<PAGE>

================================================================================


                                  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 JUNE 30, 2002

                                       OR

[ ]      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 [ ]

         At July 31, 2002, there were 37,989,129 shares of the Registrant's
Common Stock, par value $.01 per share, outstanding.


================================================================================


<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

<Table>
<Caption>
                                                                                                          PAGE
                                                                                                          ----
<S>          <C>                                                                                         <C>

PART I  -    FINANCIAL INFORMATION

    Item 1.  Financial Statements.......................................................................    1

             Consolidated Balance Sheets, June 30, 2002 and September 30, 2001..........................    1

             Consolidated Statements of Income for the three and nine months ended June 30, 2002
                and 2001................................................................................    2

             Consolidated Statement of Stockholders' Equity and Comprehensive Income
                for the nine months ended June 30, 2002.................................................    3

             Consolidated Statements of Cash Flows for the nine months ended June 30, 2002 and 2001.....    4

             Notes to Unaudited Consolidated Financial Statements.......................................    5

    Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations......   17

    Item 3.  Quantitative and Qualitative Disclosures about Market Risk.................................   33


PART II - OTHER INFORMATION

    Item 2.  Changes in Securities and Use of Proceeds..................................................   36

    Item 5.  Other Information..........................................................................   36

    Item 6.  Exhibits and Reports on Form 8-K...........................................................   88

    SIGNATURE...........................................................................................   89
</Table>




<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<Table>
<Caption>
                                                                                            JUNE 30,   SEPTEMBER 30,
                                                                                              2002         2001
                                                                                           ----------  -------------
                                                                                                          (note 2)
<S>                                                                                        <C>         <C>
                                     ASSETS
Current assets:
   Cash and cash equivalents ...........................................................   $   21,360    $    8,319
   Accounts receivable (less allowance for doubtful receivables of
      $1,537 and $1,657 at June 30, 2002 and September 30, 2001, respectively) .........       81,135        92,172
   Inventories (notes 2 and 3) .........................................................       88,799        77,227
   Deferred income taxes ...............................................................        5,324         4,801
   Prepaid expenses and other current assets ...........................................       23,580        12,998
                                                                                           ----------    ----------
      Total current assets .............................................................      220,198       195,517
   Property, plant and equipment, net of accumulated depreciation of $85,342
      and $78,890 at June 30, 2002 and September 30, 2001, respectively ................       74,146        68,919
   Intangible assets, net ..............................................................      255,278       252,581
   Deferred income taxes ...............................................................        7,707         9,619
   Other assets ........................................................................       19,388        13,111
                                                                                           ----------    ----------
      Total assets .....................................................................   $  576,717    $  539,747
                                                                                           ==========    ==========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable ....................................................................   $   17,008    $   17,336
   Current portion of long-term debt ...................................................        2,387        25,969
   Income taxes payable ................................................................           --         7,344
   Accrued payroll and employee benefits ...............................................       17,651        21,315
   Restructuring reserve (note 4) ......................................................        1,831         2,775
   Deferred income taxes ...............................................................        2,362         5,200
   Accrued rebates .....................................................................        3,177         5,421
   Other current liabilities ...........................................................        9,925         9,154
                                                                                           ----------    ----------
      Total current liabilities ........................................................       54,341        94,514
Long-term debt .........................................................................      210,901       321,536
Senior subordinated notes ..............................................................      150,000          --
Deferred income taxes ..................................................................       22,527        13,365
Other liabilities ......................................................................       12,582        16,806

Commitments and contingent liabilities:
Stockholders' equity:
   Preferred stock, $.01 par value; authorized 20,000,000 shares, none outstanding .....           --            --
   Common stock, $.01 par value; authorized 250,000,000 shares,
      37,989,129 and 37,891,458 issued and outstanding at June 30, 2002
      and September 30, 2001, respectively .............................................          380           379
   Additional paid-in capital ..........................................................       71,544        70,059
   Retained earnings ...................................................................       61,654        36,993
   Accumulated other comprehensive (loss) ..............................................       (7,212)      (13,905)
                                                                                           ----------    ----------
      Total stockholders' equity .......................................................      126,366        93,526
                                                                                           ----------    ----------
      Total liabilities and stockholders' equity .......................................   $  576,717    $  539,747
                                                                                           ==========    ==========
</Table>

     See accompanying notes to unaudited consolidated financial statements.


                                       1
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<Table>
<Caption>
                                                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                                            JUNE 30,                    JUNE 30,
                                                    ------------------------    ------------------------
                                                       2002          2001          2002          2001
                                                    ----------    ----------    ----------    ----------
                                                                   (note 2)                    (note 2)
<S>                                                 <C>           <C>           <C>           <C>
Net sales .......................................   $  119,303    $  107,257    $  341,762    $  318,558
Cost of sales ...................................       51,977        45,759       149,181       136,279
                                                    ----------    ----------    ----------    ----------
Gross profit ....................................       67,326        61,498       192,581       182,279
Selling, general and administrative expenses ....       38,677        34,477       110,955       101,446
Amortization of goodwill and other
   intangible assets ............................        2,541         2,298         7,570         6,584
                                                    ----------    ----------    ----------    ----------
      Total selling, general and
         administrative expenses ................       41,218        36,775       118,525       108,030
                                                    ----------    ----------    ----------    ----------
Operating income ................................       26,108        24,723        74,056        74,249
Other income (expense):
   Interest expense .............................       (6,571)       (8,940)      (20,174)      (25,643)
   Amortization of deferred financing fees ......         (259)         (211)         (702)         (514)
   Loss on derivative instruments (note 1) ......       (6,997)           --        (6,997)           --
   Other, net ...................................          165           210           247           183
                                                    ----------    ----------    ----------    ----------
Income before income taxes and
   extraordinary item ...........................       12,446        15,782        46,430        48,275
Income taxes ....................................        4,854         6,394        18,108        19,550
                                                    ----------    ----------    ----------    ----------
Income before extraordinary item ................        7,592         9,388        28,322        28,725
Extraordinary item, net of tax (note 7) .........       (3,661)           --        (3,661)         (498)
                                                    ----------    ----------    ----------    ----------
      Net income ................................   $    3,931    $    9,388    $   24,661    $   28,227
                                                    ==========    ==========    ==========    ==========

Basic earnings per share (note 6):
   Basic earnings per share before
      extraordinary item ........................   $     0.20    $     0.26    $     0.75    $     0.81
   Extraordinary item ...........................        (0.10)           --         (0.10)        (0.01)
                                                    ----------    ----------    ----------    ----------
   Basic earnings per share .....................   $     0.10    $     0.26    $     0.65    $     0.80
                                                    ==========    ==========    ==========    ==========
Diluted earnings per share (note 6):
   Diluted earnings per share before
      extraordinary item ........................   $     0.19    $     0.25    $     0.72    $     0.79
   Extraordinary item ...........................        (0.09)           --         (0.09)        (0.01)
                                                    ----------    ----------    ----------    ----------
   Diluted earnings per share ...................   $     0.10    $     0.25    $     0.63    $     0.78
                                                    ==========    ==========    ==========    ==========
</Table>

     See accompanying notes to unaudited consolidated financial statements.


                                       2
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                     FOR THE NINE MONTHS ENDED JUNE 30, 2002
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)

<Table>
<Caption>
                                           COMMON STOCK
                                           ------------                                 ACCUMULATED
                                                              ADDITIONAL                   OTHER          TOTAL           TOTAL
                                     NUMBER OF                  PAID-IN     RETAINED   COMPREHENSIVE   STOCKHOLDERS'  COMPREHENSIVE
                                      SHARES     PAR VALUE      CAPITAL     EARNINGS    INCOME (LOSS)     EQUITY         INCOME
                                    ----------   ----------   ----------   ----------  --------------  -------------  -------------
<S>                                 <C>          <C>          <C>          <C>         <C>             <C>            <C>

Balance at September 30, 2001,
   as reported ..................   37,891,458   $      379   $   74,661   $   38,511    $  (13,905)   $   99,646
Change in accounting principle
   (note 2) .....................           --           --       (4,602)      (1,518)           --        (6,120)
                                    ----------   ----------   ----------   ----------    ----------    ----------
Balance at September 30, 2001,
   as adjusted ..................   37,891,458          379       70,059       36,993       (13,905)       93,526
Comprehensive income:
   Net income ...................           --           --           --       24,661            --        24,661     $   24,661
   Translation adjustment .......           --           --           --           --         2,813         2,813          2,813
   Unrealized gain on
     derivative instruments .....           --           --           --           --         3,880         3,880          3,880
                                    ----------   ----------   ----------   ----------    ----------    ----------     ----------
Total comprehensive income ......           --           --           --       24,661         6,693                   $   31,354
                                                                                                                      ==========
Issuance of common stock
   from options exercised,
   including tax benefit ........       97,671            1        1,485           --            --         1,486
                                    ----------   ----------   ----------   ----------    ----------    ----------
Balance at June 30, 2002 ........   37,989,129   $      380   $   71,544   $   61,654    $   (7,212)   $  126,366
                                    ==========   ==========   ==========   ==========    ==========    ==========
</Table>


     See accompanying notes to unaudited consolidated financial statements.



                                       3
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                              NINE MONTHS ENDED JUNE 30,
                                                                              --------------------------
                                                                                  2002          2001
                                                                               ----------    ----------
                                                                                              (note 2)
<S>                                                                            <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income ..............................................................   $   24,661    $   28,227
   Adjustments to reconcile net income to net cash provided
      by operating activities:
      Depreciation .........................................................        7,997         7,514
      Amortization .........................................................        7,570         6,584
      Non-cash charges related to termination of previous credit facility ..        7,694           837
      Gain on sales of property, plant and equipment .......................         (360)          (40)
      Provision for losses on doubtful receivables .........................          487           940
      Inventory provisions .................................................        1,362            53
      Deferred income taxes ................................................        7,713         2,873
      Tax benefit from issuance of stock under employee stock plan .........          283            --
   CHANGES IN ASSETS AND LIABILITIES, NET OF EFFECTS OF
      BUSINESSES ACQUIRED:
      Decrease in accounts receivable ......................................       11,728         9,172
      Increase in inventories ..............................................      (13,254)       (6,923)
      Increase in prepaid expenses and other current assets ................      (10,485)       (4,527)
      Increase/(decrease) in accounts payable ..............................         (715)        1,040
      Increase/(decrease) in income taxes payable ..........................       (7,344)        2,313
      Increase/(decrease) in accrued payroll and employee benefits .........       (3,664)        2,131
      Decrease in restructuring reserve ....................................         (944)         (859)
      Decrease in other current liabilities ................................       (2,005)       (1,215)
      Net change in other assets and liabilities ...........................       (2,516)           68
                                                                               ----------    ----------
         Net cash provided by operating activities .........................       28,208        48,188
                                                                               ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Capital expenditures ....................................................      (12,153)       (9,556)
   Proceeds from sales of property, plant, and equipment ...................          515           128
   Net payments for businesses acquired ....................................       (8,235)      (51,653)
                                                                               ----------    ----------
         Net cash used in investing activities .............................      (19,873)      (61,081)
                                                                               ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from credit facility ...........................................      403,000       535,660
   Principal payments on credit facility ...................................     (537,911)     (503,182)
   Proceeds from long-term debt ............................................          957           140
   Payments on long-term debt ..............................................         (486)         (107)
   Payment of deferred financing fees ......................................      (11,062)       (5,494)
   Proceeds from sale of senior subordinated notes .........................      150,000            --
   Payments of prepayment penalty and terminated interest rate swap
      related to refinancing ...............................................       (5,305)           --
   Payment of Apogent dividend .............................................           --       (67,927)
   Proceeds from stock offering, net of offering costs .....................           --        50,074
   Capital contributions from Apogent ......................................           --         4,612
   Cash received from exercise of stock options ............................        1,203         1,062
   Net change in advances and loans to Apogent .............................           --          (404)
                                                                               ----------    ----------
         Net cash provided by financing activities .........................          396        14,434
                                                                               ----------    ----------
Effect of exchange rate changes on cash and cash equivalents ...............        4,310        (3,086)
Net increase (decrease) in cash and cash equivalents .......................       13,041        (1,545)
Cash and cash equivalents at beginning of period ...........................        8,319         5,783
                                                                               ----------    ----------
Cash and cash equivalents at end of period .................................   $   21,360    $    4,238
                                                                               ==========    ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Cash paid during the period for interest ................................   $   21,026    $   22,402
                                                                               ==========    ==========
   Cash paid during the period for income taxes ............................   $   22,544    $   11,582
                                                                               ==========    ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH FINANCING ACTIVITIES:
   Non-cash charge for the de-designation of interest rate swaps ...........   $    3,223    $       --
                                                                               ==========    ==========
   Non-cash charge for the write-off of deferred financing fees ............   $    4,471    $      837
                                                                               ==========    ==========
</Table>


     See accompanying notes to unaudited consolidated financial statements.


                                       4
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)


1. OVERVIEW AND BASIS OF PRESENTATION

         Sybron Dental Specialties, Inc. ("SDS" or the "Company") was
         incorporated in Delaware on July 17, 2000. The Company was created to
         effect the spin-off by Apogent Technologies Inc. ("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 subsidiaries of SDS market
         their products under brand names such as Kerr(R), belle(TM), Metrex(R),
         Ormco(R), Analytic(R) Pinnacle(R), Demetron(R), Hawe(R) and AOA(TM),
         which are well recognized in the dental, orthodontics and infection
         prevention industries. SDS has three business segments: a) Professional
         Dental, b) Orthodontics and c) Infection Prevention.

         On June 6, 2002, the Company entered into a new credit facility, which
         consists of a revolving credit facility of up to $150 million with a
         five-year commitment period, and a $200 million term loan at LIBOR plus
         250 basis points with a seven-year maturity. Additionally, the Company
         completed the sale of $150 million of 8 1/8% senior subordinated notes
         due 2012, in a private offering. The cash proceeds from the term loan
         and senior subordinated notes were used to retire the Company's
         previous credit facility. The new credit structure provides the Company
         with greater financial flexibility and longer-term financing.

         As a result of the termination of the previous credit facility on June
         6, 2002, approximately $70 million of the Company's current interest
         rate swaps could not be re-assigned to the new credit facility and thus
         were terminated. Accordingly, the Company recorded a loss on derivative
         instruments of approximately $3.8 million (or approximately $2.3
         million, net of tax) in other income (expense), which represents the
         fair value of the swaps at the termination date. Additionally, under
         the Financial Accounting Standards Board's ("FASB") Statement No. 133,
         the Company had to re-assign the remaining interest rate swaps as a
         result of the specificity of the Company's hedge documentation relating
         to the hedged item. Accordingly, a non-cash loss on derivative
         instruments of approximately $3.2 million (or approximately $2.0
         million, net of tax), representing the fair value of the remaining
         swaps at the date of the refinancing, was reclassified from other
         comprehensive income (loss) and recorded in other income (expense) to
         recognize the loss. However, these swaps were continued and were
         simultaneously re-assigned to the new credit facility. The change in
         the fair value of these re-assigned swaps from the refinancing date to
         June 30, 2002 has been recorded in other comprehensive income (loss).

         The unaudited consolidated financial statements reflect the operations
         of SDS and its wholly owned subsidiaries and affiliates. The term
         "Apogent" as used herein refers to Apogent Technologies Inc. and its
         subsidiaries. The Company's fiscal year ends on September 30. All
         significant intercompany balances and transactions have been eliminated
         in consolidation. The fiscal periods ended June 30, 2002 and June 30,
         2001 are hereinafter referred to as "2002" and "2001," respectively.

         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. Except as described in notes 2, 4 and 7 below, all
         such adjustments were of a normal recurring nature. The results for the
         period ended June 30, 2002 are not necessarily indicative of the
         results to be expected for the full year. Because certain disclosures
         have been omitted from these statements, this information should only
         be read in conjunction with the Company's consolidated financial
         statements for the years ended September 30, 2001, 2000 and 1999 and
         Management's Discussion and Analysis of Financial Condition and Results
         of Operations with respect to such years, which have been adjusted to
         reflect the change in accounting principle described in note 2, below.

                                       5
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

2. CHANGE IN ACCOUNTING PRINCIPLE

         During the quarter ended June 30, 2002, the Company changed its method
         of accounting for its domestic inventories from the last-in, first-out
         (LIFO) method to the first-in, first-out (FIFO) method. The Company
         believes the change to FIFO is preferable in the circumstances because
         in the current environment of low inflation, it will result in a better
         measurement of operating results. In addition, the Company believes
         that the change in the method of accounting for domestic inventory
         costs is preferable because it provides a better measure of the current
         value of its inventory, provides a more accurate reflection of the
         Company's financial position and liquidity, and provides a better
         matching of manufacturing costs with revenues. It will also allow for
         the valuing of inventory consistently throughout the Company. The
         Company's historical financial statements have been adjusted for all
         relevant prior periods in accordance with Accounting Principles Board
         Opinion No. 20, "Accounting Changes" to reflect this change in method
         of inventory accounting. The effect of the accounting change on income
         as previously reported for the six months ended March 31, 2002, and the
         quarter and nine months ended June 30, 2001 is as follows:

<Table>
<Caption>
                                                                                     INCREASE (DECREASE)
                                                                         SIX MONTHS         QUARTER      NINE MONTHS
                                                                            ENDED            ENDED          ENDED
                                                                       MARCH 31, 2002   JUNE 30, 2001   JUNE 30, 2001
                                                                       --------------   -------------   -------------
         <S>                                                            <C>             <C>             <C>
         Effect on:
              Income before extraordinary item ......................   $     (1,132)   $       (258)   $        237
              Net income ............................................         (1,132)           (258)            237
              Basic earnings per share before extraordinary item ....          (0.03)          (0.01)           0.01
              Basic earnings per share ..............................          (0.03)          (0.01)           0.01
              Diluted earnings per share before extraordinary item ..          (0.03)          (0.01)           0.01
              Diluted earnings per share ............................          (0.03)          (0.01)           0.01
</Table>

         The balances of additional paid-in capital and retained earnings as of
         September 30, 2001 have been adjusted for the effect (net of income
         taxes) of applying retroactively the change in the method of
         accounting.


3. INVENTORIES

         Inventories at June 30, 2002 and September 30, 2001 are presented
         below. Inventories at September 30, 2001 reflect the change in
         accounting principle (see note 2).

<Table>
<Caption>
                                            JUNE 30,      SEPTEMBER 30,
                                          ------------    -------------
                                               2002            2001
                                          ------------    ------------
         <S>                              <C>             <C>

         Raw materials and supplies ...   $     20,002    $     27,753
         Work in process ..............         23,493          14,432
         Finished goods ...............         49,954          36,586
         Inventory reserves ...........         (4,650)         (1,544)
                                          ------------    ------------
                                          $     88,799    $     77,227
                                          ============    ============
</Table>



                                       6
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)


4. RESTRUCTURING CHARGES

         In September 2001, the Company recorded a restructuring charge of
         approximately $2.4 million ($1.5 million after tax) in connection with
         the closing of Ormco's San Diego, California manufacturing facility.
         The charge consists primarily of severance and termination costs
         associated with the planned termination of sixty-three employees who
         worked at the facility. As of June 30, 2002, the majority of the
         employment terminations were completed under the restructuring plan
         with the remainder to be complete by the end of this fiscal year. Of
         the $2.4 million restructuring charge, approximately $1.7 million is a
         cash related charge for severance and contractual obligations, while
         the balance of approximately $0.7 million represents non-cash charges
         related to exited capital and other assets. SDS believes that the
         proceeds from the planned sale of the San Diego manufacturing facility
         will offset the restructuring charge. The proceeds from the planned
         sale will be used to pay down debt and reduce interest charges. The
         work previously performed at the facility is now being performed at the
         Ormco Glendora, California facility. The Company completed the closing
         of the facility as of June 30, 2002 and believes it will finalize all
         remaining costs by September 30, 2002.

         In September 2000, the Company recorded a restructuring charge of
         approximately $9.3 million ($5.8 million after tax) consisting
         primarily of exited product lines (approximately $5.3 million, $1.7
         million and $0.6 million in the Orthodontics, Professional Dental and
         Infection Prevention business segments, respectively) and severance and
         termination costs related to the planned termination of sixty-five
         employees (fifty-six located at the Metrex Research Corporation
         facility in Parker, Colorado, eight located at the Ormco facility in
         San Diego, California, and one located at the Ormco facility in
         Amersfort/Europe) as a result of the 2000 restructuring plan. Of the
         $9.3 million restructuring charge, approximately $7.8 million
         represented non-cash charges related to the exited products and
         capital, while the balance of approximately $1.5 million is a cash
         related charge for severance and contractual obligations. The Company
         completed the 2000 restructuring plan in the first quarter of 2002,
         along with the remainder of the cash charges.

         In June 1998, SDS recorded a restructuring charge of approximately
         $14.6 million (approximately $10.7 million 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 2001 restructuring charge activity since September 30, 2001 and its
         components are as follows:

<Table>
<Caption>
                                                 LEASE    SHUT-DOWN    INVENTORY    FIXED             CONTRACTUAL
                                   SEVERANCE   PAYMENTS     COSTS      WRITE-OFF   ASSETS     TAX     OBLIGATIONS   OTHER    TOTAL
                                   ---------   --------   ---------   ----------   ------   -------   -----------   -----   -------
                                      (a)         (b)        (b)          (c)        (c)      (d)         (e)
<S>                                <C>         <C>        <C>         <C>          <C>      <C>       <C>           <C>     <C>

2001 Restructuring Charge ......   $   1,050   $     --   $      --   $       --   $  250   $    --   $       775   $ 325   $ 2,400
Fiscal 2001 Non-Cash Charges ...          --         --          --           --      250        --           100     300       650
                                   ---------   --------   ---------   ----------   ------   -------   -----------   -----   -------
September 30, 2001 Balance .....       1,050         --          --           --       --        --           675      25     1,750
Fiscal 2002 Cash Payments ......         825         --          --           --       --        --            --      --       825
Fiscal 2002 Non-Cash Payments ..          --         --          --           --       --        --            --      25        25
                                   ---------   --------   ---------   ----------   ------   -------   -----------   -----   -------
June 30, 2002 Balance ..........   $     225   $     --   $      --   $       --   $   --   $    --   $       675   $  --   $   900
                                   =========   ========   =========   ==========   ======   =======   ===========   =====   =======
</Table>

         The 2000 restructuring charge activity since September 30, 2000 and its
         components are as follows:

<Table>
<Caption>
                                                 LEASE    SHUT-DOWN    INVENTORY    FIXED             CONTRACTUAL
                                  SEVERANCE    PAYMENTS     COSTS      WRITE-OFF   ASSETS     TAX     OBLIGATIONS   OTHER    TOTAL
                                  ---------    --------   ---------   ----------   ------   -------   -----------   -----   -------
                                     (a)          (b)        (b)          (c)        (c)      (d)         (e)
<S>                               <C>          <C>        <C>         <C>          <C>      <C>       <C>           <C>     <C>

2000 Restructuring Charge .....   $   1,300    $     --   $      --   $    7,600   $  200   $    --   $       100   $ 100   $9,300
Fiscal 2000 Non-Cash Charges ..          --          --          --        7,600      200        --            --      --    7,800
                                  ---------    --------   ---------   ----------   ------   -------   -----------   -----   ------
September 30, 2000 Balance ....       1,300          --          --           --       --        --           100     100    1,500
Fiscal 2001 Cash Payments .....       1,175          --          --           --       --        --            75     100    1,350
                                  ---------    --------   ---------   ----------   ------   -------   -----------   -----   ------
September 30, 2001 Balance ....         125          --          --           --       --        --            25      --      150
Fiscal 2002 Cash Payments .....         125          --          --           --       --        --            25      --      150
                                  ---------    --------   ---------   ----------   ------   -------   -----------   -----   ------
June 30, 2002 Balance .........   $      --    $     --   $      --   $       --   $   --   $    --   $        --   $  --   $   --
                                  =========    ========   =========   ==========   ======   =======   ===========   =====   ======
</Table>


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


                                       7
<PAGE>
<Table>
<Caption>
                                                 LEASE    SHUT-DOWN    INVENTORY    FIXED             CONTRACTUAL
                                  SEVERANCE    PAYMENTS     COSTS      WRITE-OFF   ASSETS     TAX     OBLIGATIONS    OTHER   TOTAL
                                  ---------    --------   ---------   ----------   ------   -------   -----------   ------  -------
                                     (a)          (b)        (b)          (c)        (c)      (d)         (e)
<S>                               <C>          <C>        <C>         <C>          <C>      <C>       <C>           <C>     <C>

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, 2001 and
   June 30, 2002 Balance ......   $      --    $     --   $      --   $       --   $   --   $   700   $        --   $  200  $   900
                                  =========    ========   =========   ==========   ======   =======   ===========   ======  =======
</Table>

(a)      Amount represents the 2001 restructuring charge for severance and
         termination costs associated with the 63 employees located at the Ormco
         San Diego facility whose employment Ormco planned to terminate as a
         result of the 2001 restructuring plan (all of whom were notified before
         September 30, 2001 of the intent to terminate their employment). As of
         June 30, 2002, the majority of the employment terminations were
         completed under the restructuring plan with the remainder to be
         completed by the end of this fiscal year. The proceeds from the planned
         sale of the Ormco San Diego facility is expected to offset the cost of
         closing the facility. The closing of the facility was completed by June
         30, 2002. The 2000 restructuring charge represents severance and
         termination costs for 65 employees whose employment was terminated
         (primarily at the Metrex facility in Parker, Colorado) as a result of
         the 2000 restructuring plan. As of September 30, 2001 all employment
         terminations were completed under the 2000 restructuring plan. The 1998
         restructuring charge represents severance and termination costs related
         to the approximately 165 employees whose employment the Company
         planned to terminate as a result of the 1998 restructuring plan
         (primarily sales and marketing personnel). As of June 30, 2002, 154
         employees have been terminated as a result of the 1998 restructuring
         plan. An adjustment of approximately $1.2 million was made in fiscal
         1999 to adjust the accrual primarily representing over accruals for
         anticipated costs associated with outplacement services, accrued fringe
         benefits, and severance associated with employees who were previously
         notified of termination and subsequently filled other Company
         positions. No additional employees will be terminated under this
         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 a statutory tax relating to assets transferred from
         an exited sales facility in Switzerland.

(e)      Amount represents certain terminated contractual obligations.


5. SEGMENT INFORMATION

         The Company's operating subsidiaries are engaged in the manufacture and
         sale of dental, orthodontics and infection prevention products in the
         United States and other countries. The Company's products are
         categorized in the following business segments: a) Professional Dental,
         b) Orthodontics and c) Infection Prevention.

         Information on these business segments is summarized as follows:



                                       8
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                         PROFESSIONAL                   INFECTION
                                            DENTAL      ORTHODONTICS    PREVENTION    ELIMINATIONS      TOTAL SDS
                                         ------------   ------------   ------------   ------------    ------------
<S>                                      <C>            <C>            <C>            <C>             <C>

THREE MONTHS ENDED JUNE 30, 2002
Revenues:
   External customer .................   $     65,152   $     45,582   $      8,569   $         --    $    119,303
   Intersegment (a) ..................            396          2,574             13         (2,983)             --
     Total revenues ..................         65,548         48,156          8,582         (2,983)        119,303
Gross profit .........................         36,189         27,071          4,066             --          67,326
Selling, general and administrative ..         20,376         16,927          3,915             --          41,218
Operating income .....................         15,813         10,144            151             --          26,108

THREE MONTHS ENDED JUNE 30, 2001
Revenues:
   External customer .................   $     55,729   $     43,400   $      8,128   $         --    $    107,257
   Intersegment (a) ..................            612          2,077              3         (2,692)             --
     Total revenues ..................         56,341         45,477          8,131         (2,692)        107,257
Gross profit .........................         31,165         26,095          4,238             --          61,498
Selling, general and administrative ..         16,306         16,903          3,566             --          36,775
Operating income .....................         14,859          9,192            672             --          24,723
</Table>

----------

(a) Includes the elimination of intergroup activity in the three months ended
June 30, 2002 and 2001.

<Table>
<Caption>
                                         PROFESSIONAL                   INFECTION
                                            DENTAL      ORTHODONTICS    PREVENTION    ELIMINATIONS      TOTAL SDS
                                         ------------   ------------   ------------   ------------    ------------
<S>                                      <C>            <C>            <C>            <C>             <C>

NINE MONTHS ENDED JUNE 30, 2002
Revenues:
   External customer .................   $    185,398   $    132,030   $     24,334   $         --    $    341,762
   Intersegment (a) ..................            916          6,462             21         (7,399)             --
     Total revenues ..................        186,314        138,492         24,355         (7,399)        341,762
Gross profit .........................        105,815         74,175         12,591             --         192,581
Selling, general and administrative ..         57,366         50,237         10,922             --         118,525
Operating income .....................         48,449         23,938          1,669             --          74,056
Segment assets
   (as of June 30, 2002) .............        347,130        182,476         47,111             --         576,717

NINE MONTHS ENDED JUNE 30, 2001
Revenues:
   External customer .................   $    164,216   $    133,334   $     21,008   $         --    $    318,558
   Intersegment (a) ..................          1,527          5,412              4         (6,943)             --
     Total revenues ..................        165,743        138,746         21,012         (6,943)        318,558
Gross profit .........................         91,389         80,242         10,648             --         182,279
Selling, general and administrative ..         48,457         49,991          9,582             --         108,030
Operating income .....................         42,932         30,251          1,066             --          74,249
</Table>

----------

(a) Includes the elimination of intergroup activity in the nine months ended
June 30, 2002 and 2001.


                                       9
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

6. 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
         are calculated by using the weighted average number of common shares
         outstanding adjusted to include the potentially dilutive effect of
         outstanding stock options. The basic weighted average number of shares
         outstanding were 37,962,934 and 35,834,734 for the quarters ended June
         30, 2002 and 2001, respectively. For the nine month periods ended June
         30, 2002 and 2001, the basic weighted average number of shares
         outstanding were 37,925,138 and 35,359,739, respectively. The number of
         incremental diluted shares were 1,566,089 and 1,555,024 for the
         quarters ended June 30, 2002 and 2001, respectively. For the nine month
         periods ended June 30, 2002 and 2001, the number of incremental diluted
         shares were 1,457,542 and 964,428, respectively, and represent the
         dilutive effect of options outstanding. There were no anti-dilutive
         shares for the quarter ended June 30, 2001. The number of anti-dilutive
         shares for the nine month period ended June 30, 2001 was 3,069. There
         were no anti-dilutive shares for both the quarter and nine month
         periods ended June 30, 2002.


7. EXTRAORDINARY CHARGES

         The extraordinary charge recorded in the third quarter of fiscal 2002
         is a result of the termination of the Company's previous credit
         facility on June 6, 2002. The charge consists of a pre-payment penalty
         on the term B loan of approximately $1.0 million, net of tax, and the
         amortization of approximately $2.7 million, net of tax, of the
         remainder of the deferred financing fees related to the previous credit
         facility (see note 1).

         The extraordinary item for fiscal 2001 represents the SDS allocation of
         the write-off of Apogent's deferred financing fees associated with the
         termination of Apogent's credit agreement due to the spin-off.


8. 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 new
         credit facility entered into on June 6, 2002.

         Below are the unaudited condensed consolidating balance sheets as of
         June 30, 2002 and September 30, 2001, statements of operations for the
         three and nine months ended June 30, 2002 and 2001, and statements of
         cash flows for the nine months ended June 30, 2002 and 2001, of Sybron
         Dental Specialties, Inc. and its subsidiaries, reflecting the
         subsidiary guarantors of the 8 1/8% senior subordinated notes.

         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.


                                       10
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

CONDENSED CONSOLIDATING BALANCE SHEETS

<Table>
<Caption>
                                                                         AS OF JUNE 30, 2002
                                           ---------------------------------------------------------------------------
                                                                               NON
                                           SYBRON DENTAL     GUARANTOR      GUARANTOR
                                            SPECIALTIES    SUBSIDIARIES    SUBSIDIARIES   ELIMINATIONS    CONSOLIDATED
                                           ------------    ------------    ------------   ------------    ------------
<S>                                        <C>             <C>             <C>            <C>             <C>
ASSETS
Current assets:
   Cash and equivalents ................   $          1    $      3,094    $     18,265   $         --    $     21,360
   Account receivable, net .............             --          49,280          31,855             --          81,135
   Inventories, net ....................             --          63,399          25,400             --          88,799
   Other current assets ................             --          24,332           4,572             --          28,904
                                           ------------    ------------    ------------   ------------    ------------
        Total current assets ...........              1         140,105          80,092             --         220,198
Property, plant and equipment, net .....             --          36,206          37,940             --          74,146
Intangible assets, net .................             --         210,298          44,980             --         255,278
Deferred income taxes ..................             --           7,707              --             --           7,707
Investment in subsidiaries .............             --         (65,986)        138,407        (72,421)             --
Other assets ...........................             --          17,164           2,224             --          19,388
                                           ------------    ------------    ------------   ------------    ------------
        Total assets ...................   $          1    $    345,494    $    303,643   $    (72,421)   $    576,717
                                           ============    ============    ============   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Account payable .....................   $         --    $     11,810    $      5,198   $         --    $     17,008
   Current portion of long-term debt ...             --           2,172             215             --           2,387
   Income taxes payable ................           (283)         (5,298)           5,256            325              --
   Accrued expenses and other
      current liabilities ..............             --          23,148          11,798             --          34,946
                                           ------------    ------------    ------------   ------------    ------------

        Total current liabilities ......           (283)         31,832          22,467            325          54,341
Long-term debt .........................             --         355,906           4,995             --         360,901
Deferred income taxes ..................             --          21,947             580             --          22,527
Other liabilities ......................             --          12,064             518             --          12,582
Commitments and contingent
   liabilities:
   Stockholders' equity:
      Preferred stock ..................             --              --              --             --              --
      Common stock .....................            380           3,944           7,081        (11,025)            380
Additional paid-in capital .............         51,060         (55,674)        134,757        (58,599)         71,544
Retained earnings ......................          3,546         (18,674)         79,909         (3,127)         61,654
Accumulated other
   comprehensive income (loss) .........        (54,702)         (5,851)         53,336              5          (7,212)
                                           ------------    ------------    ------------   ------------    ------------
        Total stockholders'equity ......            284         (76,255)        275,083        (72,746)        126,366
                                           ------------    ------------    ------------   ------------    ------------
        Total liabilities and
           stockholders' equity ........   $          1    $    345,494    $    303,643   $    (72,421)   $    576,717
                                           ============    ============    ============   ============    ============
</Table>


                                       11
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

CONDENSED CONSOLIDATING BALANCE SHEETS-CONTINUED

<Table>
<Caption>
                                                                     AS OF SEPTEMBER 30, 2001
                                           ---------------------------------------------------------------------------
                                                                               NON
                                           SYBRON DENTAL     GUARANTOR      GUARANTOR
                                            SPECIALTIES    SUBSIDIARIES    SUBSIDIARIES   ELIMINATIONS    CONSOLIDATED
                                           -------------   ------------    ------------   ------------    ------------
<S>                                        <C>             <C>             <C>            <C>             <C>

ASSETS
Current assets:
   Cash and equivalents ................   $          1    $      2,215    $      6,103   $         --    $      8,319
   Account receivable, net .............             --          59,563          32,609             --          92,172
   Inventories, net ....................             --          54,825          22,402             --          77,227
   Other current assets ................             --          14,862           2,937             --          17,799
                                           ------------    ------------    ------------   ------------    ------------
        Total current assets ...........              1         131,465          64,051             --         195,517
Property, plant and equipment, net .....             --          35,434          33,485             --          68,919
Intangible assets, net .................             --         208,817          43,764             --         252,581
Deferred income taxes ..................             --           9,619              --             --           9,619
Investment in subsidiaries .............             --         (65,463)        137,884        (72,421)             --
Other assets ...........................             --          10,957           2,154             --          13,111
                                           ------------    ------------    ------------   ------------    ------------
        Total assets ...................   $          1    $    330,829    $    281,338   $    (72,421)   $    539,747
                                           ============    ============    ============   ============    ============


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Account payable .....................   $         --    $     12,906    $      4,430   $         --    $     17,336
   Current portion of long-term debt ...             --          25,472             497             --          25,969
   Income taxes payable ................             --           2,482           4,537            325           7,344
   Accrued expenses and other
      current liabilities ..............             --          32,884          10,981             --          43,865
                                           ------------    ------------    ------------   ------------    ------------
        Total current liabilities ......             --          73,744          20,445            325          94,514
Long-term debt .........................             --         317,484           4,052             --         321,536
Deferred income taxes ..................             --          12,807             558             --          13,365
Other liabilities ......................             --          16,312             494             --          16,806
Commitments and contingent
   liabilities:
   Stockholders' equity:
      Preferred stock ..................             --              --              --             --              --
      Common stock .....................            379              53          10,971        (11,024)            379
Additional paid-in capital .............         49,576         (52,637)        131,720        (58,600)         70,059
Retained earnings ......................          3,546         (27,844)         64,503         (3,212)         36,993
Accumulated other
   comprehensive income (loss) .........        (53,500)         (9,090)         48,595             90         (13,905)
                                           ------------    ------------    ------------   ------------    ------------
        Total stockholders'equity ......              1         (89,518)        255,789        (72,746)         93,526
                                           ------------    ------------    ------------   ------------    ------------
        Total liabilities and
           stockholders' equity ........   $          1    $    330,829    $    281,338   $    (72,421)   $    539,747
                                           ============    ============    ============   ============    ============
</Table>


