |                    |      |      |   |       |     
|                                                                                                                                            | Basic - pro forma     |   | $                  | 0.29 |      |   | $     | 0.23 | 
|                                                                                                                                            |                       |   |                    |      |      |   |       |     
|                                                                                                                                            | Diluted - as reported |   | $                  | 0.30 |      |   | $     | 0.25 | 
|                                                                                                                                            |                       |   |                    |      |      |   |       |     
|                                                                                                                                            | Diluted - pro forma   |   | $                  | 0.28 |      |   | $     | 0.23 | 
|                                                                                                                                            |                       |   |                    |      |      |   |       |     

The pro forma net income may not be representative of future disclosures
since the estimated fair value of stock options granted subsequent to the
spin-off is amortized to expense over the vesting period, which was only a
partial year in 2001, and additional options may be granted in varying
quantities in future years.

9. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Companys domestic subsidiaries are guarantors of the Companys 8 1/8%
Senior Subordinated Notes due 2012, on an unsecured senior subordinated basis.
Except to the extent necessary to avoid a fraudulent conveyance, the note
guarantees are full and unconditional. The notes and the subsidiary guarantees
are unsecured and subordinated to all of the Companys and the Companys
guarantor subsidiaries existing and future unsubordinated debt, including debt
under the credit facility entered into on June 6, 2002.

Prior to January 1, 2003, SDM was a guarantor subsidiary of the Companys
8 1/8% Senior Subordinated Notes. Effective January 1, 2003, SDM was merged
into SDS. Prior period condensed consolidating financial information has been
adjusted to reflect this merger.

11



---



##### Table of Contents



Below are the unaudited condensed consolidating balance sheets as of
December 31, 2003 and September 30, 2003, statements of income for the three
months ended December 31, 2003 and 2002, and statements of cash flows for the
three months ended December 31, 2003 and 2002, of Sybron Dental Specialties,
Inc. and its subsidiaries, reflecting the subsidiary guarantors of the Senior
Subordinated Notes.

Certain general corporate expenses have been allocated to the
subsidiaries. As a matter of course, the Company retains certain assets and
liabilities at the corporate level that are not allocated to the subsidiaries
including, but not limited to, certain employee benefit, insurance and tax
liabilities. Intercompany balances include receivables/payables incurred in the
normal course of business in addition to investments and loans transacted by
subsidiaries of the Company with other subsidiaries or with the Company.

12



---



##### Table of Contents



Condensed Consolidating Balance Sheets

|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        |         | 
|---------------------------------------------- | ---------------------------------------------- | ---------------------------------------------------- | -------- | ----------------------- | -------- | ------------ | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------- |  | -------- | ---- | -------- | - | ------- | ------ | ------- | 
|                                               |                                                |                                                      |          | As of December 31, 2003
|                                               |                                                |                                                      |          |                        
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         | Non          |         |  |          |      |          |   |         |       
|                                               |                                                |                                                      |          | Sybron Dental           |          | Guarantor    |         | Guarantor    |         |              |         |              |         |  |          |     
|                                               |                                                |                                                      |          | Specialties             |          | Subsidiaries |         | Subsidiaries |         | Eliminations |         | Consolidated
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |             
|ASSETS                                        
|Current assets:                                |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               | Cash and cash equivalents                      |                                                      | $        | (1,782                  | )        |              | $       | (894         | )       |              | $       | 25,723       |         |  | $        |     |          |   | $       | 23,047 |        
|                                               | Account receivable, net                        |                                                      |          | 25                      |          |              |         | 46,710       |         |              |         | 39,903       |         |  |          |     |          |   |         | 86,638 |        
|                                               | Inventories                                    |                                                      |          |                        |          |              |         | 54,953       |         |              |         | 30,454       |         |  |          |     |          |   |         | 85,407 |        
|                                               | Other current assets                           |                                                      |          | 8,495                   |          |              |         | 2,827        |         |              |         | 5,598        |         |  |          |     |          |   |         | 16,920 |        
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total current assets                                 |          |                         | 6,738    |              |         |              | 103,596 |              |         |              | 101,678 |  |          |      |         |   |         |        | 212,012 | 
|Property, plant and equipment, net             |                                                |                                                      | 8,509    |                         |          |              | 25,908  |              |         |              | 46,875  |              |         |  |         |      |          |   | 81,292  |       
|Goodwill                                       |                                                |                                                      |         |                         |          |              | 192,976 |              |         |              | 67,998  |              |         |  |         |      |          |   | 260,974 |       
|Intangible assets, net                         |                                                |                                                      |         |                         |          |              | 16,223  |              |         |              | 165     |              |         |  |         |      |          |   | 16,388  |       
|Intercompany balances                          |                                                |                                                      |         |                         |          |              | 181,984 |              |         |              | 80,404  |              |         |  | (262,388 | )    |          |   |        |       
|Other assets                                   |                                                |                                                      | 15,393   |                         |          |              | 10,463  |              |         |              | 2,556   |              |         |  |         |      |          |   | 28,412  |       
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total assets                                         |          | $                       | 30,640   |              |         | $            | 531,150 |              |         | $            | 299,676 |  |          | $    | (262,388 | ) |         | $      | 599,078 | 
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
|Current liabilities:                           |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               | Account payable                                |                                                      | $        | 412                     |          |              | $       | 10,025       |         |              | $       | 5,018        |         |  | $        |     |          |   | $       | 15,455 |        
|                                               | Current portion of long-term debt              |                                                      |          |                        |          |              |         | 986          |         |              |         | 3,522        |         |  |          |     |          |   |         | 4,508  |        
|                                               | Income taxes payable                           |                                                      |          | 7,048                   |          |              |         | 2,203        |         |              |         | 6,949        |         |  |          | (296 | )        |   |         | 15,904 |        
|                                               | Accrued expenses and other current
liabilities |                                                      |          | 5,370                   |          |              |         | 22,526       |         |              |         | 17,076       |         |  |          |     |          |   |         | 44,972 |        
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total current liabilities                            |          |                         | 12,830   |              |         |              | 35,740  |              |         |              | 32,565  |  |          |      | (296     | ) |         |        | 80,839  | 
|Long-term debt                                 |                                                |                                                      | 12,500   |                         |          |              | 89,929  |              |         |              | 2,009   |              |         |  |         |      |          |   | 104,438 |       
|Senior subordinated notes                      |                                                |                                                      | 150,000  |                         |          |              |        |              |         |              |        |              |         |  |         |      |          |   | 150,000 |       
|Deferred income taxes                          |                                                |                                                      | 10,973   |                         |          |              |        |              |         |              | 736     |              |         |  |         |      |          |   | 11,709  |       
|Other liabilities                              |                                                |                                                      | 27,189   |                         |          |              | 17      |              |         |              | 852     |              |         |  |         |      |          |   | 28,058  |       
|Intercompany balances                          |                                                |                                                      | 178,485  |                         |          |              |        |              |         |              |        |              |         |  | (178,485 | )    |          |   |        |       
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total liabilities                                    |          |                         | 391,977  |              |         |              | 125,686 |              |         |              | 36,162  |  |          |      | (178,781 | ) |         |        | 375,044 | 
|Commitments and contingent liabilities         |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|Subsequent event                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|Stockholders equity (deficit):                |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Preferred stock                                      |          |                         |         |              |         |              |        |              |         |              |        |  |          |      |         |   |         |        |        | 
|                                               |                                                | Common stock                                         |          |                         | 4,275    |              |         |              | 53      |              |         |              | 7,081   |  |          |      | (11,025  | ) |         |        | 384     | 
|Additional paid-in capital                     |                                                |                                                      | (273,882 | )                       |          |              | 279,675 |              |         |              | 141,163 |              |         |  | (70,081  | )    |          |   | 76,875  |       
|Retained earnings (accumulated deficit)        |                                                |                                                      | (70,045  | )                       |          |              | 118,583 |              |         |              | 91,956  |              |         |  | (2,501   | )    |          |   | 137,993 |       
|Accumulated other comprehensive income
(loss)  |                                                |                                                      | (21,685  | )                       |          |              | 7,153   |              |         |              | 23,314  |              |         |  |         |      |          |   | 8,782   |       
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total stockholders equity (deficit)                 |          |                         | (361,337 | )            |         |              | 405,464 |              |         |              | 263,514 |  |          |      | (83,607  | ) |         |        | 224,034 | 
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |       
|                                               |                                                | Total liabilities and stockholders
equity (deficit) |          | $                       | 30,640   |              |         | $            | 531,150 |              |         | $            | 299,676 |  |          | $    | (262,388 | ) |         | $      | 599,078 | 
|                                               |                                                |                                                      |          |                         |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        |        

