<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-K

<Table>
<S>         <C>                                                           <C>
(Mark One)
   [X]          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                          SECURITIES EXCHANGE ACT OF 1934
                    For the fiscal year ended September 30, 2001
                                         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
</Table>

                        SYBRON DENTAL SPECIALTIES, INC.

               (Exact name of registrant as specified in charter)
<Table>
<S>                                 <C>                                            <C>
             DELAWARE                1717 WEST COLLINS AVE., ORANGE, CALIFORNIA                  92867
 (State or other jurisdiction of      (Address of principal executive offices)                 (Zip Code)
  incorporation or organization)

<S>                                 <C>
                                                33-0920985
                                     (I.R.S. Employer Identification
                                                   No.)
</Table>

       Registrant's telephone number, including area code: (714) 516-7400

          Securities registered pursuant to Section 12(b) of the Act:

<Table>
<Caption>
                                                                                NAME OF EACH EXCHANGE
                    TITLE OF EACH CLASS                                     ON WHICH EACH CLASS REGISTERED
                    -------------------                                     ------------------------------
<S>                                                          <C>
           Common Stock, par value $.01 per share                              New York Stock Exchange
              Preferred Stock Purchase Rights                                  New York Stock Exchange
             (associated with the Common Stock)
</Table>

        Securities registered pursuant to Section 12(g) of the Act: None

    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 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 [ ]

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

    The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based upon the closing sale price of the registrant's Common Stock
on December 14, 2001 as reported on the New York Stock Exchange, was
approximately $735,341,000. Shares of Common Stock held by each executive
officer and director and by each person known to beneficially own more than 5%
of the outstanding Common Stock have been excluded in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

    At December 14, 2001, there were 37,904,159 shares of the registrant's
Common Stock outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Certain portions of the registrant's Proxy Statement for its Annual Meeting
of Stockholders to be held on February 8, 2002 have been incorporated by
reference into Part III of this Form 10-K.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                        SYBRON DENTAL SPECIALTIES, INC.

                               TABLE OF CONTENTS
                                       TO
                        2001 ANNUAL REPORT ON FORM 10-K

<Table>
<Caption>
ITEM                                                                  PAGE
----                                                                  ----
<C>    <S>                                                            <C>
                                  PART I
  1    Business....................................................     1
  2    Properties..................................................    13
  3    Legal Proceedings...........................................    14
  4    Submission of Matters to a Vote of Security Holders.........    14
       Executive Officers of the Registrant........................    14
                                 PART II
  5    Market for Registrant's Common Equity and Related
       Stockholder Matters.........................................    16
  6    Selected Financial Data.....................................    16
  7    Management's Discussion and Analysis of Financial Condition
         and Results of Operations.................................    18
 7A    Quantitative and Qualitative Disclosures About Market
       Risk........................................................    38
  8    Financial Statements and Supplementary Data.................    41
  9    Changes in and Disagreements with Accountants on Accounting
         and Financial Disclosure..................................    85
                                 PART III
 10    Directors and Executive Officers of the Registrant..........    85
 11    Executive Compensation......................................    85
 12    Security Ownership of Certain Beneficial Owners and
       Management..................................................    85
 13    Certain Relationships and Related Transactions..............    85
                                 PART IV
 14    Exhibits, Financial Statement Schedules and Reports on Form
       8-K.........................................................    85
       Signatures..................................................    87
</Table>

                                        i
<PAGE>

                                     PART I

ITEM 1.  BUSINESS

GENERAL

                             BUSINESS AND PRODUCTS

     The subsidiaries of Sybron Dental Specialties, Inc. are leading
manufacturers of value-added consumable products for the dental and orthodontic
professions and products for use in infection control.

     Our subsidiaries operate in three business segments:

     - Professional Dental -- we develop, manufacture, market, and distribute a
       comprehensive line of consumable products to the dental industry
       worldwide;

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

     - Infection Control Products -- we develop, manufacture, market, and
       distribute consumable infection prevention products to the dental and
       medical markets.

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

<Table>
<Caption>
PROFESSIONAL DENTAL                                             ORTHODONTICS
-------------------                                             ------------
<S>                                                             <C>

Kerr Corporation                                                Ormco 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.

INFECTION CONTROL PRODUCTS

Metrex Research Corporation
</Table>

     We market our products in the United States and abroad under brand names
such as Kerr(R), Belle(TM), Metrex(R), Ormco(R) and "A" Company(R) Orthodontics,
Pinnacle(R), Demetron(R), Hawe(R) and AOA(TM), which are well recognized in the
dental, orthodontics and infection control industries.

                                    HISTORY

     Sybron Dental Specialties, Inc. was incorporated in Delaware on July 17,
2000. At the time of our incorporation we were a wholly owned subsidiary of
Sybron International Corporation, which is now known as Apogent Technologies
Inc. ("Apogent"). We were created to effect the spin-off by Apogent

                                        1
<PAGE>

of its dental business. As a part of the spin-off, which occurred on December
11, 2000, Apogent transferred to us, 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 interests 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 a pro rata
distribution, all of our outstanding common stock together with related
preferred stock purchase rights (the "spin-off"). As a result, we became an
independent, publicly traded company.

                             TERMS; YEAR REFERENCES

     When we use the terms "SDS," "we," "Company," or "our" in this report,
unless the context requires otherwise, we are referring to Sybron Dental
Specialties, Inc. and its subsidiaries and their respective predecessors that
prior to the spin-off comprised Apogent's dental business. Our fiscal year ends
September 30. All references to a particular year mean the fiscal year ended
September 30 of that year, unless we indicate otherwise.

                               BUSINESS STRATEGY

     Our goals are to consistently grow sales and earnings. Key elements of our
strategy to achieve these goals are:

          Product Innovation.  We strive to consistently develop and introduce
     new or improved innovative products. We believe that product innovation
     allows us to maintain our competitive position and helps fuel our internal
     growth.

          Ongoing Cost Reduction.  We are continuously seeking ways to maximize
     cost savings. As a result, we constantly evaluate our manufacturing
     processes to determine optimal production strategies, and will shift
     production between facilities or rationalize higher-cost facilities when
     necessary. We also evaluate our outsourcing arrangements in comparison to
     our in-house capabilities.

          Selective Acquisitions.  We seek suitable acquisition targets globally
     that benefit sales growth and are accretive to earnings through
     complementary product lines and additional geographic reach. Since 1993,
     when we adopted this element of our strategy, through our fiscal year ended
     September 30, 2001 we have made 26 acquisitions (including two mergers) in
     the United States and abroad. (See Note 16 to our consolidated financial
     statements in Item 8 of this Annual Report). In 2001, we made four
     acquisitions, the largest of which was the acquisition on May 31, 2001 of
     all the capital stock of Hawe Neos Holding S.A.("Hawe Neos") for
     approximately $45 million. Hawe Neos is a Swiss manufacturer and wholesaler
     of consumable dental products in the areas of prevention, restoration, and
     pharmaceutical. We funded the acquisition of Hawe Neos by selling 2,650,000
     shares of our common stock in an underwritten public offering and used the
     proceeds to repay short-term borrowings incurred to finance the
     acquisition.

     We have been able to use our existing distribution channels to market many
of the product lines we have acquired and we have achieved other synergies, such
as the elimination of duplicative administrative or other functions or the
combining of manufacturing operations, with some of these acquisitions.

     With the new SDS Credit Facility (see Note 7 to our consolidated financial
statements in Item 8 of this Annual Report), debt reduction is an important
priority; however, we will continue to pursue strategic and selective
acquisitions.

                           FORWARD-LOOKING STATEMENTS

     The description of our businesses included in this Item 1, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
Item 7 of this Annual Report, and other portions of this report 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,"

                                        2
<PAGE>

"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.

     We believe it is important to communicate expectations to our investors.
However, 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. These
factors include, among other things, those listed under "Cautionary Factors" in
Item 7 of this Annual Report. Although we believe the expectations reflected in
the forward-looking statements are reasonable, we cannot guarantee future
results. Those statements, such as the statement made in the immediately
preceding section, "Business Strategy" regarding our intent to pursue our
acquisition strategy, concern, among other things, our intent, belief or current
expectations with respect to our operating and growth strategies, our capital
expenditures, financing or other matters, regulatory matters pertaining to us
specifically and the industry in general, industry trends, competition, risks
attendant to foreign operations, reliance on key distributors, litigation,
environmental matters, and other factors affecting our financial condition or
results of operations. Such forward-looking statements involve certain risks and
uncertainties, many of which are beyond our control, that could cause actual
results to differ materially from those contemplated in the forward-looking
statements.

     We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.

BUSINESS SEGMENTS

     Professional Dental.  Products in our 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.

     Our Professional Dental products are primarily manufactured by Kerr
Corporation and its affiliates such as Sybron Canada Limited and Hawe Neos.
Kerr's products, which are generally sold through independent dental
distributors, are designed to help dentists deliver more effective and efficient
treatment to their patients. Kerr has expanded its product line through new
product development and through acquisitions.