                                       12
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)


CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                           FOR THE THREE MONTHS ENDED JUNE 30, 2002
                                         ---------------------------------------------------------------------------
                                                                             NON
                                         SYBRON DENTAL    GUARANTOR      GUARANTOR
                                          SPECIALTIES   SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                         -------------  ------------    ------------    ------------    ------------
<S>                                      <C>            <C>             <C>             <C>             <C>

Net sales ............................   $         --   $     74,523    $     47,762    $     (2,982)   $    119,303
Cost of sales ........................             --         26,947          27,985          (2,955)         51,977
                                         ------------   ------------    ------------    ------------    ------------
Gross profit .........................             --         47,576          19,777             (27)         67,326
Selling, general and administrative
   expenses ..........................             --         29,260          12,094            (136)         41,218
                                         ------------   ------------    ------------    ------------    ------------
Operating income .....................             --         18,316           7,683             109          26,108
Other income (expense):
   Interest expense ..................             --         (6,454)           (117)             --          (6,571)
   Other, net ........................             --         (6,346)           (745)             --          (7,091)
                                         ------------   ------------    ------------    ------------    ------------

Income before income taxes and
   extraordinary item ................             --          5,516           6,821             109          12,446
Income taxes .........................             --          2,264           2,590              --           4,854
                                         ------------   ------------    ------------    ------------    ------------

Income before extraordinary item .....             --          3,252           4,231             109           7,592
Extraordinary item, net of tax .......             --         (3,661)             --              --          (3,661)
                                         ------------   ------------    ------------    ------------    ------------

Net income ...........................   $         --   $       (409)   $      4,231    $        109    $      3,931
                                         ============   ============    ============    ============    ============
</Table>

<Table>
<Caption>
                                                          FOR THE THREE MONTHS ENDED JUNE 30, 2001
                                         ---------------------------------------------------------------------------
                                                                            NON
                                         SYBRON DENTAL   GUARANTOR       GUARANTOR
                                          SPECIALTIES   SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                         -------------  ------------    ------------    ------------    ------------
<S>                                      <C>            <C>             <C>             <C>             <C>

Net sales ............................   $         --   $     69,890    $     40,059    $     (2,692)   $    107,257
Cost of sales ........................             --         24,491          23,933          (2,665)         45,759
                                         ------------   ------------    ------------    ------------    ------------
Gross profit .........................             --         45,399          16,126             (27)         61,498
Selling, general and administrative
   expenses ..........................             --         26,905           9,628             242          36,775
                                         ------------   ------------    ------------    ------------    ------------
Operating income .....................             --         18,494           6,498            (269)         24,723
Other income (expense):
   Interest expense ..................             --         (8,904)            (36)             --          (8,940)
   Other, net ........................             --            (46)            127             (82)             (1)
                                         ------------   ------------    ------------    ------------    ------------
Income before income taxes and
   extraordinary item ................             --          9,544           6,589            (351)         15,782
Income taxes .........................             --          3,858           2,684            (148)          6,394
                                         ------------   ------------    ------------    ------------    ------------
Income before extraordinary item .....             --          5,686           3,905            (203)          9,388
Extraordinary item, net of tax .......             --             --              --              --              --
                                         ------------   ------------    ------------    ------------    ------------
Net income ...........................   $         --   $      5,686    $      3,905    $       (203)   $      9,388
                                         ============   ============    ============    ============    ============
</Table>



                                       13
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS - CONTINUED

<Table>
<Caption>
                                                           FOR THE NINE MONTHS ENDED JUNE 30, 2002
                                         ---------------------------------------------------------------------------
                                                                            NON
                                         SYBRON DENTAL    GUARANTOR      GUARANTOR
                                          SPECIALTIES   SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                         -------------  ------------    ------------    ------------    ------------
<S>                                      <C>            <C>             <C>             <C>             <C>

Net sales ............................   $         --   $    210,640    $    138,520    $     (7,398)   $    341,762
Cost of sales ........................             --         74,504          81,994          (7,317)        149,181
                                         ------------   ------------    ------------    ------------    ------------
Gross profit .........................             --        136,136          56,526             (81)        192,581
Selling, general and administrative
   expenses ..........................             --         84,484          34,207            (166)        118,525
                                         ------------   ------------    ------------    ------------    ------------
Operating income .....................             --         51,652          22,319              85          74,056
Other income (expense):
   Interest expense ..................             --        (19,947)           (227)             --         (20,174)
   Other, net ........................             --         (4,800)         (2,652)             --          (7,452)
                                         ------------   ------------    ------------    ------------    ------------

Income before income taxes and
   extraordinary item ................             --         26,905          19,440              85          46,430
Income taxes .........................             --         10,867           7,241              --          18,108
                                         ------------   ------------    ------------    ------------    ------------
Income before extraordinary item .....             --         16,038          12,199              85          28,322
Extraordinary item, net of tax .......             --         (3,661)             --              --          (3,661)
                                         ------------   ------------    ------------    ------------    ------------
Net income ...........................   $         --   $     12,377    $     12,199    $         85    $     24,661
                                         ============   ============    ============    ============    ============
</Table>

<Table>
<Caption>
                                                          FOR THE NINE MONTHS ENDED JUNE 30, 2001
                                         ---------------------------------------------------------------------------
                                                                            NON
                                         SYBRON DENTAL    GUARANTOR      GUARANTOR
                                          SPECIALTIES   SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                         -------------  ------------    ------------    ------------    ------------
<S>                                      <C>            <C>             <C>             <C>             <C>

Net sales ............................   $         --   $    204,498    $    121,003    $     (6,943)   $    318,558
Cost of sales ........................             --         71,236          71,905          (6,862)        136,279
                                         ------------   ------------    ------------    ------------    ------------
Gross profit .........................             --        133,262          49,098             (81)        182,279
Selling, general and administrative
   expenses ..........................             --         76,071          30,361           1,598         108,030
                                         ------------   ------------    ------------    ------------    ------------

Operating income .....................             --         57,191          18,737          (1,679)         74,249
Other income (expense):
   Interest expense ..................             --        (25,545)            (98)             --         (25,643)
   Other, net ........................             --            567             (42)           (856)           (331)
                                         ------------   ------------    ------------    ------------    ------------

Income before income taxes and
   extraordinary item ................             --         32,213          18,597          (2,535)         48,275
Income taxes .........................             --         15,364           7,391          (3,205)         19,550
                                         ------------   ------------    ------------    ------------    ------------
Income before extraordinary item .....             --         16,849          11,206             670          28,725
Extraordinary item, net of tax .......             --           (498)             --              --            (498)
                                         ------------   ------------    ------------    ------------    ------------
Net income ...........................   $         --   $     16,351    $     11,206    $        670    $     28,227
                                         ============   ============    ============    ============    ============
</Table>


                                       14
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                    FOR THE NINE MONTHS ENDED JUNE 30, 2002
                                                  ---------------------------------------------------------------------------
                                                                                      NON
                                                  SYBRON DENTAL    GUARANTOR       GUARANTOR
                                                   SPECIALTIES    SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                                  -------------   ------------    ------------    ------------   ------------
<S>                                               <C>             <C>             <C>             <C>            <C>

Cash flows provided by (used in)
   operating activities ................          $         (1)   $     15,665    $     12,629    $        (85)  $     28,208
Cash flow from investing activities:
   Capital expenditures ................                    --          (6,054)         (6,099)             --        (12,153)
   Proceeds from sales of property,
      plant, and equipment .............                    --             502              13              --            515
   Net payments for business
      acquired .........................                    --          (8,235)             --              --         (8,235)
                                                  ------------    ------------    ------------    ------------   ------------
      Net cash provided (used in) in
        investing activities ...........                    --         (13,787)         (6,086)             --        (19,873)
Cash flows from financing activities:
   Proceeds from credit facility........                    --          403,000             --              --        403,000
   Principal payments on credit
      facility..........................                    --         (537,911)            --              --       (537,911)
   Proceeds from long-term debt ........                    --               81            876              --            957
   Principal payments on long-term......
      debt .............................                    --             (486)            --              --           (486)
   Payment of deferred financing fees...                    --          (11,062)            --              --        (11,062)
   Proceeds from sale of senior
      subordinated notes................                    --          150,000             --              --        150,000
   Payments of prepayment and terminated
     interest rate swap related to refinancing              --           (5,305)            --              --         (5,305)
   cash received from exercise of
      stock options ....................                  1,203              --             --              --          1,203
                                                   ------------    ------------    ------------    ------------   ------------
      Net cash provided by (used in) financing
        activities .....................                  1,203          (1,683)            876             --            396
Effect of exchange rate changes on
   cash and cash equivalents ...........                     --             672           3,553             85          4,310
Net change in intercompany
   balances ............................                 (1,202)             12           1,190             --             --
                                                   ------------    ------------    ------------    ------------   ------------
Net increase in cash and
   cash equivalents ....................                     --             879          12,162             --         13,041
Cash and cash equivalents at
   beginning of period .................                      1           2,215           6,103             --          8,319
                                                   ------------    ------------    ------------    ------------   ------------
Cash and cash equivalents at
   end of period .......................           $          1    $      3,094    $     18,265    $        --   $     21,360
                                                   ============    ============    ============    ============   ============

Supplemental disclosures of cash
   flow information:
   Cash paid during the period for
      interest .........................           $         --    $     20,797    $        229    $         --   $    21,026
                                                   ============    ============    ============    ============   ============
   Cash paid during the period for
      income taxes .....................           $         --    $     18,085    $      4,459    $         --   $    22,544
                                                   ============    ============    ============    ============   ============
Supplemental disclosures of non-cash
   financing activities:
   Non-cash charge for the
      de-designation
      of interest rate swaps ...........           $         --    $      3,223    $         --    $         --   $     3,223
                                                   ============    ============    ============    ============   ============

   Non-cash charge for the write-off of
      deferred financing fees ..........           $         --    $      4,471    $         --    $         --   $     4,471
                                                   ============    ============    ============    ============   ============
</Table>


                                       15
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS - CONTINUED

<Table>
<Caption>
                                                              FOR THE NINE MONTHS ENDED JUNE 30, 2001
                                           ----------------------------------------------------------------------------
                                                                               NON
                                           SYBRON DENTAL     GUARANTOR      GUARANTOR
                                            SPECIALTIES    SUBSIDIARIES    SUBSIDIARIES    ELIMINATIONS    CONSOLIDATED
                                           -------------   ------------    ------------    ------------    ------------
<S>                                        <C>             <C>             <C>             <C>             <C>

Cash flows provided by (used in)
   operating activities ................   $         --    $     32,346    $     16,570    $       (728)   $     48,188
Cash flow from investing activities:
   Capital expenditures ................             --          (8,174)         (1,382)             --          (9,556)
   Proceeds from sales of property,
         plant, and equipment ..........             --              40              88              --             128
   Net payments for business
      acquired .........................             --         (51,653)             --              --         (51,653)
                                           ------------    ------------    ------------    ------------    ------------
      Net cash used in investing
        activities .....................             --         (59,787)         (1,294)             --         (61,081)
Cash flows from financing activities:
   Proceeds from credit facility........             --         535,660                              --         535,660
   Principal payments on credit
      facility..........................             --        (503,182)             --              --        (503,182)
   Proceeds from long-term debt ........             --              --             140              --             140
   Principal payments on long-term
      debt .............................             --            (107)             --              --            (107)
   Payments on deferred financing fees..             --          (5,494)             --              --          (5,494)
   Proceeds from the exercise of
      stock option .....................             --           1,062              --              --           1,062
   Net cash outflow to Apogent .........             --         (63,719)             --              --         (63,719)
   Proceeds from stock offering.........         50,074              --              --              --          50,074
                                           ------------    ------------    ------------    ------------    ------------
      Net cash provided by (used in)
        financing activities ...........         50,074         (35,780)            140              --          14,434
Effect of exchange rate changes on
   cash and cash equivalents ...........             --          (2,314)           (668)           (104)         (3,086)
Net change in intercompany
   balances ............................        (50,074)         63,124         (13,882)            832              --
                                           ------------    ------------    ------------    ------------    ------------
Net increase (decrease) in cash and
   cash equivalents ....................             --          (2,411)            866              --          (1,545)
Cash and cash equivalents at
   beginning of period .................             --             439           5,344              --           5,783
                                           ------------    ------------    ------------    ------------    ------------

Cash and cash equivalents at
   end of period .......................   $         --    $     (1,972)   $      6,210    $         --    $      4,238
                                           ============    ============    ============    ============    ============
Supplemental disclosures of cash
   flow information:
   Cash paid during the period for
      interest .........................   $         --    $     22,193    $        209    $         --    $     22,402
                                           ============    ============    ============    ============    ============
   Cash paid during the period for
      income taxes .....................   $         --    $      5,596    $      5,986    $         --    $     11,582
                                           ============    ============    ============    ============    ============
Supplemental disclosures of non-cash
   financing activities:
   Non-cash charge for the
      de-designation
      of interest rate swaps ...........   $         --    $         --    $         --    $         --    $         --
                                           ============    ============    ============    ============    ============

   Non-cash charge for the write-off of
      deferred financing fees ..........   $         --    $        837    $         --    $         --    $        837
                                           ============    ============    ============    ============    ============
</Table>


                                       16


<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         When we use the terms "we", "us" or "our" in this report, we are
referring to Sybron Dental Specialties, Inc. and its subsidiaries and their
respective predecessors. Our fiscal year ends on September 30 and, accordingly,
all references to quarters refer to our fiscal quarters. The quarters ended June
30, 2002 and 2001 refer to the third quarters of fiscal 2002 and 2001,
respectively.

GENERAL

         Our subsidiaries are leading manufacturers of value-added consumable
products for the dental and orthodontic professions and products for use in
infection prevention. Our subsidiaries operate in three business segments:

         o        Professional Dental. We develop and manufacture a
                  comprehensive line of consumable products sold through
                  independent distributors to the dental industry worldwide;

         o        Orthodontics. We engineer, manufacture, market, and distribute
                  an array of consumable orthodontic products, and endodontic
                  products used in root canal therapy, worldwide; and

         o        Infection Prevention. We develop and manufacture consumable
                  infection prevention products sold through independent
                  distributors to the medical and dental markets, principally in
                  the United States and Canada. Prior to fiscal year 2002 this
                  segment was referred to as the Infection Control Products
                  segment. The name was changed to more accurately describe the
                  products of this segment.

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

<Table>
<S>                                    <C>                                        <C>
         PROFESSIONAL DENTAL           ORTHODONTICS                               INFECTION PREVENTION

         Kerr Corporation              Ormco Corporation                          Metrex Research Corporation
         Kerr Italia S.p.A.            Ormco B.V.
         Sybron Canada Limited         Ormodent Group
         Pinnacle Products, Inc.       Allesee Orthodontic Appliances, Inc.
         Hawe Neos Holdings S.A.
</Table>

         We strive to consistently grow sales and earnings. Key elements of
our strategy to achieve these goals are: a focus on product innovation, ongoing
cost reduction, and selective acquisitions, while continuing to pursue a
strategy of debt reduction.

         Net sales for the fiscal quarter and year to date periods ended June
30, 2002 were higher than from the corresponding prior year periods. Net sales
for the third quarter of fiscal 2002 increased by 11.2% over the corresponding
fiscal 2001 period, while year to date net sales increased by 7.3% over the
comparable prior year period. Operating income for the third quarter of fiscal
2002 increased by 5.6% over the corresponding fiscal 2001 period, while year to
date operating income decreased by 0.3% from the comparable prior year period.

         Domestic sales for the quarter and year to date periods ended June 30,
2002 were higher by 6.5% and 4.4%, respectively, over the corresponding fiscal
2001 periods. International sales increased by 19.0% and 11.7% for the quarter
and year to date periods ended June 30, 2002, respectively, over the
corresponding fiscal 2001 periods. Without the effects of currency fluctuations,
international sales growth would have been 15.6% and 11.8% for the quarter and
year to date periods, respectively, over the corresponding fiscal 2001 periods.

         Substantial portions of our sales, income and cash flows are derived
internationally. The financial position and the results of operations from
substantially all of our international operations, other than most U.S. export
sales, are measured using the local currency of the countries in which such
operations are conducted and are then translated into U.S. dollars. While the
reported income


                                       17
<PAGE>
of foreign subsidiaries will be impacted by a weakening or strengthening of the
U.S. dollar in relation to a particular local currency, the effects of foreign
currency fluctuations are partially mitigated by the fact that our subsidiaries'
operations are conducted in numerous foreign countries and, therefore, in
numerous foreign currencies. In addition, our U.S. export sales may be impacted
by foreign currency fluctuations relative to the value of the U.S. dollar as
foreign customers may adjust their level of purchases upward or downward
according to the weakness or strength of their respective currencies versus the
U.S. dollar.

         During the quarter ended June 30, 2002, we changed our method of
accounting for our domestic inventories from the last-in, first-out (LIFO)
method to the first-in, first-out (FIFO) method. We believe the change to FIFO
is preferable in the circumstances because in the current environment of low
inflation, it will result in a better measurement of operating results. In
addition, we believe that the change in the method of accounting for domestic
inventory costs is preferable because it provides a better measure of the
current value of our inventory, provides a more accurate reflection of our
financial position and liquidity, and provides a better matching of
manufacturing costs with revenues. It will also allow for the valuing of
inventory consistently throughout our company. Our historical financial
statements have been adjusted for all relevant prior periods in accordance with
Accounting Principles Board Opinion No. 20, "Accounting Changes" to reflect this
change in method of inventory accounting. The effect of the accounting change on
income as previously reported for the six months ended March 31, 2002, and the
quarter and nine months ended June 30, 2001 is as follows:

<Table>
<Caption>
                                                                            INCREASE (DECREASE)
                                                                SIX MONTHS        QUARTER       NINE MONTHS
                                                                   ENDED           ENDED           ENDED
(In thousands, except per share data)                         MARCH 31, 2002   JUNE 30, 2001   JUNE 30, 2001
                                                              --------------   -------------   -------------
<S>                                                            <C>             <C>             <C>
Effect on:
     Income before extraordinary item ......................   $     (1,132)   $       (258)   $        237
     Net income ............................................         (1,132)           (258)            237
     Basic earnings per share before extraordinary item ....          (0.03)          (0.01)           0.01
     Basic earnings per share ..............................          (0.03)          (0.01)           0.01
     Diluted earnings per share before extraordinary item ..          (0.03)          (0.01)           0.01
     Diluted earnings per share ............................          (0.03)          (0.01)           0.01
</Table>

The balances of additional paid-in capital and retained earnings as of September
30, 2001 have been adjusted for the effect (net of income taxes) of applying
retroactively the change in method of accounting.

FUTURE CHARGES AND EVENTS

         We are formulating a restructuring plan for our European operations
which we expect to finalize in fiscal 2002. The amount of the resulting
restructuring charge, and the portion which will represent cash charges, will
not be known until the plan is finalized. However, based on our current,
preliminary estimates, we expect this charge to be approximately $3.0 million.

         We have made some changes in our sales and marketing programs at Kerr
and Metrex which may have a negative impact on our sales and income in the
near-term. The changes made include the termination of Kerr's annual rebate
program for its North American distributors, which rewarded dealers for
purchases made at the end of our fiscal year and the termination of certain
quarter-end incentive programs that were aimed solely at dealers, without a
corresponding incentive to stimulate end-user demand.

         These programs were in effect in the fourth quarter of our 2001 fiscal
year and may have stimulated the purchase of product in that quarter. We
anticipate that the termination in the fourth quarter of our current fiscal year
of the Kerr annual rebate program and the quarterly incentive programs will
cause the year-over-year growth for Kerr and Metrex to be negative in the 2002
fiscal fourth quarter which will impact our net income in that quarter.

         While the immediate impact of these changes is expected to be negative,
we believe these changes will create a more consistent level of dealer purchases
of our products and enable us to better plan our production and better manage
our inventory levels over time, which should allow us to reduce somewhat our
working capital requirements and manage our business more effectively.

         In addition to the impact that the termination of the incentive
programs will have on our expected 2002 fiscal year fourth quarter results, we
anticipate that sales at Ormco will be lower than we initially planned in the
2002 fiscal fourth quarter. This is the result of slight slowing in the
orthodontia market and the under performance of some elements of our sales
organization. If the sales are lower than currently expected, it will reduce our
gross margins and net income in the quarter.


                                       18
<PAGE>


RESULTS OF OPERATIONS

QUARTER ENDED JUNE 30, 2002 COMPARED TO THE QUARTER ENDED JUNE 30, 2001

         Net Sales

<Table>
<Caption>
                               FISCAL          FISCAL        DOLLAR        PERCENT
NET SALES: (IN THOUSANDS)       2002            2001         CHANGE         CHANGE
-------------------------   ------------   ------------   ------------   ------------
<S>                         <C>            <C>            <C>            <C>

Professional Dental .....   $     65,152   $     55,729   $      9,423           16.9%
Orthodontics ............         45,582         43,400          2,182            5.0
Infection Prevention ....          8,569          8,128            441            5.4
                            ------------   ------------   ------------   ------------
Total Net Sales .........   $    119,303   $    107,257   $     12,046           11.2%
                            ============   ============   ============   ============
</Table>

         Overall Company. Net sales for the third quarter of fiscal 2002
increased by $12.0 million or 11.2% from the corresponding fiscal 2001 quarter.

         Professional Dental. Increased net sales in the Professional Dental
segment resulted primarily from: (a) net sales of products from acquired
companies (approximately $6.0 million), (b) net sales of new products
(approximately $1.4 million), (c) increased net sales of existing products
(approximately $1.2 million), (d) favorable foreign currency fluctuations
(approximately $0.7 million), and (e) decreased rebate expense (approximately
$0.1 million).

         Orthodontics. Increased net sales in the Orthodontics segment resulted
primarily from: (a) net sales of new products (approximately $0.8 million), (b)
increased net sales of existing products (approximately $0.7 million), (c)
favorable foreign currency fluctuations (approximately $0.6 million), and (d)
decreased rebate expense (approximately $0.1 million).

         Infection Prevention. Increased net sales in the Infection Prevention
segment resulted primarily from net sales of products from an acquired company
(approximately $0.6 million). This increase was partially offset by a decrease
in net sales of existing products (approximately $0.2 million).

         Gross Profit

<Table>
<Caption>
                                 FISCAL     PERCENT OF      FISCAL     PERCENT OF      DOLLAR        PERCENT
GROSS PROFIT: (IN THOUSANDS)      2002        SALES          2001        SALES         CHANGE        CHANGE
----------------------------   ----------   ----------    ----------   ----------    ----------    ----------
<S>                            <C>          <C>           <C>          <C>           <C>           <C>

Professional Dental ........   $   36,189         55.5%   $   31,165         55.9%   $    5,024          16.1%
Orthodontics ...............       27,071         59.4        26,095         60.1           976           3.7
Infection Prevention .......        4,066         47.5         4,238         52.1          (172)         (4.1)
                               ----------   ----------    ----------   ----------    ----------    ----------
Total Gross Profit .........   $   67,326         56.4%   $   61,498         57.3%   $    5,828           9.5%
                               ==========   ==========    ==========   ==========    ==========    ==========
</Table>

         Overall Company. Gross profit for the quarter ended June 30, 2002
increased by $5.8 million or 9.5% from the corresponding fiscal 2001 quarter.

         Professional Dental. Increased gross profit in the Professional Dental
segment resulted primarily from: (a) margins relating to the net sales of
products from acquired companies (approximately $3.0 million), (b) a favorable
product mix (approximately $2.5 million), (c) increased unit volume of existing
products (approximately $0.7 million), (d) unit volume relating to new products
(approximately $0.7 million), (e) a favorable exchange rate effect
(approximately $0.3 million), and (f) decreased rebate expense (approximately
$0.1 million). The increase in gross profit was partially offset by: (a)
unfavorable manufacturing variances (approximately $1.9 million) and (b)
inventory reserve adjustments (approximately $0.4 million, of which
approximately $0.4 million is due to increased royalty expense, an increase in
obsolescence of approximately $0.2 million, partially offset by physical
inventory adjustments of approximately $0.2 million).

         Orthodontics. Increased gross profit in the Orthodontics segment
resulted primarily from: (a) favorable product mix margins (approximately $1.4
million), (b) a favorable exchange rate effect (approximately $0.6 million), (c)
inventory reserve adjustments (approximately $0.6 million, of which
approximately $1.1 million is due to a decrease in obsolescence, partially
offset by physical inventory adjustments of approximately $0.3 million,
increased royalty expense of approximately $0.1 million, and standard cost
adjustments of approximately $0.1 million), (d) unit volume relating to new
products (approximately $0.5 million), (e) increased net sales of existing
products (approximately $0.4 million) and (f) decreased rebate expense
(approximately $0.1 million). The increase in gross profit was partially offset
by unfavorable manufacturing variances of approximately $2.6 million.

         Infection Prevention. Gross profit in the Infection Prevention segment
decreased primarily from: (a) unfavorable manufacturing variances of
approximately $0.3 million and (b) inventory reserve adjustments (approximately
$0.2 million, of which approximately $0.4 million is related to physical
inventory adjustments, partially offset by standard cost revisions of
approximately


                                       19
<PAGE>


$0.1 million and a decrease in obsolescence of approximately $0.1 million). The
decrease in gross profit was offset by margins relating to the net sales of
products from the acquired company (approximately $0.3 million).

         Selling, General and Administrative Expenses

<Table>
<Caption>
SELLING, GENERAL AND                        FISCAL     PERCENT OF      FISCAL     PERCENT OF      DOLLAR       PERCENT
ADMINISTRATIVE EXPENSES: (IN THOUSANDS)      2002        SALES          2001         SALES        CHANGE        CHANGE
---------------------------------------   ----------   ----------    ----------   ----------    ----------   ----------
<S>                                       <C>          <C>           <C>          <C>           <C>          <C>

Professional Dental ...................   $   20,376         31.3%   $   16,306         29.3%   $    4,070         25.0%
Orthodontics ..........................       16,927         37.1        16,903         38.9            24          0.1
Infection Prevention ..................        3,915         45.7         3,566         43.9           349          9.8
                                          ----------   ----------    ----------   ----------    ----------   ----------
Total Selling General and
    Administrative Expenses ...........   $   41,218         34.5%   $   36,775         34.3%   $    4,443         12.1%
                                          ==========   ==========    ==========   ==========    ==========   ==========
</Table>

         Overall Company. Selling, general and administrative expenses for the
quarter ended June 30, 2002 increased by $4.4 million or 12.1% from the
corresponding fiscal 2001 quarter.

         Professional Dental. Increased selling, general and administrative
expenses in the Professional Dental segment resulted primarily from: (a)
expenses related to acquisitions (approximately $2.6 million), (b) increased
selling and marketing expenses (approximately $1.0 million), (c) an increase in
amortization expense of goodwill and other intangible assets (approximately $0.2
million), (d) increased general and administrative expenses (approximately $0.2
million), and (e) an increase in expenses relating to foreign currency
fluctuations (approximately $0.1 million).

         Orthodontics. Increased selling, general and administrative expenses in
the Orthodontics segment resulted primarily from: (a) increased selling and
marketing expenses (approximately $0.2 million), (b) increased general and
administrative expenses (approximately $0.1 million), and (c) increased research
and development expenses (approximately $0.1 million). The increase in selling,
general and administrative expenses was offset by a decrease in expenses related
to foreign currency fluctuations (approximately $0.4 million).

         Infection Prevention. Increased selling, general and administrative
expenses in the Infection Prevention segment resulted primarily from: (a)
increased selling and marketing expenses (approximately $0.4 million) and (b) an
increase in amortization expense of goodwill and other intangible assets
(approximately $0.1 million). The increase in selling and marketing expenses was
partially offset by decreased general and administrative expenses (approximately
$0.2 million).

         Operating Income

<Table>
<Caption>
                                    FISCAL     PERCENT OF      FISCAL     PERCENT OF      DOLLAR       PERCENT
OPERATING INCOME: (IN THOUSANDS)     2002        SALES          2001         SALES        CHANGE        CHANGE
--------------------------------  ----------   ----------    ----------   ----------    ----------    ----------
<S>                               <C>          <C>           <C>          <C>           <C>           <C>

Professional Dental ..........    $   15,813         24.3%   $   14,859         26.7%   $      954           6.4%
Orthodontics .................        10,144         22.3         9,192         21.2           952          10.4
Infection Prevention .........           151          1.8           672          8.3          (521)        (77.5)
                                  ----------   ----------    ----------   ----------    ----------    ----------
Total Operating Income .......    $   26,108         21.9%   $   24,723         23.1%   $    1,385           5.6%
                                  ==========   ==========    ==========   ==========    ==========    ==========
</Table>

         As a result of the foregoing, operating income in the third quarter of
fiscal 2002 increased by 5.6% or $1.4 million above operating income in the
corresponding quarter of fiscal 2001.

         Interest Expense

         Interest expense was $6.6 million in the third quarter of fiscal 2002,
a decrease of $2.4 million from the corresponding fiscal 2001 quarter. The
decrease resulted from reduced average debt balances in the third quarter of
fiscal 2002 and reduced average interest rates on our credit facility.

         Income Taxes

         Taxes on income in the third quarter of fiscal 2002 were approximately
$4.9 million, a decrease of $1.5 million for the corresponding fiscal 2001
quarter. The decrease was primarily due to lower taxable earnings, as well as a
decrease in the effective tax rate for the quarter from 40.5% to 39.0%.


                                       20
<PAGE>


         Income Before Extraordinary Item

         As a result of the foregoing, we had income before extraordinary item
of $7.6 million in the third quarter of fiscal 2002. Included in net income
before extraordinary item for the first nine months of fiscal 2002 is a loss of
approximately $4.3 million, net of tax, which is the loss on the interest rates
swaps that were either terminated or re-assigned as a result of the re-financing
of the previous credit facility in the third quarter of fiscal 2002.

         Extraordinary Item

         In the third quarter of fiscal 2002, we terminated our prior credit
agreement and wrote off the associated deferred financing fees of $2.7 million
(net of tax) and had termination costs of approximately $1.0 million (net of
tax), primarily due to a prepayment penalty of our terminated tranche B term
loan.

         Net Income

         As a result of the foregoing, we had net income of $3.9 million in the
quarter ended June 30, 2002, as compared to net income of $9.4 million in the
corresponding fiscal 2001 period.

         Depreciation and Amortization

         Depreciation and amortization of goodwill and other intangible assets
is allocated among the cost of sales, selling, general and administrative
expenses and other expense. Depreciation and amortization of goodwill and other
intangible assets increased $1.2 million in the third quarter of fiscal 2002
compared to the same period in the prior year due to amortization expenses of
goodwill and other intangible assets of acquired companies, as well as increased
depreciation expense due to the addition of new assets.

NINE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE NINE MONTHS ENDED JUNE 30, 2001

         Net Sales

<Table>
<Caption>
                               FISCAL         FISCAL         DOLLAR          PERCENT
NET SALES: (IN THOUSANDS)       2002           2001          CHANGE          CHANGE
-------------------------   ------------   ------------   ------------    ------------
<S>                         <C>            <C>            <C>             <C>

Professional Dental .....   $    185,398   $    164,216   $     21,182            12.9%
Orthodontics ............        132,030        133,334         (1,304)           (1.0)
Infection Prevention ....         24,334         21,008          3,326            15.8
                            ------------   ------------   ------------    ------------
Total Net Sales .........   $    341,762   $    318,558   $     23,204             7.3%
                            ============   ============   ============    ============
</Table>

         Overall Company. Net sales for the first nine months of fiscal 2002
increased by $23.2 million or 7.3% from the corresponding fiscal 2001 period.

         Professional Dental. Increased net sales in the Professional Dental
segment resulted primarily from: (a) the net sales of products from acquired
companies (approximately $17.5 million), (b) net sales of new products
(approximately $2.8 million), (c) net sales of existing products (approximately
$1.4 million), and (d) reduced rebate expense (approximately $0.3 million). The
increase in net sales was offset by the loss of the net sales of last year's
exited product lines (approximately $0.8 million).

         Orthodontics. Decreased net sales in the Orthodontics segment resulted
primarily from: (a) decreased net sales of existing products (approximately $2.6
million), (b) the loss of the net sales of last year's exited product lines
(approximately $1.3 million), and (c) unfavorable foreign currency fluctuations
(approximately $0.2 million). The decrease in net sales was partially offset by:
(a) net sales of new products (approximately $2.5 million), (b) reduced rebate
expenses (approximately $0.2 million), and (c) the net sales of products from an
acquired company (approximately $0.1 million).

         Infection Prevention. Increased net sales in the Infection Prevention
segment resulted primarily from: (a) the net sales of products from an acquired
company (approximately $2.1 million) and (b) increased net sales of existing
products (approximately $1.2 million).



                                       21
<PAGE>


         Gross Profit

<Table>
<Caption>
                                   FISCAL     PERCENT OF      FISCAL     PERCENT OF      DOLLAR       PERCENT
GROSS PROFIT: (IN THOUSANDS)        2002        SALES          2001        SALES         CHANGE        CHANGE
----------------------------     ----------   ----------    ----------   ----------    ----------    ----------
<S>                              <C>          <C>           <C>          <C>           <C>           <C>

Professional Dental ..........   $  105,815         57.1%   $   91,389         55.7%   $   14,426          15.8%
Orthodontics .................       74,175         56.2        80,242         60.2        (6,067)         (7.6)
Infection Prevention .........       12,591         51.7        10,648         50.7         1,943          18.2
                                 ----------   ----------    ----------   ----------    ----------    ----------
Total Gross Profit ...........   $  192,581         56.3%   $  182,279         57.2%   $   10,302           5.7%
                                 ==========   ==========    ==========   ==========    ==========    ==========
</Table>

         Overall Company. Gross profit for the nine months ended June 30, 2002
increased by $10.3 million or 5.7% from the corresponding fiscal 2001 period.

         Professional Dental. Increased gross profit in the Professional Dental
segment resulted primarily from: (a) margins relating to the net sales of
products from acquired companies (approximately $8.9 million), (b) a favorable
product mix (approximately $4.7 million), (c) unit volume relating to new
products (approximately $1.7 million), (d) decreased rebate expense
(approximately $0.3 million), (e) favorable manufacturing variances
(approximately $0.2 million), and (f) increased net sales of existing products
(approximately $0.6 million). The increase in gross profit was partially offset
by: (a) inventory reserve adjustments (approximately $1.6 million, of which
approximately $0.8 million is due to increased royalty expense, standard cost
revisions of approximately $0.3 million, an increase in obsolescence of
approximately $0.3 million and physical inventory adjustments of approximately
$0.2 million) and (b) margins lost from the prior year's exited products lines
(approximately $0.4 million).

         Orthodontics. Decreased gross profit in the Orthodontics segment
resulted primarily from: (a) unfavorable manufacturing variances (approximately
$4.1 million), (b) decreased net sales of existing products (approximately $1.6
million), (c) inventory reserve adjustments (approximately $0.8 million, of
which approximately $0.5 million is due to an increase in royalty expense,
physical inventory adjustments of approximately $0.3 million, an increase in
obsolescence of approximately $0.2 million, partially offset by standard cost
revisions of approximately $0.2 million), (d) margins lost from the prior year's
exited products (approximately $0.8 million), (e) unfavorable product mix
margins (approximately $0.4 million), and (e) an unfavorable exchange rate
effect (approximately $0.2 million). The decrease in gross profit was partially
offset by: (a) unit volume relating to new products (approximately $1.5
million), (b) reduced rebate expense (approximately $0.2 million), and (c)
margins relating to the net sales of products from acquired companies
(approximately $0.1 million).

         Infection Prevention. Increased gross profit in the Infection
Prevention segment resulted primarily from: (a) increased net sales of existing
products (approximately $1.3 million) and (b) margins relating to the net sales
of products from the acquired company (approximately $1.0 million). The increase
in gross profit was partially offset by: (a) unfavorable manufacturing variances
(approximately $0.3 million) and (b) inventory reserve adjustments
(approximately $0.1 million, of which $0.4 million is related to physical
inventory adjustments, partially offset by a decrease in obsolescence of
approximately $0.2 million, and standard cost revisions of approximately $0.1
million).

         Selling, General and Administrative Expenses

<Table>
<Caption>
SELLING, GENERAL AND                         FISCAL      PERCENT OF     FISCAL     PERCENT OF     DOLLAR       PERCENT
ADMINISTRATIVE EXPENSES: (IN THOUSANDS)       2002          SALES        2001         SALES       CHANGE       CHANGE
---------------------------------------    ----------   ----------    ----------   ----------    ----------   ----------
<S>                                        <C>          <C>           <C>          <C>           <C>          <C>

Professional Dental ....................   $   57,366         30.9%   $   48,457         29.5%   $    8,909         18.4%
Orthodontics ...........................       50,237         38.0        49,991         37.5           246          0.5
Infection Prevention ...................       10,922         44.9         9,582         45.6         1,340         14.0
                                           ----------   ----------    ----------   ----------    ----------   ----------
Total Selling General and
    Administrative Expenses ............   $  118,525         34.7%   $  108,030         33.9%   $   10,495          9.7%
                                           ==========   ==========    ==========   ==========    ==========   ==========
</Table>

         Overall Company. Selling, general and administrative expenses for the
nine months ended June 30, 2002 increased by $10.5 million or 9.7% from the
corresponding fiscal 2001 period.