13



---



##### Table of Contents



Condensed Consolidating Balance Sheets

|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |         |         | 
|---------------------------------------------- | ---------------------------------------------- | ---------------------------------------------------- | -------- | ------------------------ | -------- | ------------ | ------- | ------------ | ------- | ------------ | ------- | ------------ | ------- |  | -------- | ---- | -------- | - | ------- | ------- | ------- | 
|                                               |                                                |                                                      |          | As of September 30, 2003
|                                               |                                                |                                                      |          |                         
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         | Non          |         |  |          |      |          |   |         |        
|                                               |                                                |                                                      |          | Sybron Dental            |          | Guarantor    |         | Guarantor    |         |              |         |              |         |  |          |     
|                                               |                                                |                                                      |          | Specialties              |          | Subsidiaries |         | Subsidiaries |         | Eliminations |         | Consolidated
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |             
|ASSETS                                        
|Current assets:                                |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               | Cash and cash equivalents                      |                                                      | $        | 3,817                    |          |              | $       | 1,164        |         |              | $       | 17,887       |         |  | $        |     |          |   | $       | 22,868  |        
|                                               | Account receivable, net                        |                                                      |          | 108                      |          |              |         | 55,242       |         |              |         | 48,215       |         |  |          |     |          |   |         | 103,565 |        
|                                               | Inventories                                    |                                                      |          |                         |          |              |         | 56,561       |         |              |         | 27,678       |         |  |          |     |          |   |         | 84,239  |        
|                                               | Other current assets                           |                                                      |          | 7,845                    |          |              |         | 2,695        |         |              |         | 5,980        |         |  |          |     |          |   |         | 16,520  |        
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total current assets                                 |          |                          | 11,770   |              |         |              | 115,662 |              |         |              | 99,760  |  |          |      |         |   |         |         | 227,192 | 
|Property, plant and equipment, net             |                                                |                                                      | 8,684    |                          |          |              | 25,544  |              |         |              | 46,522  |              |         |  |         |      |          |   | 80,750  |        
|Goodwill                                       |                                                |                                                      |         |                          |          |              | 192,976 |              |         |              | 65,614  |              |         |  |         |      |          |   | 258,590 |        
|Intangible assets, net                         |                                                |                                                      |         |                          |          |              | 16,277  |              |         |              | 178     |              |         |  |         |      |          |   | 16,455  |        
|Intercompany balances                          |                                                |                                                      |         |                          |          |              | 186,371 |              |         |              | 75,946  |              |         |  | (262,317 | )    |          |   |        |        
|Other assets                                   |                                                |                                                      | 15,395   |                          |          |              | 10,897  |              |         |              | 2,380   |              |         |  |         |      |          |   | 28,672  |        
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total assets                                         |          | $                        | 35,849   |              |         | $            | 547,727 |              |         | $            | 290,400 |  |          | $    | (262,317 | ) |         | $       | 611,659 | 
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |         |        
|LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
|Current liabilities:                           |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               | Account payable                                |                                                      | $        | 768                      |          |              | $       | 13,665       |         |              | $       | 5,187        |         |  | $        |     |          |   | $       | 19,620  |        
|                                               | Current portion of long-term debt              |                                                      |          |                         |          |              |         | 1,285        |         |              |         | 2,429        |         |  |          |     |          |   |         | 3,714   |        
|                                               | Income taxes payable                           |                                                      |          | 10,929                   |          |              |         | (1,183       | )       |              |         | 6,735        |         |  |          | (207 | )        |   |         | 16,274  |        
|                                               | Accrued expenses and other current
liabilities |                                                      |          | 11,496                   |          |              |         | 23,502       |         |              |         | 19,890       |         |  |          |     |          |   |         | 54,888  |        
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total current liabilities                            |          |                          | 23,193   |              |         |              | 37,269  |              |         |              | 34,241  |  |          |      | (207     | ) |         |         | 94,496  | 
|Long-term debt                                 |                                                |                                                      | 10,000   |                          |          |              | 109,871 |              |         |              | 4,137   |              |         |  |         |      |          |   | 124,008 |        
|Senior subordinated notes                      |                                                |                                                      | 150,000  |                          |          |              |        |              |         |              |        |              |         |  |         |      |          |   | 150,000 |        
|Deferred income taxes                          |                                                |                                                      | 13,036   |                          |          |              |        |              |         |              | 712     |              |         |  |         |      |          |   | 13,748  |        
|Other liabilities                              |                                                |                                                      | 20,528   |                          |          |              | 94      |              |         |              | 800     |              |         |  |         |      |          |   | 21,422  |        
|Intercompany balances                          |                                                |                                                      | 178,414  |                          |          |              |        |              |         |              |        |              |         |  | (178,414 | )    |          |   |        |        
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total liabilities                                    |          |                          | 395,171  |              |         |              | 147,234 |              |         |              | 39,890  |  |          |      | (178,621 | ) |         |         | 403,674 | 
|Commitments and contingent liabilities         |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|Subsequent event                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|Stockholders equity (deficit):                |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Preferred stock                                      |          |                          |         |              |         |              |        |              |         |              |        |  |          |      |         |   |         |         |        | 
|                                               |                                                | Common stock                                         |          |                          | 4,274    |              |         |              | 53      |              |         |              | 7,081   |  |          |      | (11,025  | ) |         |         | 383     | 
|Additional paid-in capital                     |                                                |                                                      | (275,815 | )                        |          |              | 281,295 |              |         |              | 139,535 |              |         |  | (70,081  | )    |          |   | 74,934  |        
|Retained earnings (accumulated deficit)        |                                                |                                                      | (70,045  | )                        |          |              | 113,330 |              |         |              | 85,349  |              |         |  | (2,590   | )    |          |   | 126,044 |        
|Accumulated other comprehensive income
(loss)  |                                                |                                                      | (17,736  | )                        |          |              | 5,815   |              |         |              | 18,545  |              |         |  |         |      |          |   | 6,624   |        
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total stockholders equity (deficit)                 |          |                          | (359,322 | )            |         |              | 400,493 |              |         |              | 250,510 |  |          |      | (83,696  | ) |         |         | 207,985 | 
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |        
|                                               |                                                | Total liabilities and stockholders
equity (deficit) |          | $                        | 35,849   |              |         | $            | 547,727 |              |         | $            | 290,400 |  |          | $    | (262,317 | ) |         | $       | 611,659 | 
|                                               |                                                |                                                      |          |                          |          |              |         |              |         |              |         |              |         |  |          |      |          |   |         |         |        

14



---



##### Table of Contents



Condensed Consolidating Statements of Income

|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |        |  
|-------------------------------------------- | --------------------------------------- | - | -------------------------------------------- | ------ | ------------ | - | ------------ | ------ | ------------ | - | ------------ | ------ | - | - | ------ | - |  | - | ------- | ------ | -
|                                             |                                         |   | For The Three Months Ended December 31, 2003
|                                             |                                         |   |                                             
|                                             |                                         |   |                                              |        |              |   |              |        |              |   | Non          |        |   |   |        |   |  |   |        
|                                             |                                         |   | Sybron Dental                                |        | Guarantor    |   | Guarantor    |        |              |   |              |        |   |   |       
|                                             |                                         |   | Specialties                                  |        | Subsidiaries |   | Subsidiaries |        | Eliminations |   | Consolidated
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |             
|Net sales                                    |                                         | $ |                                             |        |              | $ | 73,515       |        |              | $ | 60,416       |        |   | $ | (2,074 | ) |  | $ | 131,857 |       
|Cost of sales                                |                                         |   | 263                                          |        |              |   | 26,970       |        |              |   | 34,740       |        |   |   | (2,074 | ) |  |   | 59,899  |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       
|Gross profit                                 |                                         |   | (263                                         | )      |              |   | 46,545       |        |              |   | 25,676       |        |   |   |       |   |  |   | 71,958  |       
|Selling, general and administrative
expenses |                                         |   | 5,464                                        |        |              |   | 27,780       |        |              |   | 15,258       |        |   |   |       |   |  |   | 48,502  |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       
|Operating income (loss)                      |                                         |   | (5,727                                       | )      |              |   | 18,765       |        |              |   | 10,418       |        |   |   |       |   |  |   | 23,456  |       
|Other income (expense):                      |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       
|                                             | Interest expense                        |   |                                              | (3,353 | )            |   |              | (1,721 | )            |   |              | (86    | ) |   |        |  |  |   |         | (5,160 | )
|                                             | Amortization of deferred financing fees |   |                                              |       |              |   |              | (407   | )            |   |              |       |   |   |        |  |  |   |         | (407   | )
|                                             | Other, net                              |   |                                              | 9,080  |              |   |              | (8,007 | )            |   |              | (1,127 | ) |   |        |  |  |   |         | (54    | )
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       
|Income before income taxes                   |                                         |   |                                             |        |              |   | 8,630        |        |              |   | 9,205        |        |   |   |       |   |  |   | 17,835  |       
|Income taxes                                 |                                         |   |                                             |        |              |   | 3,377        |        |              |   | 2,598        |        |   |   | (89    | ) |  |   | 5,886   |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       
|Net income                                   |                                         | $ |                                             |        |              | $ | 5,253        |        |              | $ | 6,607        |        |   | $ | 89     |   |  | $ | 11,949  |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |        |   |   |        |   |  |   |         |       

|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |        |  
|-------------------------------------------- | --------------------------------------- | - | -------------------------------------------- | ------ | ------------ | - | ------------ | ------ | ------------ | - | ------------ | ---- | - | - | ------ | - |  | - | ------- | ------ | -
|                                             |                                         |   | For The Three Months Ended December 31, 2002
|                                             |                                         |   |                                             
|                                             |                                         |   |                                              |        |              |   |              |        |              |   | Non          |      |   |   |        |   |  |   |        
|                                             |                                         |   | Sybron Dental                                |        | Guarantor    |   | Guarantor    |        |              |   |              |      |   |   |       
|                                             |                                         |   | Specialties                                  |        | Subsidiaries |   | Subsidiaries |        | Eliminations |   | Consolidated
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |             
|Net sales                                    |                                         | $ |                                             |        |              | $ | 70,411       |        |              | $ | 54,289       |      |   | $ | (4,551 | ) |  | $ | 120,149 |       
|Cost of sales                                |                                         |   | 256                                          |        |              |   | 30,604       |        |              |   | 29,265       |      |   |   | (4,551 | ) |  |   | 55,574  |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       
|Gross profit                                 |                                         |   | (256                                         | )      |              |   | 39,807       |        |              |   | 25,024       |      |   |   |       |   |  |   | 64,575  |       
|Selling, general and administrative
expenses |                                         |   | 6,604                                        |        |              |   | 24,085       |        |              |   | 12,452       |      |   |   | (23    | ) |  |   | 43,118  |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       
|Operating income (loss)                      |                                         |   | (6,860                                       | )      |              |   | 15,722       |        |              |   | 12,572       |      |   |   | 23     |   |  |   | 21,457  |       
|Other income (expense):                      |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       
|                                             | Interest expense                        |   |                                              | (3,755 | )            |   |              | (1,739 | )            |   |              | (82  | ) |   |        |  |  |   |         | (5,576 | )
|                                             | Amortization of deferred financing fees |   |                                              |       |              |   |              | (421   | )            |   |              |     |   |   |        |  |  |   |         | (421   | )
|                                             | Other, net                              |   |                                              | 10,615 |              |   |              | (9,673 | )            |   |              | (975 | ) |   |        |  |  |   |         | (33    | )
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       
|Income before income taxes                   |                                         |   |                                             |        |              |   | 3,889        |        |              |   | 11,515       |      |   |   | 23     |   |  |   | 15,427  |       
|Income taxes                                 |                                         |   |                                             |        |              |   | 2,807        |        |              |   | 3,097        |      |   |   | (42    | ) |  |   | 5,862   |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       
|Net income                                   |                                         | $ |                                             |        |              | $ | 1,082        |        |              | $ | 8,418        |      |   | $ | 65     |   |  | $ | 9,565   |       
|                                             |                                         |   |                                              |        |              |   |              |        |              |   |              |      |   |   |        |   |  |   |         |       