     Expansion of products in this segment through acquisitions include the 1994
purchase of Demetron Research Corp., a manufacturer of lights used by dentists
to cure composite filling materials applied to teeth. These products
complemented Kerr's line of composite filling materials, which it enhanced by
acquiring E&D Dental Products, Inc. and its line of composites in 1996. Kerr
added to its offering of dental lab products with the acquisition of belle de
st.claire inc. in 1996. In 1997, it added diamond dental burs to the
considerable line of dental burs manufactured by Sybron Canada Limited, with the
acquisition of the assets of Precision Rotary Instruments, Inc. In 1999,
Pinnacle Products became a part of our organization, which enabled us to add
dental disposable infection control products such as plastic coverings
(barriers) for dental equipment and filters for evacuation units to this
business segment. In the second quarter of 2000, we added Safe-Wave Products,
Inc., a manufacturer of disposable tips and adapters for air/water syringes used
in dental operatories. In the first quarter of 2001, we acquired certain assets
of the dental division of Special Metals Corporation, a contract manufacturer
and supplier of alloy powders used in Kerr's Tytin(R) and Tytin(R) FC dental
amalgams, assuring continued access to this technology. In the third quarter of
2001, we acquired all of the capital stock of Hawe Neos, a Swiss manufacturer
and wholesaler of consumable dental products in the areas of prevention,

                                        3
<PAGE>

restoration and pharmaceutical. For a more complete description of these
acquisitions, please see Note 16 to our consolidated financial statements in
Item 8 of this Annual Report.

     The Professional Dental business segment accounted for approximately 52.5%,
50.8% and 49.4% of our consolidated net sales in 2001, 2000 and 1999,
respectively.

     Orthodontics.  Products in our Orthodontics business segment include a
broad range of orthodontic appliances such as brackets, bands and buccal tubes,
wires and elastomeric products as well as endodontic 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. These products
have historically been manufactured and marketed by Ormco, which sells its
products directly to orthodontists. Ormco expanded its orthodontics product line
through the acquisition of E.T.M. Corporation (a manufacturer of orthodontic
hand instruments) and Allesee Orthodontic Appliances, Inc. (a manufacturer of
custom-made positioners, retainers and other accessories) in 1994. In 1998, we
significantly enhanced the orthodontics line through a merger with LRS
Acquisition Corp., the parent of "A" Company Orthodontics, which is a
manufacturer and developer of brackets, archwires and related products. We also
expanded our direct business in France by acquiring the Ormodent group of
companies, Ormco's French distributor. In 2000, we again expanded our product
line with the acquisition of Professional Positioners, Inc., a manufacturer of
orthodontic retainers and positioners and LPI Ormco, the former distributor of
Ormco products in Austria. In the first quarter of 2001, we completed the
acquisition of certain assets of Optident, Ltd., the former exclusive authorized
distributor of Ormco "A" Company products in the United Kingdom. For a more
complete description of these acquisitions, please see Note 16 to our
consolidated financial statements in Item 8 of this Annual Report.

     In 1995, we added endodontic products to the Orthodontics segment, which
has a separate endodontic direct sales force, with the acquisition of Excellence
in Endodontics, Inc., a manufacturer of products for microscopic endodontic
procedures. We expanded our endodontic product offerings in this segment in 1996
when we acquired the assets of Analytic Technology Corporation, a manufacturer
of endodontic equipment. In 1998, we added a line of nickel-titanium endodontic
instruments with the acquisition of the dental business of Tycom Corporation. In
1999, we vertically integrated our Tycom product line in Europe with the
purchase of Endo Direct Ltd., the exclusive European importer of Tycom's
endodontic products.

     The Orthodontics business segment accounted for approximately 40.6%, 42.6%
and 43.9% of our consolidated net sales in 2001, 2000 and 1999, respectively.

     Infection Control Products.  Products in our Infection Control Products
business segment include high level disinfectants and sterilants, enzymatic
cleaners and instrument care solutions for medical and dental instruments,
surface disinfectant products and antimicrobial skincare products for medical
and dental use. These products are manufactured or supplied by Metrex Research
Corporation, acquired in 1995. Metrex expanded its product line through the
acquisition of the businesses of Micro-Aseptic Products, Inc. (a supplier of
surface disinfectants) in 1996 and Viro Research International, Inc. (a supplier
of skin antisepsis products) in 1998, and through the acquisition of the high
level disinfectant/sterilant business of Cottrell Ltd. in 1998. In 1999, we
acquired the business of Alden Scientific, Inc. and its sister corporation
Gulfstream Medical, Inc., both manufacturers of reagents and related infection
control products used to disinfect kidney dialysis machines. Alden also
manufactures chemical detecting reagents. In the third quarter of 2001, Metrex
acquired from OBF Technologies, Inc. ("OBF"), a product line used in the
management of biohazardous and hazardous liquid medical waste. For a more
complete description of these acquisitions, please see Note 16 to our
consolidated financial statements in Item 8 of this Annual Report.

     The Infection Control Products business segment accounted for approximately
6.9%, 6.6% and 6.7% of our consolidated net sales in 2001, 2000 and 1999,
respectively.

                                        4
<PAGE>

NEW PRODUCTS

     Our business segments devote considerable resources to the development and
introduction of new products. These efforts are critical to meeting the needs of
today's dentists, endodontists and orthodontists. In the Professional Dental
segment, product development requires diverse technical expertise and knowledge
of various market trends, which we possess. Kerr takes advantage of its
expertise and knowledge by working closely with dentists to develop new and
improved products. Recently introduced products, such as TAKE 1(R) BITE brand
registration material, Point 4(TM) brand composite, NEXUS 2 brand luting cement,
K3(TM) brand endodontic file, Guardian Seal(TM) brand pit and fissure sealant,
have contributed to Kerr's increased net sales. In the Orthodontics segment,
Ormco's sales force maintains direct contact with orthodontists to identify
market trends. Ormco works closely with orthodontists to improve existing
products and develop new products primarily through programs such as its Insider
program in which selected orthodontists assist Ormco in designing, developing
and ultimately educating users on new product and technique innovations. In
recent years, Ormco has introduced a number of new products, which have
contributed significantly to its sales. Examples of those products include the
DAMON(TM) II brand self-ligating bracket and INSPIRE! brand ceramic bracket.
Metrex consistently looks for new products to add to its line of infection
control products. In 2001, Metrex added the Clearline(R) brand water line
filtration system and VioNexus(TM) brand hand wash.

MARKETS; DISTRIBUTION

     Products in the Professional Dental business segment, including dental
related Infection Control Products, are sold both domestically and
internationally through dental distributors. Kerr has 47 sales personnel in the
United States and 69 abroad (of which 9 personnel were added with the
acquisition of Hawe Neos) dedicated to the Professional Dental business segment
sales. We intend to increase the sales force over the course of the next fiscal
year by approximately 7 sales personnel world-wide. The mission of the dental
sales force is to provide training and technical support to dealers and help
sell products to the Professional Dental business segment through the dealer
network.

     Our Professional Dental companies are committed to increasing their market
share through new product development and promotional activities. Their
activities create demand for our new products that make dentists more efficient.
The sales growth resulting from this demand for new products is augmented by
modest growth in the domestic market for traditional dental consumables. We also
believe opportunities for growth exist in international markets. As economies in
emerging markets of Eastern Europe, South America and the Far East continue to
develop, their demand for dental products should grow. Our Professional Dental
companies are well positioned to take advantage of such development due to their
extensive experience in selling internationally and the quality of their
existing international dealer network.

     Products in the Orthodontics business segment are marketed by approximately
107 direct salespersons in the United States, Austria, Belgium, Canada,
Australia, Germany, France, Ireland, Japan, Mexico, New Zealand, the
Netherlands, Portugal, Spain, Switzerland and the United Kingdom, and by dealers
and distributors in other parts of the world. Ormco's direct sales force,
dealers and distributors are supported by trade journal advertising, trade
shows, seminars and telemarketing.

     The market for traditional orthodontics products is relatively mature
domestically, and is experiencing modest growth. We believe that the
international market for orthodontics products presents a growth opportunity as
worldwide awareness of dental aesthetics grows. As with other health care
markets, over the past few years the orthodontics market has experienced a
consolidation of provider practices and the formation of management
organizations and buying groups, which are intended to bring administrative
efficiencies and buying power to orthodontic practices. We believe Ormco is well
positioned to compete in this environment because its marketing philosophy is
geared toward making orthodontic practices more efficient through product
innovation and customer service.

     In 2001, Ormco's Sybron Endo team was given the responsibility for the
sales of our endodontic products, both those sold directly to end-users and
those sold through distributors (which had been handled by our Professional
Dental business segment). We believe that we can enhance the sales of those
products by having one sales and marketing group develop and manage the sales
strategy for the endodontic products. The Sybron Endo team has

                                        5
<PAGE>

approximately 18 direct salespersons in the United States. The sales force will
market our endodontic products directly to the endodontic specialists in the
United States and Canada and will provide support to our dealers and help sell
products to the general dental community through a dealer network in those
countries. In other parts of the world, our endodontic products will be sold by
dealers and distributors.

     Products in the Infection Control Products business segment are marketed
primarily to the alternate health care market in the United States and Canada by
15 direct sales and independent sales personnel (including two in Canada) and by
independent manufacturers representatives and distributors. As referred to
above, the Infection Control Products business segment also utilizes the
Professional Dental sales force to penetrate the dental market.

     The sales and marketing focus for the Infection Control Products business
segment is on core product growth, acquisition and product development. We
believe revenue growth will come primarily from dental offices, clinics and
teaching hospitals.