         Professional Dental. Increased selling, general and administrative
expenses in the Professional Dental segment resulted primarily from: (a)
expenses related to acquisitions (approximately $6.6 million), (b) increased
selling and marketing expenses (approximately $1.1 million), (c) increased
amortization expense of goodwill and other intangible assets (approximately $0.8
million), (d) increased general and administrative expenses (approximately $0.4
million), and (e) increased research and development


                                       22
<PAGE>


expenses (approximately $0.3 million). The increase in selling, general and
administrative expenses was offset by a decrease in expenses related to foreign
currency fluctuations (approximately $0.3 million).

         Orthodontics. Increased selling, general and administrative expenses in
the Orthodontics segment resulted primarily from: (a) increased selling and
marketing expenses (approximately $2.1 million), (b) increased research and
development expenses (approximately $0.4 million), and (c) expenses related to
acquisitions (approximately $0.1 million). The increase in selling, general and
administrative expenses was partially offset by: (a) decreased general and
administrative expenses (approximately $1.3 million), (b) a decrease in expenses
related to foreign currency fluctuations (approximately $1.0 million), and (c)
decreased amortization expense of goodwill and other intangible assets
(approximately $0.1 million).

         Infection Prevention. Increased selling, general and administrative
expenses in the Infection Prevention segment resulted primarily from: (a)
increased selling and marketing expenses (approximately $0.7 million), (b)
increased amortization expense of goodwill and other intangible assets
(approximately $0.3 million), (c) increased general and administrative expenses
(approximately $0.2 million), and (d) expenses related to acquisitions
(approximately $0.1 million).

         Operating Income

<Table>
<Caption>
                                      FISCAL     PERCENT OF      FISCAL     PERCENT OF      DOLLAR        PERCENT
OPERATING INCOME: (IN THOUSANDS)       2002        SALES          2001         SALES        CHANGE        CHANGE
--------------------------------    ----------   ----------    ----------   ----------    ----------    ----------
<S>                                 <C>          <C>           <C>          <C>           <C>           <C>

Professional Dental .............   $   48,449         26.1%   $   42,932         26.1%   $    5,517          12.9%
Orthodontics ....................       23,938         18.1        30,251         22.7        (6,313)        (20.9)
Infection Prevention ............        1,669          6.9         1,066          5.1           603          56.6
                                    ----------   ----------    ----------   ----------    ----------    ----------
Total Operating Income ..........   $   74,056         21.7%   $   74,249         23.3%   $     (193)         (0.3)%
                                    ==========   ==========    ==========   ==========    ==========    ==========
</Table>

         As a result of the foregoing, operating income in the first nine months
of fiscal 2002 decreased by 0.3% or $0.2 million below operating income in the
corresponding period of fiscal 2001.

         Interest Expense

         Interest expense was $20.2 million in the first nine months of fiscal
2002, a decrease of $5.5 million from the corresponding fiscal 2001 period. The
decrease resulted from reduced average debt balances in the first nine months of
fiscal 2002 and reduced average interest rates on our credit facility.

         Income Taxes

         Taxes on income in the first nine months of fiscal 2002 were $18.1
million, a decrease of $1.4 million from the corresponding fiscal 2001 period,
primarily due to lower taxable income.

         Income Before Extraordinary Item

         As a result of the foregoing, we had income before extraordinary item
of $28.3 million in the first nine months of fiscal 2002 as compared to income
before extraordinary item of $28.7 million in the corresponding fiscal 2001
period. Included in net income before extraordinary item is a loss of
approximately $4.3 million, net of tax, which is the loss on the interest rates
swaps that were either terminated or re-designated as a result of the
re-financing of the previous credit facility in the third quarter of fiscal year
2002.

         Extraordinary Item

         In the third quarter of fiscal 2002, we terminated our prior credit
agreement and wrote off the associated deferred financing fees of $2.7 million
(net of tax) and had termination costs of approximately $1.0 million (net of
tax) primarily due to a prepayment penalty on our terminated tranche B term
loan. The extraordinary item of approximately $0.5 million (net of tax) in the
prior fiscal year represents the write off of the associated deferred financing
fees as a result of the termination of Apogent's credit agreement due to the
spin-off of SDS.


                                       23
<PAGE>


         Net Income

         As a result of the foregoing, we had net income of $24.7 million in the
first nine months of fiscal 2002, as compared to net income of $28.2 million in
the corresponding fiscal 2001 period.

         Depreciation and Amortization

         Depreciation and amortization of goodwill and other intangible assets
is allocated among the cost of sales, selling, general and administrative
expenses and other expense. Depreciation and amortization of goodwill and other
intangible assets increased $1.5 million in the first nine months of fiscal 2002
compared to the same period in the prior year due to amortization of goodwill
and other intangible assets of acquired companies, as well as increased
depreciation expense due to the addition of new assets.

         CRITICAL ACCOUNTING POLICIES

         We believe the following critical accounting policies, among others,
affect significant judgments and estimates used in the preparation of our
consolidated financial statements. We base our estimates and judgments on
historical experience and on various other factors that we believe to be
reasonable under the circumstances, the results of which form the basis for
determining the carrying values of assets and liabilities that are not readily
apparent from other sources and are inherently uncertain. As a result, changes
in estimates, assumptions and general market conditions on which our judgments
and estimates are based, could cause actual results to differ materially from
future expected results.

o        Intangible Assets - Intangible assets, other than goodwill, are
         recorded at cost and are amortized, using the straight-line method,
         over their estimated useful lives. Goodwill (excess of cost over the
         net asset value of acquired businesses) recorded prior to June 30,
         2001, is amortized over 5 to 40 years, proprietary technology,
         trademarks, and other intangibles are amortized over 7 to 40 years, 9
         years, and 3 to 17 years, respectively. Goodwill recorded subsequent to
         June 30, 2001 is not being amortized to earnings, but is to be reviewed
         for impairment on an annual basis in accordance with the implementation
         of FASB Statement of Financial Accounting Standards ("SFAS") No. 142
         "Goodwill and Other Intangible Assets". We applied SFAS No. 141
         "Business Combinations" in our preliminary allocation of the purchase
         price of the Surgical Acuity business. We identified and allocated a
         value to the purchase of the intangible assets of less than $0.1
         million related to licensing agreements, and goodwill related to the
         purchase of $5.9 million. The intangible relating to licensing is being
         amortized to earnings over a period of 15 years, while the goodwill
         related to the purchase is not being amortized to earnings, but
         reviewed on an annual basis for impairment, in accordance with SFAS No.
         142. See "New Accounting Pronouncements" below for additional
         information relating to the treatment of goodwill beginning October 1,
         2002.

o        Revenue Recognition - We recognize revenue upon shipment of products,
         when the risks and rewards of ownership are passed, when persuasive
         evidence of a sales arrangement exists, the price to the buyer is fixed
         and determinable and collectability of the sales price is reasonably
         assured. A large portion of our sales of Professional Dental products
         and Infection Prevention products is sold through distributors.
         Revenues associated with sales to distributors are also recognized upon
         shipment of products when all risks and rewards of ownership of the
         product are passed. We are not obligated to allow for returns.
         Additionally, we accrue rebates based upon our various pricing
         programs. These rebates are accounted for as a reduction of revenue.
         The allowance for doubtful receivables is reviewed and adjusted
         periodically. Accounts that are judged to have a collection uncertainty
         are reserved for, in part or in total, based on management's estimate
         of the collectable balance.

o        Inventories - Periodically we review our inventory for potentially
         excess and/or obsolete items by comparing the historical demand to the
         expected future demand and adjust our obsolescence reserves
         accordingly. If circumstances change (e.g., unexpected shifts in market
         demand) there could be a material impact on the net realizable value of
         the inventory. Additionally, in the quarter ended June 30, 2002, we
         changed our method of accounting for domestic inventories from the
         last-in, first-out (LIFO) method to the first-in, first-out (FIFO)
         method, and prior period financial statements have been adjusted to
         reflect this change in accordance with Accounting Principles Board No.
         20 "Accounting Changes." For a further description of this change in
         method for accounting for inventories, please see note 2 in the notes
         to the unaudited consolidated financial statements in Item 1 above.

o        Derivative Financial Instruments - We use derivative financial
         instruments to manage our foreign currency, interest rate exposures,
         and certain net investments. We do not hold or issue financial
         instruments for trading purposes. The notional amounts of these
         contracts do not represent amounts exchanged by the parties and, thus,
         are not a measure of our risk. The net amounts exchanged are calculated
         on the basis of the notional amounts and other terms of the contracts,
         such as interest rates or exchange rates, and only represent a small
         portion of the notional amounts. The credit and market risk under these


                                       24
<PAGE>


         agreements is minimized through diversification among counterparties
         with high credit ratings. Depending on the item being hedged, gains and
         losses on derivative financial instruments are either recognized in the
         results of operations as they occur or are deferred until the hedged
         transaction occurs. Derivatives used as hedges are effective at
         reducing the risk associated with the exposure being hedged and are
         designated as a hedge at the inception of the derivative contract.
         Accordingly, changes in the fair value of the derivative are highly
         inversely correlated with changes in the fair value of the underlying
         hedged item at the inception of the hedge and over the life of the
         hedge contract.

         NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets," and SFAS No. 143, "Accounting for Asset Retirement
Obligations." SFAS No. 142 requires that goodwill no longer be amortized to
earnings, but instead reviewed for impairment. Under SFAS No. 142, the
amortization of goodwill ceases upon adoption of the statement and is effective
for fiscal years beginning after December 15, 2001. In all cases, the provisions
of SFAS No. 142 shall be initially applied at the beginning of a fiscal year.

         We have historically amortized our goodwill and other intangible assets
over their estimated useful lives. Beginning with the adoption of SFAS No. 142,
we will cease amortizing our goodwill and certain intangible assets as defined
in SFAS No. 142. We will adopt SFAS No. 142 as of the beginning of fiscal year
2003 (i.e. October 1, 2002). We recorded amortization expense of goodwill and
other intangible assets in the amount of $7.6 million and $6.6 million for the
nine month periods ended June 30, 2002 and 2001, respectively. Upon adoption of
SFAS No. 142, amortization of goodwill and certain intangible assets will not be
recorded in future periods.

         Further, to the extent an intangible asset is identified as having an
indefinite useful life, we will be required to test the intangible asset and
goodwill for impairment in accordance with the provisions of SFAS No. 142 within
the first interim period. Any impairment loss will be measured as of the date of
the adoption and recognized as the cumulative effect of a change in accounting
principle. Impairment will first be assessed by identifying our reporting units
and determining the carrying value of each reporting unit by assigning the
assets and liabilities, including the existing goodwill and intangible assets to
those reporting units, and comparing the fair value of each reporting unit to
the reporting unit's carrying amount. To the extent that the carrying amount of
each reporting unit exceeds its fair value, impairment will be measured as the
amount by which the reporting unit's net assets and liabilities (recorded and
unrecorded) exceed its fair value. We have not fully determined the effect of
adopting SFAS No. 142.

         SFAS No. 143 requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. We are required and plan to adopt
the provisions of SFAS No. 143 in the quarter ending December 31, 2002. We
believe the adoption of SFAS No. 143 will not have a material impact on our
financial position, results of operations, or cash flows.

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which supersedes both SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and the accounting and reporting provisions of APB
Opinion No. 30, "Reporting the Results of Operations -- Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions," for the disposal of a segment of a business
(as previously defined in that Opinion). SFAS No. 144 retains the fundamental
provisions in SFAS No. 121 for recognizing and measuring impairment losses on
long-lived assets held for use and long-lived assets to be disposed of by sale,
while also resolving significant implementation issues associated with SFAS No.
121. SFAS No. 144 retains the basic provisions of Opinion 30 on how to present
discontinued operations in the income statement but broadens that presentation
to include a component of an entity (rather than a segment of a business).
Unlike SFAS No. 121, an impairment assessment under SFAS No. 144 will never
result in a write-down of goodwill. Rather, goodwill is evaluated for impairment
under SFAS No. 142.

         We are required to adopt SFAS No. 144 no later than our first fiscal
year beginning after December 15, 2001, and plan to adopt its provisions in the
quarter ending December 31, 2002. We do not expect the adoption of SFAS No. 144
for long-lived assets held for use to have a material impact on our consolidated
financial statements because the impairment assessment under SFAS No. 144 is
largely unchanged from SFAS No. 121. The provisions of SFAS No. 144 for assets
held for sale or other disposal generally are required to be applied
prospectively after the adoption date to newly initiated disposal activities.
Therefore, we cannot determine the potential effects that adoption of SFAS No.
144 will have on our consolidated financial statements.

         In April 2002, the FASB issued SFAS No. 145, "Rescission of the FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." SFAS No. 145 eliminates the requirement to classify gains and
losses from the extinguishment of indebtedness as extraordinary, requires
certain lease modifications to be treated the same as a sale-leaseback


                                       25
<PAGE>
transaction, and makes other non-substantive technical corrections to existing
pronouncements. SFAS No. 145 is effective for fiscal years beginning after May
15, 2002, with earlier adoption encouraged. We expect the only impact of
adopting SFAS No. 145 to be the reclassification of current year and prior year
extraordinary losses to interest expense and income taxes.

         In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS No. 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operations, plant closing, or other exit or disposal activities.
SFAS No. 146 is effective prospectively for exit or disposal activities
initiated after December 31, 2002, with earlier adoption encouraged. As the
provisions of SFAS No. 146 are required to be applied prospectively after the
adoption date, we cannot determined the potential effects that adoption of SFAS
No. 146 will have on our consolidated financial statements.

         LIQUIDITY AND CAPITAL RESOURCES

         As a result of the acquisition of Apogent's predecessor in 1987 and the
acquisitions we have completed since 1987, we have increased the carrying value
of certain tangible and intangible assets consistent with generally accepted
accounting principles. Accordingly, our results of operations include a
significant level of non-cash expenses related to the depreciation of fixed
assets and the amortization of intangible assets, including goodwill.

         Approximately $28.2 million of cash was generated from operating
activities in the first nine months of fiscal 2002, as compared to approximately
$48.2 million from the same period of the prior year. The approximate $20.0
million decrease in cash flows from operations was primarily due to: (a) a
decrease in the net change of income taxes payable from the prior year period of
approximately $9.7 million, (b) an increase in the net change in inventories
from the comparable prior year period of approximately $6.3 million, (c) an
increase in the net change in prepaid expenses and other current assets from the
prior year period of approximately $6.0 million, (d) a decrease in the net
change in accrued payroll and employee benefits for the current year period as
compared to the prior year of approximately $5.8 million, (e) decreased earnings
compared to the prior year period of approximately $3.6 million, (f) a decrease
in the net change in other assets and liabilities of approximately $2.6 million
from the prior year period, (g) a decrease in the net change in accounts payable
from the prior year period of approximately $1.8 million, (h) a decrease in the
net change in other current liabilities from the prior year period of
approximately $0.8 million, (i) a decrease in the provision for losses on
doubtful accounts from prior year period of approximately $0.5 million, (j) a
net change in the gain on sales of property, plant and equipment from the prior
year period of approximately $0.3 million, and (k) a decrease in the net change
in the restructuring reserve of approximately $0.1 million. The decreases in
cash flows from operations were partially offset by the following: (a) an
increase in non-cash charges of approximately $6.9 million, related to the
termination of the previous credit facility (b) an increase in the net change in
deferred income taxes from the prior year period of approximately $4.8 million,
(c) an increase in the net change in accounts receivable from the prior year
period of approximately $2.6 million, (d) an increase in inventory provisions
from the prior year period of approximately $1.3 million, (e) an increase in
amortization expense of goodwill and other intangible assets from the prior year
period of approximately $1.0 million, (f) an increase in depreciation expense
from the prior year period of approximately $0.5 million, and (g) a tax benefit
from issuance of our common stock under our employee stock option plan of
approximately $0.3 million recorded in the fiscal 2002 period.

         Approximately $19.9 million of cash was used in investing activities in
the first nine months of 2002, a decrease of approximately $41.2 million from
the same period of fiscal 2001. The decrease was primarily due to: (a) the
decrease in payments for acquisitions from the prior year period of
approximately $43.4 million and (b) increased proceeds from the sales of
property, plant and equipment from the prior year of approximately $0.4 million,
partially offset by an increase in capital expenditures of approximately $2.6
million from the prior year period.

         Approximately $0.4 million of cash was provided by financing activities
in the first nine months of fiscal 2002, a decrease of approximately $14.0
million from the prior year period of fiscal 2001. The decrease was primarily
due to: (a) a decrease in the net loan proceeds of approximately $167.0 million
from the prior year period, (b) a decrease in net proceeds from our underwritten
stock offering of approximately $50.1 million, (c) the increase in deferred
financing fees from the prior year period of approximately $5.6 million, (d) a
prepayment penalty and termination costs of approximately $5.3 million related
to the refinancing and (e) the decrease in capital contributions from Apogent
from the prior year period of approximately $4.6 million (as a result of the
spin-off). The decrease in cash provided by financing activities was partially
offset by: (a) net proceeds from the sale of the senior subordinated notes of
$150.0 million, (b) the elimination of cash dividend payments to Apogent in
fiscal 2002 from the prior year period of approximately $67.9 million (as a
result of the spin-off), (c) the net change in advances and loans to Apogent
from the prior year period of approximately $0.4 million (also as a result of
the spin-off), and (d) an increase in cash received from the exercise of stock
options of approximately $0.1 million.


                                       26
<PAGE>


         Credit Facilities and Senior Subordinated Notes: On June 6, 2002, we
terminated our existing $450 million credit facility and entered into a new
$350.0 million syndicated credit facility for which Credit Suisse First Boston
is the administrative agent. The new credit facility (the "New Credit
Facility"), provides for a five-year $120.0 million revolving credit facility
(the "Revolver"), a seven-year $200.0 million term loan (the "Term Loan B") and
a five-year $30.0 million revolving credit facility (the "Euro Tranche"). Sybron
Dental Management, Inc., Kerr Corporation, Ormco Corporation and Pinnacle
Products, Inc. (the "Domestic Borrowers") will be joint and several borrowers
under the Revolver and the Term Loan B, and Hawe Neos Holding SA will be the
borrower under the Euro Tranche. In addition to the New Credit Facility, we
completed the sale of $150.0 million of 8 1/8% senior subordinated notes due
2012 (the "Senior Subordinated Notes") in a private offering. We used the
proceeds of the Term Loan B, together with proceeds from the issuance of the
Senior Subordinated Notes, to repay all of the $332.9 million of borrowings
outstanding as of June 6, 2002 under our previous credit facility.

         The New Credit Facility is jointly and severally guaranteed by Sybron
Dental Specialties, Inc., the Domestic Borrowers and each of our present and
future direct and indirect wholly-owned domestic subsidiaries, and is secured by
substantially all assets of each such entity, including the capital stock of
each domestic subsidiary. In addition, the New Credit Facility is secured by a
pledge of 65% of the capital stock of each of our first-tier material foreign
subsidiaries. The Euro Tranche is also guaranteed by certain foreign
subsidiaries and is secured by a pledge of 100% of the capital stock of certain
foreign subsidiaries and by some of the assets of our Swiss subsidiary, Hawe
Neos Holding SA, certain direct subsidiaries of Hawe Neos and certain of our
other indirect foreign subsidiaries.

         The New Credit Facility may be prepaid at any time without penalty
except for LIBOR and Euro-LIBOR breakage costs. Under the New Credit Facility,
subject to certain exceptions, we are required to apply all of the proceeds from
any issuance of debt, half of the proceeds from any issuance of equity, half of
our excess annual cash flow and, subject to permitted reinvestments, all amounts
received in connection with any sale of our assets and casualty insurance and
condemnation or eminent domain proceedings, in each case to repay the
outstanding amounts under the facility.

         The Term B Loan amortizes 1% annually for the first six years, payable
quarterly, with the balance to be paid in the seventh year in equal quarterly
installments. The Term B Loan bears interest, at our option, at either (i) a per
annum rate equal to LIBOR, plus between 225 and 275 basis points, or (ii) a per
annum rate equal to a base rate, plus between 125 and 175 basis points, in each
case as determined on a quarterly basis according to the rating of the New
Credit Facility by Standard and Poor's and Moody's. The per annum initial
interest rate for the first six months is equal to LIBOR, plus 250 basis points.
As of June 30, 2002 the amount outstanding on the Term B Loan was $200.0
million. The average interest rate at June 30, 2002 on the Term B Loan was
6.62% after giving effect to the interest rate swap agreements we had in effect
as of that date.

         The Revolver bears interest, at our option, at a per annum rate equal
to (i) LIBOR, plus between 175 and 250 basis points, or (ii) the base rate plus
between 75 and 150 basis points, in each case as determined on a quarterly basis
according to a leveraged-based pricing grid with leverage ratios from 1.75x to
3.0x. The per annum initial interest rate on the Revolver for the first six
months will be, at our option, either (i) LIBOR plus 225 basis points or (ii)
the base rate plus 125 basis points.

         The Euro Tranche will bear interest, at our option, at Euro-LIBOR or at
base rates with margins identical to those of the Revolver. The annual
commitment fee on the unused portion of the Revolver and the Euro Tranche will
vary between 0.375% to 0.5% based on the quarterly leverage ratio. As of June
30, 2002, there was no outstanding balance under the Revolver or the Euro
Tranche and the amount available under our Revolver was $120.0 million, and the
amount available under the Euro Tranche was $30.0 million.

         The New Credit Facility contains certain covenants, including, without
limitation, restrictions on: (i) debt and liens, (ii) the sale of assets, (iii)
mergers, acquisitions and other business combinations, (iv) transactions with
affiliates, (v) capital expenditures, (vi) restricted payments, including
repurchase or redemptions of the notes, and (vii) loans and investments, as well
as prohibitions on the payment of cash dividends to or the repurchase or
redemption of stock from stockholders. The New Credit Facility also has certain
financial covenants, including, without limitation, maximum leverage ratios,
minimum fixed charge coverage ratios, minimum net worth and maximum capital
expenditures.

         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 June
30, 2002.

         Prior to June 6, 2002, we had a credit facility that we entered into in
connection with the spin-off on December 11, 2000, which allowed for borrowings
up to $450.0 million from ABN AMRO Bank N.V. and certain other lenders. This
credit facility was composed of a $150.0 million five year tranche A term loan,
a $150.0 million seven year tranche B term loan, under which Kerr and Ormco were
borrowers, and a five year revolving credit facility up to $150.0 million, under
which Sybron Dental Management, Inc., was the borrower.


                                       27
<PAGE>


         The tranche A term loan bore interest primarily at the adjusted
interbank offered rate for Eurodollar deposits plus 275 basis points. The
tranche B term loan bore interest primarily at the adjusted interbank offered
rate for Eurodollar deposits plus 375 basis points. Borrowings under the
previous revolving credit facility generally bore interest on the same terms as
those under the tranche A term loan, plus we paid a commitment fee on the
average unused portion of the revolving credit facility of 0.5%.

         In connection with entering into our New Credit Facility on June 6,
2002, we issued $150.0 million of Senior Subordinated Notes bearing interest at
8 1/8%, maturing on June 15, 2012. The Senior Subordinated Notes are our
unsecured obligations, subordinated in right of payment to all our existing and
future senior debt in accordance with the subordination provisions of the
indenture.

         The Senior Subordinated Notes are generally not redeemable at our
option before June 15, 2005. Some limited redemption is allowed if we receive
cash from an equity offering. At any time and from time to time on or after June
15, 2007, we may redeem the Senior Subordinated Notes, in whole or in part, at a
redemption price equal to the percentage of principal amount set forth below
plus accrued and unpaid interest to the redemption date.

<Table>
<Caption>
         TWELVE-MONTH PERIOD COMMENCING JUNE 15;                         PERCENTAGE
         ---------------------------------------                         ----------
         <S>                                                             <C>

         2007......................................................       104.063%
         2008......................................................       102.708%
         2009......................................................       101.354%
         2010 and thereafter.......................................       100.000%
</Table>

         As a result of the terms of our New Credit Facility, we are sensitive
to a rise in interest rates. A rise in interest rates would result in increased
interest expense on our outstanding debt. In order to reduce our sensitivity to
interest rate increases, from time to time we enter into interest rate swap
agreements. As of June 30, 2002, we had five interest rate swaps outstanding
aggregating a notional amount of $126.7 million. Under the terms of the swap
agreements, we are required to pay fixed rate amounts equal to the swap
agreement rates listed below. In exchange for the payment of the fixed rate
amounts, we receive floating rate amounts equal to the three-month LIBOR rate in
effect on the date of the swap agreements and the subsequent reset dates. For
the swap agreements, the rate resets on the quarterly anniversary of the swap
agreement dates until the swaps' expiration dates. The net interest rate paid by
us is approximately equal to the sum of the swap agreement rates plus the
applicable LIBOR margin. The swap agreement rates and durations as of June 30,
2002 are as follows:

<Table>
<Caption>
EXPIRATION DATE         NOTIONAL AMOUNT    SWAP AGREEMENT DATE    SWAP AGREEMENT RATE        SWAP EFFECTIVE DATE
---------------         ---------------    -------------------    -------------------        -------------------
<S>                     <C>                <C>                    <C>                        <C>

September 15, 2002       $25.0 million      February 23, 2001           5.00%                March 15, 2001
September 15, 2002       $35.0 million      February 23, 2001           5.00%                June 15, 2001
February 16, 2005        $10.0 million      January 24, 2001            5.69%                February 16, 2001
March 31, 2005           $28.4 million      January 2, 2001             5.65%                March 30, 2001
March 31, 2005           $28.3 million      January 2, 2001             5.58%                March 30, 2001
</Table>

         Our Senior Subordinated Notes bear interest at a fixed rate. This rate
is higher than the current LIBOR rates and, therefore, we are currently looking
at opportunities to swap the interest rate from fixed to floating rate, to
reduce our interest exposure.

         We intend to fund our acquisitions, working capital requirements,
capital expenditure requirements, principal and interest payments, obligations
under the Sale/Leaseback (defined below), restructuring expenditures, other
liabilities and periodic expansion of facilities, to the extent available, with
funds provided by operations and short-term borrowings under our Revolver. To
the extent that funds are not available from those sources, particularly with
respect to our acquisition strategy, we would have to raise additional capital.

         While cash provided from operating activities may be impacted by lower
revenues due to the slowing economy and the continued risk of a competitive
market and changes in demand for our products, we believe that our cash flow
from operations, unused amounts available under our New Credit Facility, and
access to capital markets will be sufficient to satisfy our future working
capital, capital investment, acquisition and other financing requirements for
the foreseeable future. However, there can be no assurance that will be the
case.


                                       28
<PAGE>


         Sale/Leaseback: In 1988, we completed the sale and leaseback (the
"Sale/Leaseback") of our then principal domestic manufacturing and office
facilities with an unaffiliated third party. The transaction has been accounted
for as a financing for financial statement purposes, thus the facilities remain
in property, plant and equipment. The transaction was treated as a sale for
income tax purposes. The financing obligation is being amortized over the
initial 25-year lease term.

         The initial term of each lease is 25 years with five five-year renewal
options. On the fifth anniversary of the leases and every five years thereafter
(including renewal terms), the rent is increased by the percentage equal to 75%
of the percentage increase in the Consumer Price Index over the preceding five
years. The percentage increase to the rent in any five-year period is capped at
15%. Beginning January 1, 1999 annual payments increased from $1.3 million to
$1.5 million. The next adjustment will occur January 1, 2004. As a result of the
spin-off, the Sale/Leaseback was amended to extend the leases an additional 5
years, increase the basic rent by $0.15 million per year, and provides us the
option to purchase the leased premises at fair market value from June 1, 2008 to
May 31, 2009. We pay all costs of maintenance and repair, insurance, taxes and
all other expenses associated with the properties.

         We have the option to purchase the facilities according to the terms of
any bona fide offer received by the lessor from a third party at any time during
the term of the leases. We may be obligated to repurchase the property upon the
event of a breach of certain covenants or occurrence of certain other events.

         CONTRACTUAL OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

         The following table represents a comprehensive list of our contractual
obligations and other commercial commitments for the indicated periods
(calculated as of June 30, 2002);

<Table>
<Caption>
                                         PAYMENTS DUE FOR THE TWELVE MONTH PERIODS ENDED JUNE 30,
                                --------------------------------------------------------------------------
                                   2003      2004       2005       2006       2007    THEREAFTER    TOTAL
                                --------   --------   --------   --------   --------  ----------  --------
                                                              (IN THOUSANDS)
<S>                             <C>        <C>        <C>        <C>        <C>        <C>        <C>

Long-term debt ..............   $  2,591   $  2,577   $  2,564   $  2,583   $  2,595   $200,378   $213,288
Senior term notes ...........         --         --         --         --         --    150,000    150,000
Standby letters of credit ...      1,853         --         --         --         --         --      1,853
Operating leases ............      4,893      4,214      3,113      2,244      1,803      5,820     22,087
                                --------   --------   --------   --------   --------   --------   --------
Total Contractual Cash
    Obligations .............   $  9,337   $  6,791   $  5,677   $  4,827   $  4,398   $356,198   $387,228
                                ========   ========   ========   ========   ========   ========   ========
</Table>

         We believe that the cash flow from our operations, unused amounts
available under our credit facility, and access to capital markets will be
sufficient to satisfy our future working capital, capital investment,
acquisition and other financing requirements for the foreseeable future.
However, there can be no assurance that will be the case.

         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:

         o        As of June 30, 2002, we had $363.3 million in total long-term
                  debt (including current portion), and $126.4 million in
                  stockholders' equity. This level of indebtedness could have
                  significant consequences, including: (a) limiting the cash
                  flow available for working capital, capital expenditures,
                  acquisitions, and other corporate purposes because a
                  significant portion of our cash flow from operations must be
                  dedicated to servicing our debt; (b) limiting our ability to
                  obtain additional financing in the future for working capital
                  or other purposes; (c) limiting our ability to create or
                  permit liens or to pay cash dividends; and (d) limiting our
                  flexibility to react to competitive or other changes in our
                  industry, and to economic conditions generally.


                                       29
<PAGE>
                  In addition, our credit facilities contain 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 financing that we may incur could
                  restrict our operational flexibility and prevent us from
                  pursuing business opportunities of value to our stockholders.

         o        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., and Ivoclar Vivadent Group; in the Orthodontics
                  business segment, our principal competitors include Unitek, a
                  subsidiary of 3M Corporation, GAC Orthodontics, a subsidiary
                  of Dentsply, and American Orthodontics; and in the Infection
                  Prevention business segment, our principal competitors include
                  Johnson & Johnson, Steris Corporation, and Ecolab, Inc. We may
                  face increased competition from these or other companies in
                  the future and we may not be able to achieve or maintain
                  adequate market share or margins, or compete effectively, in
                  any of our markets. Any of the foregoing factors could
                  adversely affect our revenues and operating profits and hinder
                  our future expansion.

         o        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 appreciate
                  against the U.S. dollar, our business, financial condition and
                  results of operations could be adversely affected.

         o        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.

         o        Our foreign operations include manufacturing facilities in
                  Canada, Switzerland, Italy, and Mexico. An event that has a
                  material adverse impact on our foreign operations may
                  materially adversely affect our operations as a 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, retain, and discharge local
                  employees; currency exchange restrictions and fluctuations in
                  the value of foreign currency; potentially adverse tax
                  consequences; longer payment cycles; greater difficulties in
                  accounts receivable collection; changing political conditions;
                  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 these events were to occur, it could
                  have a material adverse effect on our business, financial
                  condition and result of operations.

         o        We may not be able to maintain our level of investment in
                  research and development as we incur more indebtedness and
                  greater interest expense. The indenture relating to our Senior
                  Subordinated Notes and the New Credit Facility permit us to
                  incur significant amounts of additional debt. If we incur
                  additional debt, our interest expenses 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.

         o        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


                                       30
<PAGE>


                  loss of sales momentum. We cannot be certain that we will
                  successfully manage them in the future. Also, our New Credit
                  Facility and the indenture for our Senior Subordinated Notes
                  limit our ability to consummate acquisitions by imposing
                  various conditions which must be satisfied.

         o        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.

         o        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.

         o        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 attract and
                  retain 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
                  successfully manage the future expansion of our business could
                  have a material adverse effect on our revenues and
                  profitability.

         o        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.

         o        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
                  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 concerns are justified.

         o        In fiscal 2001, approximately 24% 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 Henry Schein, Inc. or
                  Patterson Dental Co., the only distributors who account for
                  more than 5% of our sales, could have a temporary material
                  adverse effect on our results of operations or financial
                  condition until we find alternative means to distribute our
                  products.

         o        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 employees' council. There
                  is a risk of strikes or other labor disputes at our locations
                  that are unionized or are subject to national contracts which
                  could affect our operations.


                                       31
<PAGE>


         o        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.

         o        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.

         o        Under new accounting pronouncements issued by the Financial
                  Accounting Standards Board, we will be required to test
                  goodwill and other intangible assets for impairment on an
                  annual basis, using new guidelines specified in SFAS No. 142,
                  and recognize any impairment loss at the date of adoption, as
                  well as recognize and measure impairment losses on long-lived
                  assets held for use and long-lived assets to be disposed of by
                  sale (SFAS No. 144). See "New Accounting Pronouncements" above
                  for additional information regarding these pronouncements.
                  While we have yet to fully determine the effects of adopting
                  SFAS No. 142 and SFAS No. 144, we generally believe the
                  adoption of these statements will not have a material impact
                  on our financial position, results of operations, or cash
                  flows. However, we recognize that until completion of the
                  evaluation and testing of goodwill, intangibles and other
                  long-lived assets, there remains a possibility of a material
                  impact on our future consolidated financial statements.

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

         o        In connection with the spin-off, Apogent received rulings from
                  the Internal Revenue Service that, for federal income tax
                  purposes, the transactions undertaken in connection with the
                  spin-off, and the spin-off itself, would be tax free to
                  Apogent and its shareholders. These rulings are subject to the
                  validity of factual representations made to the IRS and
                  assumptions and conditions set out in the ruling request. In
                  order to assure that the representations made in connection
                  with the ruling request are true, we have agreed with Apogent
                  to certain restrictions on future actions for a period of time
                  following the spin-off. In particular, we have agreed to
                  continue the active conduct of our historic business for a
                  minimum of two years, and we have agreed not to issue stock,
                  merge with another corporation, or dispose of our assets in a
                  manner that would cause the spin-off to be treated as part of
                  a plan pursuant to which one or more persons acquire a 50% or
                  greater interest in our stock. We have agreed to indemnify
                  Apogent if the spin-off is treated as having been taxable by
                  reason of any breach of these agreements. Our indemnification
                  of Apogent for these liabilities may have a material adverse
                  effect on our financial condition and results of operations.

         o        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.

         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.



                                       32
<PAGE>
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, 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 are derived from foreign currencies.
Our foreign currency exposure exists primarily in the euro, Japanese yen,
Canadian dollar, and Australian dollar versus the U.S. dollar. With the
acquisition of Hawe Neos on May 31, 2001, we now consider the Swiss franc a
currency exposure.

         For fiscal year 2002, our projected total foreign currency exposure is
approximately 49.8 million euros, 915.7 million Japanese yen, 16.9 million
Canadian dollars, 13.7 million Australian dollars, and 11.8 million Swiss
francs. We have put in place a strategy to manage our euro and 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, and Swiss franc
at June 30, 2002.

         In August 2001, we entered into a series of zero cost collar contracts
to hedge intercompany transactions with a remaining notional amount of 10.1
million euros for fiscal year 2002. In addition, we entered into a zero cost
collar contract to hedge a remaining notional amount of 165.0 million Japanese
yen for fiscal year 2002. We are currently evaluating our foreign currency
exposure for the yen for fiscal year 2003. As of June 30, 2002, we entered into
a zero cost collar contract to hedge our intercompany transactions with a
notional amount of 720.0 million Japanese yen for fiscal year 2003.

         At June 30, 2002, approximately $0.6 million of loss (net of income
tax) representing the fair value of the zero cost collars, is included in
accumulated other comprehensive income (loss), related to the foreign currency
zero cost collar transactions. In addition, none of the foreign currency cash
flow hedges has been discontinued.

         Remaining amounts under the zero cost collar contracts in place as of
June 30, 2002 are as follows (in thousands, except rates):

<Table>
<Caption>
                                                                LOCAL
               TRADE         EFFECTIVE       MATURITY          CURRENCY        FLOOR RATE        CEILING RATE
CURRENCY       DATE            DATE            DATE             AMOUNT         PER U.S. $         PER U.S. $
--------       -----         ---------       --------          --------        ----------        ------------
<S>          <C>            <C>              <C>              <C>              <C>             <C>

Euro         8/29/2001       10/29/2001       9/27/2002          2,025             0.89                    0.92
Euro         8/29/2001       10/29/2001       9/27/2002          3,000             0.89                    0.92
Euro         8/29/2001       10/29/2001       9/26/2002          2,025             0.89                    0.92
Euro         8/29/2001       10/29/2001       9/26/2002          3,000             0.89                    0.92
Yen          9/25/2001       10/29/2001       9/26/2002        165,000           120.00        110.75 to 109.80
Yen          6/25/2002       10/15/2002       9/15/2003        720,000           122.00                  117.99
</Table>

         As of June 30, 2002, the maximum length of time over which we are
hedging our exposure to the variability in future cash flows associated with
foreign currency forecasted transaction is fifteen months for the yen and three
months for the euro.