15



---



##### Table of Contents



Condensed Consolidating Statements of Cash Flows

|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |         |         |  
|------------------------------------------------------------ | ----------------------------------------------------- | --------------------------------------------------- | ------ | -------------------------------------------- | ----- | ------------ | ------ | ------------ | ------- | ------------ | ------ | ------------ | ------ | - | - | - | - | - | ------ | ------- | ------- | -
|                                                             |                                                       |                                                     |        | For The Three Months Ended December 31, 2003
|                                                             |                                                       |                                                     |        |                                             
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        | Non          |        |   |   |   |   |   |        |        
|                                                             |                                                       |                                                     |        | Sybron Dental                                |       | Guarantor    |        | Guarantor    |         |              |        |              |        |   |   |  
|                                                             |                                                       |                                                     |        | Specialties                                  |       | Subsidiaries |        | Subsidiaries |         | Eliminations |        | Consolidated
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |             
|Cash flows provided by (used in)
operating activities        |                                                       | $                                                   | (6,920 | )                                            |       | $            | 14,350 |              |         | $            | 12,876 |              |        | $ |  |   |   | $ | 20,306 |        
|Cash flows from investing activities:                        |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             | Capital expenditures                                  |                                                     |        | (311                                         | )     |              |        | (1,668       | )       |              |        | (700         | )      |   |   |  |   |   |        | (2,679  | )      
|                                                             | Proceeds from sales of property, plant,
and equipment |                                                     |        |                                             |       |              |        |             |         |              |        | 118          |        |   |   |  |   |   |        | 118     |        
|                                                             | Payments for intangibles                              |                                                     |        |                                             |       |              |        | (232         | )       |              |        |             |        |   |   |  |   |   |        | (232    | )      
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             |                                                       | Net cash used in investing activities               |        |                                              | (311  | )            |        |              | (1,900  | )            |        |              | (582   | ) |   |   |  |   |        |         | (2,793  | )
|Cash flows from financing activities:                        |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             | Proceeds from credit facility                         |                                                     |        | 18,500                                       |       |              |        | 15,000       |         |              |        |             |        |   |   |  |   |   |        | 33,500  |        
|                                                             | Principal payments on credit facility                 |                                                     |        | (16,000                                      | )     |              |        | (35,210      | )       |              |        |             |        |   |   |  |   |   |        | (51,210 | )      
|                                                             | Proceed from long-term debt                           |                                                     |        |                                             |       |              |        |             |         |              |        | 818          |        |   |   |  |   |   |        | 818     |        
|                                                             | Principal payments on long-term debt                  |                                                     |        |                                             |       |              |        | (23          | )       |              |        | (2,007       | )      |   |   |  |   |   |        | (2,030  | )      
|                                                             | Cash received from exercise of stock
options          |                                                     |        | 1,142                                        |       |              |        |             |         |              |        |             |        |   |   |  |   |   |        | 1,142   |        
|                                                             | Cash received from ESP plan                           |                                                     |        | 522                                          |       |              |        |             |         |              |        |             |        |   |   |  |   |   |        | 522     |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             |                                                       | Net cash provided by (used in)
financing activities |        |                                              | 4,164 |              |        |              | (20,233 | )            |        |              | (1,189 | ) |   |   |  |   |        |         | (17,258 | )
|Effect of exchange rate changes on cash
and cash equivalents |                                                       |                                                     | (2,603 | )                                            |       |              | 1,338  |              |         |              | 1,189  |              |        |   |  |   |   |   | (76    | )      
|Net change in intercompany balances                          |                                                       |                                                     | 71     |                                              |       |              | 4,387  |              |         |              | (4,458 | )            |        |   |  |   |   |   |       |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|Net increase (decrease) in cash and cash
equivalents         |                                                       |                                                     | (5,599 | )                                            |       |              | (2,058 | )            |         |              | 7,836  |              |        |   |  |   |   |   | 179    |        
|Cash and cash equivalents at beginning
of period             |                                                       |                                                     | 3,817  |                                              |       |              | 1,164  |              |         |              | 17,887 |              |        |   |  |   |   |   | 22,868 |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|Cash and cash equivalents at end of
period                   |                                                       | $                                                   | (1,782 | )                                            |       | $            | (894   | )            |         | $            | 25,723 |              |        | $ |  |   |   | $ | 23,047 |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|Supplemental cash flow information:                          |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             | Cash paid during the period for interest              |                                                     | $      | 6,398                                        |       |              | $      | 1,940        |         |              | $      | 96           |        |   | $ |  |   |   | $      | 8,434   |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        
|                                                             | Cash paid during the period for income
taxes          |                                                     | $      | 2,429                                        |       |              | $      |             |         |              | $      | 2,477        |        |   | $ |  |   |   | $      | 4,906   |        
|                                                             |                                                       |                                                     |        |                                              |       |              |        |              |         |              |        |              |        |   |   |   |   |   |        |        

16



---



##### Table of Contents



Condensed Consolidating Statements of Cash Flows

|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |         |         |  
|------------------------------------------------------------ | ----------------------------------------------------- | ------------------------------------- | ------ | -------------------------------------------- | ------ | ------------ | ------ | ------------ | ---- | ------------ | ------ | ------------ | ------ | - | --- | - | - | - | ------ | ------- | ------- | -
|                                                             |                                                       |                                       |        | For The Three Months Ended December 31, 2002
|                                                             |                                                       |                                       |        |                                             
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        | Non          |        |   |     |   |   |   |        |        
|                                                             |                                                       |                                       |        | Sybron Dental                                |        | Guarantor    |        | Guarantor    |      |              |        |              |        |   |     |  
|                                                             |                                                       |                                       |        | Specialties                                  |        | Subsidiaries |        | Subsidiaries |      | Eliminations |        | Consolidated
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |             
|Cash flows provided by operating
activities                  |                                                       | $                                     | 3,083  |                                              |        | $            | 11,463 |              |      | $            | 7,526  |              |        | $ | 23  |   |   | $ | 22,095 |        
|Cash flows from investing activities:                        |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             | Capital expenditures                                  |                                       |        | (105                                         | )      |              |        | (400         | )    |              |        | (225         | )      |   |     |  |   |   |        | (730    | )      
|                                                             | Proceeds from sales of property, plant,
and equipment |                                       |        |                                             |        |              |        |             |      |              |        | 6            |        |   |     |  |   |   |        | 6       |        
|                                                             | Payments for intangibles                              |                                       |        |                                             |        |              |        | (347         | )    |              |        | (17          | )      |   |     |  |   |   |        | (364    | )      
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             |                                                       | Net cash used in investing activities |        |                                              | (105   | )            |        |              | (747 | )            |        |              | (236   | ) |     |   |  |   |        |         | (1,088  | )
|Cash flows from financing activities:                        |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             | Proceeds from credit facility                         |                                       |        | 36,500                                       |        |              |        |             |      |              |        |             |        |   |     |  |   |   |        | 36,500  |        
|                                                             | Principal payments on credit facility                 |                                       |        | (45,000                                      | )      |              |        | (387         | )    |              |        |             |        |   |     |  |   |   |        | (45,387 | )      
|                                                             | Proceed from long-term debt                           |                                       |        |                                             |        |              |        | 34           |      |              |        | 812          |        |   |     |  |   |   |        | 846     |        
|                                                             | Principal payments on long-term debt                  |                                       |        |                                             |        |              |        | (19          | )    |              |        | (1,847       | )      |   |     |  |   |   |        | (1,866  | )      
|                                                             | Payment of deferred financing fees                    |                                       |        |                                             |        |              |        | (473         | )    |              |        |             |        |   |     |  |   |   |        | (473    | )      
|                                                             | Cash received from exercise of stock
options          |                                       |        | 44                                           |        |              |        |             |      |              |        |             |        |   |     |  |   |   |        | 44      |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             |                                                       | Net cash used in financing activities |        |                                              | (8,456 | )            |        |              | (845 | )            |        |              | (1,035 | ) |     |   |  |   |        |         | (10,336 | )
|Effect of exchange rate changes on cash
and cash equivalents |                                                       |                                       | (2,796 | )                                            |        |              | 907    |              |      |              | 342    |              |        |   | (23 | ) |   |   | (1,570 | )      
|Net change in intercompany balances                          |                                                       |                                       | 9,559  |                                              |        |              | (7,669 | )            |      |              | (1,890 | )            |        |   |    |   |   |   |       |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|Net increase in cash and cash equivalents                    |                                                       |                                       | 1,285  |                                              |        |              | 3,109  |              |      |              | 4,707  |              |        |   |    |   |   |   | 9,101  |        
|Cash and cash equivalents at beginning
of period             |                                                       |                                       | (4     | )                                            |        |              | (3,928 | )            |      |              | 16,584 |              |        |   |    |   |   |   | 12,652 |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|Cash and cash equivalents at end of
period                   |                                                       | $                                     | 1,281  |                                              |        | $            | (819   | )            |      | $            | 21,291 |              |        | $ |    |   |   | $ | 21,753 |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|Supplemental cash flow information:                          |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             | Cash paid during the period for interest              |                                       | $      | 7,224                                        |        |              | $      | 1,984        |      |              | $      | 49           |        |   | $   |  |   |   | $      | 9,257   |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        
|                                                             | Cash paid during the period for income
taxes          |                                       | $      | 186                                          |        |              | $      |             |      |              | $      | 2,588        |        |   | $   |  |   |   | $      | 2,774   |        
|                                                             |                                                       |                                       |        |                                              |        |              |        |              |      |              |        |              |        |   |     |   |   |   |        |        

17



---



##### Table of Contents



10. SUBSEQUENT EVENT

Subsequent to December 31, 2003, the Company announced the implementation
of a plan to close its manufacturing facility in Tijuana, Mexico over the next
four fiscal quarters and transfer the production currently taking place there
to its other facilities in Mexico.




ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations

When we use the terms SDS, we, us, Company, or our in this
report, unless the context requires otherwise, we are referring to Sybron
Dental Specialties, Inc. and its subsidiaries and their respective predecessors
that comprised Apogents dental business prior to the spin-off. Our fiscal year
ends on September 30 and, accordingly, all references to quarters refer to our
fiscal quarters. The quarters ended December 31, 2003 and 2002 refer to the
first quarters of fiscal 2004 and 2003, respectively.