     We believe we are well positioned to take advantage of the opportunities
that exist to grow our business. Opportunities that apply to all of our business
segments arise from the trends of an increasing worldwide population, growth in
the population of people 65 and older, natural teeth being retained longer, and
increased spending on dental health in developing nations.

INTERNATIONAL

     In addition to the United States, products in our Professional Dental
business segment are manufactured at facilities in Canada, Switzerland, Italy
and Mexico. These products are sold internationally through dealers, and
supported by sales offices in Europe (including major offices in Switzerland,
France and Germany), Japan, Australia, South America and Mexico.

     Prior to 1998, products in our Orthodontics business segment were sold
directly to end-users by Ormco's sales force in Australia, New Zealand, Canada,
Germany, Switzerland, Japan and Mexico and by exclusive distributors in key
European markets such as Italy, France and Spain. Since 1998, Ormco acquired its
distributor in France, the Ormodent group of companies, and now services the
French market directly, and has also reacquired its distribution rights in the
U.K., Spain, Austria and Belgium markets, which markets it also now services
directly.

     Products in our Infection Control Products business segment are
manufactured in the United States and are distributed internationally, primarily
in Canada, where independent sales representatives sell them. These products are
sold in other countries primarily through distributors and agents.

                                        6
<PAGE>

     Domestic and international sales of our products by business segment are as
follows:

<Table>
<Caption>
                                                                   YEARS ENDED SEPTEMBER 30,
                                                                --------------------------------
                                                                  2001        2000        1999
                                                                --------    --------    --------
                                                                         (IN THOUSANDS)
<S>                                                             <C>         <C>         <C>
Professional Dental:
  Domestic..................................................    $137,499    $127,693    $107,243
  International.............................................      93,286      87,195      86,514
                                                                --------    --------    --------
       Total Professional Dental Sales......................    $230,785    $214,888    $193,757
                                                                ========    ========    ========
Orthodontics:
  Domestic..................................................    $102,940    $103,157    $ 97,229
  International.............................................      75,643      77,322      74,826
                                                                --------    --------    --------
       Total Orthodontics Sales.............................    $178,583    $180,479    $172,055
                                                                ========    ========    ========
Infection Control Products:
  Domestic..................................................    $ 28,254    $ 26,281    $ 24,705
  International.............................................       1,925       1,492       1,732
                                                                --------    --------    --------
       Total Infection Control Product Sales................    $ 30,179    $ 27,773    $ 26,437
                                                                ========    ========    ========
Total Net Sales.............................................    $439,547    $423,140    $392,249
                                                                ========    ========    ========
</Table>

     We have included other financial information about our business segments
and foreign operations in Note 19 to our consolidated financial statements in
Item 8 of this Annual Report.

COMPETITION

     Numerous competitors participate in our business segments, some of which
have substantially greater financial and other resources than ours. There can be
no assurance that we will not encounter increased competition in the future.

     We believe our principal competitive advantages in the Professional Dental
business segment include the breadth of our product lines, brand name
recognition, and our programs to educate dentists regarding techniques and
products. Our principal competitors are GC America, Inc., 3M Corporation and its
affiliate Espe GmbH & Co., Dentsply International Inc., and Ivoclar. In the
Orthodontics business segment, we compete with more than 25 companies in the
United States. We compete primarily on the basis of product quality, the level
of customer service, price and new product offerings. Our competitors include
American Orthodontics, GAC Orthodontics (a subsidiary of Dentsply), and Unitek
(a subsidiary of 3M Corporation). In the Infection Control Products business
segment, our principal competitive advantages include the breadth of our product
lines, price and our product quality. Our competitors include Johnson and
Johnson, Steris Corporation and Ecolab, Inc.

BACKLOG

     Our total backlog of orders at September 30, 2001, 2000 and 1999 was
approximately $5.4 million, $3.4 million and $3.8 million, respectively. We
expect all September 30, 2001 backlog orders to be filled in fiscal 2002.

                                        7
<PAGE>

     Our backlog by business segment is as follows:

<Table>
<Caption>
                                                                YEARS ENDED SEPTEMBER 30,
                                                                --------------------------
                                                                 2001      2000      1999
                                                                ------    ------    ------
                                                                      (IN THOUSANDS)
<S>                                                             <C>       <C>       <C>
Professional Dental.........................................    $3,338    $2,087    $2,590
Orthodontics................................................       520     1,250     1,066
Infection Control Products..................................     1,539       110       134
                                                                ------    ------    ------
       Total................................................    $5,397    $3,447    $3,790
                                                                ======    ======    ======
</Table>

RESEARCH AND DEVELOPMENT

     We have a number of research and development programs in our various
business segments, which we consider to be of importance in maintaining our
market positions. We spent approximately $9.0 million, $8.8 million and $9.4
million on research and development in 2001, 2000 and 1999, respectively.

     Our research and development expenditures by business segment are as
follows:

<Table>
<Caption>
                                                                 YEARS ENDED SEPTEMBER 30
                                                                --------------------------
                                                                 2001      2000      1999
                                                                ------    ------    ------
                                                                      (IN THOUSANDS)
<S>                                                             <C>       <C>       <C>
Professional Dental.........................................    $4,236    $4,098    $4,353
Orthodontics................................................     4,328     4,321     4,769
Infection Control Products..................................       413       334       303
                                                                ------    ------    ------
       Total................................................    $8,977    $8,753    $9,425
                                                                ======    ======    ======
</Table>

EMPLOYEES

     Our companies employed approximately 3,700 people at September 30, 2001,
approximately 170 of whom are covered by collective bargaining agreements. We
believe our employee relations are generally good. In the United States, Kerr's
and Metrex's 170 hourly employees at the Romulus, Michigan facility are members
of the UAW. The labor contract for both Kerr and Metrex will expire on January
31, 2002. We are currently in negotiations to extend the union agreements until
January 31, 2005. We are not presently aware of any significant issues that
could impede negotiations. 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. Once
national contracts are set, further negotiation can take place at the local
level. Such negotiations can affect local operations. We have had no work
stoppages related to national contracts.

PATENTS, TRADEMARKS AND LICENSES

     Our subsidiaries' products are sold under a variety of trademarks and trade
names. We own all of the trademarks and trade names we believe to be material to
the operation of their businesses, including the KERR(R), ORMCO(R), "A"
Company(R), METREX(R), Hawe(R), Herculite(R), Prodigy(R), Tytin(R), Orthos(R),
Straight-Wire(R), Metricide(R), AOA(TM), Demetron(R), Damon(TM), and Diamond(R)
trademarks, each of which we believe to have widespread name brand recognition
in its respective field and all of which we intend to continue to protect. Our
subsidiaries also own various patents, employ various

                                        8
<PAGE>

patented processes and from time to time acquire licenses from owners of patents
to apply patented processes to their operations or to sell patented products.
Except for the trademarks referred to above, we do not believe any single
patent, trademark or license is material to the operations of our business as a
whole.

REGULATION

 MEDICAL DEVICES

     Certain of our products are medical devices that are subject to regulation
by the United States Food and Drug Administration (the "FDA") and by the
counterpart agencies of the foreign countries where our products are sold. Some
of the regulatory requirements of these foreign countries are more stringent
than those applicable in the United States. Our medical devices distributed in
the European countries are CE marked per the European Medical Device Directives,
93/42/EEC. Products that are CE marked may move freely in the fifteen European
Union States and the three European Economic Area States. Our worldwide
facilities that are engaged in the manufacturing of these products are ISO 9000
certified. Pursuant to the Federal Food, Drug, and Cosmetic Act (the "FDCA"),
the FDA regulates virtually all phases of the manufacture, sale, and
distribution of medical devices, including their introduction into interstate
commerce, their manufacture, advertising, labeling, packaging, marketing,
distribution and record keeping. Pursuant to the FDCA and FDA regulations,
certain facilities of our operating subsidiaries are registered with the FDA as
medical device manufacturing establishments.

     Medical devices are classified into Class I, II or III. Pursuant to section
510(k) of the FDCA, the manufacturer or distributor of a Class I or II device
that is initially introduced commercially on or after May 28, 1976 must notify
the FDA of its intent to commercially introduce the device through the
submission of a premarket notification (a "510(k)"). Before commercial
distribution can begin, the FDA must review the 510(k) and clear the device for
commercial distribution. The FDA normally has 90 days to review the 510(k) and
grant or deny clearance to market on the basis that it is or is not
substantially equivalent to a device marketed before May 28, 1976.
Alternatively, the FDA may postpone a final decision and require the submission
of additional information, which may include clinical data. If additional
information is required, review and clearance of a 510(k) may be significantly
delayed. In order to clear a Class I or II device for marketing, the FDA must
determine, from the information contained in the 510(k) and any additional
information that is submitted, that the device is substantially equivalent to
one or more Class I or II devices that are legally marketed in the United
States. Certain Class I devices are exempt from the 510(k) premarket
notification requirement and manufacturers of such products may proceed to
market without any submission to the FDA. If a device is not considered
"substantially equivalent," it is regulated as a Class III medical device. In
general, a Class III medical device must be expressly approved by the FDA for
commercial distribution pursuant to the submission of a premarket approval
application ("PMA"). A PMA must contain, among other information, substantial
information about the manufacture of the device and data from adequate and
well-controlled clinical trials that demonstrate that the device is both safe
and effective. The PMA approval process is substantially more complex and
lengthy than the 510(k) premarket notification process.