         On July 16, 2002 we entered into a series of zero cost collar contracts
to hedge intercompany transactions with a notional amount of $24.0 million euros
for fiscal year 2003. The contract provides a floor rate of 0.97 euro per dollar
and a ceiling of 1.0305 euro per dollar, starting on October 15, 2002 and
expiring on September 16, 2003.

         During the year ending September 30, 2002, approximately $0.6 million
of loss in accumulated other comprehensive income (loss) related to the zero
cost collars are expected to be reclassified into foreign exchange gain as a
yield adjustment of the hedged foreign currency representing the fair value of
the zero cost collars.


                                       33
<PAGE>


         In September 2001, we entered into a cross currency debt swap
transaction to hedge our net investment in Hawe Neos. The agreement has an
effective date of October 16, 2001, and is a contract to exchange a U.S. dollar
principal amount of $45 million in exchange for a Swiss franc principal amount
of 71.73 million at the termination date of October 16, 2006. The interest rate
to be paid to us on the U.S. dollar principal amount of $45 million is a fixed
rate of 5.79%, and the interest rate to be paid by us on the Swiss franc
principal amount of 71.73 million is a fixed rate of 4.40%, with the interest
payments due quarterly on both the Swiss franc loan and the U.S. dollar loan. On
June 6, 2002 we terminated this cross currency debt swap transaction to satisfy
requirements under our New Credit Facility. As of June 30, 2002, we entered into
four cross currency debt swap transactions to hedge our net investment in Hawe
Neos and one cross currency debt swap to hedge our net investment in SDS Japan.
The agreements to hedge our net investment in Hawe Neos has a total aggregate
notional amount of $45 million and in SDS Japan has a notional amount of $4
million. The mechanics of the new agreements are similar to the original cross
currency debt swap terminated on June 6, 2002. However, the fixed interest rate
to be paid to us in the U.S. dollar leg of the agreements is the rate equal to
the Senior Subordinated Notes rate of 8 1/8% while the fixed interest rate to be
paid by us in 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%.

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

<Table>
<Caption>
TRADE DATE        EFFECTIVE DATE    MATURITY     US$     INTEREST       FX AMT       INTEREST
----------        --------------    --------    -----    --------     ----------     --------
<S>               <C>               <C>         <C>      <C>          <C>           <C>
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%
</Table>

         At June 30, 2002, the fair value of the cross currency debt swap
transaction was a loss of approximately $0.4 million (net of income tax)
included in translation adjustments.

         As a result of terminating the cross currency debt swap transaction to
hedge our net investment in Hawe Neos, we recognized a loss to the translation
adjustment, a component of other comprehensive income (loss) in the amount of
approximately $0.9 million (net of income tax). This amount will remain in
translation adjustment, a component of other comprehensive income (loss) until
sale or upon complete or substantially complete liquidation of our net
investment in Hawe Neos.

INTEREST RATE EXPOSURE--INTEREST RATE RISK MANAGEMENT

         We use variable-rate debt (primarily our New Credit Facility) and
Senior Subordinated Notes to finance our operations. These debt obligations
expose us to variability in interest payments due to changes in interest rates.
If interest rates increase, interest expense increases. Conversely, if interest
rates decrease, interest expense also decreases. Under our prior credit
facility, we were required to have interest rate protection for a specified
portion of the outstanding balances for a specified period of time. Although we
paid off and terminated that credit facility, we retained certain of the
interest rate swap agreements we had entered into 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.

         Concurrently with entering into our New Credit Facility, we issued
Senior Subordinated Notes with a fixed interest coupon of 8 1/8%, maturing on
June 15, 2012. The fixed interest on the notes is higher than the current LIBOR
rates, therefore we are currently looking at opportunities to swap the interest
rate from fixed to floating rate, to achieve a more balanced mix of fixed and
floating rates on the outstanding balance of the notes.

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

         For the quarter ended June 30, 2002, the total net cost of converting
from floating rate (3-month LIBOR) to fixed rate for a portion of the interest
payments under our long-term debt was approximately $1.6 million. At June 30,
2002, approximately $2.3 million loss (net of income tax) is included in
accumulated other comprehensive income (loss). Below is a table listing the
interest expense exposure detail and the fair value of the interest rate swap
agreements as of June 30, 2002 (dollars in thousands):


                                       34
<PAGE>
<Table>
<Caption>

                                                                                             THREE
                                                                                          MONTHS ENDED    FAIR VALUE
LOAN                      AMOUNT      TERM         TRADE         EFFECTIVE     MATURITY   JUNE 30, 2002    (PRE-TAX)
----                      ------      ----         -----         ---------     --------    -----------    ----------
<S>                    <C>            <C>          <C>           <C>           <C>          <C>           <C>

Kerr B (terminated)    $      --        --           --             --            --        $  251.7      $      0.0
Ormco (terminated)            --        --           --             --            --           251.7             0.0
SDM B...............      10,000      4 years      1/24/2001      2/16/2001    2/16/2005        96.9           582.3
SDM B...............      25,000      1.5 years    2/23/2001      3/15/2001    9/15/2002       192.7           193.7
Kerr B..............      28,362      4 years      1/2/2001       3/30/2001    3/31/2005       275.0         1,513.7
Ormco B.............      28,362      4 years      1/2/2001       3/30/2001    3/31/2005       269.7         1,196.9
SDM B...............      35,000      1.25 years   2/23/2001      6/15/2001    9/15/2002       270.2           274.0
                       ---------                                                            --------      ----------
Totals..............   $ 126,724                                                            $1,607.9      $  3,760.6
                       =========                                                            ========      ==========
</Table>

         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 (loss). These amounts subsequently 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.

         On June 6, 2002 we entered into a new $350.0 million syndicated credit
facility for which Credit Suisse First Boston is the administrative agent. The
New Credit Facility provides for a five-year $120.0 million Revolver, a
seven-year $200.0 million Term Loan B and a five-year $30.0 million Euro Tranche
revolving credit facility. In addition to the New Credit Facility, we completed
the sale of $150.0 million of Senior Subordinated Notes at 8 1/8% interest, due
2012, in a private offering. We used the proceeds of the Term Loan B, together
with proceeds from the issuance of the Senior Subordinated Notes, to repay all
of the $332.9 million of borrowings outstanding as of June 6, 2002 under our
previous credit facility.

         As a result of the termination of the previous credit facility on June
6, 2002, approximately $70 million of the Company's current interest rate swaps
could not be re-assigned to the new credit facility and thus were terminated.
Accordingly, the Company recorded a loss on derivative instruments of
approximately $3.8 million (or approximately $2.3 million, net of tax) in other
income (expense), which represents the fair value of the swaps at the
termination date. Additionally, under the Financial Accounting Standards Board's
("FASB") Statement No. 133, the Company had to de-designate two remaining
interest rate swaps as a result of the specificity of the Company's hedge
documentation relating to the hedged item. Accordingly, a non-cash loss on
derivative instruments of approximately $3.2 million (or approximately $2.0
million, net of tax), representing the fair value of the refinancing swaps at
the date of the refinancing, was reclassified from other comprehensive income
(loss) and recorded in other income (expense) to recognize the loss. However,
these swaps were continued and were simultaneously re-assigned to the new credit
facility. The change in the fair value of these re-assigned swaps from the
refinancing date to June 30, 2002 has been recorded in other comprehensive
income (loss).

         The re-assigned interest rate swap agreements are expected to be highly
effective as we expect the hedging relationship to meet the relevant hedge
accounting criteria of SFAS No. 133. The re-assigned interest rate swap
agreements showed no recognizable ineffectiveness for the quarter.




                                       35
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         The terms of our New Credit Facility entered into in June 2002 prohibit
the payment of cash dividends and repurchases of any of our equity interests,
including common stock. Our previous credit facility contained similar
prohibitions. The terms of the indenture for our 8 1/8% Senior Subordinated
Notes due 2012, which we issued in June 2002, prohibit the payment of cash
dividends and repurchases of any of our equity interests, including common
stock, except in certain limited circumstances where we meet various financial
tests under the indenture. We have not paid cash dividends on our common stock
in the past and we do not expect to pay cash dividends in the foreseeable
future. For a more complete discussion of our New Credit Facility and our Senior
Subordinated Notes, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources" in Item 2
of Part I above.

ITEM 5. OTHER INFORMATION

         In the third quarter ended June 30, 2002, we changed our method of
accounting for our domestic inventories from the last-in, first-out (LIFO)
method, to the first-in, first-out (FIFO) method. The following historical
financial information, which is set forth below, has been adjusted to reflect
the change in accounting principle in accordance with Accounting Principles
Board Opinion No. 20, "Accounting Changes": the table of selected consolidated
financial data for the five years in the period ended September 30, 2001, and
the nine month periods ended June 30, 2002 and 2001; the consolidated balance
sheets as of September 30, 2001 and 2000; the consolidated statements of income
for the years ended September 30, 2001, 2000 and 1999; the consolidated
statements of stockholders' equity and comprehensive income for the years ended
September 30, 2001, 2000 and 1999; the consolidated statements of cash flows for
the years ended September 30, 2001, 2000 and 1999; the notes to the consolidated
financial statements for the years ended September 30, 2001, 2000 and 1999; and
the Management's Discussion and Analysis of Financial Condition and Results of
Operations (excluding the discussion of capital resources) for the years ended
September 30, 2001, 2000 and 1999.

SELECTED CONSOLIDATED FINANCIAL DATA

<Table>
<Caption>
                                                     NINE MONTHS ENDED
                                                          JUNE 30,                        YEAR ENDED SEPTEMBER 30,
                                                    --------------------    -----------------------------------------------------
                                                      2002        2001        2001        2000       1999       1998       1997
                                                                     (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                                 <C>         <C>         <C>         <C>        <C>        <C>        <C>

Statement of Income Data:
   Net sales(a) .................................   $341,762    $318,558    $439,547    $423,140   $392,249   $370,348   $362,145

   Apogent charges(b) ...........................         --         730         730       2,979      4,228      3,620      3,617
   Income before extraordinary item .............     28,322      28,725      38,129      42,056     46,754     26,390     37,081
   Extraordinary item (c) .......................     (3,661)       (498)       (498)         --         --         --       (269)
   Net income (d) ...............................     24,661      28,227      37,631      42,056     46,754     26,390     36,812
   Basic earnings per share (e) .................   $   0.65    $   0.80    $   1.05    $   1.20   $   1.33   $   0.75   $   1.06
   Fully diluted earnings per share (e) .........   $   0.63    $   0.78    $   1.01    $     --   $     --   $     --   $     --
Balance Sheet Data:
   Advances and loans to Apogent ................   $     --    $     --    $     --    $ 77,762   $ 56,777   $ 29,088   $ 55,176
   Total assets .................................    576,717     519,387     539,747     538,253    507,391    469,066    446,925
   Long-term debt, excluding current portion ....    360,901     331,752     321,536     298,482    283,447    248,175    259,297
   Stockholders' equity .........................    126,366      81,652      93,526     148,368    150,534    124,987    101,385
</Table>

(a)      Net sales have been adjusted to include shipping and handling fees
         previously reported in selling, general and administrative expenses in
         the amount of $4.4 million, $4.1 million, $3.5 million and $3.5 million
         for fiscal years ended 2000, 1999, 1998 and 1997, respectively.

(b)      Represents an allocation of Apogent's corporate office, general and
         administrative expenses.


                                       36
<PAGE>


(c)      The extraordinary item in current fiscal year ending 2002 represents
         the write off of the associated deferred financing fees of $2.7 million
         (net of tax) related to the termination of our prior credit agreement
         and termination costs of approximately $1.0 million (net of tax)
         primarily due to a prepayment penalty on our terminated tranche B loan.
         The extraordinary item of approximately $0.5 million (net of tax) in
         the prior fiscal year ending 2001 represents the write off of the
         unamortized financing fees as a result of the termination of Apogent's
         credit agreement due to our spin-off from Apogent. The extraordinary
         item of approximately $0.3 million in the fiscal year ended 1997
         represents the write-off of unamortized financing fees resulting from
         the re-financing of Apogent's debt.

(d)      Includes restructuring charges (relating to a restructuring charge and
         merger, transaction and integration expenses associated with the merger
         with LRS Acquisition Corp.) of $25.1 million ($17.1 million after tax)
         in 1998, $1.4 million ($0.9 million after tax) in 1999 for merger,
         transaction and integration expenses associated with the mergers with
         Pinnacle Products of Wisconsin, Inc. and LRS Acquisition Corp., and
         certain adjustments to the 1998 restructuring reserve. A restructuring
         charge of $9.3 million ($5.8 million after tax) in 2000 for the closing
         of the Metrex Parker, Colorado facility, and the restructuring of the
         Ormco San Diego and Amersfort/Europe businesses, as well as inventory
         and related charges for product exits in 2000 in all three of our
         business segments; and a $2.4 million ($1.5 million after tax)
         restructuring charge related to the closing of the Ormco San Diego,
         California facility in fiscal 2001.

(e)      Earnings per share data for the four years ended September 30, 2000 to
         1997 are computed using the 35,108,649 shares outstanding at December
         11, 2000, the date of our spin-off, as the outstanding average number
         of shares for each year. This number of outstanding shares is presumed
         to be outstanding for each fiscal year 2000 to 1997. Diluted earnings
         per share for the years ended September 30, 2000 to 1997 have been
         omitted as no Sybron Dental Specialties, Inc. stock options existed
         prior to the date of the spin-off and any calculation of diluted
         earnings per share would not be meaningful.


                                       37
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                         SYBRON DENTAL SPECIALTIES, INC.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------     --------------------
                                                                                                  PAGE
---------------------------------------------------------------------------------------------     --------------------
<S>                                                                                               <C>
Independent Auditors' Report                                                                      37.2
---------------------------------------------------------------------------------------------     --------------------
Consolidated Balance Sheets as of September 30, 2001 and 2000                                     38
---------------------------------------------------------------------------------------------     --------------------
Consolidated Statements of Income for the years ended September 30, 2001, 2000 and 1999           39
---------------------------------------------------------------------------------------------     --------------------
Consolidated Statements of Stockholders' Equity and Comprehensive Income for the years            40
ended September 30, 2001, 2000 and 1999
---------------------------------------------------------------------------------------------     --------------------
Consolidated Statements of Cash Flows for the years ended September 30, 2001, 2000 and 1999       41
---------------------------------------------------------------------------------------------     --------------------
Notes to Consolidated Financial Statements                                                        42
---------------------------------------------------------------------------------------------     --------------------
</TABLE>


<PAGE>
                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Sybron Dental Specialties, Inc.:


We have audited the accompanying consolidated balance sheets of Sybron Dental
Specialties, Inc. and Subsidiaries as of September 30, 2001 and 2000, and the
related consolidated statements of income, stockholders' equity and
comprehensive income and cash flows for each of the years in the three-year
period ended September 30, 2001. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sybron Dental
Specialties, Inc. and Subsidiaries as of September 30, 2001 and 2000, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 2001, in conformity with accounting
principles generally accepted in the United States of America.


  /s/ KMPG LLP


Orange County, California
November 19, 2001, except as to note 22
  which is as of May 8, 2002 and notes 1(c), 3, 4, 13, 14, 16, 19, and 20
  which are as of August 2, 2002

<PAGE>


CONSOLIDATED FINANCIAL STATEMENTS

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           SEPTEMBER 30, 2001 AND 2000

<Table>
<Caption>
                                                                                         2001            2000
                                                                                     ------------    ------------
                                                                                            (IN THOUSANDS)
                                                                                       AS ADJUSTED (NOTE 1 (c))
<S>                                                                                  <C>             <C>
ASSETS
Current assets:
   Cash and cash equivalents (note 18) ...........................................   $      8,319    $      5,783
   Accounts receivable (less allowance for doubtful receivables of
      $1,657 and $2,056 in 2001 and 2000, respectively) (note 2) .................         92,172          85,767
   Inventories (notes 1, 3) ......................................................         77,227          68,375
   Deferred income taxes (note 4) ................................................          4,801           8,977
   Prepaid expenses and other current assets (note 1) ............................         12,998           6,497
                                                                                     ------------    ------------
      Total current assets .......................................................        195,517         175,399
                                                                                     ------------    ------------
Advances and loans to Apogent (note 18) ..........................................             --          77,762
Property, plant and equipment, net (notes 5, 7 and 8) ............................         68,919          55,326
Intangible assets, net (note 6 and 16) ...........................................        252,581         220,705
Deferred income taxes (note 4) ...................................................          9,619           2,094
Other assets (note 11) ...........................................................         13,111           6,967
                                                                                     ------------    ------------
   Total assets ..................................................................   $    539,747    $    538,253
                                                                                     ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable ..............................................................   $     17,336    $     11,351
   Current portion of long-term debt (notes 7 and 8) .............................         25,969          21,761
   Income taxes payable (note 4) .................................................          7,344           2,774
   Income taxes payable to Apogent ...............................................             --           3,982
   Accrued payroll and employee benefits (note 11) ...............................         21,315          15,210
   Restructuring reserve (note 12) ...............................................          2,775           2,403
   Deferred income taxes (note 4) ................................................          5,200           3,225
   Accrued rebates ...............................................................          5,421           5,137
   Other current liabilities .....................................................          9,154           5,109
                                                                                     ------------    ------------
      Total current liabilities ..................................................         94,514          70,952
                                                                                     ------------    ------------
Long-term debt (note 7, 8, 9 and 16) .............................................        321,536         298,482
Deferred income taxes (note 4) ...................................................         13,365          11,616
Other liabilities (note 11) ......................................................         16,806           8,835
Commitments and contingent liabilities: (notes 8, 11, 15 and 16)

Stockholders' equity:
Preferred stock, $.01 par value; authorized 20,000,000 shares, none outstanding ..             --              --
Common stock, $.01 par value; authorized 250,000,000 shares, 37,891,458
   issued and outstanding at September 30, 2001 ..................................            379              --
Additional paid-in capital .......................................................         70,059         160,046
Retained earnings ................................................................         36,993              --
Accumulated other comprehensive loss .............................................        (13,905)        (11,678)
                                                                                     ------------    ------------
Total stockholders' equity (notes 1, 7, 10, 14, 16, 17) ..........................         93,526         148,368
                                                                                     ------------    ------------
   Total liabilities and stockholders' equity ....................................   $    539,747    $    538,253
                                                                                     ============    ============
</Table>

          See accompanying notes to consolidated financial statements.


                                       38
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                              2001            2000           1999
                                                                          ------------    ------------    ------------
                                                                                         (IN THOUSANDS)
                                                                                    AS ADJUSTED (NOTE 1 (c))
<S>                                                                       <C>             <C>             <C>

Net sales .............................................................   $    439,547    $    423,140    $    392,249
Cost of sales:
   Cost of product sold ...............................................        188,870         174,410         163,473
   Restructuring charges (note 12) ....................................          1,291           8,646              --
                                                                          ------------    ------------    ------------
      Total cost of sales .............................................        190,161         183,056         163,473
                                                                          ------------    ------------    ------------
Gross profit ..........................................................        249,386         240,084         228,776
                                                                          ------------    ------------    ------------
Selling, general and administrative expenses (note 1) .................        140,006         132,223         122,249
Apogent charges (note 18) .............................................            730           2,979           4,228
Merger, transaction and integration expenses (note 12) ................             --              --           2,569
Restructuring charges (note 12) .......................................             --             680          (1,177)
Depreciation and amortization of goodwill and other intangible assets .          9,099           8,383           7,501
                                                                          ------------    ------------    ------------
      Total selling, general and administrative expenses ..............        149,835         144,265         135,370
                                                                          ------------    ------------    ------------
Operating income ......................................................         99,551          95,819          93,406
                                                                          ------------    ------------    ------------
Other income (expense):
   Interest expense (notes 7, 10, 11 and 18) ..........................        (33,458)        (25,899)        (17,074)
   Interest income--Apogent (note 18) .................................             --             852           1,151
   Amortization of deferred financing fees (note 7) ...................           (714)           (282)           (154)
   Restructuring charges (note 12) ....................................         (1,088)             --              --
   Other, net .........................................................           (652)            218             (85)
                                                                          ------------    ------------    ------------
Income before income taxes and extraordinary item .....................         63,639          70,708          77,244
Income taxes (note 4) .................................................         25,510          28,652          30,490
                                                                          ------------    ------------    ------------
Income before extraordinary item ......................................   $     38,129    $     42,056    $     46,754
Extraordinary item, net of tax (note 21) ..............................           (498)             --              --
                                                                          ------------    ------------    ------------
      Net income ......................................................   $     37,631    $     42,056    $     46,754
                                                                          ============    ============    ============

Basic earnings per share (note 14):
   Basic earnings per share before extraordinary item .................   $       1.06    $       1.20    $       1.33
   Extraordinary item (note 21) .......................................          (0.01)            -.-             -.-
                                                                          ------------    ------------    ------------
   Basic earnings per share ...........................................   $       1.05    $       1.20    $       1.33
                                                                          ============    ============    ============
Diluted earnings per share (note 14):
   Diluted earnings per share before extraordinary item ...............   $       1.02
   Extraordinary item (note 21) .......................................          (0.01)
                                                                          ------------
   Diluted earnings per share .........................................   $       1.01
                                                                          ============
</Table>

          See accompanying notes to consolidated financial statements.


                                       39
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
                    COMPREHENSIVE INCOME FOR THE YEARS ENDED
                        SEPTEMBER 30, 2001, 2000 AND 1999


<Table>
<Caption>
                                                                                                               ACCUMULATED
                                                         COMMON STOCK                                             OTHER
                                                 ---------------------------    ADDITIONAL                    COMPREHENSIVE
                                                   NUMBER OF                     PAID-IN         RETAINED        INCOME
                                                    SHARES       PAR VALUE       CAPITAL         EARNINGS         (LOSS)
                                                 ------------   ------------   ------------    ------------   -------------
<S>                                              <C>            <C>            <C>             <C>            <C>

Balance at September 30, 1998, as reported ...             --   $         --   $    133,143              --    $     (3,635)
Change in accounting principle (note 1 (c)) ..             --             --         (4,521)             --              --
                                                 ------------   ------------   ------------    ------------    ------------
Balance at September 30, 1998, as adjusted ...             --             --        128,622              --          (3,635)
Comprehensive income (loss):
   Net income ................................             --             --             --          46,754              --
   Translation adjustment ....................             --             --             --              --          (2,615)
   Minimum pension liability adjustment ......             --             --             --              --           1,681
                                                 ------------   ------------   ------------    ------------    ------------
     Total comprehensive income ..............             --             --             --          46,754            (934)

Capital contribution from Apogent (note 18) ..             --             --         16,210              --              --
Dividends paid to Apogent (note 18) ..........             --             --             --         (36,483)             --
                                                                ------------   ------------    ------------    ------------
Balance at September 30, 1999 ................             --             --        144,832          10,271          (4,569)
Comprehensive income (loss):
   Net income ................................             --             --             --          42,056              --
   Translation adjustment ....................             --             --             --              --          (7,109)
                                                 ------------   ------------   ------------    ------------    ------------
     Total comprehensive income ..............             --             --             --          42,056          (7,109)

Capital contribution from Apogent (note 18) ..             --             --         21,399              --              --
Dividends paid to Apogent (note 18) ..........             --             --         (6,185)        (52,327)             --
                                                 ------------   ------------   ------------    ------------    ------------
Balance at September 30, 2000 ................             --             --        160,046              --         (11,678)
Comprehensive income (loss):
   Net income ................................             --             --            638          36,993              --
   Translation adjustment ....................             --             --             --              --           3,238
   Unrealized loss on derivative
     instruments (note 10) ...................             --             --             --              --          (5,465)
                                                 ------------   ------------   ------------    ------------    ------------
     Total comprehensive income ..............             --             --            638          36,993          (2,227)

Capital contribution from Apogent (note 18) ..             --             --          4,612              --              --
Issuance of common stock in connection
   with the Apogent spin-off
   (notes 1, 13, 17) .........................     35,108,649            351           (351)             --              --
Dividends paid to Apogent (note 18) ..........             --             --        (67,927)             --              --
Non-cash dividends to Apogent (note 18) ......             --             --        (78,167)             --              --
Issuance of common stock from options
   exercised .................................        132,809              1          1,282              --              --
Proceeds from stock offering, net of
   offering costs (note 17) ..................      2,650,000             27         49,926              --              --
                                                 ------------   ------------   ------------    ------------    ------------
Balance at September 30, 2001 ................     37,891,458   $        379   $     70,059    $     36,993    $    (13,905)
                                                 ============   ============   ============    ============    ============

<Caption>



                                                    TOTAL           TOTAL
                                                STOCKHOLDERS'    COMPREHENSIVE
                                                    EQUITY          INCOME
                                                 ------------    -------------
<S>                                              <C>            <C>

Balance at September 30, 1998, as reported ...   $    129,508
Change in accounting principle (note 1 (c)) ..         (4,521)
                                                 ------------
Balance at September 30, 1998, as adjusted ...        124,987
Comprehensive income (loss):
   Net income ................................         46,754    $     46,754
   Translation adjustment ....................         (2,615)         (2,615)
   Minimum pension liability adjustment ......          1,681           1,681
                                                 ------------    ------------
     Total comprehensive income ..............                   $     45,820
                                                                 ============
Capital contribution from Apogent (note 18) ..         16,210
Dividends paid to Apogent (note 18) ..........        (36,483)
                                                 ------------
Balance at September 30, 1999 ................        150,534
Comprehensive income (loss):
   Net income ................................         42,056    $     42,056
   Translation adjustment ....................         (7,109)         (7,109)
                                                 ------------    ------------
     Total comprehensive income ..............                   $     34,947
                                                                 ============
Capital contribution from Apogent (note 18) ..         21,399
Dividends paid to Apogent (note 18) ..........        (58,512)
                                                 ------------
Balance at September 30, 2000 ................        148,368
Comprehensive income (loss):
   Net income ................................         37,631    $     37,631
   Translation adjustment ....................          3,238           3,238
   Unrealized loss on derivative
     instruments (note 10) ...................         (5,465)         (5,465)
                                                 ------------    ------------
     Total comprehensive income ..............                   $     35,404
                                                                 ============
Capital contribution from Apogent (note 18) ..          4,612
Issuance of common stock in connection
   with the Apogent spin-off
   (notes 1, 13, 17) .........................             --
Dividends paid to Apogent (note 18) ..........        (67,927)
Non-cash dividends to Apogent (note 18) ......        (78,167)
Issuance of common stock from options
   exercised .................................          1,283
Proceeds from stock offering, net of
   offering costs (note 17) ..................         49,953
                                                 ------------
Balance at September 30, 2001 ................   $     93,526
                                                 ============
</Table>


          See accompanying notes to consolidated financial statements.


                                       40
<PAGE>


                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                                       2001            2000             1999
                                                                                   ------------    ------------    ------------
                                                                                                  (IN THOUSANDS)
                                                                                             AS ADJUSTED (NOTE 1 (c))
<S>                                                                                <C>             <C>             <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income ..................................................................   $     37,631    $     42,056    $     46,754
   ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
      BY OPERATING ACTIVITIES:
      Depreciation .............................................................          9,772          10,033           9,804
      Amortization .............................................................          9,207           8,491           7,662
      Loss (gain) on sales of property, plant and equipment ....................            233            (195)            (19)
      Provision for losses on doubtful receivables .............................          1,260             936             819
      Inventory provisions .....................................................          1,443          10,234           5,327
      Deferred income taxes ....................................................            207             276           5,437
   CHANGES IN ASSETS AND LIABILITIES, NET OF EFFECTS OF BUSINESSES ACQUIRED:
      (Increase) in accounts receivable ........................................         (1,096)         (1,036)            (59)
      (Increase) decrease in inventories .......................................         (1,461)          3,279          (1,950)
      (Increase) decrease in prepaid expenses and other current assets .........         (6,499)           (145)          2,020
      Increase (decrease) in accounts payable ..................................          4,926          (1,769)          1,266
      Increase (decrease) in income taxes payable ..............................            588             702          (9,540)
      Increase (decrease) in other current liabilities .........................          3,480           6,229          (2,125)
      Increase (decrease) in accrued payroll and employee benefits .............          6,105           1,960          (1,270)
      Increase (decrease) in restructuring reserve .............................            372           1,069          (3,800)
      Net change in other assets and liabilities ...............................         (5,585)        (19,693)         (8,979)
                                                                                   ------------    ------------    ------------
        Net cash provided by operating activities ..............................         60,583          62,427          51,347
CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures .....................................................        (14,416)        (11,968)        (13,020)
      Proceeds from sales of property, plant and equipment .....................            124             609             214
      Net payments for businesses acquired .....................................        (51,498)        (21,398)        (15,538)
                                                                                   ------------    ------------    ------------
        Net cash used in investing activities ..................................        (65,790)        (32,757)        (28,344)
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from credit facility ...............................................   $    562,160    $    221,760    $    234,040
   Principal payments on credit facility .......................................       (539,021)       (182,880)       (299,320)
   Proceeds from long-term debt ................................................            937              --         120,000
   Principal payments on long-term debt ........................................         (1,593)           (300)        (33,028)
   Payment of deferred financing fees ..........................................         (5,494)             --              --
   Payment of Apogent dividends ................................................        (67,927)        (58,512)        (36,483)
   Proceeds from stock offering, net of offering costs .........................         49,953              --              --
   Capital contributions from Apogent ..........................................          4,612          21,399          16,210
   Cash received from exercise of stock options ................................          1,283              --              --
   Net change in advances and loans to Apogent .................................           (404)        (20,985)        (27,689)
   Other .......................................................................             --          (3,464)           (369)
                                                                                   ------------    ------------    ------------
      Net cash provided by (used in) financing activities ......................          4,506         (22,982)        (26,639)
Effect of exchange rate changes on cash and cash equivalents ...................          3,237          (6,995)            444
Net increase (decrease) in cash and cash equivalents ...........................          2,536            (307)         (3,192)
Cash and cash equivalents at beginning of period ...............................          5,783           6,090           9,282
                                                                                   ------------    ------------    ------------
Cash and cash equivalents at end of period .....................................   $      8,319    $      5,783    $      6,090
                                                                                   ============    ============    ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   CASH PAID DURING THE YEAR FOR:
      Interest .................................................................   $     24,779    $     25,504    $     16,957
                                                                                   ============    ============    ============
      Interest received from Apogent ...........................................   $         --    $        852    $      1,151
                                                                                   ============    ============    ============
      Income taxes .............................................................   $     20,132    $     27,674    $     32,906
                                                                                   ============    ============    ============
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Non-cash dividend to Apogent ................................................   $     78,167    $         --    $         --
                                                                                   ============    ============    ============
</Table>

          See accompanying notes to consolidated financial statements.



                                       41
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999
                             (DOLLARS IN THOUSANDS)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         On November 8, 2000, Sybron International Corporation, which is now
known as Apogent Technologies Inc. ("Apogent"), announced that it had declared a
pro rata distribution to its shareholders of the common stock and related
preferred stock purchase rights of Sybron Dental Specialties, Inc. (formerly
known as SDS Holding Co.). Shareholders of record as of November 30, 2000
received one share of Sybron Dental Specialties, Inc. ("SDS") common stock for
every three shares of Apogent common stock they owned as of the record date. SDS
owns all of the outstanding stock of Sybron Dental Management, Inc. ("SDM"),
formerly named Sybron Dental Specialties, Inc. Prior to the distribution
("spin-off"), Sybron Dental Management, Inc. was a direct wholly-owned
subsidiary of Apogent. Immediately prior to the spin-off, Apogent contributed
all of the stock of Sybron Dental Management, Inc. to Sybron Dental Specialties,
Inc. As used in these Notes to the Consolidated Financial Statements, the term
"SDS" or the "Company" means Sybron Dental Management, Inc. for the periods
prior to the spin-off and Sybron Dental Specialties, Inc. (formerly known as SDS
Holding Co.) for periods after the spin-off. The spin-off was effective on
December 11, 2000.

         SDS has presented in these consolidated financial statements its assets
and liabilities at the same amounts previously presented in the consolidated
financial statements of Apogent, except as noted in note 1(c) below.

         The subsidiaries of SDS are leading manufacturers of value-added
products for the professional dental, orthodontics, and infection prevention
markets in the United States and abroad (see note 19).

         (a) PRINCIPLES OF CONSOLIDATION AND FISCAL YEAR END

         The consolidated financial statements reflect the operations of SDS and
its wholly owned subsidiaries. The term "Apogent" as used herein refers to
Apogent and its subsidiaries. The Company's fiscal year ends on September 30.
All significant intercompany balances and transactions have been eliminated. The
fiscal years ended September 30, 2001, 2000 and 1999 are hereinafter referred to
as "2001", "2000" and "1999", respectively.

         (b) CASH EQUIVALENTS

         For purposes of reporting cash flows, cash and cash equivalents include
investments in debt obligations with original maturities of three months or
less.

         (c)  INVENTORIES

         During the quarter ended June 30, 2002, the Company changed its
method of accounting for its domestic inventories from the last-in, first-out
(LIFO) method to the first-in, first-out (FIFO) method. The Company believes the
change to FIFO is preferable in the circumstance because in the current
environment of low inflation it will result in a better measurement of
operating results. In addition, the Company believes that the change in the
method of accounting for domestic inventory costs is preferable because it
provides a better measure of the current value of its inventory, provides a more
accurate reflection of the Company's financial position and liquidity, and
provides a better matching of manufacturing costs with revenues. It will also
allow for the valuing of inventory consistently throughout the Company. The
Company's historical financial statements have been adjusted for all relevant
prior periods in accordance with Accounting Principles Board Opinion No. 20,
"Accounting Changes" to reflect this change in the method of inventory
accounting. The effect of the accounting change on income as previously reported
for the years ended September 30, 2001, 2000 and 1999 are as follows:



                                       42
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                                             Increase (Decrease)
                                                                          Years Ended September 30,
                                                                      2001            2000            1999
                                                                --------------   -------------   -------------
<S>                                                              <C>             <C>             <C>
             (In thousands, except per share data)
Effect on:
     Income before extraordinary item ........................   $     (1,518)   $        459    $       (540)
     Net Income ..............................................         (1,518)            459            (540)
     Basic earnings per share before extraordinary item ......          (0.04)          (0.02)          (0.02)
     Basic earnings per share ................................          (0.04)          (0.02)          (0.02)
     Diluted earnings per share before extraordinary item ....          (0.05)
     Diluted earnings per share ..............................          (0.05)
</Table>

         The balance of additional paid-in capital as of September 30, 1998 has
been adjusted for the effect (net of income taxes) of applying retroactively the
change in method of accounting.

         Inventories are stated at the lower of cost or market. Elements of cost
included in inventories are: raw materials, direct labor, manufacturing overhead
(which includes indirect labor, fringe benefits, consumable supplies,
depreciation of production equipment and tooling) and retained costs
representing the excess of manufacturing or production costs over amounts
charged to cost of sales.

         (d)  PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives of
depreciable assets (5 to 45 years for land improvements, buildings and building
improvements, and 3 to 20 years for machinery and equipment) using the
straight-line method. The Company assesses the recoverability of assets by
comparing the carrying amount of an asset to future net cash flows expected to
be generated by that asset. If such assets are considered impaired, the
impairment to be recognized is measured by the amount by which the carrying
amounts of the assets exceed the fair value of the assets.

         The Company's San Diego, California facility is currently available for
sale and the manufacturing conducted there is planned to be absorbed into the
Glendora, California facility as a part of the Company's 2001 restructuring plan
for the orthodontic segment. Accordingly, the Company has reclassified the
carrying amount of approximately $4.4 million of the facility from property,
plant and equipment to other current assets in the 2001 consolidated balance
sheet. The Company anticipates the sale of the facility to occur in fiscal year
2002.

         (e)  INTANGIBLE ASSETS

         Intangible assets are recorded at cost and are amortized, using the
straight-line method, over their estimated useful lives. Excess costs over net
asset values of acquired businesses (goodwill) are amortized over 5 to 40 years,
proprietary technology, trademarks, and other intangibles are amortized over 7
to 40, 9 years, and 3 to 17 years, respectively. The Company assesses the
recoverability of its goodwill by determining whether the amortization of the
goodwill balance over its remaining life can be recovered through projected
undiscounted future cash flows of the acquired businesses. If projected future
cash flows indicate that unamortized goodwill will not be recovered, an
adjustment would be made to reduce the net goodwill to an amount equal to
projected future cash flows discounted at the Company's incremental borrowing
rate. Cash flow projections are based on trends of historical performance and
management's estimate of future performance, giving consideration to existing
and anticipated competitive and economic conditions. No adjustments to goodwill
were made in 2001, 2000 and 1999.

         (f)  REVENUE RECOGNITION

         The Company recognizes revenue upon shipment of products, when the
risks and rewards of ownership are passed, and when persuasive evidence of a
sales arrangement exists, the price to the buyer is fixed and determinable and
collectability of the sales price is reasonably assured. A large portion of the
Company's sales of Professional Dental products is sold through distributors.
Revenues associated with sales to distributors are also recognized upon shipment
of products when all risks and rewards of ownership of the product are passed.
The Company is not obligated to allow for returns.

         The Company accrues rebates based upon its various pricing programs.
These rebates are accounted for as a reduction of revenue.


                                       43
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         In September 2001, in accordance with the Emerging Issues Task Force
("EITF") Issue No. 00-10--"Accounting for Shipping and Handling Fees and Costs",
which requires that all amounts billed to a customer in a sale transaction
related to shipping and handling be recorded as revenue, the Company
reclassified net sales in its consolidated financial statements to include those
amounts previously recorded in selling, general and administrative expenses. The
amounts of shipping and handling fees added to net sales for the years ended
September 30, 2001, 2000 and 1999 were approximately $4.2 million, $4.4 million,
and $4.1 million, respectively. Historically, the Company had recorded shipping
and handling amounts billed to customers as a reduction to selling, general and
administrative expenses. Prior year amounts have been reclassified to conform to
the requirements of the EITF.