General

We are a leading global manufacturer and marketer of a broad range of
consumable dental products and related small equipment, and as a manufacturer
and distributor of products for use in infection prevention in both the medical
and dental markets. Our subsidiaries operate in two business segments:



| |  |  | Professional Dental. We develop and manufacture a variety of branded
dental consumable products and consumable infection prevention products
sold through independent distributors to the dental industry worldwide,
as well as to medical markets; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Orthodontics.We develop, manufacture, and market an array of
consumable orthodontic products and endodontic products to orthodontic
and endodontic specialists worldwide.                                                                              

Our primary subsidiaries in each of our business segments are as follows:

|                            |  |                                     
|--------------------------- |  | ------------------------------------
|Professional Dental         |  | Orthodontics                        
|                            |  |                                     
|Kerr Corporation            |  | Ormco Corporation                   
|Kerr Italia S.p.A           |  | Ormco B.V.                          
|Sybron Canada Limited       |  | Ormodent Group                      
|Pinnacle Products, Inc.     |  | Allesee Orthodontic Appliances, Inc.
|KerrHawe S.A.               |  |                                     
|Metrex Research Corporation |  |                                     
|SpofaDental a.s             |  |                                     

Results of Operations

Overview

Our net sales in the first quarter of fiscal 2004 were $131.9 million, an
increase of 9.7% over the corresponding prior year period, of which 5.2% is due
to favorable currency translation, 3.0% is due to the acquisition of
SpofaDental a.s. in the fourth quarter of fiscal 2003, and 1.5% is due to net
internal growth, which excludes the net sales of SpofaDental and currency
fluctuations.

Our domestic sales for the first quarter ended December 31, 2003 were
$69.7 million, representing an increase of $0.7 million or 1.0% over the
comparable prior year period. International sales increased by $11.0 million,
or 21.5%, to $62.2 million for the quarter ended December 31, 2003 compared to
the same period in the prior year. Foreign currency fluctuations in the quarter
ended December 31, 2003 represented $6.3 million of the increase in
international sales over the comparable prior year period.

Our revenues were impacted by increased sales in our Orthodontics segment
for existing products, such as our Damon 2 self-ligating bracket, as well as
the introduction of new products, such as our Titanium Orthos2 buccal tubes and
our Inspire Ice clear-ceramic brackets. We expect to see continued revenue
growth in fiscal 2004 as we promote the Damon 2 system through educational
seminars and introduce extensions to our line of high-end brackets. Another
contributor to our growth in the Orthodontic segment in the first quarter of
fiscal 2004 was our endodontic product line. We anticipate our planned expanded
sales presence in Europe this year will continue to offer long-term growth
opportunities in this market. In fiscal 2003 we transferred the net sales of a
portion of our endodontic product line from the Professional Dental segment to
the Orthodontic segment. At the commencement of the 2004 fiscal

18



---



##### Table of Contents



year we transferred the remaining net sales of our European endodontic
product line from the Professional Dental segment to the Orthodontics segment.
The operating results of the Professional Dental segment for fiscal year 2004
do not include the net sales of the recently transferred European endodontic
product line. They are, however, included in the fiscal 2003 results. The
operating results of the Orthodontics segment include the net sales of the
recently transferred European endodontic product line in fiscal year 2004, but
do not reflect the net sales of those products in the prior year fiscal period. While the transfer
impacted the respective results of operations we reported for the Professional
Dental and Orthodontics segments for fiscal 2004, there was no impact on our
reported consolidated results of operations for the fiscal quarter.

Our Professional Dental segment experienced lower than historical internal
revenue growth, largely the result of a decrease in the net sales of our LED
curing light, when compared to sales in the first quarter of fiscal 2003. The
LED curing light was introduced in the first quarter of fiscal 2003 and
generated significant net sales during that quarter. While our LED curing light
sales comparison to prior periods will continue to reflect lower revenues, we
anticipate our consumable products to reflect positive internal growth for the
remainder of fiscal 2004. We have scheduled the introduction of 18 new products
in fiscal 2004 for our Professional Dental segment. Two of these products
introduced in the first quarter, Stand-Out and Fill-In, had a delayed
introduction into the market, which also contributed to lower than expected
sales in this business segment. Other factors expected to impact revenues are
the weakening economy in Asia, as well as reductions to regulatory health
reimbursement programs in Germany, which will have a somewhat negative impact
on the Orthodontic segment sales for rest fiscal 2004. Additionally, we expect
to see continued pricing pressures in a competitive environment in both
business segments this fiscal year.

Operating income for the first quarter of fiscal 2004 was $23.5 million,
representing an increase of 9.3% from the corresponding fiscal 2003 period.
Operating income was negatively impacted by increased selling, general and
administrative expenses for the quarter ended December 31, 2003 of $5.4
million, or 12.5%, from the corresponding prior year period. The increase in
selling, general and administrative expense is primarily the result of increased
expenses due to; foreign currency translation rates, the timing in recognition
of advertising and promotional expenses, sales commissions, research and
development, and expenses incurred by our newly acquired company, SpofaDental
a.s. Lastly, we are continuing to incur expenses in association with
Sarbanes-Oxley compliance efforts, both in terms of one-time costs as well as
ongoing expenses. We expect these expenses to be approximately $0.75 million
per quarter for the remainder of fiscal 2004.

Interest expense in the first quarter of fiscal 2004 was $5.2 million, or
$0.4 million less than the prior year period. The decrease was a result of
lower average debt in the quarter of $269.8 million, or $66.9 million less than
in the prior year period, partially offset by an increase in the average
interest rate to 7.48%, from 6.48% in the prior year period. The average
interest rate is expected to continue to increase as we pay down our lower
interest-bearing debt in fiscal 2004. Due to payment terms and hedging
contracts, our higher interest-bearing debt is unavailable for non-scheduled
principal payments in the current fiscal year.

Income taxes in the first quarter of fiscal 2004 were $5.9 million, or
33.0% of income before taxes as compared to income taxes of $5.9 million, or
38.0% of income before taxes in the corresponding fiscal 2003 period. The 5.0%
reduction in our tax rate is primarily attributable to the benefits resulting
from the consolidation of several of our European facilities into Switzerland,
which has a lower tax rate. We believe that our effective tax rate for the full
year will remain at 33.0%. However, this is based on current assumptions
regarding the income contributions from our various operations around the
world. Should the income contributions from territories with higher tax rates
exceed our expectations, then our effective tax rate could be higher than
33.0%.

Subsequent to December 31, 2003, we announced the implementation of a plan
to close our manufacturing facility in Tijuana, Mexico over the next four
fiscal quarters and transfer the production currently taking place there to our
other facilities in Mexico. This facility rationalization is expected to result
in an annual savings of $1.7 million, with an expected cost of $2.1 million
over the next four quarters. We expect a modest increase in our inventory
levels for the next several quarters as we build inventory of certain products
to cover demand during the transition of production to the new facilities. We
do not anticipate any impairment loss due to the closure of this facility.

Quarter Ended December 31, 2003 Compared to the Quarter Ended December 31, 2002

Net Sales

|                    |                 |      |                |         |        |   |        |         | 
|------------------- | --------------- | ---- | -------------- | ------- | ------ | - | ------ | ------- | 
|                    |                 |      | Fiscal         |         | Fiscal
|Net Sales           |                 | 2004 |                | 2003   
|                    |                 |      |                |        
|                    |                 |      | (in thousands)
|Professional Dental |                 | $    | 71,444         |         |        | $ | 70,928 |        
|Orthodontics        |                 |      | 60,413         |         |        |   | 49,221 |        
|                    |                 |      |                |         |        |   |        |        
|                    | Total Net Sales |      | $              | 131,857 |        |   | $      | 120,149 | 
|                    |                 |      |                |         |        |   |        |        

19



---



##### Table of Contents



Overall Company.Net sales for the quarter ended December 31, 2003
increased by $11.7 million, or 9.7%, from the corresponding fiscal 2003
quarter.

Professional Dental.Increased net sales in the Professional Dental
segment resulted primarily from: (a) the net sales of products from an acquired
company (approximately $3.7 million) and (b) favorable foreign currency
fluctuations (approximately $2.7 million). The increase in net sales was
partially offset by: (a) decreased net sales of existing products
(approximately $4.3 million), (b) a decrease in net sales due to the transfer
of the European endodontic product sales to the Orthodontics segment, which
contributed approximately $1.3 million in net sales to the Professional Dental
segment in the comparable prior year period, and (c) increased rebate
(approximately $0.3 million).

Orthodontics.Increased net sales in the Orthodontics segment resulted
primarily from: (a) increased net sales of existing products (approximately
$3.6 million), (b) favorable foreign currency fluctuations (approximately $3.6
million), (c) net sales of new products (approximately $2.1 million), (d) an
increase in net sales due to the transfer of the European endodontic product
sales from the Professional Dental segment, which contributed approximately
$1.3 million in net sales to the Orthodontics segment in the first quarter of
fiscal 2004, and (e) reduced rebate (approximately $0.6 million).

Gross Profit

|                    |                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |      |  
|------------------- | ------------------ | ---- | ---------------------------------- | --------- | ---------- | ---- | ------ | --------- | ---------- | - | ------ | ------ |  |  | ---- | ---- | -
|                    |                    |      | Fiscal                             |           | Percent of |      | Fiscal |           | Percent of
|Gross Profit        |                    | 2004 |                                    | Net Sales |            | 2003 |        | Net Sales
|                    |                    |      |                                    |           |            |      |        |          
|                    |                    |      | (in thousands, except percentages) |           |            |      |       
|Professional Dental |                    | $    | 38,123                             |           |            |      | 53.4   | %         |            | $ | 38,403 |        |  |  | 54.1 | %   
|Orthodontics        |                    |      | 33,835                             |           |            |      | 56.0   |           |            |   | 26,172 |        |  |  | 53.2 |     
|                    |                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |     
|                    | Total Gross Profit |      | $                                  | 71,958    |            |      |        | 54.6      | %          |   | $      | 64,575 |  |  |      | 53.7 | %
|                    |                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |     

Overall Company.Gross profit for the quarter ended December 31, 2003
increased by $7.4 million or 11.4% from the corresponding fiscal 2003 quarter.