     A medical device, whether exempt from premarket notification, cleared for
marketing under the 510(k) pathway, or cleared pursuant to a PMA approval, is
subject to ongoing regulatory oversight by the FDA to ensure compliance with
regulatory requirements, including, but not limited to, product labeling
requirements and limitations, including those related to promotion and marketing
efforts, current good manufacturing practices and quality system requirements,
record keeping, and medical device (adverse reaction) reporting.

     All of our dental and orthodontic treatment products and our high level
disinfectants and sterilants are regulated as Class I or Class II medical
devices.

     Dental mercury is currently regulated by the FDA as a Class I device (not
exempt from the 510(k) premarket notification requirement), and amalgam alloy is
regulated as a Class II device. In February 1993, the FDA reported to its Dental
Products Advisory Panel that it planned to regulate encapsulated mercury and
amalgam alloy, like those sold by Kerr, as a single Class II device. At the same
time, the FDA planned to propose the reclassification of dental mercury as a
Class II device, so as to conform to the Class II designation for amalgam alloy
and to the planned Class II

                                        9
<PAGE>

designation for encapsulated mercury and amalgam alloy. In October 1994, the
FDA's Dental Products Panel of the Medical Devices Advisory Committee voted
unanimously to recommend reclassification of dental mercury from Class I to
Class II. Class II devices, unlike Class I devices, may be subject to
performance standards or special controls. At this time, there are no
performance standards or special controls applicable to mercury or to
encapsulated mercury and amalgam alloy, although it is possible that the FDA
could propose special controls during the reclassification process. With a Class
II designation, the amalgam products would continue to be subject to the 510(k)
premarket notification process. We are uncertain as to when, and if, the FDA
will publish its decision on the classification.

     All dental amalgam filling materials, including Kerr's dental amalgam
products contain mercury. The use of mercury in various products, including
dental amalgams, is being examined by various groups and U.S. and foreign
governmental agencies as a part of an effort to reduce the amount of mercury to
which individuals are exposed and that is discharged into the environment. We
are aware of at least one foreign government agency that, as a result of a study
it conducted has proposed a plan, that would discontinue the use of amalgams
once a suitable alternative is found.

     Various groups, that have expressed concerns about the health effects
allegedly caused by the mercury in amalgams, are active in lobbying state,
federal and foreign lawmakers and regulators to pass laws or adopt regulatory
changes or recommendations regarding the use of dental amalgams. To date, these
efforts have resulted in restrictions on or recommendations against the use of
amalgams in certain clinical situations in some states and countries. The
actions have generally been taken to reduce human exposure to mercury where
other safe and practical alternatives to dental amalgam exist. Certain groups
opposed to the use of amalgams have filed a lawsuit against the American Dental
Association ("ADA") and the California Dental Association ("CDA") alleging,
among other things, the ADA and CDA have issued rules preventing dentists from
discussing mercury with their patients.

     In the United States, the FDA's Dental Devices Panel, the National
Institute of Health and the United States Public Health Service have indicated
that the use of amalgams does not cause verifiable adverse effects in patients
who have amalgam fillings. All of these agencies have recommended further
research on the subject and, in large part because of their initiatives,
research with respect to potential health effects of dental amalgams is ongoing
at various places around the world.

 OVER THE COUNTER DRUG PRODUCTS

     Certain of our products, namely our topical anti-microbial infection
control products, are subject to regulation by the FDA as over the counter drug
products. In order to market a product as an over the counter drug, we are
required to comply with certain requirements relating to testing and labeling of
these products. Each new product is listed with the FDA; however, there is no
requirement for premarket submissions or approvals.

 FEDERAL INSECTICIDE, FUNGICIDE AND RODENTICIDE ACT

     Certain of our infection control products are classified as pesticides and
are subject to regulation by the United States Environmental Protection Agency
("EPA") under the Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA")
and by various State Environmental Agencies under the laws of those States.
Under FIFRA, no one may sell, distribute or use a pesticide unless it is
registered with the EPA. Registration includes approval by the EPA of the
product's label, including the claims and instructions for use. The producer of
a pesticide must provide data from tests done according to EPA guidelines. These
tests are designed to determine whether a pesticide has the potential to cause
adverse effects on humans, wildlife, plants and possible ground or surface water
contamination. Testing must also be submitted to support the claims on the
product labeling. Separate registrations must be obtained from the EPA and each
state in which the product is sold. Registrations must be renewed annually. The
regulations also require producers to report adverse events associated with
their products to the EPA. Failure to pay registration fees or provide necessary
testing data, or evidence that the product is the cause of an adverse effect on
humans or the environment, could result in the cancellation of a FIFRA
registration.

                                        10
<PAGE>

 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

     Our operations entail a number of environmentally sensitive production
processes. Compliance with environmental laws and regulations along with
regulations relating to workplace safety is a significant factor in our
businesses. Our domestic facilities are subject to federal, state and local laws
and regulations concerning, among other things, solid and hazardous waste
disposal, air emissions and waste water discharge, and our foreign facilities
are subject to local laws and regulations regarding the environment. Our
operations are also subject to regulation relating to workplace safety, both in
the United States and abroad. Violations of any of these laws and regulations or
the release of toxic or hazardous materials used in our operations into the
environment could expose us to significant liability. Similarly, third party
lawsuits relating to environmental and workplace safety issues could result in
substantial liability.

RAW MATERIALS

     We purchase a wide range of raw materials and supplies from a number of
suppliers and do not rely on sole sources to any material extent. We do not
foresee any significant difficulty in obtaining necessary materials or supplies.

RISKS ATTENDANT TO FOREIGN OPERATIONS

     We conduct our businesses in numerous foreign countries and as a result are
subject to risks of fluctuations in exchange rates of various foreign currencies
and other risks associated with foreign trade. For the years 2001, 2000 and
1999, our net sales outside the United States accounted for approximately 39%,
39%, and 42%, respectively, of consolidated net sales. See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
International Operations" and Item 7A, "Quantitative and Qualitative Disclosures
About Market Risk" for further information concerning the possible effects of
foreign currency fluctuations and currency hedges intended to mitigate their
impact.

RELIANCE ON KEY DISTRIBUTORS

     A substantial portion of our sales is made through major independent
distributors. The loss of certain of our dental distributors could have a
material adverse effect on our results of operations or financial condition.

TRANSACTIONS AND AGREEMENTS BETWEEN APOGENT AND SDS

     In order to effect the spin-off, Apogent and SDS entered into a number of
interrelated agreements. Certain of these agreements continue to define the
ongoing relationship between the parties after the spin-off and are briefly
described below. Because these agreements were negotiated while we were a wholly
owned subsidiary of Apogent, they are not the result of negotiations between
independent parties, although we and Apogent have set pricing believed to be
comparable to that set through arm's-length negotiations. In the future,
additional or modified agreements, arrangements and transactions may be entered
into and such agreements and transactions will be determined through
arm's-length negotiations.

 CONTRIBUTION AGREEMENT

     Pursuant to the Contribution Agreement, Plan and Agreement of
Reorganization and Distribution providing for the spin-off, immediately prior to
the spin-off, all of the capital stock of SDM, which owned, directly or
indirectly, the stock or other equity interests in the subsidiaries that held
substantially all of the assets and liabilities of the dental business, was
transferred by Apogent to us along with certain other assets relating to the
dental business. Under this agreement, prior to such transfer, SDM settled all
intercompany loans and advances with Apogent by way of a non-cash dividend of
$78.2 million, and a cash dividend to Apogent 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.

                                        11
<PAGE>

 ASSIGNMENT AND ASSUMPTION AGREEMENT

     Pursuant to the General Assignment, Assumption and Agreement Regarding
Litigation, Claims and Other Liabilities, in general, we and our U.S.
subsidiaries indemnify Apogent and its subsidiaries and affiliates against
liabilities, litigation and claims actually or allegedly arising out of the
dental business, including discontinued operations within those business
segments. 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 its Apogent's laboratory business, including
discontinued operations within those business segments, and other items not
transferred to us. In circumstances in which any liability of Apogent and SDS is
joint, the parties will share responsibility for such liability on a mutually
agreed basis consistent with the allocation of the business segments.

 INSURANCE MATTERS AGREEMENT

     An Insurance Matters Agreement governs the rights and obligations of
Apogent and us with respect to various pre-existing contracts insuring Apogent
and covering risks associated with, or arising out of, the dental business. The
types of policies covered by the Insurance Matters Agreement include, without
limitation, automobile liability, comprehensive and general liability. The
Insurance Matters Agreement also establishes certain procedures for dealing with
pending litigation, new litigation and the resolution of disputes between the
parties concerning that agreement.

 TAX INDEMNIFICATION AGREEMENT

     The Tax Sharing and Indemnification Agreement governs the allocation of
certain tax responsibilities between Apogent and its subsidiaries on the one
hand and us and our subsidiaries on the other hand after the spin-off. The Tax
Indemnification Agreement defines each company's rights and obligations with
respect to deficiencies and refunds of federal, state and other taxes relating
to the business operations for tax years (or portions thereof) ending on or
prior to the spin-off and with respect to certain tax attributes of the
companies after the spin-off. The Tax Indemnification Agreement also specifies
the parties' respective obligations in connection with any audit or
investigation concerning any federal, state or other taxes or in the event the
spin-off is subsequently determined not to qualify as tax-free for U.S. federal
income tax purposes.

 CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT

     As of the spin-off, SDS and Apogent had entered into a Confidentiality and
Nondisclosure Agreement whereby, subject to certain exceptions, each party
agreed to treat as confidential and not disclose certain proprietary and other
confidential information belonging to the other company.

                                        12
<PAGE>

ITEM 2.  PROPERTIES

     We operate manufacturing facilities in the United States and certain
foreign countries. The following table sets forth information regarding our
principal properties by business segment. Properties with less than 20,000
square feet of building space have been omitted from this table.

<Table>
<Caption>
LOCATION OF FACILITY                           BUILDING SPACE AND PRIMARY USE                                OWNED OR LEASED
--------------------                           ------------------------------                                ---------------
<S>                                            <C>                                                           <C>
HEADQUARTERS
Orange, California...........................  118,000 sq. ft./headquarters, manufacturing and warehouse        leased

PROFESSIONAL DENTAL
Morrisburg, Ontario..........................  60,000 sq. ft./manufacturing                                      owned
Morrisburg, Ontario..........................  30,000 sq. ft./manufacturing                                     leased
Danbury, Connecticut.........................  30,000 sq. ft./manufacturing                                     leased
Romulus, Michigan............................  220,000 sq. ft./manufacturing                                    leased
Scafati, Italy...............................  58,000 sq. ft./manufacturing                                      owned
Lakeville, Minnesota.........................  38,000 sq. ft./assembly                                           owned
Bioggio, Switzerland.........................  231,000 sq. ft./manufacturing                                     owned

ORTHODONTICS
San Diego, California........................  76,000 sq. ft./manufacturing                                      owned
Mexicali, Mexico.............................  57,000 sq. ft./manufacturing                                     leased
Glendora, California.........................  111,000 sq. ft./manufacturing                                    leased
Redmond, Washington..........................  29,000 sq. ft./manufacturing                                     leased
Uman, Yucatan, Mexico........................  35,000 sq. ft./manufacturing                                      owned
Tijuana, Mexico..............................  32,000 sq. ft./manufacturing                                      owned
Sturtevant, Wisconsin........................  21,000 sq. ft/manufacturing                                      leased

INFECTION CONTROL PRODUCTS
Romulus, Michigan............................  85,000 sq. ft./manufacturing                                     leased
</Table>

     We consider our plants and equipment to be well maintained and suitable for
their purposes. We have, from time to time, expanded and will continue to expand
facilities as the need arises. We expect to fund such expansions through
internally generated funds or borrowings under our Credit Facility, which are
described in Note 7 to our consolidated financial statements in Item 8 of this
Annual Report. All of our owned domestic properties are encumbered under our
Credit Facility. Our facility in Bioggio, Switzerland is encumbered by a
mortgage given to the former shareholder of Hawe Neos as security for certain
indemnification obligations we gave the former shareholder when we acquired Hawe
Neos. See "Liquidity and Capital Resources" in Item 7 of this Annual Report.

     Our San Diego, California facility is currently available for sale and the
manufacturing conducted there is planned to be absorbed into the Glendora,
California facility. See "Restructuring Charges" in Item 7 of this Annual
Report.

                                        13
<PAGE>

     We have signed a lease to rent 30,000 square feet in a building located in
San Dimas, California. We intend to use the space to create a distribution
center. We have also entered into an agreement to lease 34,000 square feet of a
building, which is being built next to our current facility in Uman, Yucatan,
Mexico. The building will be used for manufacturing product. We intend to begin
to occupy both facilities sometime in 2002.

ITEM 3.  LEGAL PROCEEDINGS

     SDS 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. SDS and its
subsidiaries are vigorously defending lawsuits and other claims against them.
Pursuant to the agreements described above between Apogent and SDS relating to
the spin-off, we will indemnify Apogent and its subsidiaries against costs and
liabilities associated with past or future operations of the dental business,
and Apogent will indemnify SDS and its subsidiaries against costs and
liabilities associated with past or future operations of the laboratory
business. We believe that any liabilities which might be reasonably expected to
result from any of SDS's or its subsidiaries' pending cases and claims would not
have a material adverse effect on our results of operations or financial
condition, even if we are unable to recover amounts that we expect to recover
with 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. See Note 12 to our consolidated financial statements in
Item 8 of this Annual Report and "Item 1. Business -- Transactions and
Agreements Between Apogent and SDS."

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

EXECUTIVE OFFICERS OF THE REGISTRANT

     Set forth below is the names, ages, positions and experience of our
executive officers. All executive officers hold office at the pleasure of the
Board of Directors.

<Table>
<Caption>
NAME                                            AGE                      POSITIONS AND EXPERIENCE
----                                            ---                      ------------------------
<S>                                             <C>    <C>
Floyd W. Pickrell, Jr. ......................   56     President and Chief Executive Officer of SDS since October
                                                       2000; President of SDM since August 1993; appointed Chairman
                                                       of the Board of Kerr Corporation in August 1993, and
                                                       Chairman of the Board of Ormco in February 1993; served as
                                                       President of Kerr from August 1993 until November 1998;
                                                       joined Ormco in 1978 and served as Ormco's President from
                                                       March 1983 until November 1998; previously served as Ormco's
                                                       Vice President of Marketing and as its National Sales
                                                       Manager.

Michael R. DePrez............................   60     Executive Vice President of Operations and Chief Information
                                                       Officer of SDS since October 2000. Joined SDM in September
                                                       1997 as Vice President of Information Technology and Chief
                                                       Information Officer; appointed Executive Vice President of
                                                       Operations in May 1999 with continued responsibilities as
                                                       Chief Information Officer. Previously Vice President of
                                                       Information Technology for Aramark Corporation and Director
                                                       of Information Technology for Mitsubishi Corporation.
</Table>

                                        14
<PAGE>

<Table>
<Caption>
NAME                                            AGE                      POSITIONS AND EXPERIENCE
----                                            ---                      ------------------------
<S>                                             <C>    <C>
Daniel E. Even...............................   49     President of Ormco since November 1998; Executive Vice
                                                       President and General Manager of Ormco from 1993 until
                                                       November 1998; Director of Allesee Orthodontic Appliances
                                                       (since July 1994) and Director and President of LRS
                                                       Acquisition Corporation (since April 1998). Joined Ormco in
                                                       1979 and held various management positions at Ormco
                                                       including Vice President Marketing and Research &
                                                       Development.

A.J. LaSota..................................   59     Vice President, General Manager and Director of Metrex
                                                       Research Corporation since November 1998; General Manager
                                                       for Metrex from December 1997 until November 1998. Joined
                                                       Metrex in September 1995 as Director of Sales and Marketing.
                                                       Previously served as founder and President of Endolap
                                                       Incorporated.

Steven J. Semmelmayer........................   44     President of Kerr Corporation since November 1998; Executive
                                                       Vice President and General Manager of Kerr from 1993 until
                                                       November 1998; Director and Chief Executive Officer of
                                                       Pinnacle Products (since October 1998); and Director and
                                                       President of Safe Wave Products (since February 2000).
                                                       Joined Ormco in 1979 and held various management positions
                                                       with Ormco including national Sales Director prior to being
                                                       transferred to Kerr.

Stephen J. Tomassi...........................   49     Vice President -- General Counsel and Secretary of SDS since
                                                       October 2000. Joined Apogent in 1988 as Corporate Counsel,
                                                       becoming Assistant General Counsel in June 1992, and
                                                       continued to serve in that role until the spin-off.
                                                       Previously in private practice from 1984 to 1988 with the
                                                       law firm of Halling & Cayo.

John A. Trapani..............................   56     Vice President of Human Resources of SDS. Joined Ormco in
                                                       October 1983 as Vice President of Human Resources since
                                                       October 2000; appointed Vice President of Human Resources
                                                       and Secretary for SDM and Kerr in 1993, and Vice President
                                                       Human Resources and Secretary for Ormco in 1994; also serves
                                                       as Secretary for a variety of SDS-affiliated companies.
                                                       Previously served as Manager of Employee Relations and
                                                       Manager of Administration for Rockwell International B-1
                                                       Division; and Manager Disney University and Manager of
                                                       Employment for Walt Disney Productions Studios and WED
                                                       Enterprises.

Gregory D. Waller............................   52     Vice President -- Finance, Chief Financial Officer and
                                                       Treasurer of SDS since October 2000. Vice
                                                       President -- Finance and Director of SDM since August 1993;
                                                       Vice President and Treasurer of Kerr and Ormco since August
                                                       1993; Vice President -- Finance, Director and Treasurer of
                                                       Metrex Research Corporation since March 1995. Joined Ormco
                                                       in December 1980 as Vice President and Controller; Vice
                                                       President of Kerr European Operations from July 1989 to
                                                       August 1993.