         (g) INCOME TAXES

         The Company was included in the consolidated income tax return filed by
Apogent through December 11, 2000, but has been responsible for its own filings
since the spin-off. U.S. income tax payments, refunds, credits, provisions and
deferred income tax components prior to the spin-off have been allocated to SDS
in accordance with Apogent's tax allocation policy. Such policy allocated income
tax components included in the consolidated income tax return of Apogent to SDS
to the extent such components were generated by or related to SDS.

         Income taxes are accounted for under the asset and liability method
wherein deferred tax assets and liabilities are recognized for future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.

         (h) RESEARCH AND DEVELOPMENT COSTS

         Research and development costs are charged to selling, general and
administrative expenses in the period they are incurred. Research and
development costs for 2001, 2000 and 1999 were approximately $8,977, $8,753 and
$9,425, respectively.

         (i) FOREIGN CURRENCY TRANSLATION

         The functional currency for the Company's foreign operations is the
applicable local currency. The translation from the applicable foreign
currencies to U.S. dollars is performed for balance sheet accounts using current
exchange rates in effect at the balance sheet date and for revenue and expense
accounts using a weighted average exchange rate during the period. The gains or
losses, net of applicable deferred income taxes, resulting from such
translations are included in accumulated comprehensive income (loss), a
component of stockholders' equity. Gains and losses resulting from foreign
currency transactions are included in net income. Foreign currency transaction
losses for 2001, 2000 and 1999 were approximately $1,974, $4,134 and $22,
respectively.

         (j) PENSIONS

         The Company and its subsidiaries participate in various pension plans
covering substantially all employees. U.S. and Canadian pension obligations are
funded by payments to pension fund trustees. Other foreign pensions are funded
as expenses are incurred. The Company's policy is generally to fund the minimum
amount required under the Employee Retirement Income Security Act of 1974, as
amended, for plans subject thereto.

         (k) DEFERRED FINANCING FEES

         Deferred financing fees are capitalized and amortized as a separate
component of other income (expense) over the life of the related debt
agreements.

         (l) ADVERTISING COSTS

         Advertising costs included in selling, general and administrative
expenses are expensed as incurred and were $4,574, $4,117 and $3,903 in 2001,
2000 and 1999, respectively.

         (m) USE OF ESTIMATES

         The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and


                                       44
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

         (n) DERIVATIVE FINANCIAL INSTRUMENTS

         The Company uses derivative financial instruments to manage its foreign
currency, interest rate exposures, and a certain net investment. The Company
does not hold or issue financial instruments for trading purposes. The notional
amounts of these contracts do not represent amounts exchanged by the parties
and, thus, are not a measure of the Company's risk. The net amounts exchanged
are calculated on the basis of the notional amounts and other terms of the
contracts, such as interest rates or exchange rates, and only represent a small
portion of the notional amounts. The credit and market risk under these
agreements is minimized through diversification among counter parties with high
credit ratings. Depending on the item being hedged, gains and losses on
derivative financial instruments are either recognized in the results of
operations as they occur or are deferred until the hedged transaction occurs.
Derivatives used as hedges are effective at reducing the risk associated with
the exposure being hedged and are designated as a hedge at the inception of the
derivative contract. Accordingly, changes in the fair value of the derivative
are highly correlated with changes in the fair value of the underlying hedged
item at the inception of the hedge and over the life of the hedge contract.

         (o) ENVIRONMENTAL EXPENDITURES

         Environmental expenditures that relate to current ongoing operations or
to conditions caused by past operations are expensed. The Company determines its
liability on a site by site basis and records a liability at the time when the
liability is probable and can be reasonably estimated. The estimated liability
is not reduced for possible recoveries from insurance carriers.

         (p) COMPREHENSIVE INCOME (LOSS)

         The components of accumulated other comprehensive income (loss) consist
of translation adjustments, minimum pension liability adjustments, and
unrealized gains (losses) on derivative instruments and are included on the
accompanying consolidated statements of stockholders' equity and comprehensive
income.

         (q) STOCK-BASED COMPENSATION

         The Company applies the provisions of Statement of Financial Accounting
Standards ("SFAS") SFAS No. 123, "Accounting for Stock-Based Compensation". As
permitted by SFAS No. 123, the Company continues to follow the guidance of
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees". Consequently, compensation related to stock options reflects the
difference between the grant price and the fair value of the underlying common
shares at the grant date. The Company issues stock options to employees with a
grant price equal to the market value of common stock on the grant date. As
required by SFAS No. 123, the Company discloses in Note 13 "Stock-Based
Compensation" the pro forma effect on operations, as if compensation costs were
recorded at the estimated fair value of the stock options granted.

         (r) EARNINGS PER SHARE

         Basic earnings per share are calculated by dividing net income
available to common stockholders by the weighted average of common shares
outstanding during the year. Diluted earnings per share are calculated by using
the weighted average of common shares outstanding adjusted to include the
potentially dilutive effect of outstanding stock options.

         Basic earnings per share data for fiscal years ended September 30, 2000
and 1999 were based on the 35,108,649 shares outstanding as of the date of the
spin-off on December 11, 2000. Diluted earnings per share for the years ended
September 30, 2000 and 1999 have been omitted as no SDS stock options existed
prior to the date of the spin-off and any calculation of diluted earnings per
share would not be meaningful.

         (s) RECLASSIFICATION

         Certain amounts in the prior year consolidated financial statements
have been reclassified to conform to the current year presentation.



                                       45
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(2) BUSINESS AND CREDIT CONCENTRATIONS

         Certain of the Company's Professional Dental products are sold through
major distributors, none of which has exceeded 10% of the Company's consolidated
net sales in 2001, 2000 or 1999. Accounts receivable from each of these
distributors was less than 10% of the outstanding consolidated accounts
receivable balances at September 30, 2001 or 2000.

(3) INVENTORIES

         Inventories at September 30, 2001 and 2000 consist of the following:

<Table>
<Caption>
                                             2001            2000
                                         ------------    ------------
<S>                                      <C>             <C>

Raw materials and supplies ...........   $     27,753    $     24,300
Work in process ......................         14,432           8,410
Finished goods .......................         36,586          40,012
Excess and obsolescence reserves .....         (1,544)         (4,347)
                                         ------------    ------------
                                         $     77,227    $     68,375
                                         ============    ============
</Table>

(4)  INCOME TAXES

         Total income tax expense (benefit) for the years ended September 30,
2001, 2000 and 1999 is allocated as follows:

<Table>
<Caption>
                                     2001            2000           1999
                                 ------------    ------------   ------------
<S>                              <C>             <C>            <C>

Income from operations .......   $     25,510    $     28,652   $     30,490
Extraordinary items ..........           (339)             --             --
                                 ------------    ------------   ------------
                                 $     25,171    $     28,652   $     30,490
                                 ============    ============   ============
</Table>

         Income tax expense (benefit) attributable to income from operations
         consists of:

<Table>
<Caption>
                                        CURRENT         DEFERRED          TOTAL
                                      ------------    ------------    ------------
<S>                                   <C>             <C>             <C>

Year ended September 30, 2001:
   U.S., state and local ..........   $     14,977    $      1,005    $     15,982
   Foreign ........................          9,359             169           9,528
                                      ------------    ------------    ------------
                                      $     24,336    $      1,174    $     25,510
                                      ============    ============    ============

Year ended September 30, 2000:
   U.S., state and local ..........   $     21,175    $     (2,323)   $     18,852
   Foreign ........................          9,856             (56)          9,800
                                      ------------    ------------    ------------
                                      $     31,031    $     (2,379)   $     28,652
                                      ============    ============    ============

Year ended September 30, 1999:
   U.S., state and local ..........   $     17,063    $      2,981    $     20,044
   Foreign ........................         10,564            (118)         10,446
                                      ------------    ------------    ------------
                                      $     27,627    $      2,863    $     30,490
                                      ============    ============    ============
</Table>

         The domestic and foreign components of income before income taxes and
extraordinary items are as follows:

<Table>
<Caption>
                                                              2001           2000           1999
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>

United States .........................................   $     37,729   $     49,613   $     53,004
Foreign ...............................................         25,910         21,095         24,240
                                                          ------------   ------------   ------------
Income before income taxes and extraordinary items ....   $     63,639   $     70,708   $     77,244
                                                          ============   ============   ============
</Table>

         Income tax expense attributable to income from operations was $25,510,
$28,652 and $30,490 in 2001, 2000 and 1999 respectively, and differed from the
amounts computed by applying the U.S. Federal income tax rate of 35 percent to
income from operations before income taxes, and extraordinary items in 2001,
2000 and 1999 as a result of the following:



                                       46
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                                                  2001            2000            1999
                                                                              ------------    ------------    ------------
<S>                                                                           <C>             <C>             <C>

Computed "expected" tax expense ...........................................   $     22,274    $     24,748    $     27,035
Increase (reduction) in income taxes resulting from:
Change in beginning of year valuation allowance for
  deferred tax assets allocated to income tax expense .....................           (418)             --            (884)
Amortization of goodwill ..................................................          1,624           1,543           1,332
State and local income taxes, net of Federal income tax benefit ...........          1,624           2,014           3,050
Foreign income taxed at rates higher than U.S. Federal income .............            877           2,473           2,098
Foreign tax credits utilized in excess of U.S. tax on foreign earnings ....           (723)           (984)         (1,396)
Net foreign sales corporation benefit .....................................         (1,493)         (1,257)         (1,187)
Other, net ................................................................          1,745             115             442
                                                                              ------------    ------------    ------------
                                                                              $     25,510    $     28,652    $     30,490
                                                                              ============    ============    ============
</Table>

         The significant components of deferred income tax expense (benefit)
attributable to income from operations for 2001, 2000 and 1999 are as follows:

<Table>
<Caption>
                                                                        2001            2000            1999
                                                                    ------------    ------------    ------------
<S>                                                                 <C>             <C>             <C>

Deferred tax expense (exclusive of the effects of other
  components listed below) ......................................   $      1,592    $     (2,379)   $      3,747
Decrease in the valuation allowance for deferred tax assets .....           (418)             --            (884)
                                                                    ------------    ------------    ------------
                                                                    $      1,174    $     (2,379)   $      2,863
                                                                    ============    ============    ============
</Table>

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at September
30, 2001 and 2000 are presented below.

<Table>
<Caption>
                                                        2001            2000
                                                    ------------    ------------
<S>                                                 <C>             <C>

Deferred tax assets:
Inventories .....................................   $      1,078    $      1,636
Compensation ....................................          1,969           1,484
Sale/Leaseback ..................................          3,021           3,021
Employee benefits ...............................          1,786           1,342
Net operating loss carryforwards ................            975           1,393
Foreign tax credit carryforwards ................          1,827              --
Warranty and other accruals .....................          4,739           3,588
                                                    ------------    ------------
        Total gross deferred tax assets .........         15,395          12,464
        Less valuation allowance ................           (975)         (1,393)
                                                    ------------    ------------
        Net deferred tax assets .................         14,420          11,071
                                                    ------------    ------------
Deferred tax liabilities:
Depreciation ....................................         (2,441)         (2,509)
Purchase accounting .............................         (9,764)         (8,522)
Other ...........................................         (6,360)         (3,810)
                                                    ------------    ------------
        Total gross deferred tax liabilities ....        (18,565)        (14,841)
                                                    ------------    ------------
        Net deferred tax liabilities ............   $     (4,145)   $     (3,770)
                                                    ============    ============
</Table>

         The change in the net deferred tax liabilities contains $3,280 of
deferred tax benefit related to the fair values of the Company's derivative
financial instruments. The net change in the total valuation allowance for the
years ended September 30, 2001 and 2000 was a decrease of $418 and an increase
of $155, respectively. The valuation allowance for deferred tax assets as of
October 1, 1999 was $1,238. The valuation allowance relates primarily to net
operating loss carryforwards in certain foreign jurisdictions, in which there is
a history of pre-tax accounting losses. Management is unable to conclude that
there will be pre-tax accounting income in those jurisdictions in the near term.
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.


                                       47
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         At September 30, 2001, the Company has an aggregate of $2,786 of
foreign net operating loss carry forwards from certain foreign jurisdictions,
the majority of which expire between 2004 and 2010.

         Accumulated earnings of foreign subsidiaries at September 30, 2001,
2000 and 1999 of approximately $48,000, $38,000, and $35,000 respectively, have
been reinvested in the business and no provision for income taxes has been made
for the repatriation of these earnings.

(5)  PROPERTY, PLANT AND EQUIPMENT

         Major classifications of property, plant and equipment at September 30,
2001 and 2000 are as follows:

<Table>
<Caption>
                                                               SEPTEMBER 30,
                                                      ----------------------------
                                                          2001            2000
                                                      ------------    ------------
<S>                                                   <C>             <C>

Land and land improvements ........................   $      6,310    $      1,809
Buildings and building improvements ...............         25,401          25,031
Machinery and equipment ...........................        102,773          87,413
Construction in progress ..........................         13,325           7,873
                                                      ------------    ------------
                                                           147,809         122,126
Less: Accumulated depreciation and amortization ...        (78,890)        (66,800)
                                                      ------------    ------------
                                                      $     68,919    $     55,326
                                                      ============    ============
</Table>

         There were no commitments for purchases of equipment at September 30,
2001 and 2000. Machinery and equipment includes capitalized leases, net of
amortization, totaling $22 and $4 at September 30, 2001 and 2000, respectively
(see note 8).

(6) INTANGIBLE ASSETS

         Intangible assets at September 30, 2001 and 2000 are as follows:

<Table>
<Caption>
                                                               SEPTEMBER 30,
                                                       ----------------------------
                                                           2001            2000
                                                       ------------    ------------
<S>                                                    <C>             <C>

Excess costs over net asset values of businesses
  acquired (goodwill) ..............................   $    290,643    $    249,564
Proprietary technology .............................         12,941          12,189
Trademarks .........................................         15,477          15,477
Other ..............................................         15,184          15,932
                                                       ------------    ------------
                                                            334,245         293,162
Less: Accumulated amortization .....................        (81,664)        (72,457)
                                                       ------------    ------------
                                                       $    252,581    $    220,705
                                                       ============    ============
</Table>

(7)  LONG-TERM DEBT

         Credit Facility: In connection with the spin-off, SDS together with
certain of its subsidiaries entered into a new credit facility (the "SDS Credit
Facility"), which allows for borrowings up to $450 million from ABN AMRO Bank
N.V. and certain other lenders. The SDS Credit Facility is comprised of a $150
million five year tranche A term loan (the "Tranche A Term Loan"), a $150
million seven year tranche B term loan (the "Tranche B Term Loan"), under which
Kerr and Ormco, two of the Company's subsidiaries, are borrowers (the "Term Loan
Borrowers"), and a five year revolving credit facility up to $150 million (the
"Revolving Credit Facility"), under which SDM, another one of the Company's
subsidiaries, is the borrower. Historically, certain affiliates of SDS have been
obligors under various credit agreements of Apogent (the "Credit Facilities")
described below. Apogent has historically recorded a portion of debt outstanding
under the Credit Facilities on the books of SDS. The balance at September 30,
2000 represented the historical balances at SDS. Long-term debt at September 30,
2001 and 2000 consists of the following:



                                       48
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                        SEPTEMBER 30,
                                                ----------------------------
                                                    2001            2000
                                                ------------    ------------
<S>                                             <C>             <C>

Term Loan Facility ..........................   $    283,411    $    189,172
Revolving Credit Facility ...................         51,500         122,600
Sale/Leaseback Obligation ...................          7,951           8,072
Capital leases and other (see note 8) .......          4,643             399
                                                ------------    ------------
                                                     347,505         320,243
Less: Current portion of long-term debt .....        (25,969)        (21,761)
                                                ------------    ------------
                                                $    321,536    $    298,482
                                                ============    ============
</Table>

         The Tranche A Term Loan bears interest, at the option of SDS, equal to
(a) the higher of (i) the rate from time to time publicly announced by ABN AMRO
Bank N.V. as its prime rate plus 1% to 1.75% or (ii) the federal funds rate plus
an additional 1.5% to 2.25% depending upon certain financial ratios or (b) the
adjusted interbank offered rate for Eurodollar deposits with an additional 2% to
2.75% depending upon certain financial ratios. The highest percentage on the
grid was applicable through September 30, 2001. The average interest rate at
September 30, 2001 on the Tranche A Term Loan was 7.10%, and the amount
outstanding as of September 30, 2001 on the Tranche A Term Loan was $134.8
million. The final principal payment on the Tranche A Term Loan is due November
2005.

         The Tranche B Term Loan bears interest, at the option of SDS, equal to
(a) the higher of (i) the rate from time to time publicly announced by ABN AMRO
Bank N.V. as its prime rate plus 2.75% or (ii) the federal funds rate plus 3.25%
or (b) the adjusted interbank offered rate for Eurodollar deposits plus 3.75%.
The average interest rate at September 30, 2001 on the Tranche B Term Loan was
8.75% and the amount outstanding as of September 30, 2001 on the Tranche B Term
Loan was $148.7 million. The final principal payment on the Tranche B Term Loan
is due November 2007.

         The Revolving Credit Facility also provides for the issuance of standby
letters of credit and commercial letters of credit as required in the ordinary
course of business. Borrowings under the Revolving Credit Facility generally
bear interest on the same terms as those under Tranche A Term Loan. In addition,
SDS pays a commitment fee on the average unused portion of the Revolving Credit
Facility ranging between .375% to .5% depending on certain financial ratios. For
the year ended September 30, 2001, the Company paid approximately $0.4 million
in commitment fees. The average interest rate at September 30, 2001 on the
Revolving Credit Facility was 8.91%, and the amount outstanding as of September
30, 2001 under the Revolving Credit Facility was $51.5 million.

         The SDS Credit Facility contains numerous financial and operating
covenants, including, among other things: restrictions on investments;
requirements that SDS maintain certain financial ratios and restrictions on the
ability of SDS and its subsidiaries to create or permit liens, limit the
incurrence of additional indebtedness, or to pay dividends or make other
restricted payments. As of September 30, 2001, SDS was in compliance with all
such covenants.

         All interest on the historical books under the Apogent Credit
Facilities was at floating rates, primarily based on the Eurodollar rates and,
as such, exposed the Company to fluctuations in Eurodollar rates. The Company
has not historically mitigated that risk through derivative instruments. Under
the SDS Credit Facility, the Company is required to have interest rate
protection for a minimum of 50% of the of the aggregate outstanding principal
amount of the Tranche A Term Loan and Tranche B Term Loan for not fewer than
four years. The Company is currently meeting this obligation.

         The SDS Credit Facility is secured by domestic real and personal
property assets, and a pledge of capital stock of SDS, Kerr and Ormco, and
certain other material domestic and foreign SDS subsidiaries.

         Under the Apogent Credit Facilities, prior to the December 11, 2000
spin-off, borrowings under the term loans were collateralized by the capital
stock of Apogent's domestic subsidiaries and by 65% of the stock held by the
domestic affiliates in their direct foreign affiliates. The term loans were due
in various quarterly installments of principal and interest through July 31,
2004. Furthermore, additional reductions were required to be made from the
proceeds of certain other specified borrowings and certain asset sales not in
the ordinary course of business.

         Sale/Leaseback: In 1988, the Company completed the sale and leaseback
(the "Sale/Leaseback") of its then principal domestic manufacturing and office
facilities with an unaffiliated third party. The transaction has been accounted
for as a financing for financial statement purposes, thus the facilities remain
in property, plant and equipment. The transaction was a sale for income tax
purposes. The financing obligation is being amortized over the initial 25-year
lease term.


                                       49
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         The initial term of each lease is 25 years with five five-year renewal
options. On the fifth anniversary of the leases and every five years thereafter
(including renewal terms), the rent is increased by the percentage equal to 75%
of the percentage increase in the Consumer Price Index over the preceding five
years. The percentage increase to the rent in any five-year period is capped at
15%. Beginning January 1, 1999 annual payments increased from $1.3 million to
$1.5 million. The next adjustment will occur January 1, 2004. As a result of the
spin-off, the Sale/Leaseback has been amended to extend the leases an additional
5 years, increase the basic rent by $.15 million per year, and provide the
option to purchase the leased premises at fair market value from June 1, 2008 to
May 31, 2009.

         The Company pays all costs of maintenance and repair, insurance, taxes
and all other expenses associated with the properties. In addition, each of the
leases is unconditionally guaranteed by the Company.

         The Company has the option to purchase the facilities according to the
terms of any bona fide offer received by the lessor from a third party at any
time during the term of the leases. The Company may be obligated to repurchase
the property upon the event of a breach of certain covenants or occurrence of
certain other events.

         Stock Offering: On June 8, 2001, we sold 2,650,000 shares of common
stock in an underwritten public offering generating net proceeds of
approximately $50.0 million, which were primarily used to repay money borrowed
under the Revolving Credit Facility to finance the acquisitions of Hawe Neos
Holdings S.A. ("Hawe Neos") and OBF Technologies, Inc. ("OBF").

         Maturities of Long-Term Debt: In connection with the spin-off on
December 11, 2000 the Company settled all intercompany loans and advances with
Apogent by way of a non-cash dividend of $78.2 million, and paid a cash dividend
of $67.9 million to Apogent. Additionally, the Company borrowed $375 million
under the SDS Credit Facility.

         Maturities of long-term debt reflect the SDS Credit Facility,
Sale/Leaseback, and other long-term debt as of September 30, 2001 as follows:

<Table>
<Caption>
         FISCAL
         ------
<S>                                                                <C>
         2002...................................................   $   25,969
         2003...................................................       30,714
         2004...................................................       35,695
         2005...................................................       40,688
         2006...................................................       64,022
         Thereafter.............................................      150,417
                                                                   ----------
                                                                   $  347,505
</Table>

(8) LEASE COMMITMENTS

         As of September 30, 2001, minimum rentals, excluding rent payments
under the Sale/Leaseback described in note 7, under capital and noncancellable
operating leases consisting primarily of machinery and equipment, and building
leases are:

<Table>
<Caption>
FISCAL                                                   CAPITAL      OPERATING
------                                                   -------      ---------
<S>                                                     <C>         <C>

2002.................................................   $      12   $     4,512
2003.................................................           8         3,636
2004.................................................           8         2,850
2005.................................................           5         2,200
2006.................................................          --         1,549
Thereafter...........................................          --         4,084
                                                        ---------   -----------
                                                        $      33   $    18,831
                                                                    ===========
Less amounts representing interest...................           5
                                                        ---------
Present value of net minimum lease payments..........          28
Less current portion.................................          10
                                                        ---------
Long-term obligations under capital leases...........   $      18
                                                        =========
</Table>

         Amortization of assets held under capital leases is included with
depreciation expense.


                                       50
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         Rental expense under operating leases was $6,056, $4,904 and $3,794 in
2001, 2000 and 1999, respectively.

(9) FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of financial instruments approximate fair value
due to the short maturity of those instruments except as follows:

         LONG-TERM DEBT

         Credit Facilities: The fair value of the SDS Credit Facility as of
September 30, 2001 approximates the carrying amount, as the interest rates are
variable and approximate rates that the Company could obtain under similar terms
at the balance sheet date.

         The fair value of the Apogent Credit Facilities was determined by
estimating the interest rate margins (the premium over the Eurodollar rate) on
each of Apogent's allocation of the Tranche A Term Loan Facility, Tranche B Term
Loan Facility and the Revolving Credit Facility for companies with credit risk
similar to that of SDS. In 2000 the Apogent spread over the Eurodollar rate was
75 basis points for the Tranche A Term Loan Facility and the Revolving Credit
Facility and a spread of the Eurodollar rate plus 200 basis points on the
Tranche B Term Loan Facility.

         Derivatives: The Company had interest rate swaps, a cross currency debt
swap and foreign exchange zero cost collars in place at September 30, 2001 (see
note 10). The fair values of these instruments were provided by third party
broker/bankers. The Company had no derivatives in place at September 30, 2000.

<Table>
<Caption>
                                                     SEPTEMBER 30, 2001            SEPTEMBER 30, 2000
                                                ---------------------------   ---------------------------
                                                  REPORTED       ESTIMATED      REPORTED      ESTIMATED
                                                   AMOUNT       FAIR VALUE       AMOUNT       FAIR VALUE
                                                ------------   ------------   ------------   ------------
<S>                                             <C>            <C>            <C>            <C>

Long-term debt (including current portion) ..   $    347,505   $    347,505   $    320,243   $    310,074
Derivatives instruments .....................          8,146          8,146             --             --
                                                ------------   ------------   ------------   ------------
         Total fair value ...................   $    355,651   $    355,651   $    320,243   $    310,074
                                                ============   ============   ============   ============
</Table>

         The estimated fair values of the Company's financial instruments have
been determined using available market information and appropriate valuation
methodologies. However, considerable judgment is required to interpret market
data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that could be
realized in a current market exchange. The use of different market assumptions
or estimation methodologies may have a material impact on the estimated fair
value amounts.

(10) DERIVATIVES

         FOREIGN EXCHANGE CURRENCY RISK MANAGEMENT

         SDS operates internationally; therefore, its 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, Yen, Swiss franc,
Canadian dollar, and the Australian dollar.

         The Company believes it is prudent to minimize the variability caused
by foreign currency risk. Management attempts to minimize foreign currency risk
by using derivative instruments when prudent. The Company does not use
derivative instruments for purposes other than hedging.

         Although the Company has a U.S. dollar functional currency, a
substantial portion of its sales, income, and cash flow are derived from foreign
currencies. The Company's foreign currency exposure exists primarily in the
Euro, Japanese Yen, Canadian dollar, and Australian dollar versus the U.S.
dollar. With the acquisition of Hawe Neos. on May 31, 2001, the Company now
considers the Swiss franc a currency exposure.

         For fiscal year 2002, the Company's projected total foreign currency
exposure is approximately 49.8 million Euros, 915.7 million Japanese Yen, 16.9
million Canadian dollars, 13.7 million Australian dollars, and 11.8 million
Swiss franc. The Company has put in place a strategy to manage its Euro and 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, and Swiss
franc for fiscal year 2002.


                                       51
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         In August 2001, the Company entered into a series of zero cost collar
contracts to hedge intercompany transactions with a total notional amount of
40.2 million Euros for fiscal year 2002. In addition, the Company entered into a
zero cost collar contract to hedge a total notional amount of 660.0 million
Japanese Yen for fiscal year 2002.

         For fiscal year 2001, approximately $0.03 million of loss, net of
income tax, representing the fair value of the zero cost collars, was recorded
in accumulated other comprehensive income (loss), related to the foreign
currency zero cost collar transactions. In addition, none of the foreign
currency cash flow hedges have been discontinued.

         Zero cost collar contracts in place as of September 30, 2001 are as
follows (in thousands, except rates):

<Table>
<Caption>
                                                    LOCAL
               TRADE     EFFECTIVE    MATURITY    CURRENCY    FLOOR RATE     CEILING RATE
CURRENCY        DATE       DATE         DATE       AMOUNT     PER U.S. $      PER U.S. $
--------      -------    ---------    --------    --------    ----------     ------------
<S>           <C>        <C>          <C>         <C>         <C>         <C>

  Euro        8/29/01    10/29/01     9/27/02        8,100        0.89                 0.92
  Euro        8/29/01    10/29/01     9/27/02       12,000        0.89                 0.92
  Euro        8/29/01    10/29/01     9/26/02        8,100        0.89                 0.92
  Euro        8/29/01    10/29/01     9/26/02       12,000        0.89                 0.92
  Yen         9/25/01    10/29/01     9/26/02      660,000      120.00     113.90 to 109.80
</Table>

         As of September 30, 2001, the maximum length of time over which the
Company is hedging its exposure to the variability in future cash flows
associated with foreign currency forecasted transaction is twelve months.

         During the year ending September 30, 2002, approximately $0.05 million
of losses in accumulated other comprehensive income (loss) related to the zero
cost collars are expected to be reclassified into foreign exchange loss as a
yield adjustment of the hedged foreign currency representing the fair value of
the zero cost collars.

         In September 2001, the Company entered into a cross currency debt swap
transaction to hedge its net investment in Hawe Neos. The agreement has an
effective date of October 16, 2001, and is a contract to exchange a U.S. dollar
principal amount of $45 million in exchange for a Swiss franc principal amount
of 71.73 million at the termination date of October 16, 2006. The interest rate
to be paid to the Company on the U.S. dollar principal amount of $45 million is
a fixed rate of 5.79%, and the interest rate to be paid by the Company on the
Swiss franc principal amount of 71.73 million is a fixed rate of 4.40%, with the
interest payments due quarterly on both the Swiss franc loan and the U.S. dollar
loan.

         For fiscal year 2001, the fair value of the cross currency debt swap
transaction gain (net of income tax) included in translation adjustments was
$580.

         INTEREST RATE EXPOSURE--INTEREST RATE RISK MANAGEMENT

         The Company uses variable-rate debt to finance its operations. These
debt obligations expose the Company to variability in interest payments due to
changes in interest rates. If interest rates increase, interest expense
increases. Conversely, if interest rates decrease, interest expense also
decreases. Under the SDS Credit Facility, the Company is required to have
interest rate protection for a minimum of fifty percent of the aggregate
outstanding principal amount of the Tranche A Term Loan and Tranche B Term Loan
for not fewer than four years.

         To meet this requirement, management has entered into several interest
rate swap agreements to manage fluctuations in cash flows resulting from
interest rate risk.

         The interest rate swaps change the variable-rate cash flow exposure on
the Tranche A Term Loan and Tranche B Term Loan to fixed-rate cash flows by
entering into receive-variable, pay-fixed interest rate swaps.

         The Company does not enter into speculative contracts and continues to
assess its exposure to interest rate risk on an ongoing basis.

         For fiscal year ended 2001, the total net cost of converting from
floating rate (3-month LIBOR) to fixed rate from a portion of the interest
payments of the debt obligation was $575. Below is a table listing the interest
expense exposure detail (in thousands):


                                       52
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                                                           FISCAL 2001
LOAN                  AMOUNT         TERM           TRADE       EFFECTIVE      MATURITY       COST
----                  ------      ----------     ----------     ---------      --------    -----------
<S>                <C>            <C>           <C>             <C>            <C>         <C>
Kerr B..........   $    35,000       4 years     12/22/2000      01/16/01      1/18/2005   $     223.3
Ormco B.........        35,000       4 years     12/22/2000      01/16/01      1/18/2005         223.3
Revolver........        10,000       4 years      1/24/2001      02/16/01      2/16/2005          46.4
Revolver........        25,000     1.5 years      2/23/2001      03/15/01      9/15/2002          28.2
Kerr A..........        32,586       4 years       1/2/2001      03/30/01      3/31/2005           7.3
Ormco A.........        32,586       4 years       1/2/2001      03/30/01      3/31/2005           7.1
Ormco B.........        35,000    1.25 years      2/23/2001      06/15/01      9/15/2002          39.4
                   -----------                                                             -----------
Totals..........   $   205,172                                                             $     575.0
                   ===========                                                             ===========
</Table>

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

         During the year ending September 30, 2002, approximately $3.6 million
of losses in accumulated other comprehensive income (loss) related to the
interest rate swaps are expected to be reclassified into interest expense as a
yield adjustment of the hedged debt obligation.

         During the year ended September 30, 2001, an approximate $5.4 million
loss (net of income tax) was recorded in accumulated other comprehensive income
(loss). Fair value of the interest rate swap agreements as of September 30, 2001
are as follows (in thousands):

<Table>
<Caption>
                                                                                        FISCAL VALUE
LOAN                  AMOUNT         TERM         TRADE       EFFECTIVE      MATURITY     (PRE-TAX)
----               -----------    ----------   ----------     ---------      --------   ------------
<S>                <C>            <C>          <C>            <C>           <C>         <C>

Kerr B..........   $    35,000       4 years   12/22/2000      01/16/01     1/18/2005   $   2,147.5
Ormco B.........        35,000       4 years   12/22/2000      01/16/01     1/18/2005       2,147.5
Revolver........        10,000       4 years    1/24/2001      02/16/01     2/16/2005         571.6
Revolver........        25,000     1.5 years    2/23/2001      03/15/01     9/15/2002         555.0
Kerr A..........        32,586       4 years     1/2/2001      03/30/01     3/31/2005       1,463.0
Ormco A.........        32,586       4 years     1/2/2001      03/30/01     3/31/2005       1,397.8
Ormco B.........        35,000    1.25 years    2/23/2001      06/15/01     9/15/2002         777.7
                   -----------                                                          -----------
Totals..........   $   205,172                                                          $   9,060.1
                   ===========                                                          ===========
</Table>

(11) EMPLOYEE BENEFIT PLANS

         Pension and Other Postretirement Benefits: The Company participates in
various defined benefit pension plans covering substantially all of its U.S.
employees. The benefits are generally based on various formulas, the principal
factors of which are years of service and compensation. The Company's funding
policy is to generally make annual contributions in excess of the minimum
required contributions required by applicable regulations in order to avoid any
Pension Benefit Guarantee Corporation ("PBGC") variable premium payments. 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 Kerr Corporation employees, which are funded as costs are
incurred. Eligible employees who reached age 55 prior to January 1, 1996 will
become eligible for postretirement health care benefits only if they reach
retirement age while working for SDS. The Company accrues, as current costs, the
future lifetime retirement benefits for qualifying active employees. The
postretirement health care plans for Kerr Corporation, a subsidiary of SDS,
currently follow a policy instituted by the predecessor of Apogent in 1986 where
the Company's contributions were frozen at the levels equal to Kerr
Corporation's contributions on December 31, 1988, except where collective
bargaining agreements prohibited such a freeze. Employees of SDS are also part
of a retirement security pension plan. This plan covers all qualifying active
SDS employees as of the date of the spin-off, and employees retiring after the
spin-off and their dependents.

         The following assumptions were used in determining the funded status of
our defined benefit pension plans:


                                       53
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                        2001          2000
                                                     ----------    ----------
<S>                                                  <C>           <C>

Discount rate ....................................          7.5%          8.0%
Rate of increase in compensation levels ..........          4.0%          4.0%
Expected long-term rate of return on assets ......         10.0%         10.0%
</Table>

         The following assumptions were used in determining the accumulated
postretirement benefit obligation of the Company's postretirement healthcare
plans.

<Table>
<Caption>
                                                       2001          2000
                                                    ----------    ----------
<S>                                                 <C>           <C>
Discount rate ...................................         7.75%         8.00%
Average increase in medical costs ...............         5.50%         5.50%
</Table>

<Table>
<Caption>
                                                                           PENSION BENEFITS             OTHER BENEFITS
                                                                       ------------------------    ------------------------
                                                                           2001          2000          2001          2000
                                                                       ----------    ----------    ----------    ----------
<S>                                                                    <C>           <C>           <C>           <C>

Change in benefit obligations:
   Obligations at beginning of year ................................   $   27,451    $   21,238    $    4,706    $    4,818
   Service cost ....................................................        1,848         1,920           152           138
   Interest cost ...................................................        2,134         1,993           359           367
   Actuarial (gain) loss ...........................................        5,170         3,020         1,578          (188)
   Benefit payments ................................................         (768)         (740)         (387)         (429)
   Foreign exchange rates ..........................................          141            20            --            --
                                                                       ----------    ----------    ----------    ----------
   Obligations at end of year ......................................   $   35,976    $   27,451    $    6,408    $    4,706

Change in fair value of plan assets:
   Fair value of plan assets at beginning of year ..................   $   29,625    $   23,986    $       --    $       --
   Actual return on plan assets ....................................       (4,551)        3,504            --            --
   Employer contributions ..........................................        1,159         2,845            --            --
   Benefit payments ................................................         (768)         (740)           --            --
   Foreign exchange rates ..........................................          143            30            --            --
                                                                       ----------    ----------    ----------    ----------
   Fair value of plan assets at end of year ........................   $   25,608    $   29,625    $       --    $       --

Funded status:
   Funded status at end of year ....................................   $  (10,369)   $    2,174    $   (6,408)   $   (4,706)
   Unrecognized transition asset ...................................          (56)         (130)           --            --
   Unrecognized prior service cost .................................          676           743            --            --
   Unrecognized (gain) loss ........................................       10,209        (2,416)        1,661            83
   Remaining excess of fair value of plan assets
      over projected benefit obligation recognized
      as a result of the 1987 acquisition of Sybron Corporation ....        1,251         1,369            --            --
                                                                       ----------    ----------    ----------    ----------
Net amount recognized at measurement date ..........................        1,711         1,740        (4,747)       (4,623)
Employer contribution paid after measurement date ..................        1,701           442            --            --
                                                                       ----------    ----------    ----------    ----------
Net amount recognized at end of year ...............................   $    3,412    $    2,182    $   (4,747)   $   (4,623)
                                                                       ==========    ==========    ==========    ==========
</Table>



                                       54
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         The following table provides the amounts recognized in the Company's
consolidated balance sheets:

<Table>
<Caption>
                                                                         PENSION BENEFITS            OTHER BENEFITS
                                                                    ------------------------    ------------------------
                                                                       2001          2000          2001          2000
                                                                    ----------    ----------    ----------    ----------
<S>                                                                 <C>           <C>           <C>           <C>

Prepaid benefit cost ............................................   $    3,998    $    3,839    $       --    $       --
Accrued benefit liability .......................................       (3,618)       (3,468)       (4,747)       (4,623)
Intangible asset ................................................           31            --            --            --
Remaining excess of fair value of plan assets
   over projected benefit obligation recognized
   as a result of the 1987 acquisition of Sybron International ..        1,251         1,369            --            --
Other ...........................................................           49            --            --            --
                                                                    ----------    ----------    ----------    ----------
Net amount recognized at measurement date .......................        1,711         1,740        (4,747)       (4,623)
Employer contributions paid after measurement date ..............        1,701           442            --            --
                                                                    ----------    ----------    ----------    ----------
Net amount recognized in other non-current
   assets or (liabilities) at September 30 ......................   $    3,412    $    2,182    $   (4,747)   $   (4,623)
                                                                    ==========    ==========    ==========    ==========
</Table>

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

<Table>
<Caption>
                                                   PENSION BENEFITS                          OTHER BENEFITS
                                        --------------------------------------    ------------------------------------
                                           2001          2000          1999          2001         2000         1999
                                        ----------    ----------    ----------    ----------   ----------   ----------
<S>                                     <C>           <C>           <C>           <C>          <C>          <C>

Service cost ........................   $    1,848    $    1,920    $    1,645    $      152   $      138   $      129
Interest cost .......................        2,134         1,993         1,707           359          367          274
Expected return on plan assets ......       (2,894)       (2,249)       (2,265)           --           --           --
Amortization of transition asset ....          (71)            4             4            --           --           --
Amortization of prior service cost ..           72            31            (6)           --           --           --
Amortization of net loss ............          (21)           41            35            --           --           31
                                        ----------    ----------    ----------    ----------   ----------   ----------
Net periodic benefit cost ...........   $    1,068    $    1,740    $    1,120    $      511   $      505   $      434
                                        ==========    ==========    ==========    ==========   ==========   ==========
</Table>

         At September 30, 2001 all plans except the Sybron Canada Pension Plan
had benefit obligations in excess of fair value. There were no plans with
accumulated benefit obligations in excess of fair value of plan assets at
September 30, 2000.