Professional Dental.Decreased gross profit in the Professional Dental
segment resulted primarily from: (a) decreased net sales of existing products
(approximately $2.4 million), (b) decreased gross profit due to the transfer of
the European endodontic product line to the Orthodontics segment, which
contributed approximately $0.3 million in gross profit for the Professional
Dental segment in the comparable prior year period, (c) inventory adjustments
(approximately $0.3 million, of which approximately $0.2 million is due to
standard cost revisions and physical inventory adjustments of approximately
$0.1 million) and (d) increased rebate (approximately $0.3 million). The
decrease in gross profit was partially offset by: (a) gross profit derived from
the net sales of products from an acquired company (approximately $1.8 million)
and (b) favorable foreign currency fluctuations (approximately $1.2 million).
Gross margin percent was negatively impacted in the quarter ended December 31,
2003 by reduced manufacturing volume, resulting in factory overhead being
absorbed by fewer units, which offset the positive impact of favorable foreign
currency fluctuations.

Orthodontics.Increased gross profit in the Orthodontics segment resulted
primarily from: (a) favorable foreign currency fluctuations (approximately
$3.6 million), (b) increased net sales of existing products (approximately $2.0
million), (c) gross profit relating to new products (approximately $1.1
million), (d) decreased rebate (approximately $0.5 million), (e) inventory
adjustments (approximately $0.3 million, of which approximately $0.1 million is
due to a decrease in obsolescence, standard cost revisions of approximately
$0.1 million and physical inventory adjustments of approximately $0.1 million),
and (f) increased gross profit due to the transfer of the European endodontic
product line from the Professional Dental segment, which contributed
approximately $0.3 million in gross profit to the Orthodontics segment in the
first quarter of fiscal 2004. Gross margin percent was positively impacted in
the quarter ended December 31, 2003 by increased manufacturing volume,
resulting in factory overhead being absorbed by more units, and by the positive
impact of favorable foreign currency fluctuations.

Selling, General and Administrative Expenses

|                                             |                                                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |      |  
|-------------------------------------------- | -------------------------------------------------- | ---- | ---------------------------------- | --------- | ---------- | ---- | ------ | --------- | ---------- | - | ------ | ------ |  |  | ---- | ---- | -
|                                             |                                                    |      | Fiscal                             |           | Percent of |      | Fiscal |           | Percent of
|Selling, General and Administrative Expenses |                                                    | 2004 |                                    | Net Sales |            | 2003 |        | Net Sales
|                                             |                                                    |      |                                    |           |            |      |        |          
|                                             |                                                    |      | (in thousands, except percentages) |           |            |      |       
|Professional Dental                          |                                                    | $    | 26,527                             |           |            |      | 37.1   | %         |            | $ | 24,629 |        |  |  | 34.7 | %   
|Orthodontics                                 |                                                    |      | 21,975                             |           |            |      | 36.4   |           |            |   | 18,489 |        |  |  | 37.6 |     
|                                             |                                                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |     
|                                             | Total Selling, General and
Administrative Expenses |      | $                                  | 48,502    |            |      |        | 36.8      | %          |   | $      | 43,118 |  |  |      | 35.9 | %
|                                             |                                                    |      |                                    |           |            |      |        |           |            |   |        |        |  |  |      |     

20



---



##### Table of Contents



Overall Company.Selling, general and administrative expenses for the
quarter ended December 31, 2003 increased by $5.4 million or 12.5% from the
corresponding fiscal 2003 quarter.

Professional Dental.Increased selling, general and administrative
expenses in the Professional Dental segment resulted primarily from: (a)
expenses of an acquired company (approximately $1.5 million), (b) increased
selling and marketing expenses (approximately $0.7 million), (c) an increase in
expenses relating to foreign currency fluctuations (approximately $0.3 million)
and (d) increased research and development expenses (approximately $0.1
million). The increase in selling, general and administrative expenses was
partially offset by: (a) decreased general and administrative expenses
(approximately $0.6 million) and (b) decreased amortization expense of other
intangible assets (approximately $0.1 million).

Orthodontics.Increased selling, general and administrative expenses in
the Orthodontics segment resulted primarily from: (a) increased selling and
marketing expenses due to timing in recognition of the expenses (approximately
$2.6 million), (b) increased expenses related to foreign currency fluctuations
(approximately $0.7 million) and (c) increased research and development
expenses (approximately $0.2 million).

Operating Income

|                    |                        |      |        |           |            |      |                                    |           |            |   |        |        |  |  |      |      |  
|------------------- | ---------------------- | ---- | ------ | --------- | ---------- | ---- | ---------------------------------- | --------- | ---------- | - | ------ | ------ |  |  | ---- | ---- | -
|                    |                        |      | Fiscal |           | Percent of |      | Fiscal                             |           | Percent of
|Operating Income    |                        | 2004 |        | Net Sales |            | 2003 |                                    | Net Sales
|                    |                        |      |        |           |            |      |                                    |          
|                    |                        |      |        |           |            |      | (in thousands, except percentages) |           |            |   |       
|Professional Dental |                        | $    | 11,596 |           |            |      | 16.2                               | %         |            | $ | 13,774 |        |  |  | 19.4 | %   
|Orthodontics        |                        |      | 11,860 |           |            |      | 19.6                               |           |            |   | 7,683  |        |  |  | 15.6 |     
|                    |                        |      |        |           |            |      |                                    |           |            |   |        |        |  |  |      |     
|                    | Total Operating Income |      | $      | 23,456    |            |      |                                    | 17.8      | %          |   | $      | 21,457 |  |  |      | 17.9 | %
|                    |                        |      |        |           |            |      |                                    |           |            |   |        |        |  |  |      |     

As a result of the foregoing, operating income for the quarter ended
December 31, 2003 increased by 9.3% or $2.0 million from operating income in
the corresponding quarter of fiscal 2003.

Interest Expense

Interest expense was $5.2 million in the first quarter of fiscal 2004, a
decrease of $0.4 million from the corresponding fiscal 2003 quarter. The
decrease resulted from reduced average debt balances from $336.7 million in
fiscal 2003 to $269.8 million in fiscal 2004, partially offset by an increase
in the average interest rate on debt from 6.48% in fiscal 2003 to 7.48% in
fiscal 2004. Debt that was paid down in the first quarter of fiscal 2004 was
adjustable rate debt with a lower average interest rate. This increase in
interest rates is expected to continue for the balance of the year.

Income Taxes

Taxes on income in the first quarter of fiscal 2004 were $5.9 million, or
33.0% of income before taxes as compared to taxes on income of $5.9 million, or
38.0% of income before taxes in the corresponding 2003 period.

Liquidity and Capital Resources

Our main source of liquidity is cash generated by operating activities
and, to a lesser extent, borrowings under our credit facility. The borrowings
under our credit facility are made from our $120.0 million revolving credit
facility, which is part of our $350 million syndicated credit facility. As of
December 31, 2003, $103.3 million of the $120.0 million revolving credit was
available for borrowing.

Cash provided by operations for the three months ended December 31, 2003
was $20.3 million, as compared to $22.1 million for the three months ended
December 31, 2002 a decrease of $1.8 million. The decrease resulted primarily
from decreases in accrued payroll, accounts payable and other current
liabilities, as well as an increase in inventories. These factors were
partially offset by a decrease in accounts receivable due to the timing of cash
receipts in the beginning of the first quarter of fiscal 2004. Working capital
decreased to $131.2 million at December 31, 2003 from $132.7 million at
September 30, 2003. The current ratio increased to 2.6 at December 31, 2003
from 2.4 at September 30, 2003, primarily due to the decreases in accrued
payroll, accounts payable and other current liabilities previously discussed.
Days sales outstanding (DSO) was 61.1 for the three months ended December 31,
2003, as

21



---



##### Table of Contents



compared to 60.9 days for the three months ended December 31, 2002 and
60.1 for the three months ended September 30, 2003. We usually see a slowdown
in collections during the holiday season, as a result our fiscal first quarter
DSO calculation is typically the highest of the year. Inventory days were 130
as of December 31, 2003, as compared to 153 days at December 31, 2002 due to
our increased focus on supply chain and inventory management. We expect
inventory levels to increase modestly over the next several quarters, as
inventory of certain products is built to cover demand during the transition of
manufacturing from our Tijuana facility to other facilities in Mexico.

Capital expenditures for property, plant and equipment were $2.7 million
and $0.7 million for the first three months of 2004 and 2003, respectively. We
expect capital expenditures for all of fiscal 2004 to be approximately $15.0
million.

Net cash used by financing activities for the three months ended December
31, 2003 was $17.3 million. Net debt repayments were $18.9 million, offset by
cash received from the exercise of stock options and the employee
stock purchase plan of $1.6 million.

We expect on an ongoing basis, to be able to finance cash requirements,
including capital expenditures, debt service, operating leases and potential
future acquisitions, from the funds generated from operations and amounts
available under our existing credit facilities.

Our ability to meet our debt service requirements and to comply with such
covenants is dependent upon our future performance, which is subject to
financial, economic, competitive and other factors affecting us, many of which
are beyond our control. We were in compliance with all such covenants at
December 31, 2003.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

There have been no material changes to our contractual obligations outside
the ordinary course of our business from those disclosed in our Annual Report
on Form 10-K for the fiscal year ended September 30, 2003.

Cautionary Factors

This report contains, and other disclosures that we make from time to time
may contain, forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as anticipate,
believe, continue, estimate, expect, goal, objective, outlook,
could, intend, may, might, plan, potential, predict, should, or
will or the negative of these terms or other comparable terminology signify
forward-looking statements. You should read statements that contain these words
carefully because they discuss our future expectations; contain projections of
our future results of operations or our financial conditions; or state other
forward-looking information.

Forward-looking statements involve known and unknown risks, uncertainties,
and other factors that may cause actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by any forward-looking statements. Although we believe the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results. In addition to the assumptions and other
factors referenced specifically in connection with such statements, the
following factors could impact our business and financial prospects and affect
our future results of operations and financial condition:

We are a holding company and are dependent upon dividends, interest income
and loans from our subsidiaries to meet our debt service obligations.

We are a United States holding company and conduct substantially all of
our operations through our subsidiaries, some of which are located in other
countries. Our ability to meet our debt service obligations will therefore be
dependent on receipt of dividends, interest income and loans from our direct
and indirect subsidiaries. Our subsidiaries may be limited in the amounts they
are permitted to pay as dividends to us on their capital stock as a result of
statutory and other contractual restrictions. In particular, there are
significant tax and other legal restrictions on the ability of non-U.S.
subsidiaries to remit money to us. As a result, some or all of our

22



---



##### Table of Contents



subsidiaries may not be able to pay dividends to us. If they do not, we
may not be able to make debt service payments on our debt instruments.