Frances B. L. Zee............................   51     Vice President of Regulatory Affairs and Quality Assurance
                                                       of SDS since October 2000; Vice President of Regulatory
                                                       Affairs and Quality Assurance of SDM since August 1993; Vice
                                                       President of Regulatory Affairs and Quality Assurance for
                                                       Kerr and Ormco since January 1994. Joined Ormco in May 1983
                                                       as Manager of Quality Assurance and later became Director of
                                                       Regulatory Affairs/Quality Assurance.
</Table>

                                        15
<PAGE>

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Since our inception, we have not paid any dividends on our Common Stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" in Item 7 of this Annual Report,
and Note 7 to our consolidated financial statements contained in Item 8 of this
Annual Report, for a description of certain restrictions on our ability to pay
dividends. Subject to such limitations, any future dividends will be at the
discretion of our Board of Directors and will depend upon, among other factors,
our earnings, financial condition and other requirements. We have no current
intention to pay cash dividends on our Common Stock.

     Based upon record ownership as of December 14, 2001, the number of record
holders of our Common Stock is 276.

     Prior to the spin-off there was no public trading market for our stock.
Commencing November 28, 2000, our Common Stock began to trade on the New York
Stock Exchange on a "when issued" basis under the symbol "SYD." "Regular way"
trading began on December 12, 2000, the day after the spin-off was effected. The
market information set forth below is for the period from November 28, 2000
through September 30, 2001 and is based on NYSE sales prices.

<Table>
<Caption>
                                                                 HIGH      LOW
                                                                ------    ------
<S>                                                             <C>       <C>
First Quarter (beginning Nov. 28, 2000).....................    $17.81    $13.00
Second Quarter..............................................     21.30     16.25
Third Quarter...............................................     22.00     18.50
Fourth Quarter..............................................     22.69     17.00
</Table>

ITEM 6.  SELECTED FINANCIAL DATA

     The following table sets forth selected consolidated financial information
for the five years in the period ended September 30, 2001. The historical
information shown may not necessarily be indicative of the results of operations
or financial position that would have been obtained if SDS was an independent
company during the periods shown or of SDS' future performance as an independent
company. This selected financial information should be read in conjunction with
our consolidated financial statements and the notes thereto contained in Item 8
of this Annual Report.

                                        16
<PAGE>

<Table>
<Caption>
                                                                             YEAR ENDED SEPTEMBER 30,
                                                               ----------------------------------------------------
                                                                 2001       2000       1999       1998       1997
                                                               --------   --------   --------   --------   --------
                                                                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S>                                                            <C>        <C>        <C>        <C>        <C>
Statement of Income Data:
  Net sales(a)..............................................   $439,547   $423,140   $392,249   $370,348   $362,145
  Apogent charges(b)........................................        730      2,979      4,228      3,620      3,617
  Income before extraordinary item..........................     39,647     41,597     47,294     27,496     37,064
  Extraordinary item(c).....................................       (498)        --         --         --       (269)
  Net income(d).............................................     39,149     41,597     47,294     27,496     36,795
  Basic earnings per share(f)...............................   $   1.09   $   1.18   $   1.35   $   0.78   $   1.05
  Fully diluted earnings per share(f).......................   $   1.06         --         --         --         --
Balance Sheet Data:
  Advances and loans to Apogent.............................   $     --   $ 77,762   $ 56,777   $ 29,088   $ 55,176
  Total assets..............................................    549,048    545,577    515,314    476,287    452,702
  Long-term debt, excluding current portion.................    321,536    298,482    283,447    248,175    259,297
  Stockholders' equity(e)...................................     99,646    152,970    155,595    129,508    104,800
</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. See Note 1 to
    our consolidated financial statements in Item 8 of this Annual Report for
    further information regarding revenue recognition.

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

(c) Represents the write-off of unamortized financing fees resulting from the
    refinancing of Apogent's debt in fiscal 1997 and the termination of
    Apogent's credit agreement in fiscal 2001. See Note 7 to our consolidated
    financial statements in Item 8 of this Annual Report.

(d) Includes restructuring charges (relating to a restructuring charge and
    merger, transaction and integration expenses associated with the merger with
    LRS) 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 and LRS and certain adjustments to
    the 1998 restructuring reserve. (See "Management's Discussion and Analysis
    of Financial Condition and Results of Operations" -- Item 7, and Note 12 to
    our consolidated financial statements in Item 8 of this Annual Report); 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 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.

(e) See "Management's Discussion and Analysis of Financial Condition and Results
    of Operations -- Liquidity and Capital Resources" in Item 7 of this Annual
    Report for an explanation of the decrease in the September 30, 2001
    stockholders' equity from the prior fiscal year period.

(f) Earnings per share data for the four years ended September 30, 1997 to 2000
    is computed using 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 outstanding shares is presumed to be outstanding
    for each fiscal year 1997 to 2000. Diluted earnings per share for the years
    ended September 30, 1997 to 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.

                                        17
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

     The following discussion should be read in conjunction with our
consolidated financial statements and the accompanying notes contained in Item 8
of this Annual Report.

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 approximately sixty-three employees located at Ormco's San
Diego, California manufacturing facility as a result of the closing of this
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 anticipated gain on the sale will be used to pay down debt and reduce
interest charges. Work functions currently performed at the facility will be
absorbed into our Glendora, California facility. The closing is expected to be
complete by April 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 for 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 anticipate completing the 2000 restructuring plan in
the first quarter of 2002, along with the remainder of the 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 in Item 8 of this Annual Report).

                                        18
<PAGE>

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

<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) 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) 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 to be terminated at the Ormco San Diego facility
    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 anticipated 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.

                                        19
<PAGE>

(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 grew in 2001 and 2000 from 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 7.4% and 0.8%, respectively, over the
corresponding prior year periods. Excluding the restructuring charges, operating
income decreased by 0.1% in 2001, and increased by 9.1% 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 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 have 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

     As discussed in "Business -- New Products," 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:

                                        20
<PAGE>

<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.

INFECTION CONTROL PRODUCTS
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

                                        21
<PAGE>

$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 in Item 8 of this Annual Report). 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 contained in Item 8 of this Annual Report.

<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>

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 Control Products..................................       30,179        27,773
                                                                 --------      --------
     Total Net Sales........................................     $439,547      $423,140
                                                                 ========      ========
</Table>

                                        22
<PAGE>

     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 Control Products.  Increased net sales in the Infection Control
Products 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).

 Gross Profit

<Table>
<Caption>
                                                                            PERCENT OF                PERCENT OF
GROSS PROFIT                                                      2001        SALES         2000        SALES
------------                                                    --------    ----------    --------    ----------
                                                                                (IN THOUSANDS)
<S>                                                             <C>         <C>           <C>         <C>
Professional Dental.........................................    $129,870       56.3%      $121,965       56.8%
Orthodontics................................................     106,070       59.4%       105,286       58.3%
Infection Control Products..................................      15,976       52.9%        12,061       43.4%
                                                                --------       ----       --------       ----
     Total Gross Profit.....................................    $251,916       57.3%      $239,312       56.6%
                                                                ========       ====       ========       ====
</Table>

     Overall Company.  Gross profit for the twelve months ended September 30,
2001 increased by $12.6 million or 5.3% 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 $0.4 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 the LIFO provision of
approximately $0.3 million, 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).

     Orthodontics.  Increased gross profit in the Professional Dental segment
resulted primarily from: (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),
(d) inventory adjustments (approximately $0.7 million, of which approximately
$3.5 million is a decrease in the LIFO provision,

                                        23
<PAGE>

approximately $0.7 million is related to physical inventory adjustments,
partially offset by 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), and (e) margins
relating to net sales of products from acquired companies (approximately $0.5
million). The increased gross profit margins were partially offset by: (a)
unfavorable exchange rate (approximately $5.3 million), (b) decreased sales
volume of existing products (approximately $4.4 million), (c) unfavorable
product mix margins (approximately $1.9 million), and (d) margins lost from last
year's exited products (approximately $1.6 million).

     Infection Control Products.  Gross profit in the Infection Control Products
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 $0.5 million, of which approximately $0.5 million is due to a
favorable physical inventory adjustment, a decrease in standard cost of
approximately $0.2 million, a decrease in the LIFO provision of approximately
$0.1 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).

 Selling, General and Administrative Expenses

<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 Control Products..................................      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 Control Products.  Increased selling, general and administrative
expenses in the Infection Control Products 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).

                                        24
<PAGE>

 Operating Income

<Table>
<Caption>
                                                                            PERCENT OF                PERCENT OF
OPERATING INCOME:                                                 2001        SALES         2000        SALES
-----------------                                               --------    ----------    --------    ----------
                                                                                 (IN THOUSANDS)
<S>                                                             <C>         <C>           <C>         <C>
Professional Dental.........................................    $ 60,438       26.2%      $ 56,071       26.1%
Orthodontics................................................      38,845       21.8%        38,545       21.4%
Infection Control Products..................................       2,798        9.3%           431        1.6%
                                                                --------       ----       --------       ----
     Total Operating Income.................................    $102,081       23.2%      $ 95,047       22.5%
                                                                ========       ====       ========       ====
</Table>

     As a result of the foregoing, operating income for the year ended September
30, 2001 increased by 7.4% or $7.0 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 $26.5 million, a decrease of $1.8 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
$39.6 million in 2001, as compared to net income of $41.6 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 $39.1 million in 2001,
as compared to net income of $41.6 million in the corresponding 2000 period.