         An increase of one percentage point in the per capita cost of health
care costs associated with the plans for which the Company's contributions are
not frozen would increase the accumulated postretirement benefit obligation and
service and interest cost components as of September 30, 2001 by approximately
$1,156 and $140, respectively. Similarly, a decrease of one percentage point in
the per capita cost of health care costs would decrease the accumulated
postretirement benefit obligation and service and interest cost components as of
September 30, 2001 by approximately $919 and $93, respectively.

         Because more than 60% of the 2001, 2000 and 1999 net periodic
postretirement benefit costs relate to interest costs, the Company has
classified such interest costs as interest expense. This resulted in a non-cash
increase in interest expense of approximately $359, $367, and $274 in 2001, 2000
and 1999, respectively.

         Savings Plans: Employees in the United States are eligible to
participate in contributory savings plans maintained by the Company under
Section 401(k) of the Internal Revenue Code of 1986, as amended (the "Code").
Company matching contributions under the plans, net of forfeitures, were
approximately $1,467, $1,354 and $1,274 for 2001, 2000 and 1999, respectively.

(12) RESTRUCTURING AND MERGER AND INTEGRATION CHARGES

         In September 2001, the Company recorded a restructuring charge of
approximately $2,400 (approximately $1,500 after tax) representing severance and
termination costs for approximately 63 employees (primarily at the San Diego,
California facility) as a result of the 2001 restructuring plan. The
restructuring charge was classified as components of cost of sales
(approximately $1,300 relating to manufacturing severance and exited capital),
and other expenses (approximately $1,100).

         Restructuring activity relating to the September 30, 2001 restructure
charge and its components are as follows:


                                       55
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                  LEASE      SHUT-   INVENTORY     FIXED                         CONTRACTUAL
                               SEVERANCE   PAYMENTS     DOWN    WRITE-OFF    ASSETS      TAX     OBLIGATIONS
                                  (a)         (b)     COSTS(b)     (c)         (c)       (d)         (e)        OTHER       TOTAL
                               ---------   --------  ---------  ---------   --------   --------  -----------   --------   --------
<S>                            <C>         <C>       <C>        <C>         <C>        <C>       <C>           <C>        <C>

2001 Restructuring Charge ...   $  1,050   $     --   $     --   $     --   $    250   $     --   $      775   $    325   $  2,400
2001 Non-Cash Charges .......         --         --         --         --        250         --          100        300        650
                                --------   --------   --------   --------   --------   --------   ----------   --------   --------
September 30, 2001 balance ..   $  1,050   $     --   $     --   $     --   $     --   $     --   $      675   $     25   $  1,750
                                ========   ========   ========   ========   ========   ========   ==========   ========   ========
</Table>

         In September 2000, the Company recorded a restructuring charge of
approximately $9,300 (approximately $5,800 after tax) representing the exiting
of several product lines and severance and termination costs for approximately
65 employees (primarily at the Metrex Parker, Colorado facility) as a result of
the 2000 restructuring plan. The restructuring charge was classified as
components of cost of sales (approximately $7,700 relating to the write-off of
inventory), and selling, general and administrative expenses (approximately
$1,600).

         Restructuring activity relating to the September 30, 2000 restructure
charge and its components are as follows:

<Table>
<Caption>
                                  LEASE      SHUT-   INVENTORY     FIXED                         CONTRACTUAL
                               SEVERANCE   PAYMENTS     DOWN    WRITE-OFF    ASSETS      TAX     OBLIGATIONS
                                  (a)         (b)     COSTS(b)     (c)         (c)       (d)         (e)        OTHER       TOTAL
                               ---------   --------  ---------  ---------   --------   --------  -----------   --------   --------
<S>                            <C>         <C>       <C>        <C>         <C>        <C>       <C>           <C>        <C>

2000 Restructuring Charge ...  $   1,300   $     --   $     --  $   7,600   $    200   $     --   $     100    $    100   $  9,300
2000 Non-Cash Charges .......         --         --         --      7,600        200         --          --          --      7,800
                               ---------   --------   --------  ---------   --------   --------   ---------    --------   --------
September 30, 2000 balance ..      1,300         --         --         --         --         --         100         100      1,500
2001 Cash Payments ..........      1,175         --         --         --         --         --          75         100      1,350
                               ---------   --------   --------  ---------   --------   --------   ---------    --------   --------
September 30, 2001 balance ..  $     125   $     --   $     --  $      --   $     --   $     --   $      25    $     --   $    150
                               =========   ========   ========  =========   ========   ========   =========    ========   ========
</Table>

         In June 1998, the Company 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 restructuring charge was classified as
components of cost of sales (approximately $4,600 relating to the write-off of
inventory), selling, general and administrative expenses (approximately $9,200)
and income tax expense (approximately $700).

         Restructuring activity relating to the June 30, 1998 restructure charge
and its components are as follows:

<Table>
<Caption>
                                   LEASE      SHUT-   INVENTORY     FIXED                         CONTRACTUAL
                                SEVERANCE   PAYMENTS     DOWN    WRITE-OFF    ASSETS      TAX     OBLIGATIONS
                                   (a)         (b)     COSTS(b)     (c)         (c)       (d)         (e)        OTHER       TOTAL
                                ---------   --------  ---------  ---------   --------   --------  -----------   --------   --------
<S>                             <C>         <C>       <C>        <C>         <C>        <C>       <C>           <C>        <C>

1998 Restructuring charge ....   $  4,300   $    300   $    400   $  4,600   $  1,300   $    700    $    900    $  2,100   $ 14,600
1998 Cash Payments ...........      1,800         --        100         --         --         --         300       1,400      3,600
1998 Non-Cash Charges ........         --         --         --      4,600      1,300         --          --          --      5,900
                                 --------   --------   --------   --------   --------   --------    --------    --------   --------
September 30, 1998 balance ...      2,500        300        300         --         --        700         600         700      5,100
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
2000 Cash Payments ...........                                                                           300         100        400
                                 --------   --------   --------   --------   --------   --------    --------    --------   --------
September 30, 2000 and
September 30, 2001 balances ..   $     --   $     --   $     --   $     --   $     --   $    700    $     --    $    200   $    900
                                 ========   ========   ========   ========   ========   ========    ========    ========   ========
</Table>

----------

(a)      Amount represents severance and termination costs for approximately 165
         terminated employees (primarily sales and marketing personnel) related
         to the June 1998 restructuring plan. As of September 30, 2001, 154
         employees have been 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 severance associated with employees who were previously notified of
         termination and subsequently filled other Company positions. No
         additional employees will be terminated under this restructuring plan.
         The September 2000 restructuring charge represents severance and
         termination costs for approximately 65 terminated employees (primarily
         at the Metrex, Parker, Colorado facility) as a result of the 2000
         restructuring plan. As of September 30, 2001 all terminations were
         completed under the 2000 restructure plan. The September 2001
         restructuring charge represents


                                       56
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         severance and termination costs for approximately 63 employees to be
         terminated at the Ormco San Diego facility as a result of the September
         2001 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 a statutory tax relating to assets transferred from
         an exited sales facility in Switzerland.

(e)      Amount represents certain terminated contractual obligations.

(13) STOCK-BASED COMPENSATION

         In connection with the spin-off, officers and employees were allowed to
exchange their Apogent stock options for SDS stock options having an aggregate
intrinsic value (the spread between the market value and exercise price of the
option shares) equal to the aggregate intrinsic value of the Apogent stock
options exchanged immediately prior to the spin-off and an exercise price that
maintained the ratio of the exercise price per share to the market value per
share of the Apogent stock options exchanged immediately prior to the spin-off.
For these SDS stock options, the exercise price and the number of shares of SDS
common stock subject to each option were determined by adjusting the exercise
price and the number of shares subject to the corresponding Apogent stock option
exchanged under an adjustment formula, designed to preserve the aggregate
intrinsic value and exercise price to market value relationship referred to
above, based on the relationship between the trading prices on the New York
Stock Exchange of Apogent common stock and SDS common stock trading on a "when
issued" basis, during the period of "when issued" trading ending on the date of
the spin-off. Other than the adjustment of the exercise price and the number of
shares subject to each option, the terms of the SDS stock options received in
exchange for Apogent stock options are the same as the terms of the Apogent
stock options for which they were exchanged. The SDS stock options issued in
exchange for Apogent stock options were issued under SDS's 2000 Long-Term
Incentive Plan.

         Under SDS's 2000 Long-Term Incentive Plan (the "2000 Stock Plan"),
incentive stock options and nonqualified stock options may be granted to any
full-time, non-union employee of SDS or any of its subsidiaries, including any
employee who is a member of the Board of Directors, but excluding any director
who is not an employee of SDS or any of its subsidiaries. Subject to the terms
and provisions of the plan, options may be granted to eligible employees
selected by the compensation committee of the Board of Directors, which
administers the plan. The committee has the discretion to determine the number
of shares subject to options granted and the terms and conditions of the
options. The exercise price of an option granted under the plan is determined by
the committee, but may not be less than 100% of the fair market value of the
underlying SDS common stock on the date of grant.

         The total number of shares of SDS common stock authorized for issuance
under the 2000 Stock Plan is 5,450,000. Shares available for an award under the
2000 Stock Plan may be either authorized but unissued or reacquired shares. If
any award is canceled, terminates, expires or lapses for any reason, any shares
subject to such award shall again be available under the plan, subject to such
requirements as may be promulgated by the compensation committee. The number of
options that may be awarded to any employee during any fiscal year is limited to
1,000,000.

         On September 25, 2001, SDS established the Sybron Dental Specialties,
Inc. 2001 Long-Term Incentive Plan (the "2001 Stock Plan"). The 2001 Stock Plan
permits the granting of nonqualified stock options to any full-time, non-union
employee of SDS or any of its subsidiaries, excluding officers or directors of
SDS. Subject to the terms and provisions of the 2001 Stock Plan, options may be
granted to eligible employees selected by the compensation committee of the
Board of Directors, which administers the 2001 Stock Plan. The committee has the
discretion to determine the number of shares subject to options granted and the
terms and conditions of the options. The exercise price of an option granted
under the 2001 Stock Plan is determined by the committee, but may not be less
than 100% of the fair market value of the underlying SDS common stock on the
date of grant.

         The total number of shares of SDS common stock authorized for issuance
under the 2001 Stock Plan is 1,000,000. Shares available for an award under the
2001 Stock Plan may be either authorized but unissued or reacquired shares. If
any award is canceled, terminates, expires or lapses for any reason, any shares
subject to such award shall again be available under the 2001 Stock Plan,
subject to such requirements as may be promulgated by the compensation
committee.

         Options granted under the 2000 Stock Plan and the 2001 Stock Plan are
exercisable up to ten years from date of grant. Stock options vest under the
plans subject to the restrictions and conditions that the compensation committee
approves. Typically the vesting schedule is 25% per year based on the date of
grant. The Apogent options that were exchanged under the 2000 Stock Plan
maintained their original vesting schedule, which typically also vest at 25% per
year based on the date of grant.


                                       57
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)





         The 2000 Outside Directors' Stock Option Plan (the "Directors' Plan")
is administered by the compensation committee of the Board of Directors. A
maximum of 300,000 shares of SDS common stock may be issued pursuant to the
exercise of nonqualified stock options granted under the Directors' Plan. Shares
subject to and not issued under an option which expires, terminates or is
canceled for any reason shall again become available for the granting of options
under the Directors' Plan. These options are exercisable up to ten years from
date of grant and vest on the date of grant.

         The granting of options is automatic under the Directors' Plan. Upon
the first meeting of the Board of Directors following the annual meeting of
stockholders in 2001 through 2005, each person then serving SDS as a member of
the Board of Directors who is not a full-time employee of SDS or its
subsidiaries shall automatically be granted an option to purchase 10,000 shares
of SDS common stock (subject to appropriate adjustment for stock splits and
other changes affecting the common stock). If there is not a sufficient number
of remaining available shares under the Directors' Plan to grant each outside
director an option to purchase the number of shares specified, each outside
director shall receive an option to purchase an equal number of the remaining
available shares, determined by dividing the remaining available shares by the
number of outside directors. The exercise price at which share may be purchased
under each option shall be 100% of the fair market value of SDS common stock on
the date the option is granted.

         At September 30, 2001, 1,421,264 shares of common stock were reserved
for future stock option grants under the above plans.

         The following is a summary of the stock option activity since December
11, 2000 (spin-off):

<Table>
<Caption>
                                                 NUMBER OF    WEIGHTED AVERAGE
                                                  OPTIONS      EXERCISE PRICE
                                               ------------   ----------------
<S>                                            <C>            <C>

Outstanding at the beginning of the year ...             --     $         --
Conversions of Apogent options .............      2,329,593            12.33
Granted ....................................      3,057,617            15.57
Exercised ..................................       (132,809)           (9.66)
Canceled ...................................        (58,474)          (14.59)
                                               ------------     ------------
Options outstanding at end of year .........      5,195,927     $      14.28
Options exercisable at end of year .........      1,559,109     $      12.16
                                               ------------     ------------
Weighted average fair value of options
  granted during the year ..................                    $      5.11
</Table>

         If the Company had elected to recognize compensation cost based on the
fair value at the date of grant, consistent with the method as prescribed by
SFAS No. 123, net income would have changed to the pro forma amounts indicated
below (in thousands, except per share data):

<Table>
<Caption>
                                                                                 2001
                                                                              ----------
<S>                                                                           <C>

As reported (as adjusted to reflect the change in accounting principle
 see note 1(c)).............................................................   $   37,631
Pro forma net income: ......................................................   $   35,843
Basic pro forma earnings per share: ........................................   $     1.00
Diluted pro forma earnings per share: ......................................   $     0.97
</Table>

         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 are 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. For fiscal years ended prior to September 30, 2001,
the pro forma net income would be the same as the actual income reported, as
there were no SDS options in existence prior to the spin-off.

         The fair value of options granted during 2001 was determined using the
Black-Scholes pricing model with the following assumptions: risk-free interest
rate based on an average 4-year United States treasury note yield at the date of
grant (5.17% average rate), an expected life of 4 years, stock price volatility
of 31.32% and no dividend yield.

         The following table summarizes information regarding options
outstanding and options exercisable at September 30, 2001:



                                       58
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                 OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                                                      WEIGHTED-
                                OUTSTANDING AT         AVERAGE             WEIGHTED-     EXERCISABLE AT    WEIGHTED-
                                 SEPTEMBER 30,        REMAINING             AVERAGE       SEPTEMBER 30,     AVERAGE
RANGE OF EXERCISE PRICES            2001          CONTRACTUAL LIFE      EXERCISE PRICE        2001       EXERCISE PRICE
------------------------        --------------   -------------------    --------------   --------------  --------------
<S>                             <C>              <C>                    <C>              <C>             <C>

  $1.94 to $3.88........             17,033              1.3               $   3.60            17,033      $    3.60
  $3.88 to $5.82........            187,857              3.1               $   4.86           187,857      $    4.86
  $5.82 to $7.76........             72,805              4.3               $   6.54            72,805      $    6.54
  $7.76 to $9.70........            121,818              5.2               $   8.54           121,818      $    8.54
$11.64 to $13.58........            337,971              7.7               $  13.16           126,502      $   13.29
$13.58 to $15.52........          4,315,982              8.4               $  14.98           973,094      $   14.00
$17.46 to $19.40........            142,461              9.7               $  18.37            60,000      $   19.40
                                  5,195,927              8.0               $  14.28         1,559,109      $   12.16
</Table>

(14) EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted net
income per common share:

<Table>
<Caption>
IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)                       2001            2000           1999
---------------------------------------                   ------------    ------------   ------------
<S>                                                       <C>             <C>            <C>

Numerator:
   Income before extraordinary item ...................   $     38,129    $     42,056   $     46,754
   Extraordinary item .................................           (498)             --             --
                                                          ------------    ------------   ------------
Numerator for basic and diluted net income per
  common share--net income ............................   $     37,631    $     42,056   $     46,754
Denominator:
Weighted average common shares outstanding--basic .....         35,995          35,109         35,109
Effect of dilutive securities:
Employee stock options ................................          1,084              --             --
Dilutive potential common shares ......................          1,084              --             --
Denominator for diluted net income per common share ...         37,079              --             --
Basic net income per common share:
   Income from operations before extraordinary item ...   $       1.06    $       1.20   $       1.33
   Extraordinary item .................................          (0.01)             --             --
                                                          ------------    ------------   ------------
Basic net income per common share .....................   $       1.05    $       1.20   $       1.33
                                                          ============    ============   ============
Diluted net income per common share:
   Income from operations before extraordinary item ...   $       1.02
   Extraordinary item .................................          (0.01)
                                                          ------------
Diluted net income per common share ...................   $       1.01
                                                          ============
</Table>

         Earnings per share data for the years ended September 30, 2000 and 1999
is computed based on the 35,108,649 shares outstanding at December 11, 2000, the
date of the spin-off, as the outstanding average number of shares for each year.
This number of shares is presumed to be outstanding for each fiscal year ended
2000 and 1999. Diluted earnings per share for the years ended September 30, 2000
and 1999 have been omitted as no SDS stock options existed prior to the date of
the spin-off and any calculation of diluted earnings per share would not be
meaningful.

         Weighted average shares issuable upon the exercise of stock options,
which were not included in the calculation, were four thousand in 2001 because
they were antidilutive.

(15) COMMITMENTS AND CONTINGENT LIABILITIES

         The Company or its subsidiaries are at any one time parties to a number
of lawsuits or subject to claims arising out of their respective operations,
including products liability, patent and trademark or other intellectual
property infringement, contractual liability, workplace safety and environmental
claims and cases, some of which involve claims for substantial damages. The
Company and its subsidiaries are vigorously defending lawsuits and other claims
against them. The Company believes that any liabilities which might reasonably
be expected to result from any of the pending cases and claims would not have a
material adverse effect on the results of operations or financial condition of
the Company, even if it is unable to recover amounts that it expects to recover
with


                                       59
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

respect to those pending cases and claims through insurance, indemnification
arrangements, or other sources. There can be no assurance as to this, however,
or that litigation having such a material adverse effect will not arise in the
future.

(16) ACQUISITIONS

         The Company has completed nine acquisitions and one merger since the
beginning of 1999. The acquired companies are all engaged in businesses related
to the Company (see note 19 for a description of business segments).

2001

         ACQUISITIONS

         During 2001, the Company completed four acquisitions for cash, all of
which were accounted for as purchase business combinations. The aggregate
purchase price of the acquisitions (which are not significant, individually or
in the aggregate), net of cash acquired, was approximately $51,498. The results
of these acquisitions are included in the Company's results of operations as of
the date they were acquired. The total goodwill and intangibles for these
acquired companies was approximately $37,409 and are being amortized over 5 to
30 years. The following unaudited table outlines the sales, operating income and
total assets for the most recent available twelve-month period prior to each
cash acquisition.

<Table>
<Caption>
                                                                      OPERATING    TOTAL      TYPE OF
BUSINESS SEGMENT                          DATE             SALES       INCOME     ASSETS    ACQUISITION
----------------                          ----             -----      ---------   ------    -----------
<S>                                    <C>               <C>          <C>         <C>       <C>

Company Acquired

PROFESSIONAL DENTAL:
   Hawe Neos Holdings S.A..........    May 2001          $   16,800      N/A     $  23,431     Stock
   Special Metals Corporation......    December 2000     $    5,400      N/A     $   1,042     Asset

ORTHODONTICS:
   Optident, Ltd...................    December 2000     $    1,900      N/A           N/A     Asset

INFECTION CONTROL:
   OBF Technologies, Inc...........    June 2001         $    3,000      N/A     $     482     Asset
</Table>

2000

         ACQUISITIONS

         During 2000, the Company completed three acquisitions for cash, all of
which were accounted for as purchase business combinations. The aggregate
purchase price of the acquisitions (which are not significant, individually or
in the aggregate), net of cash acquired, was approximately $16,800. The results
of these acquisitions were included in the Company's results of operations as of
the date they were acquired. The total goodwill and intangibles for these
acquired companies was approximately $15,800 and will be amortized over 5 to 20
years. The following unaudited table outlines the sales, operating income and
total assets for the most recent available twelve-month period prior to each
cash acquisition.

<Table>
<Caption>
                                                              OPERATING    TOTAL     TYPE OF
BUSINESS SEGMENT                       DATE          SALES     INCOME     ASSETS   ACQUISITION
----------------                       ----          -----    ---------   ------   -----------
<S>                              <C>              <C>         <C>         <C>      <C>

Company Acquired

PROFESSIONAL DENTAL:
   Safe-Wave, Inc............    February 2000    $  4,046     $  869    $ 1,269      Stock

ORTHODONTICS:
   Pro Positioners, Inc......    December 1999    $  5,405     $  529    $ 2,338      Stock
   LPI Ormco.................    October 1999     $    300        N/A        N/A      Asset
</Table>


                                       60
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1999

         ACQUISITIONS

         During 1999, the Company completed two acquisitions for cash. In
addition, the Company completed one transaction for stock (the "Pinnacle
Merger"). The aggregate cash price of the acquisitions (none of which
individually or aggregated was significant) was approximately $10,600. The
Company may be subject to future purchase price adjustments based upon an
earnout provision under one of the purchase and sale agreements. Such earnout
provision has a maximum future payout of approximately $1,000. The earnout
provision is subject to the achievement of certain financial goals and is not
contingent upon employment. The earnout, if achieved, is payable through 2002
and are accounted for as additional goodwill. Earnout payments of approximately
$1,000, $1,000, and $4,900 were made in 2001, 2000, and 1999, respectively. All
cash acquisitions were accounted for as purchase business combinations. The
results of the cash acquisitions were included in the Company's results of
operations as of the date they were acquired. The Pinnacle Merger, a merger
between Pinnacle Products of Wisconsin, Inc. ("Pinnacle") and a subsidiary of
Apogent formed for that purpose, was accounted for as a pooling of interests.
Results from Pinnacle are included from the first day of the first reporting
periods. The following table outlines sales and operating income for the most
recent date prior to the acquisition, and total assets at the most recent
available date prior to acquisition, for each of the acquired companies. The
type of acquisition refers to whether the Company purchased assets or the stock
of the acquired companies. The total goodwill for the acquired companies
including earnout payments for prior years' acquisitions was $14,200.

<Table>
<Caption>
                                                                         OPERATING    TOTAL     TYPE OF
BUSINESS SEGMENT                                   DATE         SALES     INCOME     ASSETS   ACQUISITION
----------------                                   ----         -----    ---------   ------   -----------
<S>                                             <C>          <C>         <C>         <C>      <C>

Company Acquired

ORTHODONTICS:
   Endo Direct Ltd.........................     July 1999    $    338     $    8    $   395     Stock

INFECTION CONTROL PRODUCTS:
   Alden Scientific, Inc. and Gulfstream
        Medical, Inc.......................     July 1999    $  3,519     $1,569    $ 1,058     Asset
</Table>

         The following unaudited pro forma financial information presents the
consolidated results of the operations of the Company and the purchased
businesses referred to above as if the 2001 and 2000 acquisitions had occurred
as of the beginning of 2000, after giving effect to certain adjustments,
including amortization of goodwill, additional depreciation expense, increased
interest expense on debt related to the acquisitions and related tax effects.
The pro forma information does not necessarily reflect the results of operations
that would have occurred had the Company and the acquired companies constituted
a single entity during such periods.

<Table>
<Caption>
                                                 YEAR ENDED       YEAR ENDED
                                                SEPTEMBER 30,   SEPTEMBER 30,
                                                    2001             2000
                                                -------------   ------------
<S>                                             <C>             <C>

Net sales ...................................   $    456,869    $    444,305
Net income ..................................   $     39,017    $     43,878
Earnings per share--basic ...................   $       1.08    $       1.22
Earnings per share--fully diluted ...........   $       1.05
</Table>

(17) STOCKHOLDERS' EQUITY

         Stock Offering: On June 8, 2001, the Company sold 2,650,000 shares of
common stock in an underwritten public offering generating net proceeds of
approximately $50.0 million, which were primarily used to repay funds borrowed
to finance the acquisitions of Hawe Neos and OBF.

         Shareholder Rights Plan: On December 8, 2000, the Board of Directors
adopted a Rights Agreement pursuant to which Rights are distributed as a
dividend at the rate of one Right for each share of common stock, par value $.01
per share, of the Company outstanding upon consummation of the spin-off on
December 11, 2000, or issued thereafter. Each Right initially will entitle
stockholders to buy one one-hundredth of a share of a series of preferred stock
for sixty-five dollars. The Rights generally will be exercisable if a person or
group acquires beneficial ownership of 15 percent or more of the Company's
common stock or commences a tender or exchange offer upon consummation of which
such person or group would beneficially own 15 percent or more of the Company's
common stock. Thereafter, or if thereafter the Company is involved in a merger
or certain other business combinations not approved by the Board of Directors,
each Right will entitle its holder, other than the acquiring person or group, to
purchase common stock of either the Company or the acquirer having a value of
twice the exercise price of the Right. The Rights are attached


                                       61
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

to the common stock unless and until they become exercisable and will expire on
December 11, 2010, unless earlier redeemed by the Company for $.01 each, or
exchanged by the Company as provided in the Rights Agreement.

         OTHER COMPREHENSIVE INCOME (LOSS)

<Table>
<Caption>
                                             2001                              2000                             1999
                                ------------------------------    ------------------------------    ------------------------------
                                 PRE-TAX   TAX EXP.     NET        PRE-TAX   TAX EXP.     NET       PRE-TAX    TAX EXP.     NET
YEARS ENDED SEPTEMBER 30,        AMOUNT    (CREDIT)    AMOUNT       AMOUNT   (CREDIT)    AMOUNT      AMOUNT    (CREDIT)   AMOUNT
-------------------------       --------   --------   --------    --------   --------   --------    --------   --------   --------
<S>                             <C>        <C>        <C>         <C>        <C>        <C>         <C>        <C>        <C>

Foreign currency
   translation
   adjustments ..............   $  5,405   $  2,167   $  3,238    $(11,948)  $ (4,839)  $ (7,109)   $ (4,322)  $ (1,707)  $ (2,615)
Unrealized loss on
   derivative instruments ...     (9,108)    (3,643)    (5,465)         --         --         --       2,778      1,097      1,681
                                --------   --------   --------    --------   --------   --------    --------   --------   --------
Other comprehensive
   income (loss) from
   continuing operations ....   $ (3,703)  $ (1,476)  $ (2,227)   $(11,948)  $ (4,839)  $ (7,109)   $ (1,544)  $   (610)  $   (934)
                                ========   ========   ========    ========   ========   ========    ========   ========   ========
</Table>

(18) TRANSACTIONS WITH APOGENT

         Cash management and advances: Prior to the spin-off, Apogent managed
the cash not considered necessary for current operating requirements of its
subsidiaries, including the operations of SDS. Cash collected from and cash
payments to the operations of SDS were collected or funded from a centralized
treasury operation and were either credited or charged to SDS in the normal
course of business. Advances to and collections from SDS were indirectly charged
or credited with interest as such advances to or collections from SDS were
applied to borrowings or repayments under the Credit Facilities. On an annual
basis and on the date of spin-off, outstanding balances were cleared via an
intercompany dividend to or capital contribution from Apogent.

         Dividends paid to and capital contributions from Apogent: On December
11, 2000, Apogent completed the spin-off of SDS. Just prior to the spin-off, SDM
paid Apogent a cash dividend of $67.9 million representing the difference
between $375 million and the actual allocation of Apogent bank debt to SDM as of
the spin-off, and SDM settled all intercompany loans and advances made to
Apogent by SDM by way of a non-cash dividend to Apogent of $78.2 million,
resulting in the settlement of the intercompany operating account. In addition,
SDS paid $307.1 million to Chase Manhattan Bank to satisfy the obligations
attributable to it under the Apogent Credit Facilities.

         To accomplish the above transactions, on December 11, 2000, the date of
the spin-off, SDS borrowed approximately $375 million under the SDS Credit
Facility. All of this caused more indebtedness to be placed on the Company's
books than historically had been allocated from Apogent. See consolidated
statements of changes in stockholders' equity.

         Apogent Credit Facilities: Apogent historically recorded a portion of
its outstanding debt (and associated interest expense) under its Credit
Facilities to certain of its subsidiaries, including the operations of SDS.
SDS's historical debt outstanding under the Credit Facilities at September 30,
2000 was $311,772 and SDS's historical interest expense was $24,443 in 2000. As
part of the spin-off, the Company entered into the SDS Credit Facility (see note
7) and the Apogent Credit Facilities were paid off.

         Apogent Charges: Apogent performed certain functions for the Company
(legal, tax, treasury, consolidation accounting, financial reporting and
insurance) and therefore charged its corporate office, general and
administrative expenses to its subsidiaries. SDS's share of such costs amounted
to $730, $2,979 and $4,228 in 2001, 2000 and 1999, respectively. Services
performed at the corporate office generally benefited the domestic operations,
and therefore Apogent corporate office, general and administrative expenses were
generally charged based on SDS's domestic revenues as a percentage of total
Apogent domestic revenues. Because general and administrative expenses at
Apogent generally benefited domestic operations, Apogent considered this method
to be a reasonable basis for allocation.

         Intercompany Loans with Apogent: The loan due from Apogent at September
30, 2000 was as follows:

<Table>
<Caption>
                                           AMOUNT        RATE        MATURITY
                                           ------        ----        --------
<S>                                        <C>           <C>         <C>

2000:
Sybron Holdings A/S.................       $1,773        5.50%       On Demand
</Table>


                                       62
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

         This amount is included in loans to Apogent on the accompanying 2000
consolidated balance sheet. As a result of the spin-off there were no
outstanding loans with Apogent as of September 30, 2001.

(19)  SEGMENT INFORMATION

         In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"), which is effective for financial statements for
periods beginning after December 15, 1997. SFAS No. 131 establishes standards
for the way public business enterprises are to report information about
operating segments in annual and interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas and major customers. The Company adopted
SFAS No. 131 in 1999 and has restated the previously reported annual segment
operating results to conform to the Statement's management approach and to
reflect the Pinnacle Merger.

         The Company's operating subsidiaries are engaged in the manufacture and
sale of dental products in the United States and other countries. Dental
products are categorized in the business segments of a) Professional Dental, b)
Orthodontics and c) Infection Control Products. A description of the business
segments follows:

         Products in the Professional Dental business segment include light
cured composite filling materials and bonding agents, amalgam alloy filling
materials, dental burs, impression materials, and curing lights used in general
dentistry, filling materials, instruments and sealers used in endodontics,
waxes, specialty burs, investment and casting materials, equipment and
accessories used in dental laboratories and disposable infection control
products for dental equipment.

         Products in the Orthodontics business segment include a broad range of
orthodontic appliances such as brackets, bands and buccal tubes, wires and
elastomeric products. Brackets, bands, buccal tubes and wires are manufactured
from a variety of metals to exacting specifications for standard use or to meet
the custom specifications of a particular orthodontist. Elastomeric orthodontic
products include rubber bands and power chains to consolidate space. Products in
this area also include orthodontic instruments and general orthodontic supply
products. Orthodontics also includes certain endodontic products.

         Products in the Infection Control Products business segment include
high level disinfectants and sterilants, and enzymatic cleaners and instrument
care solutions for medical and dental instruments, surface disinfectant products
and antimicrobial skincare products for medical and dental use.

         The corporate office general and administrative expenses have been
allocated to the segments on the basis of domestic net sales.

         Information on these business segments is summarized as follows:

<Table>
<Caption>
                                                                                    INFECTION
                                                     PROFESSIONAL                    CONTROL                          TOTAL
                                                        DENTAL      ORTHODONTICS     PRODUCTS     ELIMINATIONS         SDS
                                                     ------------   ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>            <C>             <C>
2001
Revenues:
   External customer .............................   $    230,785   $    178,583   $     30,179   $         --    $    439,547
   Intersegment ..................................          1,999          7,345             15         (9,359)             --
                                                     ------------   ------------   ------------   ------------    ------------
      Total revenues .............................   $    232,784   $    185,928   $     30,194   $     (9,359)   $    439,547
                                                     ============   ============   ============   ============    ============
Gross profit .....................................        130,379        103,249         15,758             --         249,386
Selling, general and admin .......................         69,432         67,225         13,178             --         149,835
Operating income .................................         60,947         36,024          2,580             --          99,551
Depreciation and amortization ....................          9,398          7,464          2,117             --          18,979
Interest expense .................................         17,739         15,719             --             --          33,458
Segment assets ...................................        320,287        171,151         48,309             --         539,747
Expenditures for property, plant and equipment ...          4,836          4,626          4,954             --          14,416
</Table>


                                       63
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

<Table>
<Caption>
                                                                                    INFECTION
                                                     PROFESSIONAL                    CONTROL                          TOTAL
                                                        DENTAL      ORTHODONTICS     PRODUCTS     ELIMINATIONS         SDS
                                                     ------------   ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>            <C>             <C>

                                                                                                                          2000
Revenues:
   External customer .............................   $    214,888   $    180,479   $     27,773   $         --    $    423,140
   Intersegment ..................................          1,049          5,774             41         (6,864)             --
                                                     ------------   ------------   ------------   ------------    ------------
      Total revenues .............................   $    215,937   $    186,253   $     27,814   $     (6,864)   $    423,140
                                                     ============   ============   ============   ============    ============
Gross profit .....................................        122,132        106,000         11,952             --         240,084
Selling, general and admin .......................         65,894         66,741         11,630             --         144,265
Operating income .................................         56,238         39,259            322             --          95,819
Depreciation and amortization ....................          7,943          8,496          2,085             --          18,524
Interest income--Apogent .........................            682            170             --             --             852
Interest expense .................................         17,071          8,828             --             --          25,899
Segment assets ...................................        246,301        228,873         63,079             --         538,253
Expenditures for property, plant and equipment ...          6,412          5,038            518             --          11,968
</Table>

<Table>
<Caption>
                                                                                    INFECTION
                                                     PROFESSIONAL                    CONTROL                          TOTAL
                                                        DENTAL      ORTHODONTICS     PRODUCTS     ELIMINATIONS         SDS
                                                     ------------   ------------   ------------   ------------    ------------
<S>                                                  <C>            <C>            <C>            <C>             <C>

                                                                                                                          1999
Revenues:
   External customer .............................   $    193,757   $    172,055   $     26,437   $         --    $    392,349
   Intersegment ..................................            592          3,967             --         (4,559)             --
                                                     ------------   ------------   ------------   ------------    ------------
      Total revenues .............................   $    194,349   $    176,022   $     26,437   $     (4,559)   $    392,349
                                                     ============   ============   ============   ============    ============
Gross profit .....................................        107,251        107,232         14,293             --         228,776
Selling, general and admin .......................         64,223         60,481         10,666             --         135,370
Operating income .................................         43,028         46,751          3,627             --          93,406
Depreciation and amortization ....................          8,499          7,656          1,311             --          17,466
Interest income--Apogent .........................            144          1,007             --             --           1,151
Interest expense .................................         12,032          5,041              1             --          17,074
Segment assets ...................................        225,756        218,729         62,906             --         507,391
Expenditures for property, plant and equipment ...          6,571          6,116            333             --          13,020
</Table>

         No customer accounted for more than 10% of net sales for the three
reported periods.

         The Company's international operations are conducted principally in
Europe. Inter-geographic sales are made at prices approximating market.