We operate in a highly competitive industry and we cannot be certain that
we will be able to compete effectively.

Numerous competitors participate in our business segments, some of which
have substantially greater financial and other resources than we do. Our
principal competitors in the Professional Dental business segment include
Dentsply International Inc., 3M Corporation and its affiliate ESPE GmbH & Co.,
Ivoclar Vivadent Group, Johnson & Johnson, Steris Corporation, and Ecolab,
Inc.; and in the Orthodontics business segment, our principal competitors
include Unitek, a subsidiary of 3M Corporation, GAC Orthodontics, a subsidiary
of Dentsply, and American Orthodontics. Some of the companies have a larger
sales force and invest more heavily in research, product development and
product marketing than we do. As a result, we may not be able to achieve or
maintain adequate market share or margins, or compete effectively, against
these companies.

We rely heavily on manufacturing operations to produce the products we
sell, and our results could be affected by disruptions of our manufacturing
operations.

We rely upon our manufacturing operations to produce most of the products
we sell. While we do not presently anticipate any significant disruption of
those operations, should a disruption occur, for any reason, such as strikes,
labor disputes, or other labor unrest, power interruptions, fire, war, or other
force majuere, it could adversely affect our sales and customer relationships
and therefore adversely affect our business. In particular, we rely upon our
facilities in Mexico to manufacture a substantial portion of our orthodontic
products. Any disruption in our ability to import those products into the
United States could severely impact our orthodontics sales. Although most of
our raw materials are available from a number of potential suppliers, our
operations also depend upon our ability to obtain raw materials at reasonable
prices.

Our substantial level of indebtedness could adversely affect our financial
condition.

We presently have, and will continue to have, a substantial amount of
indebtedness which require significant interest payments. As of December 31,
2003, we had $258.9 million in total long-term borrowings (including current
portion), and $224.0 million in stockholders equity. In addition, subject to
restrictions in the indenture for our Senior Subordinated Notes and our Credit
Facility, we may incur additional indebtedness.

Our substantial level of indebtedness could have important consequences,
which include the following:



| |  |  | our ability to obtain additional financing for working capital,
capital expenditures, acquisitions, or general corporate purposes may be
impaired;                                                                                                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | we must use a substantial portion of our cash flow from operations to
service our Senior Subordinated Notes and other indebtedness, which will
reduce the funds available to us for other purposes such as potential
acquisitions and capital expenditures;
|
| |  |  | we are exposed to fluctuations in interest rates, to the extent our
borrowings bear variable rates of interest, including through interest
rate swap agreements;                                                                                           
|
| |  |  | we have a higher level of indebtedness than some of our competitors,
which may put us at a competitive disadvantage and reduce our
flexibility in planning for, or responding to, changing conditions in
our industry, including increased competition; and
|
| |  |  | we are more vulnerable to general economic downturns and adverse
developments in our business.                                                                                                                                                             

From time to time we have engaged in interest rate hedges to mitigate the
impact of interest rate fluctuations. If we are unable to, or elect not to
employ interest rate hedges, it could have a material adverse effect on our
profitability.

In addition, our Credit Facility contains numerous restrictive operating
and financial covenants, which could limit our operating flexibility. Our
ability to pay or refinance our indebtedness will depend upon our future
operating performance, which will be affected by general economic, financial,
competitive, legislative, regulatory, and other factors beyond our control.
Increases in interest rates would adversely affect our cash flows and therefore
our results of operations. In addition, the terms of any additional debt or
equity

23



---



##### Table of Contents



financing that we may incur could restrict our operational flexibility and
prevent us from pursuing business opportunities of value to our stockholders.

We may incur impairment charges on our intangible assets with indefinite
lives that would reduce our earnings.

On October 1, 2002, we adopted Statement of Financial Accounting Standards
No. 142, Goodwill and Other Intangible Assets, which requires that goodwill
and intangible assets that have an indefinite useful life be tested at least
annually for impairment. Goodwill and other intangible assets with indefinite
lives must also be tested for impairment between the annual test if an event
occurs that would more likely than not reduce the fair value of the asset below
its carrying amount. As of December 31, 2003, goodwill and other intangible
assets with indefinite lives represented approximately 44% of our total assets.
If during the testing an impairment loss is required, our financial results for
the relevant period will be reduced by the amount of the impairment loss, net
of income tax effects, if any.

Future exchange rate fluctuations or inflation may adversely affect our
results of operations.

We manufacture many of our products, including those in our Professional
Dental business segment, in our facilities in Mexico, Canada, Switzerland,
Czech Republic and Italy. These products are supported by our sales offices in
Europe, Japan, Australia, South America and Mexico. In fiscal 2003, our foreign
facilities selling, general and administrative expenses represented
approximately 31.7% of our consolidated selling, general and administrative
expenses while our foreign sales represented approximately 43.1% of our total
net sales.

We measure our financial position and results of operations from
substantially all of our international operations, other than most U.S. export
sales, using local currency of the countries in which we conduct such
operations and then translate them into U.S. dollars.

The reported income of our foreign subsidiaries will be impacted by a
weakening or strengthening of the U.S. dollar in relation to a particular local
currency. Our U.S. export sales may also be affected by foreign currency
fluctuations relative to the value of the U.S. dollar as foreign customers may
adjust their level of purchases according to the weakness or strength of their
respective currencies versus the U.S. dollar. In addition, any future increases
in the inflation rate in any country where we have operations may negatively
affect our results of operations. To the extent these local currencies
depreciate against the U.S. dollar, our business, financial condition and
results of operations could be adversely affected.

We have engaged in currency hedges to mitigate the impact of foreign
currency fluctuations. If we are unable to, or elect not to continue to employ
currency hedges, it could have a material adverse effect on our net sales and
profitability. As we expand our international presence, these risks may
increase.

Acquisitions have been and continue to be an important part of our growth
strategy; failure to consummate strategic acquisitions could limit our growth
and failure to successfully integrate acquisitions could adversely impact our
results.

Our business strategy includes continued growth through strategic
acquisitions, which depends upon the availability of suitable acquisition
candidates at reasonable prices and our ability to quickly resolve transitional
challenges. Failure to consummate appropriate acquisitions would adversely
impact our growth and failure to successfully integrate them would adversely
affect our results. These challenges include integration of product lines,
sales forces and manufacturing facilities and decisions regarding divestitures,
cost reductions, and realizing other synergies. Also, these challenges involve
risks of employee turnover, disruption in product cycles and the loss of sales
momentum. We cannot be certain that we will successfully manage them in the
future. Also, our Credit Facility and the indenture for the Senior Subordinated
Notes limit our ability to consummate acquisitions by imposing various
conditions which must be satisfied.

Our profitability may be affected by factors outside our control.

Our ability to increase sales, and to profitably distribute and sell our
products, is subject to a number of risks, including changes in our business
relationships with our principal distributors, competitive risks such as the
entrance of additional competitors into our markets, pricing and technological
competition, risks associated with the development and marketing of new
products in order to remain competitive and risks associated with changes in
demand for dental services which can be affected by economic conditions, health
care reform, government regulation, and more stringent limits on expenditures
by dental insurance providers or governmental programs.

24



---



##### Table of Contents



We strive to increase our margins by controlling our costs and by
improving our manufacturing efficiencies. There can be no assurance, however,
that our efforts will continue to be successful. Margins can be affected by
many factors, including competition, product mix, and the effect of
acquisitions.

If we are unable to successfully manage growth and retain qualified
personnel, we may not be able to compete effectively and our revenues may drop
significantly.

We intend to continue to expand our business over time into new geographic
regions and additional products and services, subject to the sufficiency of our
cash resources and our ability to comply with the covenants in our various debt
instruments. Our future performance will depend, in large part, upon our
ability to implement and manage our growth effectively. Our growth in the
future will continue to place a significant strain on our administrative,
operational, and financial resources. We anticipate that, if we are successful
in expanding our business, we will be required to recruit and hire a
substantial number of new managerial, finance, accounting, and support
personnel. Failure to retain and attract additional management personnel who
can manage our growth effectively would have a material adverse effect on our
performance. To manage our growth successfully, we will also have to continue
to improve and upgrade operational, financial and accounting systems, controls
and infrastructure as well as expand, train and manage our employees. Our
failure to manage the future expansion of our business could have a material
adverse effect on our revenues and profitability.

Our ability to hire and retain competent employees is also subject to a
number of risks, including unionization of our non-union employees and changes
in relationships with our unionized employees. In particular, many of our
non-management employees in Europe are subject to national labor contracts,
which are negotiated from time to time at the national level between the
national labor union and the employees council. There is a risk of strikes or
other labor disputes at our locations which are unionized or are subject to
national contracts which could affect our operations.

We rely heavily upon key distributors, and we could lose sales if any of
them stop doing business with us.

In fiscal 2003, approximately 25% of our sales were made through our top
five independent distributors. Mergers and consolidation of our distributors
have temporarily slowed sales of our products in the past and may do so in the
future. We believe that the loss of either one of our top two distributors, the
only distributors who account for more than 5% of our consolidated net sales
and who sell primarily into the dental segment, could have a material adverse
effect on our results of operations or financial condition until we find
alternative means to distribute our products.

We are subject to product liability litigation and related risks which
could adversely affect our business.

Because many of our products are designed for use in and around a
patients mouth, and because many of these products contain chemicals, metals,
and other materials, we are subject to claims and litigation brought by
patients or dental professionals alleging harm caused by the use of or exposure
to our products. We may need to devote substantial amounts of time and
attention to defending ourselves and may also be required to pay large amounts
in settlement or upon judgment. We may also be required to or may voluntarily
recall products, which would require substantial effort and cost. Litigation or
a product recall could divert significant amounts of our managements time from
other important matters. Our business could also be adversely affected by
public perceptions about the safety of our products, whether or not any such
concerns are justified.

Our business is subject to quarterly variations in operating results due
to factors outside of our control.

Our business is subject to quarterly variations in operating results
caused by a number of factors, including business and industry conditions, the
timing of acquisitions, distribution chain issues, and other factors beyond our
control. All these factors make it difficult to predict operating results for
any particular period. We may be subject to risks arising from other business
and investment considerations that may be disclosed from time to time in our
Securities and Exchange Commission filings or in other publicly written
documents.