 Earnings Per Share

     Basic earnings per share for the year ended September 30, 2001 were $1.09
per share, while fully diluted earnings per share were $1.06 per share. For the
year ended September 30, 2000, basic earnings per share of $1.18 were computed
using the 35,108,649 shares outstanding as of the date of the spin-off

                                        25
<PAGE>

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.

 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 Control Products..................................       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 Control Products.  Increased net sales in the Infection Control
Products 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).

                                        26
<PAGE>

 Gross Profit

<Table>
<Caption>
                                                                            PERCENT OF                PERCENT OF
GROSS PROFIT                                                      2000        SALES         1999        SALES
------------                                                    --------    ----------    --------    ----------
                                                                                (IN THOUSANDS)
<S>                                                             <C>         <C>           <C>         <C>
Professional Dental.........................................    $121,965      56.8%       $107,781      55.6%
Orthodontics................................................     105,286      58.3%        107,602      62.5%
Infection Control Products..................................      12,061      43.4%         14,293      54.1%
                                                                --------      -----       --------      -----
     Total Gross Profit.....................................    $239,312      56.5%       $229,676      58.6%
                                                                ========      =====       ========      =====
</Table>

     Overall Company.  Gross profit for the twelve months ended September 30,
2000 increased by $9.6 million or 4.2 % 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), (e) a LIFO adjustment (approximately $0.7
million), and (f) other inventory charges (approximately $0.3 million).

     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), (c) unfavorable foreign currency
fluctuations (approximately $4.4 million), and (d) a LIFO adjustment
(approximately $1.1 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 Control Products.  Decreased gross profit in the Infection
Control Products 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 $0.6 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).

                                        27
<PAGE>

 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 Control Products..................................      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 Control Products.  Increased selling, general and administrative
expenses in the Infection Control Products 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).

 Operating Income

<Table>
<Caption>
                                                                            PERCENT OF                PERCENT OF
OPERATING INCOME:                                                 2000        SALES         1999        SALES
-----------------                                               --------    ----------    --------    ----------
                                                                                 (IN THOUSANDS)
<S>                                                             <C>         <C>           <C>         <C>
Professional Dental.........................................    $ 56,071       26.1%      $ 43,558       22.5%
Orthodontics................................................      38,545       21.4%        47,121       27.4%
Infection Control Products..................................         431        1.6%         3,627       13.7%
                                                                --------       ----       --------       ----
     Total Operating Income.................................    $ 95,047       22.5%      $ 94,306       24.0%
                                                                ========       ====       ========       ====
</Table>

                                        28
<PAGE>

     As a result of the foregoing, operating income for the year ended September
30, 2000 increased by 0.8% or $0.7 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 $28.3 million, a decrease of $2.5 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 $41.6 million in 2000,
as compared to net income of $47.3 million in the corresponding 1999 period.

 Earnings Per Share

     Basic earnings per share for the years ended September 30, 2000 and 1999
were $1.18 per share and $1.35 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.

                                        29
<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.

                                        30
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     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.

     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 $12.1 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 the net change in other current liabilities from the
prior year of approximately $2.7 million, (e) a decrease in net income from the
prior year period of approximately $2.4 million, (f) a decrease in the net
change in restructuring reserve from the prior year period of approximately $0.7
million, and (g) a decrease in depreciation expense from the prior year period
of approximately $0.3 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 net increase in the net change in deferred income taxes payable
from the prior year period of approximately $0.7 million, (f) an increase in the
net change in income taxes payable from the prior year period of approximately
$0.5 million, (g) a decrease in the gain on sales of property, plant and
equipment from the prior year period of approximately $0.4 million, and (h) 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 SDS 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 Facilities (approximately $35.1 million) and
capital contributions from Apogent (approximately $21.4 million).

                                        31
<PAGE>

     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.

     Prior to the spin-off, our capital requirements arose principally from our
allocation of the indebtedness incurred in connection with the permanent
financing for the 1987 acquisition of the predecessor to Apogent and subsequent
refinancings, obligations to pay rent under the Sale/Leaseback facility (as
defined herein), working capital needs, primarily related to inventory and
accounts receivable, capital expenditures, primarily related to purchases of
machinery, the purchase of various businesses and product lines in execution of
our acquisition strategy, payments to be made in connection with our
restructuring in 1998, and the periodic expansion of physical facilities. We
expect our future capital requirements to be similar to those prior to spin-off.
In addition, we required capital to service bank debt and related interest
allocated in the spin-off of $311.8 million. It is currently our intent to
de-leverage and to continue to pursue our acquisition strategy when those
acquisitions appear to be in the best interest of the stockholders, and taking
into account our level of debt and interest. If acquisitions continue at our
historical pace, of which there can be no assurance, we may require financing
beyond the capacity of our Credit Facility (as defined below). In addition,
certain acquisitions previously completed contain "earnout provisions" requiring
further payments in the future if certain financial results are achieved by the
acquired companies. See Note 13 to our consolidated financial statements
contained in Item 8 of this Annual Report.

     The statement contained in the immediately preceding paragraph concerning
our intent to continue to pursue our acquisition strategy is a forward-looking
statement. Our ability to continue our acquisition strategy is subject to a
number of uncertainties, including, but not limited to, our ability to raise
capital beyond the capacity of our Credit Facility and the availability of
suitable acquisition candidates at reasonable prices. See "Cautionary Factors"
below.

 CREDIT FACILITY

     We obtained a new credit facility (the "SDS Credit Facility") in connection
with the spin-off 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 our 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 our subsidiaries,
is the borrower.

     The Tranche A Term Loan bears interest, at the option of the Term Loan
Borrowers, 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 applicable percentage on the grid was in place through September 30,
2001. Repayments under the Tranche A Term Loan are due in quarterly
installments, which began on March 31, 2001. As of September 30, 2001, the
remaining amounts due in fiscal 2002, 2003, 2004 and 2005 are $23.75 million,
$28.75 million, $33.75 million and $38.75 million, respectively, with the final
payment of $9.8 million due in November 2005. As of September 30, 2001 the
amount outstanding on the Tranche A Term Loan was $134.8 million. The average
interest rate at September 30, 2001 on the Tranche A Term Loan was 7.10%.

     The Tranche B Term Loan bears interest, at the option of the Term Loan
Borrowers, 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% depending upon certain financial ratios or (b) the
adjusted interbank offered rate for Eurodollar deposits plus 3.75%. Repayments
under the Tranche B Term Loan are due in quarterly installments, which began on
March 31, 2001. As of September 30, 2001, the remaining amounts due in 2002,
2003, 2004, 2005, 2006, and 2007 are $1.5 million, $1.5 million, $1.5 million,
$1.5 million, $53.8 million and $71.3 million, respectively, with the final
payment of $17.6 million due in

                                        32
<PAGE>

November 2007. As of September 30, 2001 the amount outstanding on the Tranche B
Term Loan was $148.7 million. The average interest rate at September 30, 2001 on
the Tranche B Term Loan was 8.75%.

     Borrowings under the Revolving Credit Facility generally bear interest on
the same terms as those under Tranche A Term Loan. In addition, SDM pays a
commitment fee on the average unused portion of the Revolving Credit Facility
ranging from 0.375% to 0.5% depending on certain financial ratios. Until
September 30, 2001, we were required to pay the highest end of the range. The
Revolving Credit Facility also provides for the issuance of standby letters of
credit and swing line loans of credit as required in the ordinary course of
business, subject to certain sublimits. As of September 30, 2001 the amount
outstanding under the Revolving Credit Facility was $51.5 million. The average
interest rate at September 30, 2001 on the Revolving Credit Facility was 8.91%.

     The SDS Credit Facility contains numerous financial and operating
covenants, including, among others: restrictions on acquisitions and
investments; requirements that we maintain certain financial ratios;
restrictions on our ability to incur indebtedness or to create or permit liens,
or to pay cash dividends; and limitations on incurrence of additional
indebtedness. 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
September 30, 2001.

     We entered into a First Amendment and Consent to the SDS Credit Facility
with our senior lenders as of April 18, 2001. Among other things, the first
amendment set forth the lenders' consent to our acquisition of Hawe Neos. The
first amendment provided that we could finance the acquisition with the proceeds
of our Revolving Credit Facility, as we did, and then, within forty-five days of
the consummation of the acquisition, apply the proceeds of a completed equity
financing to repay that borrowing, which we did. The first amendment also
restricted our ability to complete other acquisitions during calendar year 2001
without the consent of the lenders.

     All interest on our historical books under the credit facilities managed by
Apogent (the "Apogent Credit Facilities"), was at floating rates, primarily
based on the Eurodollar rates and, as such, we were exposed to fluctuations in
Eurodollar rates. We have not historically mitigated that risk through
derivative instruments. The SDS Credit Facility is anticipated to use primarily
the Eurodollar rates provided the rates are more favorable to us. Under the SDS
Credit Facility, we are required to have interest rate protection for a minimum
of 50% of the aggregate outstanding principal amount of the Tranche A Term Loan
and Tranche B Term Loan for not fewer than four years. We are currently meeting
this obligation.