<Table>
<Caption>
                                                         2001            2000            1999
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Net Sales:
United States:
   Customers ....................................   $    268,693    $    257,131    $    229,177
   Inter-geographic .............................         25,027          17,399          14,527
                                                    ------------    ------------    ------------
                                                         293,720         274,530         243,704
                                                    ------------    ------------    ------------
Europe:
   Customers ....................................         87,371          83,935          87,265
   Inter-geographic .............................         46,088          44,802          42,497
                                                    ------------    ------------    ------------
                                                         133,459         128,737         129,762
                                                    ------------    ------------    ------------
All other areas:
   Customers ....................................         83,483          82,074          75,807
   Inter-geographic .............................         13,872          12,607          11,966
                                                    ------------    ------------    ------------
                                                          97,355          94,681          87,773
Inter-geographic sales ..........................        (84,987)        (74,808)        (68,990)
                                                    ------------    ------------    ------------
      Total net sales ...........................   $    439,547    $    423,140    $    392,249
                                                    ============    ============    ============

Net property, plant and equipment:
   United States ................................   $     35,434    $     35,203    $     38,628
   Europe .......................................         17,577           3,297           3,763
   All other areas ..............................         15,908          16,826          15,097
                                                    ------------    ------------    ------------
      Total net property, plant and equipment ...   $     68,919    $     55,326    $     57,488
                                                    ============    ============    ============
</Table>


                                       64
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)




(20) QUARTERLY FINANCIAL INFORMATION

<Table>
<Caption>
                                          FIRST         SECOND         THIRD         FOURTH
                                         QUARTER        QUARTER       QUARTER        QUARTER       TOTAL YEAR
                                      ------------   ------------   ------------   ------------   ------------
                                                                    (UNAUDITED)        (b)
<S>                                   <C>            <C>            <C>            <C>            <C>

2001
Net sales(a) ......................   $     98,458   $    112,843   $    107,257   $    120,989   $    439,547
                                      ============   ============   ============   ============   ============
Gross profit (d) ..................   $     56,319   $     64,463   $     61,498   $     67,106   $    249,386
                                      ============   ============   ============   ============   ============
Extraordinary item, net of tax ....   $       (498)  $         --   $         --   $         --   $       (498)
                                      ============   ============   ============   ============   ============
Net income (d) ....................   $      7,410   $     11,429   $      9,388   $      9,404   $     37,631
                                      ============   ============   ============   ============   ============
Basic earnings per share (d) ......   $       0.21   $       0.33   $       0.26   $       0.25   $       1.05
                                      ============   ============   ============   ============   ============
Diluted earnings per share (d) ....   $       0.21   $       0.32   $       0.25   $       0.23   $       1.01
                                      ============   ============   ============   ============   ============
2000
Net sales(a) ......................   $     94,303   $    109,450   $    106,252   $    113,135   $    423,140
                                      ============   ============   ============   ============   ============
Gross profit (d) ..................   $     55,136   $     65,143   $     61,951   $     57,854   $    240,084
                                      ============   ============   ============   ============   ============
Net income (d) ....................   $     10,022   $     13,813   $     11,301   $      6,920   $     42,056
                                      ============   ============   ============   ============   ============
Basic earnings per share(d) .......   $       0.29   $       0.39   $       0.32   $       0.20   $       1.20
                                      ============   ============   ============   ============   ============
</Table>

------------

(a)      Net sales have been adjusted to include the reclassification of
         shipping and handling fees from selling, general and administrative
         expenses for each quarter in 2001 and 2000.

(b)      Restructuring charges were recorded in the amount of $2,379 and $9,326
         in the fourth quarter of 2001 and 2000, respectively.

(c)      Earnings per share data for quarters in the fiscal year ended September
         30, 2000 were calculated using the 35,108,649 shares outstanding as of
         the date of the spin-off on December 11, 2000. Diluted earnings per
         share for quarters in the fiscal year ended September 30, 2000 have
         been omitted as no SDS stock options existed prior to the date of the
         spin-off and any calculation of diluted earnings per share would not be
         meaningful.

(d)      In the third quarter of fiscal 2002, the Company changed its inventory
         costing method from the LIFO method to the FIFO method. All previously
         reported results have been restated to reflect the retroactive
         application of this accounting change (see note 1 (c)).

(21) EXTRAORDINARY ITEM

         Due to the spin-off of SDS, Apogent terminated its credit agreement and
wrote off the associated deferred financing fees. This resulted in an after tax
write-off of $0.5 million that was allocated to SDS and treated as an
extraordinary item in the 2001 consolidated statement of income.

(22) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

         Below are the condensed consolidating balance sheets, statements of
operations, and statements of cash flows of Sybron Dental Specialties, Inc. for
the fiscal years ended September 30, 2001, 2000 and 1999.

         Intercompany balances include receivables/payables incurred in the
normal course of business in addition to investments and loans transacted
between subsidiaries of the Company or with Sybron Dental Specialties, Inc.


                                       65
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


CONDENSED CONSOLIDATING BALANCE SHEETS

<Table>
<Caption>
                                                                          AS OF SEPTEMBER 30, 2001
                                             -------------------------------------------------------------------------------------
                                                                                     NON
                                             SYBRON DENTAL       GUARANTOR         GUARANTOR
                                              SPECIALTIES       SUBSIDIARIES      SUBSIDIARIES      ELIMINATIONS      CONSOLIDATED
                                             -------------      ------------      ------------      ------------      ------------
<S>                                          <C>                <C>               <C>               <C>               <C>
ASSETS
Current assets:
   Cash and equivalents ................        $       1         $   2,215         $   6,103        $      --         $   8,319
   Account receivable, net .............               --            59,563            32,609               --            92,172
   Inventories, net ....................               --            54,825            22,402               --            77,227
   Other current assets ................               --            14,862             2,937               --            17,799
                                                ---------         ---------         ---------        ---------         ---------
        Total current assets ...........                1           131,465            64,051               --           195,517
Property, plant and equipment, net .....               --            35,434            33,485               --            68,919
Intangible assets, net .................               --           208,817            43,764               --           252,581
Deferred income taxes ..................               --             9,619                --               --             9,619
Investment in subsidiaries .............               --           (65,463)          137,884          (72,421)               --
Other assets ...........................               --            10,957             2,154               --            13,111
                                                ---------         ---------         ---------        ---------         ---------
        Total assets ...................        $       1         $ 330,829         $ 281,338        $ (72,421)        $ 539,747
                                                =========         =========         =========        =========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Account payable .....................        $      --         $  12,906         $   4,430        $      --         $  17,336
   Current portion of long-term debt ...               --            25,472               497               --            25,969
   Income taxes payable ................               --             2,482             4,537              325             7,344
   Accrued expenses and other
      current liabilities ..............               --            32,884            10,981               --            43,865
                                                ---------         ---------         ---------        ---------         ---------
        Total current liabilities ......               --            73,744            20,445              325            94,514
Long-term debt .........................               --           317,484             4,052               --           321,536
Deferred income taxes ..................               --            12,807               558               --            13,365
Other liabilities ......................               --            16,312               494               --            16,806
Commitments and contingent
   liabilities:
   Stockholders' equity:
      Preferred stock ..................               --                --                --               --                --
      Common stock .....................              379                53            10,971          (11,024)              379
Additional paid-in capital .............           49,576           (52,637)          131,720          (58,600)           70,059
Retained earnings ......................            3,546           (27,844)           64,503           (3,212)           36,993
Accumulated other
   comprehensive gain (loss) ...........          (53,500)           (9,090)           48,595               90           (13,905)
                                                ---------         ---------         ---------        ---------         ---------
        Total stockholders'equity ......                1           (89,518)          255,789          (72,746)           93,526
                                                ---------         ---------         ---------        ---------         ---------
        Total liabilities and
           stockholders' equity ........        $       1         $ 330,829         $ 281,338        $ (72,421)        $ 539,747
                                                =========         =========         =========        =========         =========
</Table>


                                       66
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


CONDENSED CONSOLIDATING BALANCE SHEETS

<Table>
<Caption>
                                                                            AS OF SEPTEMBER 30, 2000
                                               -------------------------------------------------------------------------------------
                                                                                         NON
                                               SYBRON DENTAL       GUARANTOR          GUARANTOR
                                                SPECIALTIES       SUBSIDIARIES       SUBSIDIARIES      ELIMINATIONS     CONSOLIDATED
                                               -------------      ------------       ------------      ------------     ------------
<S>                                            <C>                <C>                <C>               <C>              <C>
ASSETS
Current assets:
   Cash and equivalents ................        $       --         $      439         $    5,344        $       --        $   5,783
   Account receivable, net .............                --             61,453             24,314                --           85,767
   Inventories, net ....................                --             50,024             18,351                --           68,375
   Other current assets ................                --             13,184              2,290                --           15,474
                                                ----------         ----------         ----------        ----------        ---------
        Total current assets ...........                --            125,100             50,299                --          175,399
Advances and loans to Apogent ..........                --             77,762                 --                --           77,762
Property, plant and equipment, net .....                --             35,204             20,122                --           55,326
Intangible assets, net .................                --            210,165             10,540                --          220,705
Deferred income taxes ..................                --              2,094                 --                --            2,094
Investment in subsidiaries .............                --            (34,806)            34,806                --               --
Other assets ...........................                --              4,779              2,188                --            6,967
                                                ----------         ----------         ----------        ----------        ---------
        Total assets ...................        $       --         $  420,298         $  117,955        $       --        $ 538,253
                                                ==========         ==========         ==========        ==========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Account payable .....................        $       --         $    8,459         $    2,892        $       --        $  11,351
   Current portion of long-term debt ...                --             21,621                140                --           21,761
   Income taxes payable ................                --             (1,188)             3,962                --            2,774
   Income taxes payable to Apogent .....                --              3,982                 --                --            3,982
Accrued expenses and other
      current liabilities ..............                --             22,892              8,192                --           31,084
                                                ----------         ----------         ----------        ----------        ---------
        Total current liabilities ......                --             55,766             15,186                --           70,952
Long-term debt .........................                --            298,358                124                --          298,482
Deferred income taxes ..................                --             11,065                551                --           11,616
Other liabilities ......................                --              8,465                370                --            8,835
Commitments and contingent
   liabilities:
   Stockholders' equity:
      Preferred stock ..................                --                 --                 --                --               --
      Common stock .....................                --            (10,710)            10,710                --               --
Additional paid-in capital .............               832            149,589              9,625                --          160,046
Retained earnings ......................                --            (54,682)            54,682                --               --
Accumulated other
   comprehensive gain (loss) ...........              (832)           (37,553)            26,707                --          (11,678)
                                                ----------         ----------         ----------        ----------        ---------
        Total stockholders'equity ......                --             46,644            101,724                --          148,368
                                                ----------         ----------         ----------        ----------        ---------
        Total liabilities and
           stockholders' equity ........        $       --         $  420,298         $  117,955        $       --        $ 538,253
                                                ==========         ==========         ==========        ==========        =========
</Table>


                                       67
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                 FOR THE YEAR ENDED SEPTEMBER 30, 2001
                                          -------------------------------------------------------------------------------------
                                                                                 NON
                                          SYBRON DENTAL       GUARANTOR        GUARANTOR
                                           SPECIALTIES       SUBSIDIARIES     SUBSIDIARIES       ELIMINATIONS      CONSOLIDATED
                                          -------------      ------------     ------------       ------------      ------------
<S>                                       <C>                <C>              <C>                <C>               <C>
Net sales ..............................    $      --         $ 283,997         $ 164,910         $  (9,360)        $ 439,547
Cost of sales ..........................           --           102,776            96,637            (9,252)          190,161
                                            ---------         ---------         ---------         ---------         ---------
Gross profit ...........................           --           181,221            68,273              (108)          249,386
Selling, general and administrative
     expenses ..........................           --           106,306            41,965             1,564           149,835
                                            ---------         ---------         ---------         ---------         ---------
Operating income .......................           --            74,915            26,308            (1,672)           99,551
Other income (expense):
     Interest expense ..................           --           (33,225)             (233)               --           (33,458)
     Other, net ........................           --              (476)           (1,122)             (856)           (2,454)
                                            ---------         ---------         ---------         ---------         ---------
Income before income taxes and
     extraordinary item ................           --            41,214            24,953            (2,528)           63,639
Income taxes ...........................           --            19,208             9,507            (3,205)           25,510
                                            ---------         ---------         ---------         ---------         ---------
Income before extraordinary item .......           --            22,006            15,446               677            38,129
Extraordinary item, net of tax .........           --              (498)               --                --              (498)
                                            ---------         ---------         ---------         ---------         ---------
Net income .............................    $      --         $  21,508         $  15,446         $     677         $  37,631
                                            =========         =========         =========         =========         =========
</Table>

<Table>
<Caption>
                                                                     FOR THE YEAR ENDED SEPTEMBER 30, 2000
                                              ------------------------------------------------------------------------------------
                                                                                      NON
                                              SYBRON DENTAL      GUARANTOR         GUARANTOR
                                               SPECIALTIES      SUBSIDIARIES      SUBSIDIARIES      ELIMINATIONS      CONSOLIDATED
                                              -------------     ------------      ------------      ------------      ------------
<S>                                           <C>               <C>               <C>               <C>               <C>
Net sales ..............................        $       --        $ 280,157         $ 149,847         $  (6,864)        $ 423,140
Cost of sales ..........................                --          101,855            88,065            (6,864)          183,056
                                                ----------        ---------         ---------         ---------         ---------
Gross profit ...........................                --          178,302            61,782                --           240,084
Selling, general and administrative
     expenses ..........................                --          103,497            40,768                --           144,265
                                                ----------        ---------         ---------         ---------         ---------
Operating income .......................                --           74,805            21,014                --            95,819
Other income (expense):
     Interest expense ..................                --          (25,772)             (127)               --           (25,899)
     Other, net ........................                --              766                22                --               788
                                                ----------        ---------         ---------         ---------         ---------
Income before income taxes and
     extraordinary item ................                --           49,799            20,909                --            70,708
Income taxes ...........................                --           19,634             9,018                --            28,652
                                                ----------        ---------         ---------         ---------         ---------
Net income .............................        $       --        $  30,165         $  11,891         $      --         $  42,056
                                                ==========        =========         =========         =========         =========
</Table>


                                       69
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                     FOR THE YEAR ENDED SEPTEMBER 30, 1999
                                              -----------------------------------------------------------------------------------
                                                                                      NON
                                              SYBRON DENTAL      GUARANTOR         GUARANTOR
                                               SPECIALTIES      SUBSIDIARIES      SUBSIDIARIES      ELIMINATIONS     CONSOLIDATED
                                              -------------     ------------      ------------      ------------     ------------
<S>                                           <C>               <C>               <C>               <C>              <C>
Net sales ..............................        $      --        $ 247,821         $ 148,986         $  (4,558)        $ 392,249
Cost of sales ..........................               --           80,142            87,889            (4,558)          163,473
                                                ---------        ---------         ---------         ---------         ---------
Gross profit ...........................               --          167,679            61,097                --           228,776
Selling, general and administrative
     expenses ..........................               --           98,924            36,446                --           135,370
                                                ---------        ---------         ---------         ---------         ---------
Operating income .......................               --           68,755            24,651                --            93,406
Other income (expense):
     Interest expense ..................               --          (16,919)             (155)               --           (17,074)
     Other, net ........................               --            1,302              (390)               --               912
                                                ---------        ---------         ---------         ---------         ---------
Income before income taxes and
     extraordinary item ................               --           53,138            24,106                --            77,244
Income taxes ...........................               --           20,973             9,517                --            30,490
                                                ---------        ---------         ---------         ---------         ---------
Net income .............................        $      --        $  32,165         $  14,589         $      --         $  46,754
                                                =========        =========         =========         =========         =========
</Table>


                                       70
<PAGE>
\
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                                FOR THE YEAR ENDED SEPTEMBER 30, 2001
                                                        ----------------------------------------------------------------------------
                                                                                          NON
                                                        SYBRON DENTAL   GUARANTOR      GUARANTOR
                                                         SPECIALTIES   SUBSIDIARIES   SUBSIDIARIES     ELIMINATIONS     CONSOLIDATED
                                                        -------------  ------------   ------------     ------------     ------------
<S>                                                     <C>            <C>            <C>              <C>              <C>
Cash flows (used in) provided by
     operating activities ........................        $       1     $ 102,913      $ (42,242)        $    (89)       $  60,583
Cash flow from investing activities:
     Capital expenditures ........................               --       (10,955)        (3,461)              --          (14,416)
     Proceeds from sales of property,
         plant, and equipment ....................               --            28             96               --              124
     Net payments for business
         acquired ................................               --        (6,500)       (44,998)              --          (51,498)
                                                          ---------     ---------      ---------         --------        ---------
         Net cash used in investing
             activities ..........................               --       (17,427)       (48,363)              --          (65,790)
Cash flows from financing activities:
     Proceed from long-term debt .................               --       562,099            998               --          563,097
     Principal payments on long-term
         debt ....................................               --      (540,569)           (45)              --         (540,614)
     Proceed from the exercise of
         stock option ............................            1,283            --             --               --            1,283
     Net cash outflow to Apogent .................               --       (63,719)            --               --          (63,719)
     Other .......................................           51,386        (6,927)            --               --           44,459
                                                          ---------     ---------      ---------         --------        ---------
         Net cash provided by financing
             activities ..........................           52,669       (49,116)           953               --            4,506
Effect of exchange rate changes on
     cash and cash equivalents ...................               --        (4,114)         7,262               89            3,237
Net change in intercompany
     balances ....................................          (52,669)      (30,479)        83,148               --               --
                                                          ---------     ---------      ---------         --------        ---------
Net (decrease) increase in cash and
     cash equivalents ............................                1         1,777            758               --            2,536
Cash and cash equivalents at
     beginning of period .........................               --           438          5,345               --            5,783
                                                          ---------     ---------      ---------         --------        ---------
Cash and cash equivalents at
     end of period ...............................        $       1     $   2,215      $   6,103         $     --        $   8,319
                                                          =========     =========      =========         ========        =========

Supplemental disclosures of cash
     flow information:
     Cash paid during the period for
         interest ................................        $      --     $  24,437      $     342         $     --        $  24,779
                                                          =========     =========      =========         ========        =========
     Cash paid during the period for
         income taxes ............................        $      --     $  11,083      $   9,049         $     --        $  20,132
                                                          =========     =========      =========         ========        =========
Supplemental disclosures of non-cash investing
     and financing activities:
     Non-cash dividend to Apogent ................        $      --     $  78,167      $      --         $     --        $  78,167
                                                          =========     =========      =========         ========        =========
</Table>


                                       71
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                         FOR THE YEAR ENDED SEPTEMBER 30, 2000
                                                   --------------------------------------------------------------------------------
                                                                                        NON
                                                   SYBRON DENTAL      GUARANTOR       GUARANTOR
                                                    SPECIALTIES     SUBSIDIARIES     SUBSIDIARIES     ELIMINATIONS     CONSOLIDATED
                                                   -------------    ------------     ------------     ------------     ------------
<S>                                                <C>              <C>              <C>              <C>              <C>
Cash flows (used in) provided by
     operating activities ...................        $      --        $  41,567       $  20,860         $     --        $  62,427
Cash flow from investing activities:
     Capital expenditures ...................               --           (6,674)         (5,294)              --          (11,968)
     Proceeds from sales of property,
         plant, and equipment ...............               --              159             450               --              609
     Net payments for business
         acquired ...........................               --          (21,398)             --               --          (21,398)
                                                     ---------        ---------       ---------         --------        ---------
         Net cash used in investing
             activities .....................               --          (27,913)         (4,844)              --          (32,757)
Cash flows from financing activities:
     Proceed from long-term debt ............               --          221,760              --               --          221,760
     Principal payments on long-term
         debt ...............................               --         (183,084)            (96)              --         (183,180)
     Proceed from the exercise of
         stock option .......................               --               --              --               --               --
     Net cash outflow to Apogent ............               --          (58,098)             --               --          (58,098)
     Other ..................................              832            2,505          (6,801)              --           (3,464)
                                                     ---------        ---------       ---------         --------        ---------
         Net cash provided by financing
             activities .....................              832          (16,917)         (6,897)              --          (22,982)
Effect of exchange rate changes on
     cash and cash equivalents ..............               --             (354)         (6,641)              --           (6,995)
Net change in intercompany
     balances ...............................             (832)           2,562          (1,730)              --               --
                                                     ---------        ---------       ---------         --------        ---------
Net (decrease) increase in cash and
     cash equivalents .......................               --           (1,055)            748               --             (307)
Cash and cash equivalents at
     beginning of period ....................               --            1,493           4,597               --            6,090
                                                     ---------        ---------       ---------         --------        ---------
Cash and cash equivalents at
     end of period ..........................        $      --        $     438       $   5,345         $     --        $   5,783
                                                     =========        =========       =========         ========        =========

Supplemental disclosures of cash
     flow information:
     Cash paid during the period for
         interest ...........................        $      --        $  25,226       $     278         $     --        $  25,504
                                                     =========        =========       =========         ========        =========
     Interest received from Apogent .........        $      --        $     852       $      --         $     --        $     852
                                                     =========        =========       =========         ========        =========
     Cash paid during the period for
         income taxes .......................        $      --        $  23,581       $   4,093         $     --        $  27,674
                                                     =========        =========       =========         ========        =========
</Table>


                                       72
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

<Table>
<Caption>
                                                                        FOR THE YEAR ENDED SEPTEMBER 30, 1999
                                                   -------------------------------------------------------------------------------
                                                                                        NON
                                                   SYBRON DENTAL      GUARANTOR      GUARANTOR
                                                    SPECIALTIES     SUBSIDIARIES    SUBSIDIARIES     ELIMINATIONS     CONSOLIDATED
                                                   -------------    ------------    ------------     ------------     ------------
<S>                                                <C>              <C>             <C>              <C>              <C>
Cash flows (used in) provided by
     operating activities ...................        $      --        $  37,708      $  13,639         $     --        $  51,347
Cash flow from investing activities:
     Capital expenditures ...................               --           (8,401)        (4,619)              --          (13,020)
     Proceeds from sales of property,
         plant, and equipment ...............               --              141             73               --              214
     Net payments for business
         acquired ...........................               --          (15,538)            --               --          (15,538)
                                                     ---------        ---------      ---------         --------        ---------
         Net cash used in investing
             activities .....................               --          (23,798)        (4,546)              --          (28,344)
Cash flows from financing activities:
     Proceed from long-term debt ............               --          354,040             --               --          354,040
     Principal payments on long-term
         debt ...............................               --         (332,263)           (85)              --         (332,348)
     Proceed from the exercise of
         stock option .......................               --               --             --               --               --
     Net cash outflow to Apogent ............               --          (47,962)            --               --          (47,962)
     Other ..................................               --            6,872         (7,241)              --             (369)
                                                     ---------        ---------      ---------         --------        ---------
         Net cash provided by financing
             activities .....................               --          (19,313)        (7,326)              --          (26,639)
Effect of exchange rate changes on
     cash and cash equivalents ..............               --              124            320               --              444
Net change in intercompany
     balances ...............................               --            3,550         (3,550)              --               --
                                                     ---------        ---------      ---------         --------        ---------
Net (decrease) increase in cash and
     cash equivalents .......................               --           (1,729)        (1,463)              --           (3,192)
Cash and cash equivalents at
     beginning of period ....................               --            3,222          6,060               --            9,282
                                                     ---------        ---------      ---------         --------        ---------
Cash and cash equivalents at
     end of period ..........................        $      --        $   1,493      $   4,597         $     --        $   6,090
                                                     =========        =========      =========         ========        =========

Supplemental disclosures of cash
     flow information:
     Cash paid during the period for
         interest ...........................        $      --        $  16,834      $     123         $     --        $  16,957
                                                     =========        =========      =========         ========        =========
     Interest received from Apogent .........        $      --        $   1,151      $      --         $     --        $   1,151
                                                     =========        =========      =========         ========        =========
     Cash paid during the period for
         income taxes .......................        $      --        $  28,528      $   4,378         $     --        $  32,906
                                                     =========        =========      =========         ========        =========
</Table>


                                       73
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR FISCAL YEARS 2001, 2000 AND 1999 (REVISED TO REFLECT THE CHANGE
IN ACCOUNTING PRINCIPLE)

               The following management's discussion and analysis of financial
condition and results of operations relates to fiscal years 2001, 2000 and 1999,
and has been revised to reflect our change in our method of accounting for
domestic inventory discussed above. The discussion should be read in conjunction
with our consolidated financial statements and related notes included in this
Item 5.

THE SPIN-OFF

               Prior to December 11, 2000, we were a wholly owned subsidiary of
Sybron International Corporation, which is now known as Apogent Technologies
Inc. On December 11, 2000, Sybron International spun off its dental business by
way of a pro rata distribution to its shareholders of all of our outstanding
common stock together with related preferred stock purchase rights. As a result
of the spin-off, we became an independent, publicly traded company.

RESTRUCTURING CHARGES

               Our results for fiscal 2001 include restructuring charges of
approximately $2.4 million ($1.5 million after tax) consisting primarily of
severance and termination for the approximately sixty-three employees located at
Ormco's San Diego, California manufacturing facility whose employment the
company planned to terminate as a result of the closing of the facility. Of the
$2.4 million restructuring charges, approximately $1.7 million are cash related
charges for severance and contractual obligations, while the balance of
approximately $0.7 million represents non-cash charges related to exited capital
and other assets. We believe the anticipated sale of the San Diego manufacturing
facility will offset the restructuring charge; the proceeds from the sale will
be used to pay down debt and reduce interest charges. Work functions previously
performed at the facility were absorbed into our Glendora, California facility.
The closing was completed as of June 30, and we believe all the costs associated
with the closing will be finalized by September 30, 2002.


               Our results for fiscal 2000 include charges of approximately $9.3
million ($5.8 million after tax) consisting primarily of exited product lines
(approximately $5.3 million, $1.7 million and $0.6 million in the Orthodontics,
Professional Dental and Infection Control Products businesses, respectively),
and severance and termination costs related to the planned termination of
approximately sixty-five employees (fifty-six located at the Metrex Research
Corporation facility in Parker, Colorado, eight located at the Ormco San Diego,
California facility, and one located at the Ormco Amersfort/Europe facility), as
a result of the 2000 restructuring plan. Of the $9.3 million restructuring
charges, approximately $7.8 million represented non-cash charges related to the
exited products and capital, while the balance of approximately $1.5 million
were cash related charges for severance and contractual obligations. We
completed the 2000 restructuring plan in the first quarter of 2002, and we paid
the remainder of the associated cash charges.

               Our results for fiscal 1999 include charges of approximately $2.6
million ($1.6 million after tax), consisting primarily of transaction costs
relating to the merger with Pinnacle Products of Wisconsin, Inc. (the "Pinnacle
Merger") associated with non-stockholder compensation of approximately $1.9
million and integration costs of approximately $0.7 million associated with the
merger with LRS Acquisition Corp. (the "LRS Merger"), the parent of "A" Company
Orthodontics. Our 1999 results also include income of $1.2 million ($0.8 million
after tax) relating to adjustments made to the 1998 restructuring reserve,
consisting of unused severance. The 1999 results have been restated to reflect
the Pinnacle Merger, which was accounted for as a pooling of interests, and all
prior period data has been adjusted to reflect the historical results of
Pinnacle as if the merger took place on October 1, 1996.

               Our results for 1998 contain charges with respect to the
restructuring of certain operations of SDS relating primarily to the
consolidation of Ormco Corporation and "A" Company Orthodontics, and merger,
transaction and integration charges associated with the LRS Merger. (See Note 12
to the consolidated financial statements).

Restructuring activity since June 30, 1998 and its components are as follows (in
thousands):


                                       74
<PAGE>

<Table>
<Caption>
                                                                   INVENTORY
                                                 LEASE   SHUT-DOWN   WRITE-   FIXED             CONTRACTUAL
                                     SEVERANCE  PAYMENTS   COSTS      OFF     ASSETS      TAX   OBLIGATIONS
                                        (a)       (b)       (b)       (c)      (c)        (d)       (e)      OTHER     TOTAL
                                     ---------  -------- --------- ---------  -------   ------- ----------- -------   -------
<S>                                  <C>        <C>      <C>       <C>        <C>       <C>     <C>         <C>       <C>
1998 Restructuring charge .........   $ 4,300   $   300   $   400   $ 4,600   $ 1,300   $   700   $   900   $ 2,100   $14,600
1998 Cash Payments ................     1,800        --       100        --        --        --       300     1,400     3,600
1998 Non-Cash Charges .............        --        --        --     4,600     1,300        --        --        --     5,900
                                      -------   -------   -------   -------   -------   -------   -------   -------   -------
September 30, 1998 balance ........   $ 2,500   $   300   $   300   $    --   $    --   $   700   $   600   $   700   $ 5,100
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
2000 Cash Payments ................        --        --        --        --        --        --       300       100       400
                                      -------   -------   -------   -------   -------   -------   -------   -------   -------
September 30, 2000 and
  September 30, 2001 balance ......   $    --   $    --   $    --   $    --   $    --   $   700   $    --   $   200   $   900
                                      =======   =======   =======   =======   =======   =======   =======   =======   =======

2000 Restructuring Charge .........   $ 1,300   $    --   $    --   $ 7,600   $   200   $    --   $   100   $   100   $ 9,300
2000 Non-Cash Charges .............        --        --        --     7,600       200        --        --        --     7,800
                                      -------   -------   -------   -------   -------   -------   -------   -------   -------
September 30, 2000 balance ........   $ 1,300   $    --   $    --   $    --   $    --   $    --   $   100   $   100   $ 1,500
2001 Cash Payments ................     1,175        --        --        --        --        --        75       100     1,350
                                      -------   -------   -------   -------   -------   -------   -------   -------   -------
September 30, 2001 balance ........   $   125   $    --   $    --   $    --   $    --   $    --   $    25   $    --   $   150
                                      =======   =======   =======   =======   =======   =======   =======   =======   =======

2001 Restructuring charge .........   $ 1,050   $    --   $    --   $    --   $   250   $    --   $   775   $   325   $ 2,400
2001 Non-Cash Charges .............        --        --        --        --       250        --       100       300       650
                                      -------   -------   -------   -------   -------   -------   -------   -------   -------
September 30, 2001 balance ........   $ 1,050   $    --   $    --   $    --   $    --   $    --   $   675   $    25   $ 1,750
                                      =======   =======   =======   =======   =======   =======   =======   =======   =======
</Table>

----------

(a)      Amount represents severance and termination costs for approximately 165
         terminated employees (primarily sales and marketing personnel) whose
         employment the Company planned to terminate under the 1998
         restructuring plan. As of September 30, 2001, 154 employees have been
         terminated as a result of the 1998 restructuring plan. An adjustment of
         approximately $1.2 million was made in fiscal 1999 to adjust the
         accrual primarily representing over accruals for anticipated costs
         associated with outplacement services, accrued fringe benefits, and
         severance associated with employees who were previously notified of
         termination and subsequently filled other Company positions. No
         additional employees will be terminated under this restructuring plan.
         The September 2000 restructuring charge represents severance and
         termination costs for approximately 65 terminated employees (primarily
         at the Metrex, Parker, Colorado facility) whose employment the Company
         planned to terminate as a result of the 2000 restructuring plan. As of
         September 30, 2001 all terminations were completed under the 2000
         restructuring plan. The September 2001 restructuring charge represents
         severance and termination costs for approximately 63 employees at the
         Ormco San Diego facility whose employment the Company planned to
         terminate as a result of the September 2001 restructuring plan (all of
         whom were notified before September 30, 2001 of the intent to terminate
         their employment). The proceeds from the planned sale of the Ormco San
         Diego facility is expected to offset the cost of closing the facility.
         No significant changes are expected to be made to the September 2001
         restructure 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 a statutory tax relating to assets transferred from
         an exited sales facility in Switzerland.

(e)      Amount represents certain terminated contractual obligations.


SALES GROWTH AND OPERATING INCOME GROWTH

               Net sales in 2001 and 2000 were higher than the previous
corresponding periods. Net sales in 2001 and 2000 increased by 3.9% and 7.9%,
respectively, from corresponding prior year periods. Including restructuring
charges, operating income in 2001 and 2000 increased by 3.9% and 2.6%,
respectively, over the corresponding prior year periods. Excluding the
restructuring charges, operating income decreased by 4.1% in 2001, and increased
by 10.9% in 2000 over the prior year periods. In 2001, as a result of the
spin-off, we incurred additional expenses such as corporate governance costs,
stock transfer agent costs, incremental


                                       75
<PAGE>

professional fees and other costs in connection with operating as a stand alone
company from the prior year, when we were a wholly owned subsidiary of Apogent.

               In May of 2000, the Emerging Issues Task Forces ("EITF") reached
a consensus on Issue No. 00-10--"Accounting for Shipping and Handling Fees and
Costs" that all amounts billed to a customer in a sale transaction related to
shipping and handling, if any, represents revenues earned for the goods provided
and should be classified as revenue. Historically, we have recorded our shipping
and handling amounts billed to our customers as a reduction to selling, general
and administrative expenses. In September 2001, in accordance with Issue No.
00-10, we adjusted our net sales to include those amounts previously
recorded as a reduction to selling, general and administrative expenses. The
amounts added to net sales and reclassified from selling, general and
administrative expenses for years ended September 30, 2001, 2000 and 1999, were
approximately $4.2 million, $4.4 million and $4.1 million, respectively.

               Sales grew for the year ended September 30, 2001, both
domestically and internationally. Domestic and international sales increased by
4.5% and 2.9%, respectively, over the prior year. International sales were
negatively impacted by the strengthening of the U.S. dollar. Without currency
effects, international sales would have increased by 9.1%.

               Partially offsetting the increase in net sales for the year ended
September 30, 2001 was a decrease of 1.1% over the prior year net sales in the
orthodontic business segment. A slight slowing in the orthodontia market, as
well as some areas in the sales organization that have been identified by
management as needing some improvements resulted in the decrease in net sales.
We have initiated some management changes within the Ormco sales organization to
address the decrease in sales.

ACQUISITIONS

               We have maintained an active program of development and
introduction of new products. We believe that new product introductions are
important to our ability to maintain our competitive position. We have also
pursued numerous acquisition opportunities, completing 26 acquisitions between
1993 and 2001, four of which we completed in 2001 and three in 2000.
Acquisitions completed in 2001 and 2000 are as follows:

<Table>
<Caption>
                                                    ANNUAL SALES PRIOR  ACQUISITION
COMPANY                                               TO ACQUISITION        DATE                       DESCRIPTION
-------                                             ------------------  -----------                    -----------
<S>                                                 <C>                 <C>            <C>
PROFESSIONAL DENTAL

Fiscal year 2001

Special Metals Corporation..................           $5.4 million        12/00       Manufacturer and supplier of alloys used in
                                                                                       Kerr's Tytin(R) and Tytin(R) FC dental
                                                                                       amalgams.

Hawe Neos Holding S.A.......................          $16.8 million         5/01       Manufacturer and wholesaler of consumable
                                                                                       dental products in the area of prevention,
                                                                                       restoration and pharmaceutical.

Fiscal year 2000

Safe-Wave Products, Inc.....................           $4.0 million         2/00       Manufacturer of disposable tips and adapters
                                                                                       for air/water syringes used in dental
                                                                                       operatories.

ORTHODONTICS

Fiscal year 2001

Optident, Ltd...............................           $1.9 million        12/00       Distributor of Ormco/ "A" Company products in
                                                                                       the United Kingdom (incremental sales were
                                                                                       approximately $0.7 million).

Fiscal year 2000

LPI Ormco...................................           $0.3 million        10/99       Distributor of Ormco orthodontic products in
                                                                                       Austria.

Professional Positioners, Inc...............           $5.4 million        12/99       Manufacturer of orthodontic retainers and
                                                                                       positioners.
</Table>


                                       76
<PAGE>

<Table>
<S>                                                 <C>                 <C>            <C>
INFECTION PREVENTION

Fiscal year 2001

OBF Technologies, Inc.......................           $3.0 million         6/01       Product line used in the management of
                                                                                       biohazardous and hazardous liquid medical
                                                                                       waste.
</Table>

               These acquisitions are consistent with our strategy of acquiring
product lines that can be manufactured in existing facilities, sold through
existing sales and distribution networks, or both. We intend to continue to seek
out acquisition candidates consistent with our strategy. However, there can be
no assurance of the number or size of future acquisitions.

INTERNATIONAL OPERATIONS

               Substantial portions of our sales, income and cash flows are
derived internationally. The financial position and the results of operations
from substantially all of our international operations, other than most U.S.
export sales, are measured using the local currency of the countries in which
such operations are conducted and are then translated into U.S. dollars. While
the reported income of foreign subsidiaries will be impacted by a weakening or
strengthening of the U.S. dollar in relation to a particular local currency, the
effects of foreign currency fluctuations are mitigated by the fact that the
subsidiaries' operations are conducted in numerous foreign countries and,
therefore, in numerous foreign currencies. In addition, our U.S. export sales
may be impacted by foreign currency fluctuations relative to the value of the
U.S. dollar as foreign customers may adjust their level of purchases upward or
downward according to the weakness or strength of their respective currencies
versus the U.S. dollar.