Changes in international trade laws and in the business, political and
regulatory environment abroad could materially adversely affect our business.

Our foreign operations include manufacturing facilities in the Czech
Republic, Canada, Switzerland, Italy and Mexico. Accordingly, an event that has
a material adverse impact on our foreign operations may materially adversely
affect our operations as a

25



---



##### Table of Contents



whole. The business, regulatory and political environments in countries
where we have operations differ from those in the United States and our foreign
operations are exposed to a number of inherent risks, including, but not
limited to:



| |  |  | changes in international trade laws, such as the North American Free
Trade Agreement, or NAFTA, affecting our activities in Mexico and
Canada;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | changes in local labor laws and regulations affecting our ability to hire and retain local employees;                                         
|
| |  |  | currency exchange restrictions and fluctuations in the value of foreign currency;                                                             
|
| |  |  | potentially adverse tax consequences;                                                                                                         
|
| |  |  | longer payment cycles;                                                                                                                        
|
| |  |  | greater difficulties in collecting accounts receivable;                                                                                       
|
| |  |  | political conditions in countries where we have operations;                                                                                   
|
| |  |  | unexpected changes in the regulatory environment; and                                                                                         
|
| |  |  | changes in general economic conditions in countries, such as Italy
and Mexico, that have historically been less stable than the United
States.

If any of the events described were to occur, it could have a material
adverse effect on our business, financial condition and results of operations.

If we incur more indebtedness and greater interest expense, we may not be
able to maintain our level of investment in research and development.

The indenture relating to our Senior Subordinated Notes and our Credit
Facility permit us to incur significant amounts of additional debt. If we incur
additional debt, our interest expense will rise. We may find we do not have
enough available cash to pay for the increased interest expense and other
budgeted expenses. We may need to reduce our discretionary expenses, including
research and development, which could reduce or delay the introduction of new
products. We may not be able to maintain our level of investment in research
and development as we incur more indebtedness and greater interest expense.

Certain of our products and manufacturing facilities are subject to
regulation, and our failure to obtain or maintain the required regulatory
approvals for these products could hinder or prevent their sale and increase
our costs of regulatory compliance.

Our ability to continue manufacturing and selling those of our products
that are subject to regulation by the United States Food and Drug
Administration, state laws or other domestic or foreign governments or agencies
is subject to a number of risks, including the promulgation of stricter laws or
regulations, reclassification of our products into categories subject to more
stringent requirements, or the withdrawal of the approval needed to sell one or
more of our products. The costs of complying with these regulations and the
delays in receiving required regulatory approvals or the enactment of new
adverse regulations or regulatory requirements may force us to cut back our
operations, recall products, increase our costs of regulatory compliance,
prevent us from selling a product or hinder our growth.

We may be required to satisfy certain indemnification obligations to
Apogent, or may not be able to collect on indemnification rights from Apogent.

Pursuant to the terms of the agreements executed in connection with our
spin-off from Apogent, we and our U.S. subsidiaries, in general, indemnify
Apogent and its subsidiaries and affiliates against liabilities, litigation and
claims actually or allegedly arising out of the dental business, including
discontinued operations relating to our business. Similarly, Apogent and its
U.S. subsidiaries indemnify us and our subsidiaries and affiliates against
liabilities, litigation and claims actually or allegedly arising out of
Apogents business, including discontinued operations related to the laboratory
business, and other operations and assets not transferred to us. These
indemnification obligations could be significant. The availability of these
indemnities will depend upon the future financial strength of each of the
companies. We cannot determine whether we will have substantial indemnification
obligations to Apogent and

26



---



##### Table of Contents



its affiliates in the future. We also cannot assure you that, if Apogent
has substantial indemnification obligations to us and our affiliates, Apogent
will have the ability to satisfy those obligations.

Except as may be required by applicable securities laws or regulations, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.




ITEM 3.Quantitative and Qualitative Disclosures About Market Risk.

Foreign Exchange Currency Risk Management

We operate internationally; therefore, our earnings, cash flows, and
financial position are exposed to foreign currency risk from foreign currency
denominated receivables and payables, forecasted sales transactions, as well as
net investments in certain foreign operations. These items are denominated in
foreign currencies, including but not limited to the euro, Japanese yen, Swiss
franc, Mexican peso, Canadian dollar, and the Australian dollar.

We believe it is prudent to minimize the variability caused by foreign
currency risk. We attempt to minimize foreign currency risk by using derivative
instruments when prudent. We do not use derivative instruments for purposes
other than hedging.

Although we have a U.S. dollar functional currency, a substantial portion
of our sales, income, and cash flow is derived from foreign currencies. Our
foreign currency exposure exists primarily in the euro, Japanese yen, Canadian
dollar, Swiss franc, Mexican peso and Australian dollar versus the U.S. dollar.
With the acquisition of SpofaDental a.s. on August 4, 2003, we now consider the
Czech koruna a currency exposure.

For fiscal year 2004, our projected total foreign currency exposure is
estimated to be approximately 88.3 million euros, 938.0 million Japanese yen,
11.5 million Canadian dollars, 17.8 million Australian dollars, 14.8 million
Mexican peso, 28.3 million Czech koruna and 29.8 million Swiss francs. We have
put in place a strategy to manage our euro and Japanese yen cash flow exposure
through the use of zero cost collar contracts. There were no such contracts in
place for the Canadian dollar, Australian dollar, Mexican peso, Czech koruna
and Swiss franc at December 31, 2003.

In January, March, April, and May 2003, we entered into a series of zero
cost collar contracts to hedge intercompany transactions with a total notional
amount of 42.0 million euros and 720.0 million Japanese yen for fiscal year
2004. In addition, in December 2003, we entered into a series of zero cost
collar contracts to hedge intercompany transactions with a total notional
amount of 9.0 million euros and 180.0 million Japanese yen for the first
quarter of our fiscal year 2005.

At December 31, 2003, an unrealized loss of $3.5 million (net of income
tax), representing the fair value of the zero cost collars, is included in
accumulated other comprehensive income. In addition, none of the foreign
currency cash flow hedges has been discontinued.

Zero cost collar contracts in place as of December 31, 2003 are as follows
(in thousands, except rates):

|         |  |            |            |                |  |      |            |        |  |            |            |              |  |       |         |  |  |  |        |  |  |  |        | 
|-------- |  | ---------- | ---------- | -------------- |  | ---- | ---------- | ------ |  | ---------- | ---------- | ------------ |  | ----- | ------- |  |  |  | ------ |  |  |  | ------ | 
|         |  |            |            |                |  |      |            |        |  |            |            |              |  | Local |         |  |  |  |        |  |  | 
|         |  |            |            |                |  |      |            |        |  | Maturity   |            | Currency     |  |       |         |  |  |  |        | 
|Currency |  | Trade Date |            | Effective Date |  | Date |            | Amount |  | Floor Rate |            | Ceiling Rate
|         |  |            |            |                |  |      |            |        |  |            |            |             
|Euro     |  |            | 03/06/2003 |                |  |      | 01/15/2004 |        |  |            | 03/15/2004 |              |  |       | 10,500  |  |  |  | 1.06   |  |  |  | 1.11   | 
|Euro     |  |            | 04/14/2003 |                |  |      | 04/15/2004 |        |  |            | 06/15/2004 |              |  |       | 10,500  |  |  |  | 1.04   |  |  |  | 1.08   | 
|Euro     |  |            | 05/02/2003 |                |  |      | 07/15/2004 |        |  |            | 09/15/2004 |              |  |       | 10,500  |  |  |  | 1.09   |  |  |  | 1.13   | 
|Euro     |  |            | 12/15/2003 |                |  |      | 10/15/2004 |        |  |            | 12/15/2004 |              |  |       | 9,000   |  |  |  | 1.20   |  |  |  | 1.24   | 
|Yen      |  |            | 03/06/2003 |                |  |      | 10/15/2003 |        |  |            | 03/15/2004 |              |  |       | 180,000 |  |  |  | 117.00 |  |  |  | 115.37 | 
|Yen      |  |            | 04/14/2003 |                |  |      | 04/15/2004 |        |  |            | 06/15/2004 |              |  |       | 180,000 |  |  |  | 121.00 |  |  |  | 116.75 | 
|Yen      |  |            | 05/01/2003 |                |  |      | 07/15/2004 |        |  |            | 09/15/2004 |              |  |       | 180,000 |  |  |  | 119.50 |  |  |  | 116.75 | 
|Yen      |  |            | 12/15/2003 |                |  |      | 10/15/2004 |        |  |            | 12/15/2004 |              |  |       | 180,000 |  |  |  | 108.00 |  |  |  | 104.40 | 

As of December 31, 2003, the maximum length of time over which we are
hedging our exposure to the variability in future cash flows associated with
foreign currency forecasted transactions is twelve months for the Japanese yen
and twelve months for the euro.

In June 2002, we entered into four cross currency debt swap transactions
to hedge our net investment in Hawe Neos and one cross currency debt swap
transaction to hedge our net investment in SDS Japan. The agreements are
contracts to exchange U.S. dollar

27



---



##### Table of Contents



principal aggregating a total amount of $45.0 million in exchange for a
Swiss franc principal aggregating a total amount of 67.5 million and U.S.
dollar principal amount of $4.0 million in exchange for a Japanese yen amount
of 486.0 million. Both the Swiss franc contracts and the Japanese yen contract
mature on June 15, 2007. The fixed interest rate to be paid to us on the U.S.
dollar leg of the agreements is a rate equal to the Senior Subordinated Notes
rate of 8 1/8% while the fixed interest rate to be paid by us on the Swiss
franc leg of the agreements ranges from 6.39% to 6.45% and the Japanese yen leg
of the agreements is 3.65%, with the interest payments due semi-annually.

The following are the details of the cross currency debt swaps (amounts in
millions, except rates):

|           |  |                |          |          |  |     |          |          |  |        |      |          |  |  |       |   |  |            |  |  |       |   |  | 
|---------- |  | -------------- | -------- | -------- |  | --- | -------- | -------- |  | ------ | ---- | -------- |  |  | ----- | - |  | ---------- |  |  | ----- | - |  | 
|Trade Date |  | Effective Date |          | Maturity |  | US$ |          | Interest |  | FX Amt |      | Interest
|           |  |                |          |          |  |     |          |          |  |        |      |         
|06/25/02   |  |                | 06/27/02 |          |  |     | 06/15/07 |          |  | $      | 15.0 |          |  |  | 8 1/8 | % |  | CHF 22.50  |  |  | 6.450 | %
|06/26/02   |  |                | 06/28/02 |          |  |     | 06/15/07 |          |  | $      | 15.0 |          |  |  | 8 1/8 | % |  | CHF 22.50  |  |  | 6.390 | %
|06/27/02   |  |                | 07/01/02 |          |  |     | 06/15/07 |          |  | $      | 7.5  |          |  |  | 8 1/8 | % |  | CHF 11.25  |  |  | 6.390 | %
|06/27/02   |  |                | 07/01/02 |          |  |     | 06/15/07 |          |  | $      | 7.5  |          |  |  | 8 1/8 | % |  | CHF 11.25  |  |  | 6.390 | %
|06/25/02   |  |                | 06/27/02 |          |  |     | 06/15/07 |          |  | $      | 4.0  |          |  |  | 8 1/8 | % |  | JPY 486.00 |  |  | 3.650 | %

At December 31, 2003, an unrealized loss of $6.8 million (net of income
tax), representing the fair value of the cross currency debt swap, was included
in accumulated other comprehensive income.

Interest Rate Exposure  Interest Rate Risk Management

We use our Credit Facility and Senior Subordinated Notes to finance our
operations. The Credit Facility exposes us to variability in interest payments
due to changes in interest rates. If interest rates increase, our interest
expense increases. Conversely, if interest rates decrease, our interest expense
also decreases. We entered into interest rate swap agreements to manage
fluctuations in cash flows resulting from interest rate risk. These interest
rate swaps change a portion of our variable-rate cash flow exposure to
fixed-rate cash flows.

We continue to assess our exposure to interest rate risk on an ongoing
basis.

The table below provides information about our debt obligations that are
sensitive to changes in interest rates as of December 31, 2003. For these debt
obligations, the table presents principal cash flows and related weighted
average interest rates by expected maturity dates. Weighted average variable
rates are based on implied forward 3-month LIBOR rates in the yield curve at
the reporting date. The information is presented in U.S. dollar equivalents.

|                |                       |      |                                  |       |   |      |   |       |   |      |                                    |            |   |            |   |       |   |  |   |       |   |  |   |         |   |  |   |         | 
|--------------- | --------------------- | ---- | -------------------------------- | ----- | - | ---- | - | ----- | - | ---- | ---------------------------------- | ---------- | - | ---------- | - | ----- | - |  | - | ----- | - |  | - | ------- | - |  | - | ------- | 
|                |                       |      | Twelve Months Ending December 31 |       |   |      |  
|                |                       |      |                                  |       |   |      |  
|Liabilities     |                       | 2004 |                                  | 2005  |   | 2006 |   | 2007  |   | 2008 |                                    | Thereafter |   | Fair Value
|                |                       |      |                                  |       |   |      |   |       |   |      |                                    |            |   |           
|                |                       |      |                                  |       |   |      |   |       |   |      | (in thousands, except percentages) |            |   |            |   |       |   |  |  
|Long-Term Debt: |                       |      |                                  |       |   |      |   |       |   |      |                                    |            |   |            |   |       |   |  |   |       |   |  |   |         |   |  |   |        
|                | Fixed Rate Debt       |      |                                  |      |   |      |   |      |   |      |                                    |           |   |            |   |      |   |  |   |      |   |  | $ | 150,000 |   |  | $ | 163,125 | 
|                | Average Interest Rate |      |                                  | 8.125 | % |      |   | 8.125 | % |      |                                    | 8.125      | % |            |   | 8.125 | % |  |   | 8.125 | % |  |   | 8.125   | % |  |   |         | 
|                | Variable Rate Debt    |      | $                                | 4,508 |   |      | $ | 1,119 |   |      | $                                  | 1,136      |   |            | $ | 1,141 |   |  | $ | 1,173 |   |  | $ | 99,869  |   |  | $ | 108,946 | 
|                | Average Interest Rate |      |                                  | 4.255 | % |      |   | 5.855 | % |      |                                    | 6.845      | % |            |   | 7.560 | % |  |   | 8.055 | % |  |   | 8.340   | % |  |   |         | 

For the quarter ended December 31, 2003, the total net cost of converting
from floating rate (3-month LIBOR) to fixed rate from a portion of the interest
payments under our long-term debt obligations was approximately $0.5 million.
At December 31, 2003, an unrealized loss of $1.8 million (net of income tax) is
included in accumulated other comprehensive income. Below is a table listing
the interest expense exposure detail and the fair value of the interest rate
swap agreements as of December 31, 2003 (in thousands):

|        |  |          |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       |              |       |   |         |   |         | 
|------- |  | -------- | ------ | ---- |  | ------- |  | --------- | -------- | -------- |  | ---- | --------- | --------- |  |  | --------- |  |  | ------------ | ----- | ------------ | ----- | - | ------- | - | ------- | 
|        |  |          |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       | Three Months |       |   |         |  
|        |  |          |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       | Ended        |       |   |         |  
|        |  | Notional |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  | December 31, |       | Fair Value  
|Loan    |  | Amount   |        | Term |  | Trade   |  | Effective |          | Maturity |  | 2003 |           | (Pre-tax)
|        |  |          |        |      |  |         |  |           |          |          |  |      |           |          
|Kerr B  |  | $        | 18,108 |      |  | 4 years |  |           | 1/2/2001 |          |  |      | 3/30/2001 |           |  |  | 3/31/2005 |  |  | $            | 170.6 |              |       | $ | 950.7   |  
|Ormco B |  |          | 25,345 |      |  | 5 years |  |           | 1/2/2001 |          |  |      | 3/30/2001 |           |  |  | 6/30/2006 |  |  |              | 291.9 |              |       |   | 1,970.1 |  
|        |  |          |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       |              |       |   |         |   |         | 
|Total   |  | $        | 43,453 |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       | $            | 462.5 |   |         | $ | 2,920.8 | 
|        |  |          |        |      |  |         |  |           |          |          |  |      |           |           |  |  |           |  |  |              |       |              |       |   |         |   |         | 

The fair value of interest rate swap agreements designated as hedging
instruments against the variability of cash flows associated with
floating-rate, long-term debt obligations are reported in accumulated other
comprehensive income. These amounts subsequently

28



---



##### Table of Contents



are reclassified into interest expense as a yield adjustment in the same
period in which the related interest on the floating-rate debt obligations
affects earnings.




ITEM 4.Controls and Procedures

Disclosure Controls and Procedures:The Companys management, with the
participation of the Companys Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Companys disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the
end of the period covered by this report. Based on such evaluation, the
Companys Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Companys disclosure controls and
procedures are effective in recording, processing, summarizing and reporting,
on a timely basis, information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act.

Internal Control Over Financial Reporting:The Companys management, with
the participation of the Companys Chief Executive Officer and Chief Financial
Officer, also conducted an evaluation of the Companys internal control over
financial reporting to determine whether any changes occurred during the
quarter covered by this report that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial
reporting. Based on that evaluation, we have concluded that there have been no
such changes during the period covered by this report.




PART II - OTHER INFORMATION




ITEM 6.Exhibits and Reports on Form 8-K

(a) Exhibits:



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | See the Exhibit Index included on the last page in this report, which is
incorporated herein by reference.

(b) Reports on Form 8-K:



| |                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On November 18, 2003, the Company furnished a Current Report on Form 8-K
furnishing the Companys press release announcing the Companys financial
results for the quarter and twelve-month period ended September 30, 2003.



| |                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 27, 2004, subsequent to the end of the quarter for which this
report is filed, the Company furnished a Current Report on Form 8-K
furnishing the Companys press release announcing the Companys financial
results for the quarter ended December 31, 2003.

29



---



##### Table of Contents






SIGNATURE



| |                                                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                              
|----------------------- |  | ---------------------------------------------
|                        |  | SYBRON DENTAL SPECIALTIES, INC. (Registrant) 
|                        |  |                                              
|Date: February 11, 2004 |  | /s/ GREGORY D. WALLER                        
|                        |  |                                              
|                        |  |                                              
|                        |  | Gregory D. Waller                            
|                        |  | Vice President - Finance,                    
|                        |  | Chief Financial Officer & Treasurer*         
|                        |  |                                              
|                        |  | *   executing as both the principal financial
|                        |  | officer and a duly authorized officer of     
|                        |  | the Company.                                 

30



---



##### Table of Contents






SYBRON DENTAL SPECIALTIES, INC.
(THE REGISTRANT)
(COMMISSION FILE NO. 1-16057)
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 2003

|               |  |                                                                                                                                                                       |  |                                                                                                                                                             |  |              
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------
|Exhibit Number |  | Description                                                                                                                                                           |  | Incorporated Herein By Reference To                                                                                                                         |  | FiledHerewith
|               |  |                                                                                                                                                                       |  |                                                                                                                                                             |  |              
|3.1            |  | (a) Restated Certificate of
Incorporation of the Registrant                                                                                                           |  | Exhibit 3.1 to Amendment No. 2 to the
Registrants Registration Statement on Form
10/A filed on November 9, 2000 (File No.
1-16057) (the Form 10/A No. 2) |  |              
|               |  |                                                                                                                                                                       |  |                                                                                                                                                             |  |              
|               |  | (b) Certificate of Designation,
Preferences and Rights of Series A
Preferred Stock                                                                                    |  | Exhibit 3.1(b) to the Registrants Form 10-K
for the fiscal year ended September 30, 2000                                                                   |  |              
|3.2            |  | Bylaws of the Registrant                                                                                                                                              |  | Exhibit 3.2 to the Form 10/A No. 2                                                                                                                          |  |              
|31.1           |  | Certification pursuant to Rule 13a-14(a) or
Rule 15d-14(a), as adopted pursuant to
section 302 of the Sarbanes- Oxley
Act of 2002                                     |  |                                                                                                                                                             |  | X            
|31.2           |  | Certification pursuant to Rule 13a-14(a) or
Rule 15d-14(a), as adopted pursuant to
section 302 of the Sarbanes- Oxley
Act of 2002                                     |  |                                                                                                                                                             |  | X            
|32             |  | Chief Executive and Chief Financial
Officers certification pursuant to 18 U.S.C.
section 1350, as adopted pursuant to
section 906 of the Sarbanes- Oxley
Act of 2002 |  |                                                                                                                                                             |  | X            

31