               From time to time we employ currency hedges to mitigate the
impact of foreign currency fluctuations. In August 2001, we hedged our foreign
currency exposure to protect against currency fluctuations in fiscal 2002 by
securing monthly zero cost collars with a notional amount of approximately $36.6
million for the Euro and a notional amount of approximately $5.5 million for the
Japanese Yen. No currency gain or loss was recognized in the consolidated
statement of income for the year ended September 2001; however, a currency loss
of $0.03 million (net of income tax), representing the fair value of the zero
cost collars, was recorded in accumulated other comprehensive income (loss), a
component of stockholders' equity (See Note 10 to the consolidated financial
statements). Additionally, in September 2001, we entered into a cross currency
debt swap transaction to hedge our net investment in Hawe Neos. The agreement
entered into on September 20, 2001, with an effective date of October 16, 2001,
is a contract to exchange a U.S. dollar principal amount of $45 million in
exchange for a Swiss franc principal amount of 71.7 million at the termination
date of October 16, 2006. For fiscal year 2001, the fair value of the cross
currency debt swap transaction gain (net of income tax) included in the
cumulative translation adjustments was $0.58 million. We expect to continue to
employ measures to protect our earnings from currency volatility through the use
of currency options, forward contracts or similar instruments for fiscal year
2002. Apogent, prior to the spin-off, had also employed currency hedges on
behalf of SDS. In November 1999, Apogent decided to employ a series of foreign
currency options with a U.S. dollar notional amount of approximately $38.2
million at a cost of approximately $0.9 million. These options were designed to
protect SDS from potential detrimental effects of currency movements associated
with the U.S. dollar versus the Euro and Japanese yen in the second, third and
fourth quarters of fiscal 2000 as compared to the second, third and fourth
quarters of 1999. In fiscal year 2000, Euro options expiring on March 29, 2000
and June 28, 2000 were sold at a gain of $1.2 million and the Japanese yen
options expiring on March 29, 2000 and June 28, 2000 expired worthless.
Approximately $1.1 million of the Euro options gain was allocated to SDS.
Options expiring September 26, 2000 were sold at a profit with a gain for SDS of
approximately $1.4 million. Allocations of gains and losses were based upon
SDS's exposure to the currencies hedged, relative to the consolidated Apogent
exposure. There were no outstanding derivative financial instruments as of
September 30, 2000 and 1999.

               The following table sets forth our domestic sales and sales
outside the United States in 2001, 2000 and 1999. See also Note 19 to our
consolidated financial statements.

<Table>
<Caption>
                                                                         YEAR ENDED SEPTEMBER 30,
                                                       -----------------------------------------------------------
                                                             2001                 2000                 1999
                                                       -----------------    -----------------    -----------------
                                                                             (IN THOUSANDS)
<S>                                                    <C>                  <C>                  <C>
Domestic net sales.................................    $         268,693    $         257,131    $         229,177
International net sales............................              170,854              166,009              163,072
                                                       -----------------    -----------------    -----------------
               Total net sales.....................    $         439,547    $         423,140    $         392,249
                                                       =================    =================    =================
</Table>


                                       77
<PAGE>

RESULTS OF OPERATIONS

               YEAR ENDED SEPTEMBER 30, 2001 COMPARED TO THE YEAR ENDED
               SEPTEMBER 30, 2000

               Net Sales

<Table>
<Caption>
                                                                           YEAR ENDED SEPTEMBER 30,
                                                                  ----------------------------------------
NET SALES:                                                                2001                 2000
                                                                  -----------------    -------------------
                                                                              (IN THOUSANDS)
<S>                                                               <C>                  <C>
Professional Dental...........................................    $         230,785    $           214,888
Orthodontics..................................................              178,583                180,479
Infection Prevention..........................................               30,179                 27,773
                                                                  -----------------    -------------------
               Total Net Sales................................    $         439,547    $           423,140
                                                                  =================    ===================
</Table>

               Overall Company. Net sales for the twelve months ended September
30, 2001 increased by $16.4 million or 3.9% from the corresponding 2000 period.
After adjusting for the impact of the strengthening U.S. dollar, sales would
have increased by $26.7 million or 6.3% from the corresponding 2000 period.

               Professional Dental. Increased net sales in the Professional
Dental segment resulted primarily from: (a) the net sales of products from
acquired companies (approximately $10.1 million), (b) net sales of new products
(approximately $8.5 million), (c) increased net sales of existing products
(approximately $4.1 million), and (d) decreased rebate expense (approximately
$0.7 million). The increase in net sales was partially offset by: (a)
unfavorable foreign currency fluctuations (approximately $4.9 million), (b) the
loss of the net sales of last year's exited product lines (approximately $2.4
million) and (c) decreased shipping and handling fees (approximately $0.2
million).

               Orthodontics. Decreased net sales in the Orthodontics segment
resulted primarily from: (a) decreased net sales of existing products
(approximately $7.8 million), (b) unfavorable foreign currency fluctuations
(approximately $5.3 million), and (c) a loss of the net sales of last year's
exited product lines (approximately $2.9 million). The decrease in net sales was
partially offset by: (a) net sales of new products (approximately $13.0
million), and (b) the net sales of products from acquired companies
(approximately $1.1 million).

               Infection Prevention. Increased net sales in the Infection
Prevention segment was due primarily to: (a) increased net sales of existing
products (approximately $1.3 million) and (b) the net sales of products from the
acquired company (approximately $1.1 million).

<Table>
<Caption>
                                                         PERCENT OF                 PERCENT OF
GROSS PROFIT                                   2001        SALES         2000         SALES
                                             --------    ----------     --------    ----------
                                                              (IN THOUSANDS)
<S>                                          <C>         <C>            <C>         <C>
Professional Dental ....................     $130,379         56.5%     $122,132         56.8%
Orthodontics ...........................      103,249         57.8%      106,000         58.7%
Infection Prevention ...................       15,758         52.2%       11,952         43.0%
                                             --------     --------      --------     --------
               Total Gross Profit ......     $249,386         56.7%     $240,084         56.7%
                                             ========     ========      ========     ========
</Table>

               Overall Company. Gross profit for the twelve months ended
September 30, 2001 increased by $9.3 million or 3.9% from the corresponding
fiscal 2000 period.

               Professional Dental. Increased gross profit in the Professional
Dental segment resulted primarily from: (a) margins relating to the net sales of
products from acquired companies (approximately $6.1 million), (b) increased
unit volume relating to new products (approximately $5.0 million), (c) increased
net sales of existing products (approximately $2.4 million), (d) a decrease in
restructuring charge (approximately $1.8 million), (e) decreased rebate expense
(approximately $0.7 million), and (f) inventory reserve adjustments
(approximately $0.7 million of which approximately $0.6 million is related to a
standard cost adjustment, and approximately $0.4 million is due to physical
inventory adjustments, partially offset by an increase in obsolescence of
approximately $0.2 million, and an increase in royalty expense of approximately
$0.1 million). The increased gross profit was partially offset by: (a)
unfavorable manufacturing variances (approximately $4.4 million), (b) an
unfavorable exchange rate effect (approximately $2.6 million), (c) margins lost
from the prior year's exited products lines (approximately $1.2 million), and
(d) an unfavorable product mix (approximately $0.3 million).


                                       78
<PAGE>

               Orthodontics. Decrease gross profit margins were primarily due
to: (a) unfavorable exchange rate (approximately $5.3 million), (b) decreased
sales volume of existing products (approximately $4.4 million), (c) inventory
adjustments (approximately $2.8 million, due to an increase in royalty expense
of approximately $1.7 million, an increase in obsolescence of approximately $1.5
million, and approximately $0.3 million increase in standard cost revisions
partially offset by approximately $0.7 million related to physical inventory
adjustments, (d) unfavorable product mix margins (approximately $1.9 million),
and (e) margins lost from last year's exited products (approximately $1.6
million). The decreased gross profits were partially offset by: (a) unit volume
relating to new products (approximately $7.8 million), (b) a decrease in
restructuring charge (approximately $4.0 million), (c) favorable manufacturing
variances (approximately $1.0 million), and (d) margins relating to net sales of
products from acquired companies (approximately $0.5 million).

               Infection Prevention. Gross profit in the Infection Prevention
segment increased due to: (a) a decrease in restructuring charge (approximately
$1.5 million), (b) increased volume relating to existing products (approximately
$1.0 million), (c) the margins relating to the net sales of products from
acquired companies (approximately $0.6 million), (d) inventory adjustments
(approximately $0.4 million, of which approximately $0.5 million is due to a
favorable physical inventory adjustment, and a decrease in standard cost of
approximately $0.2 million, partially offset by and $0.3 million obsolescence
adjustment), (e) reduced manufacturing variance costs (approximately $0.2
million), and (f) unit volume related to new product sales (approximately $0.1
million).

<Table>
<Caption>
                                                                                       PERCENT OF                 PERCENT OF
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                 2001        SALES          2000        SALES
                                                                           --------    ----------     --------    ----------
                                                                                           (IN THOUSANDS)
<S>                                                                        <C>              <C>       <C>              <C>
Professional Dental ..................................................     $ 69,432         30.1%     $ 65,894         30.7%
Orthodontics .........................................................       67,225         37.6%       66,741         37.0%
Infection Prevention .................................................       13,178         43.7%       11,630         41.9%
                                                                           --------     --------      --------     --------
               Total Selling, General and Administrative Expenses ....     $149,835         34.1%     $144,265         34.1%
                                                                           ========     ========      ========     ========
</Table>

               Overall Company. Selling, general and administrative expenses for
the year ended September 30, 2001 increased by $5.6 million or 3.9% from the
corresponding 2000 period.

               Professional Dental. Increased selling, general and
administrative expenses in the Professional Dental segment resulted primarily
from: (a) increased general and administrative expenses (approximately $3.0
million), (b) increased selling, general and administrative expenses related to
acquisitions (approximately $2.3 million), and (c) increased amortization
(approximately $1.1 million). These increases were partially offset by: (a)
favorable foreign currency fluctuations (approximately $2.7 million), (b)
decreased selling and marketing expenses (approximately $0.1 million), and (c)
decreased research and development expenses and other expenses (approximately
$0.1 million).

               Orthodontics. Increased selling, general and administrative
expenses in the Orthodontics segment resulted primarily from: (a) increased
selling and marketing expenses (approximately $2.6 million), (b) increased
general and administrative expenses (approximately $1.3 million), and (c)
increased selling, general and administrative expenses related to acquisitions
(approximately $0.1 million). Partially offsetting these increases were: (a)
favorable foreign currency fluctuations (approximately $2.6 million), (b)
decreased amortization (approximately $0.5 million), and (c) a decrease in
restructuring charges (approximately $0.4 million).

               Infection Prevention. Increased selling, general and
administrative expenses in the Infection Prevention segment resulted primarily
from: (a) increased general and administrative expenses (approximately $1.0
million), (b) increased selling and marketing expenses (approximately $0.7
million), and (c) increased amortization (approximately $0.1 million). Partially
offsetting these increases was a decrease in restructuring charges
(approximately $0.3 million).


                                       79
<PAGE>

               Operating Income

<Table>
<Caption>
                                                          PERCENT OF               PERCENT OF
OPERATING INCOME:                               2001        SALES        2000        SALES
                                               -------    ----------    -------    ----------
                                                              (IN THOUSANDS)
<S>                                            <C>        <C>           <C>        <C>
Professional Dental ......................     $60,947        26.4%     $56,238        26.2%
Orthodontics .............................      36,024        20.2%      39,259        21.8%
Infection Prevention .....................       2,580         8.5%         322         1.2%
                                               -------     -------      -------     -------
               Total Operating Income ....     $99,551        22.6%     $95,819        22.6%
                                               =======     =======      =======     =======
</Table>

               As a result of the foregoing, operating income for the year ended
September 30, 2001 increased by 3.9% or $3.7 million over operating income for
the corresponding 2000 period.

               Interest Expense

               Interest expense was $33.5 million in 2001, an increase of $7.6
million from the corresponding 2000 period. The increase resulted from a higher
average debt balance and higher average interest rates on our credit facility,
primarily due to the December 11, 2000 spin-off. See "Liquidity and Capital
Resources" below.

               Income Taxes

               Income taxes in 2001 were $25.5 million, a decrease of $3.1
million from the corresponding 2000 period. The decrease resulted primarily from
lower taxable income, as well as a decrease in the effective tax rate to 40.1%
for the year ended September 30, 2001 as compared to 40.5% for the corresponding
prior year period.

               Income Before Extraordinary Item

               As a result of the foregoing, we had income before extraordinary
item of $38.1 million in 2001, as compared to net income of $42.1 million in the
corresponding 2000 period.

               Extraordinary Item

               Due to the spin-off of SDS, Apogent terminated its credit
agreement and wrote off the associated deferred financing fees. This resulted in
an after tax write-off of $0.5 million that was allocated to SDS.

               Net Income

               As a result of the foregoing, we had net income of $37.6 million
in 2001, as compared to net income of $42.1 million in the corresponding 2000
period.

               Earnings Per Share

               Basic earnings per share for the year ended September 30, 2001
were $1.05 per share, while fully diluted earnings per share were $1.01 per
share. For the year ended September 30, 2000, basic earnings per share of $1.20
were computed using the 35,108,649 shares outstanding as of the date of the
spin-off on December 11, 2000. Diluted earnings per share for the year ended
September 30, 2000 have been omitted as no SDS stock options existed prior to
the date of the spin-off and any calculation of diluted earnings per share would
not be meaningful.

               Depreciation and Amortization

               Depreciation and amortization expense is allocated among cost of
sales, selling, general and administrative expenses and other expense.
Depreciation and amortization increased $0.5 million in 2001 due to additional
amortization from the step-up of assets, goodwill and intangibles recorded from
the various acquisitions, as well as routine operating capital expenditures.


                                       80
<PAGE>

               YEAR ENDED SEPTEMBER 30, 2000 COMPARED TO THE YEAR ENDED
               SEPTEMBER 30, 1999

               Net Sales

<Table>
<Caption>
                                          YEAR ENDED SEPTEMBER 30,
                                          -----------------------
NET SALES:                                 2000           1999
                                          --------       --------
                                              (IN THOUSANDS)
<S>                                       <C>            <C>
Professional Dental ...............       $214,888       $193,757
Orthodontics ......................        180,479        172,055
Infection Prevention ..............         27,773         26,437
                                          --------       --------
               Total Net Sales ....       $423,140       $392,249
                                          ========       ========
</Table>

               Overall Company. Net sales for the twelve months ended September
30, 2000 increased by $30.9 million or 7.9% from the corresponding 1999 period.
After adjusting for the impact of the strengthening U.S. dollar, sales would
have increased by $37.7 million or 9.6% from the corresponding 1999 period.

               Professional Dental. Increased net sales in the Professional
Dental segment resulted primarily from: (a) net sales of new products
(approximately $34.8 million) and (b) net sales of products from acquired
companies net of discontinued products (approximately $2.7 million). Increased
net sales were partially offset by: (a) decreased net sales of existing products
(approximately $12.0 million), (b) increased rebate expense (approximately $.9
million), and (c) unfavorable foreign currency fluctuations (approximately $3.5
million).

               Orthodontics. Increased net sales in the Orthodontics segment
resulted primarily from: (a) net sales of new products (approximately $7.9
million), (b) net sales of products of an acquired company (approximately $4.7
million), and (c) increase shipping and handling fees (approximately $0.2
million). Increased net sales were partially offset by unfavorable foreign
currency fluctuations (approximately $4.4 million).

               Infection Prevention. Increased net sales in the Infection
Prevention segment resulted primarily from net sales of products of an acquired
company (approximately $3.0 million), partially offset by decreased net sales of
existing products due to dealer consolidations and product life cycle maturities
and from a voluntary suspension of sales of certain products as a result of
issues raised by the FDA. The impact of the action was mitigated by Metrex's
ability to supply substitute products to its customers (approximately $1.7
million).

               Gross Profit

<Table>
<Caption>
                                                                PERCENT OF                        PERCENT OF
GROSS PROFIT                                     2000             SALES            1999             SALES
                                               ---------        ----------      ---------         ----------
                                                                   (IN THOUSANDS)
<S>                                            <C>              <C>             <C>               <C>
Professional Dental ....................       $ 122,132            56.8%       $ 107,251             55.4%
Orthodontics ...........................         106,000            58.7%         107,232             62.3%
Infection Prevention ...................          11,952            43.0%          14,293             54.1%
                                               ---------        --------         --------         --------
               Total Gross Profit ......       $ 240,084            56.7%       $ 228,776             58.3%
                                               =========        ========         ========         ========
</Table>

               Overall Company. Gross profit for the twelve months ended
September 30, 2000 increased by $11.3 million or 4.9 % from the corresponding
fiscal 1999 period.

               Professional Dental. Increased gross profit in the Professional
Dental segment resulted primarily from: (a) increased volume (approximately
$13.7 million), (b) a favorable product mix (approximately $3.3 million), (c)
inventory valuation adjustments, primarily related to a favorable physical
inventory adjustment (approximately $3.0 million), (d) net sales of products of
an acquired company net of discontinued product lines (approximately $1.7
million), and (e) increased shipping and handling fees (approximately $0.1
million). Increased gross profit was partially offset by: (a) increased
manufacturing overhead (approximately $2.6 million), (b) the 2000 restructuring
charges related to exited products (approximately $1.8 million), (c) unfavorable
foreign currency fluctuations (approximately $1.3 million), (d) an increase in
rebate expense ($0.9 million), and (e) other inventory charges (approximately
$0.3 million).


                                       81
<PAGE>

               Orthodontics. Decreased gross profit in the Orthodontics segment
resulted primarily from: (a) increased manufacturing variances (approximately
$5.8 million), (b) the 2000 restructuring charges relating primarily to exited
product lines (approximately $5.3 million), and (c) unfavorable foreign currency
fluctuations (approximately $4.4 million). The decrease in gross profit was
partially offset by (a) increased unit volume relating to new products
(approximately $5.2 million), (b) favorable product mix increase (approximately
$4.8 million), (c) net sales of products of an acquired company (approximately
$2.0 million), (d) inventory adjustments primarily related to a positive
revaluation of standard costs associated with manufacturing (approximately $2.0
million), (e) increased shipping and handling fees (approximately $0.2 million),
and (f) a decrease in unit volume of existing products (approximately $0.1
million).

               Infection Prevention. Decreased gross profit in the Infection
Prevention segment resulted primarily from: (a) the 2000 restructuring charges
primarily related to exited product lines (approximately $1.5 million), (b)
increased manufacturing overhead (approximately $1.0 million), (c) decreased
volume (approximately $0.9 million), (d) other inventory valuation adjustments
(approximately $0.7 million), (e) product mix (approximately $0.2 million), and
(f) an increase in rebate expense (approximately $0.1 million). Decreased gross
profit was partially offset by: (a) the effects of an acquired company
(approximately $2.0 million) and (b) increased shipping and handling fees
(approximately $0.1 million).

               Selling, General and Administrative Expenses

<Table>
<Caption>
                                                                                         PERCENT OF                  PERCENT OF
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:                                  2000        SALES            1999       SALES
                                                                             --------    ----------       --------   ----------
                                                                                              (IN THOUSANDS)
<S>                                                                          <C>         <C>              <C>        <C>
Professional Dental ..................................................       $ 65,894         30.7%       $ 64,223        33.1%
Orthodontics .........................................................         66,741         37.0%         60,481        35.2%
Infection Prevention .................................................         11,630         41.9%         10,666        40.3%
                                                                             --------     --------        --------    --------
               Total Selling, General and Administrative Expenses ....       $144,265         34.1%       $135,370        34.5%
                                                                             ========     ========        ========    ========
</Table>

               Overall Company. Selling, general and administrative expenses for
the year ended September 30, 2000, increased by $8.9 million or 6.6% from the
corresponding 1999 period.

               Professional Dental. Increased selling, general and
administrative expenses in the Professional Dental segment resulted primarily
from: (a) higher selling and marketing expenses (approximately $3.0 million),
(b) unfavorable foreign currency fluctuations (approximately $0.6 million), (c)
higher general and administrative expenses (approximately $0.6 million), and (d)
increased amortization (approximately $0.3 million). The increase was partially
offset by: (a) the 1999 restructuring charges (approximately $2.0 million), (b)
a decrease in corporate charges from Apogent based on a lower domestic sales
percentage (approximately $0.5 million), and (c) decreased research and
development expenses and other expenses (approximately $0.3 million).

               Orthodontics. Increased selling, general and administrative
expenses in the Orthodontics segment resulted primarily from: (a) increased
general and administrative expenses (approximately $2.8 million), (b) increased
selling, general and administrative expenses as a result of acquired companies
(approximately $1.4 million), (c) a 1999 reversal of restructuring charges
(approximately $1.2 million), (d) increased selling and marketing expenses
(approximately $0.9 million), (e) unfavorable foreign currency fluctuations
(approximately $0.9 million), (f) the 2000 restructuring charges related to
severance, outplacement services and contractual liabilities (approximately $0.4
million), and (g) increased amortization of intangibles primarily as a result of
acquisitions (approximately $0.3 million). Increased selling, general and
administrative expenses in the Orthodontics segment were partially offset by:
(a) decreased research and development expenses (approximately $0.4 million),
(b) a decrease in corporate charges from Apogent based on a lower domestic sales
percentage (approximately $0.7 million), and (c) the 1999 restructuring charges
(approximately $0.5 million).

               Infection Prevention. Increased selling, general and
administrative expenses in the Infection Prevention segment resulted primarily
from: (a) increased selling, general and administrative expenses primarily as a
result of acquired companies (approximately $0.5 million), (b) amortization of
intangibles primarily from acquired businesses (approximately $0.3 million), and
(c) the 2000 restructuring charges (approximately $0.2 million).


                                       82
<PAGE>

               Operating Income

<Table>
<Caption>
                                                                      PERCENT OF                   PERCENT OF
OPERATING INCOME:                                         2000          SALES          1999          SALES
                                                         -------      ----------      -------      ----------
                                                                          (IN THOUSANDS)
<S>                                                      <C>          <C>             <C>          <C>
Professional Dental ..................................   $56,238          26.2%       $43,028          22.2%
Orthodontics .........................................    39,259          21.8%        46,751          27.2%
Infection Prevention .................................       322           1.2%         3,627          13.7%
                                                         -------       -------        -------       -------
               Total Operating Income ................   $95,819          22.6%       $93,406          23.8%
                                                         =======       =======        =======       =======
</Table>

               As a result of the foregoing, operating income for the year ended
September 30, 2000 increased by 2.6% or $2.4 million from operating income for
the corresponding 1999 period.

               Interest Expense

               Interest expense was $25.9 million in 2000, an increase of $8.8
million from the corresponding 1999 period. The increase resulted from a higher
average debt balance allocated from Apogent resulting primarily from funding
acquisitions, an increase in average interest rates primarily due to the
addition of a Term B Loan in July 1999 and an increase in the adjusted interbank
offered rate for Eurodollar deposits which determine the interest charges on
floating rate debt. See "Liquidity and Capital Resources" below.

               Income Taxes

               Income taxes in 2000 were $28.7 million, a decrease of $1.8
million from the corresponding 1999 period. The decrease resulted primarily from
lower taxable income.

               Net Income

               As a result of the foregoing, we had net income of $42.1 million
in 2000, as compared to net income of $46.8 million in the corresponding 1999
period.

               Earnings Per Share

               Basic earnings per share for the years ended September 30, 2000
and 1999 were $1.20 per share and $1.33 per share, respectively, which were
computed using the 35,108,649 shares outstanding as of the date of the spin-off
on December 11, 2000. Diluted earnings per share for the years ended September
30, 2000 and 1999 have been omitted as no SDS stock options existed prior to the
date of the spin-off and any calculation of diluted earnings per share would not
be meaningful.

               Depreciation and Amortization

               Depreciation and amortization expense is allocated among cost of
sales, selling, general and administrative expenses and other expense.
Depreciation and amortization increased $0.9 million in 2000 due to additional
amortization from the step-up of assets, goodwill and intangibles recorded from
the various acquisitions as well as routine operating capital expenditures.

               New Accounting Pronouncements

               In July 2001, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets," and in
June 2001, SFAS No. 143 "Accounting for Asset Retirement Obligations." SFAS No.
141 requires that all business combinations be accounted for under a single
method -- the purchase method. Use of the pooling-of-interests method is no
longer permitted. SFAS No. 141 requires that the purchase method be used for
business combinations initiated after June 30, 2001. SFAS No. 142 requires that
goodwill no longer be amortized to earnings, but instead reviewed for
impairment. Under SFAS No. 142, the amortization of goodwill ceases upon
adoption of the Statement and is effective for fiscal years beginning after
December 15, 2001, which for calendar year-end companies will be January 1,
2002. Early application is permitted for entities with fiscal years beginning
after March 31, 2001, provided that the first interim financial statements have
not been previously issued. In all cases, the provisions of SFAS No. 142 shall
be initially applied at the beginning of a fiscal year.


                                       83
<PAGE>

               We have historically amortized our goodwill and other intangible
assets over their estimated useful lives. Beginning with the adoption of SFAS
No. 142, we will cease amortizing our goodwill and certain intangible assets as
defined in SFAS No. 142. We anticipate adopting SFAS No. 142 as of the beginning
of fiscal year 2003 (i.e. October 1, 2002). We recorded amortization expense in
the amount of $9.2 million and $8.5 million for the years ended September 30,
2001 and 2000, respectively. Upon adoption of SFAS No. 142, amortization of
goodwill and certain intangible assets will not be recorded in future periods.
Additionally, we will be required to evaluate our existing intangible assets and
goodwill and to make any necessary reclassifications in order to conform to the
new criteria in SFAS No. 141 for recognition of identifiable intangible assets
apart from goodwill and to reassess the useful lives of such assets.

               Further, to the extent an intangible asset is identified as
having an indefinite useful life, we will be required to test the intangible
asset and goodwill for impairment in accordance with the provision of SFAS No.
142 within the first interim period. Any impairment loss will be measured as of
the date of the adoption and recognized as the cumulative effect of a change in
accounting principle in the first interim period. Impairment will first be
assessed by identifying our reporting units and determining the carrying value
of each reporting unit by assigning the assets and liabilities, including the
existing goodwill and intangible assets to those reporting units, and comparing
the fair value of each reporting unit to the reporting unit's carrying amount.
To the extent that the carrying amount of each reporting unit exceeds its fair
value, impairment will be measured as the amount by which the reporting unit's
net assets and liabilities (recorded and unrecorded) exceed its fair value. We
have not fully determined the effect of adopting SFAS No. 142.

               SFAS No. 143 requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. We are required and plan to
adopt the provisions of SFAS No. 143 for the quarter ending December 31, 2002.
We believe the adoption of SFAS No. 143 will not have a material impact on our
financial position, results of operations, or cash flows.

               In August 2001, the FASB issued FASB Statement No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets (Statement
144)", which supersedes both FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of
(Statement 121)" and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions (Opinion 30)", for the disposal of a segment of a
business (as previously defined in that Opinion). Statement 144 retains the
fundamental provisions in Statement 121 for recognizing and measuring impairment
losses on long-lived assets held for use and long-lived assets to be disposed of
by sale, while also resolving significant implementation issues associated with
Statement 121. Statement 144 retains the basic provisions of Opinion 30 on how
to present discontinued operations in the income statement but broadens that
presentation to include a component of an entity (rather than a segment of a
business). Unlike Statement 121, an impairment assessment under Statement 144
will never result in a write-down of goodwill. Rather, goodwill is evaluated for
impairment under Statement No. 142, "Goodwill and Other Intangible Assets".

               We are required to adopt Statement 144 no later than the year
beginning after December 15, 2001, and plan to adopt its provisions for the
quarter ending December 31, 2002. We do not expect the adoption of Statement 144
for long-lived assets held for use to have a material impact on our consolidated
financial statements because the impairment assessment under Statement 144 is
largely unchanged from Statement 121. The provisions of the Statement for assets
held for sale or other disposal generally are required to be applied
prospectively after the adoption date to newly initiated disposal activities.
Therefore, we cannot determine the potential effects that adoption of Statement
144 will have on our consolidated financial statements.

INFLATION

               We do not believe that inflation has had a material impact on net
sales or income during any of the periods presented above. There can be no
assurance, however, that our business will not be affected by inflation in the
future.

LIQUIDITY

               As a result of the acquisition of Apogent's predecessor in 1987
and the acquisitions SDS and its subsidiaries have completed since 1987, we have
increased the carrying value of certain tangible and intangible assets
consistent with current generally accepted accounting principles. Accordingly,
our results of operations include a significant level of non-cash expenses
related to the depreciation of fixed assets and the amortization of intangible
assets, including goodwill. During fiscal 2001, goodwill and intangible assets
increased by approximately $41.1 million, primarily as a result of continued
acquisition activity.


                                       84
<PAGE>
               Approximately $60.6 million of cash was generated from operating
activities in 2001, as compared to approximately $62.4 million for the same
period of the prior year. The approximate $1.8 million decrease in cash flows
from operations was primarily due to: (a) a decrease in the net change in
inventory provisions from the prior year period of approximately $8.8 million
(of which approximately $7.6 million decrease from the prior year was related to
the 2000 exited product lines), (b) an increase in the net change in prepaid
expenses from the prior year period of approximately $6.4 million, (c) an
increase in the net change in inventories from the prior year period of
approximately $4.7 million, (d) a decrease in net income from the prior year
period of approximately $4.4 million, (e) the net change in other current
liabilities from the prior year of approximately $2.7 million, (f) a decrease in
the net change in restructuring reserve from the prior year period of
approximately $0.7 million, (g) a decrease in depreciation expense from the
prior year period of approximately $0.3 million, and (h) a decrease in the net
change in income taxes payable from the prior year period of approximately $0.1
million. The decreases in cash flow were partially offset by: (a) a net increase
in the net change in other assets and liabilities from the prior year period of
approximately $14.1 million, (b) a net increase in the net change in accounts
payable from the prior year period of approximately $6.7 million, (c) a net
increase in the net change in accrued payroll and employee benefits from the
prior year period of approximately $4.1 million, (d) an increase in amortization
from the prior year period of approximately $0.7 million, (e) a decrease in
the gain on sales of property, plant and equipment from the prior year period of
approximately $0.4 million, and (f) a net increase in the provision for losses
on doubtful accounts from the prior year period of approximately $0.3 million.

               Approximately $65.8 million of cash was used in investing
activities in 2001, an increase of approximately $33.0 million from the same
period in the prior year (primarily due to additional payments for acquisitions
from the prior year period of approximately $30.1 million, increased capital
expenditures from the prior year period of approximately $2.4 million, and lower
proceeds from sales of property, plant and equipment from the prior year period
of approximately $.5 million). Approximately $4.5 million of cash was provided
by financing activities in 2001 as compared to cash used in the prior year
period financing activities of approximately $23.0 million. In 2000, increased
investing activities resulted primarily from an increase in acquisition activity
(approximately $5.9 million), partially offset by a decrease in capital
expenditures (approximately $1.1 million), and increased proceeds from sales of
property, plant and equipment (approximately $0.4 million).

               In 2001, the approximate $27.5 million increase in cash provided
by financing activities from the prior year period was primarily attributed to:
(a) the net proceeds from our underwritten stock offering of approximately $50.0
million, (b) the net change in advances and loans to Apogent from the prior year
period of approximately $20.6 million, (c) a net change in other financing
activities from the prior year period of approximately $3.4 million, and (d) an
increase in cash received from the exercise of stock options of approximately
$1.3 million. The cash provided by the preceding financing activities were
partially offset by: (a) a decrease in the capital contributions from Apogent
over the prior year of approximately $16.8 million, (b) an increase in loan
activity from the prior year period of approximately $16.1 million, (c) an
increase in the cash dividend payment to Apogent from the prior year period of
approximately $9.4 million, and (d) the payment of deferred financing fees
related to the our prior credit facility of approximately $5.5 million. In 2000,
approximately $23.0 million of cash was used in financing activities, primarily
from dividends paid to Apogent (approximately $58.5 million), an increase in
advances to Apogent (approximately $21.0 million), partially offset by
borrowings under the Apogent credit agreement, of which certain of our
subsidiaries were obligers, (approximately $35.1 million) and
capital contributions from Apogent (approximately $21.4 million).

               The reduction in paid-in capital since September 30, 2000
primarily reflects the payment of $67.9 million in cash dividends to Apogent as
a result of the spin-off, and the settlement of all intercompany loans and
advances with Apogent by way of a non-cash dividend of approximately $78.2
million as a result of the spin-off, partially offset by the net proceeds from
the June 8, 2001 underwritten stock offering of approximately $50 million.


                                       85
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)            Exhibits:

               See the Exhibit Index following the Signature page in this
report, which is incorporated herein by reference.

(b)            Reports on Form 8-K:

               A Form 8-K dated May 10, 2002, was filed on May 13, 2002 to
report, under Item 5, "Other Events and Regulation FD Disclosure," an amendment
of our audited and interim financial statements. Our audited consolidated
financial statements for each year in the three year period ended September 30,
2001 and for the six months ended March 31, 2002 and 2001, were amended to add a
new note, "Condensed Consolidating Financial Information" to comply with Rule
3-10 of Regulation S-X. A complete copy of the adjusted financial statements was
filed as an exhibit.

               A Form 8-K dated May 13, 2002, was filed on May 13, 2002 to
report, under Item 5, "Other Events and Regulations FD Disclosure," our
intention to offer for sale $150 million of senior subordinated notes due 2012
in a private offering. A copy of the related press release was filed as an
exhibit.


                                       88
<PAGE>

                                    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: August 6, 2002            /s/ GREGORY D. WALLER
                                ------------------------------------------------
                                    Gregory D. Waller
                                    Vice President - Finance,
                                    Chief Financial Officer & Treasurer*

                                *   executing as both the principal financial
                                    officer and the duly authorized officer of
                                    the Company.


                                       89
<PAGE>
                         SYBRON DENTAL SPECIALTIES, INC.
                               (THE "REGISTRANT")
                          (COMMISSION FILE NO. 1-16057)
                                  EXHIBIT INDEX
                                       TO
        QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2002

<Table>
<Caption>
                                                                                        Filed
Exhibit Number     Description                    Incorporated by Reference to:         Herewith
<S>                <C>                            <C>                                   <C>
3.1                A. Restated                    Amendment No. 2 to
                   Certificate of                 the Registrant's
                   Incorporation of the           Registration
                   Registrant                     Statement on Form
                                                  10/A filed on
                                                  November 9, 2000
                                                  (File No. 1-16057)
                                                  (the "Form 10/A No.
                                                  2")

                   B. Certificate of              Exhibit 3.1(b) to the
                   Designation,                   2000 10-K
                   Preferences and
                   Rights of Series
                   A Preferred Stock

3.2                Bylaws of the                  Exhibit 3.2 to the
                   Registrant                     Form 10/A No. 2

3.3                Restated Certificate           Exhibits 3.1 and 3.2
                   of Incorporation and           of the Form 10/A No.
                   Bylaws                         2


4.1                Rights Agreement,              Exhibit 4 to the
                   dated as of Decem              Registrant's Current
                   8, 2000, between               Report on Form 8-K
                   Registrant and                 dated December 8,
                   EquiServe Trust                2000 and filed on
                   Company, N.A., as              December 12, 2000
                   Rights Agent,
                   including the Form of
                   Certificate of
                   Designation,
                   Preferences and
                   Rights of Series A
                   Preferred Stock
                   (Exhibit A), Form of
                   Rights Certificate
                   (Exhibit B) and Form
                   of Summary of Rights
                   (Exhibit C)

4.2                Indenture, dated as                                                  X
                   of June 6, 2002,
                   between Registrant,
                   its subsidiary
                   guarantors, and
                   Wilmington Trust
                   Company

4.3                Registration Rights                                                  X
                   Agreement, dated as
                   of June 6, 2002,
                   between Registrant,
                   Credit Suisse First
                   Boston Corporation,
                   Lehman Brothers Inc.,
                   Goldman, Sachs & Co.,
                   Robert W. Baird & Co.
                   Incorporated, Credit
                   Lyonnais Securities
                   (USA) Inc., Fleet
                   Securities, Inc., and
                   Tokyo-Mitsubishi
                   International plc.

4.4                Credit Agreement,                                                    X
                   dated as of June 6,
                   2002, between
                   Registrant and
                   certain of its
                   subsidiaries and
                   Credit Suisse First
                   Boston Corporation
                   and other lenders

4.5                Amended and Restated                                                 X
                   Purchase Agreement,
                   dated as of May 22, 2002
                   between Registrant and
                   Credit Suisse First Boston
                   Corporation, Lehman
                   Brothers Inc., Goldman,
                   Sachs & Co., Robert W.
                   Baird & Co. Incorporated,
                   Credit Lyonnais Securities
                   (USA) Inc., Fleet
                   Securities, Inc. and
                   Tokyo-Mitsubishi
                   International plc.

12.1               Computation of Ratio                                                 X
                   of Earnings to Fixed
                   Charges

18.1               Letter of KPMG LLP                                                   X
                   Regarding Change in
                   Accounting Principle

23.1               Consent of KPMG LLP                                                  X

99.1               Chief Executive                                                      X
                   Officers' certification
                   pursuant to 18 U.S.C.
                   section 1350, as
                   adopted pursuant to
                   section 960 of the
                   Sarbanes - Oxley Act
                   of 2002

99.2               Chief Financial                                                      X
                   Officers certification
                   pursuant to 18 U.S.C.
                   Section 1350, as
                   adopted pursuant to
                   section 960 of the
                   Sarbanes - Oxley Act
                   of 2002

</Table>

* Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant has
  omitted certain agreements with respect to long-term debt.  The Registrant
  agrees to furnish a copy of any such agreements to the Securities and Exchange
  Commission upon request.