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

     As a result of the terms of the SDS 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 September 30, 2001, we had six interest rate swaps outstanding
aggregating a notional amount of $205.2 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 Eurodollar Rate Margin. The swap agreement rates and durations are as
follows:

                                        33
<PAGE>

<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
January 18, 2005     $70.0 million    December 22, 2000            5.78%          January 16, 2001
February 16, 2005    $10.0 million    January 24, 2001             5.69%          February 16, 2001
March 31, 2005       $32.6 million    January 2, 2001              5.65%          March 30, 2001
March 31, 2005       $32.6 million    January 2, 2001              5.58%          March 30, 2001
</Table>

     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 the Revolving Credit
Facility. 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.

     The Revolving Credit Facility provides up to $150 million in available
credit. At September 30, 2001, there was approximately $98.5 million of
available credit under the Revolving Credit Facility.

     Historically and prior to the spin-off, our operations were funded through
the Apogent Credit Facilities. Certain of our affiliates were obligors under the
Apogent Credit Facilities and as such, Apogent had historically recorded a
portion of the debt outstanding and related interest under these facilities with
us. At September 30, 2000, approximately $311.8 million of the borrowings under
the Apogent Credit Facilities, consisting of term loan facilities (the "Old
Tranche A Term Loan" and "Old Tranche B Term Loan") and a revolving credit
facility (the "Old Revolving Credit Facility") were recorded by us. Under the
Old Tranche A Term Loan, we had $69.5 million outstanding at September 30, 2000.
Under the Old Tranche B Term Loan, we had $119.7 million outstanding at
September 30, 2000. Under the Old Revolving Credit Facility, we had $122.6
million outstanding at September 30, 2000. Our cash flow has been substantially
affected by the historical debt (and related interest expense) and by charges
related to an allocation of corporate operating expenses by Apogent to us. Our
interest expense was $33.5 million and $25.9 million for the years ended
September 30, 2001 and 2000, respectively. Apogent corporate operating expenses
charged to us were and $0.7 million and $3.0 million during the years ended
September 30, 2001 and 2000, respectively. The interest expense and corporate
operating expense charges are not necessarily indicative of the interest charges
and corporate operating expenses that would have been incurred by us if we had
been an independent company during the periods presented. During the first
quarter of 2001, we assumed stand-alone corporate expenses, as well as incurred
corporate charges from Apogent prior to the spin-off. Borrowed funds after the
spin-off have higher interest rates than those historically recorded by us.
Since the spin-off, we have been responsible for the expenses of being an
independent company.

     We believe that the cash flows from operations, unused amounts available
under the SDS 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.

     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 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

                                        34
<PAGE>

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 provides us the option to purchase the leased premises at fair 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. In addition, we unconditionally
guarantee each of the leases.

     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.

     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 and OBF.

CAUTIONARY FACTORS

     This report contains 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:

     - As of September 30, 2001, we had $347.5 million in total debt, and $99.6
       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.

       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. At September 30, 2001, approximately $51.5 million of our
       indebtedness was incurred under our Revolving Credit Facility. 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.

     - The tragic events of September 11, 2001 and their aftermath are affecting
       most public companies. Fortunately, none of our employees was lost or
       injured (and none of our properties or records was damaged) as a result
       of the terrorist attacks that occurred in the United States on September
       11. Although our operations during that week were hampered by the
       temporary disruption of transportation and communications,

                                        35
<PAGE>

       management does not believe the impact will be material. However, at this
       time, we are unable to predict the long-term impact of these events, or
       of the domestic and foreign response, on either our industry as a whole
       or on our operations and financial condition in particular.

     - Our business strategy includes continued growth through strategic
       acquisitions, which depends upon the availability of suitable acquisition
       candidates at reasonable prices and our ability to quickly resolve
       transitional challenges. Failure to consummate appropriate acquisitions
       would adversely impact our growth and failure to successfully integrate
       them would adversely affect our results. These challenges include
       integration of product lines, sales forces and manufacturing facilities
       and decisions regarding divestitures, cost reductions, and realizing
       other synergies. Also, these challenges involve risks of employee
       turnover, disruption in product cycles and the loss of sales momentum. We
       cannot be certain that we will successfully manage them in the future.
       Also, our credit facilities limit our ability to consummate acquisitions
       without the consent of our lenders.

     - In 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.

     - Our ability to increase sales, and to profitably distribute and sell our
       products, is subject to a number of risks, including any 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 with dental,
       orthodontic and infection control innovations; 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.

     - Our business is subject to quarterly variations in operating results
       caused by a number of factors, including business and industry
       conditions, the timing of acquisitions, distribution chain issues, and
       other factors beyond our control. All these factors make it difficult to
       predict operating results for any particular period.

     - We 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.

     - Our foreign operations include manufacturing facilities in Canada,
       Switzerland, Italy, and Mexico. Accordingly, an event that has a material
       adverse impact on our foreign operations may materially adversely affect
       our operations as a whole. The business, regulatory and political
       environments in countries where we have operations differ from those in
       the United States and our foreign operations are exposed to a number of
       inherent risks, including, but not limited to: changes in international
       trade laws, such as the North American Free Trade Agreement, or NAFTA,
       affecting our activities in Mexico and Canada; changes in local labor
       laws and regulations affecting our ability to hire and retain local
       employees; currency exchange restrictions and fluctuations in the value
       of foreign currency; potentially adverse tax consequences; longer payment
       cycles; greater difficulties in accounts receivable collection; political
       conditions in countries where we have operations; unexpected changes in
       the regulatory environment; and changes in general economic conditions in
       countries, such as Italy and Mexico, that have historically been less
       stable than the United States. If any of the events described in these
       risks were to occur, it could have a material adverse effect on our
       business, financial condition and results of operations.

     - 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

                                        36
<PAGE>

       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.

     - 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.

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

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

     - Our ability to hire and retain competent employees is also subject to a
       number of risks, including unionization of our non-union employees and
       changes in relationships with our unionized employees. In particular,
       many of our non-management employees in Europe are subject to national
       labor contracts, which are negotiated from time to time at the national
       level between the national labor union and 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.

     - Our ability to continue manufacturing and selling those of our products
       that are subject to regulation by the United States Food and Drug
       Administration 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, increase our costs, and hinder our
       growth.

     - 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
       GC America, Inc., 3M Corporation and its affiliate Espe GmbH & Co., and
       Dentsply International Inc.; in the Orthodontics business segment, we
       compete with companies such as American Orthodontics, GAC Orthodontics, a
       subsidiary of Dentsply, and Unitek, a subsidiary of 3M Corporation; and
       in the Infection Control Products business segment, our principal
       competitors include Johnson and Johnson, Steris Corporation, and Ecolab,
       Inc. We may face increased competition from them 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 hinder our future expansion.

     - 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. 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.

                                        37
<PAGE>

     - 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.

     - 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.

     - 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.

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

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

RISK MANAGEMENT

     We are exposed to market risk from changes in foreign currency exchange
rates and interest rates. To reduce our risk from these foreign currency rate
and interest rate fluctuations, we occasionally enter into various hedging
transactions. We do not anticipate material changes to our primary market risks
other than fluctuations in magnitude from increased or decreased foreign
currency denominated business activity or floating rate debt levels. We do not
use financial instruments for trading purposes and are not a party to any
leveraged derivatives.

FOREIGN EXCHANGE

     We have, from time to time, used foreign currency options to hedge our
exposure from adverse changes in foreign currency rates. Our foreign currency
exposure exists primarily in the Euro, Australian dollar, Swiss Franc, Canadian
dollar, and the Japanese Yen values versus the U.S. dollar. Hedging may be
accomplished by the use of foreign currency options, forward contracts or
similar instruments, and the gain or loss on these options would be used to
offset gains or losses in the foreign currencies to which they pertain. Hedges
of anticipated transactions may be accomplished with options that expire on or
near the maturity date of the anticipated transactions. As of September 30,
2001, we had monthly zero cost collars in place to protect against foreign
currency fluctuations in the Euro and the Japanese Yen for fiscal year 2002.

                                        38
<PAGE>

     For the fiscal year 2002, we expect our exposure from our primary foreign
currencies to approximate the following:

<Table>
<Caption>
                                                                      ESTIMATED EXPOSURE             ESTIMATED
                                                                DENOMINATED IN THE RESPECTIVE        EXPOSURE
CURRENCY                                                               FOREIGN CURRENCY           IN U.S. DOLLARS
--------                                                        ------------------------------    ---------------
                                                                                 (IN THOUSANDS)
<S>                                                             <C>                      <C>      <C>
Euro........................................................             49,800           EUR         $45,400
Japanese Yen................................................            915,700           JPY         $ 7,700
Canadian Dollar.............................................             16,900           CAD         $10,700
Australian Dollar...........................................             13,700           AUD         $ 6,700
Swiss Franc.................................................             11,800           CHF         $ 7,300
</Table>

     As a result of these anticipated exposures, in August 2001 we entered into
a series of zero cost collar transactions to protect a total notional amount of
40.2 million Euros and 660 million Japanese Yen of intercompany transactions for
our fiscal year 2002 exposure from detrimental effects of foreign currency
fluctuations. As a result, an approximate $0.03 million loss representing the
fair value of the zero cost collars (net of income tax), was recorded in
accumulated other comprehensive income (loss) as a component of stockholders'
equity.

     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 71.73 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. The interest rate to be paid to us on the U.S.
dollar principal amount of $45 million is 5.79%, and the interest rate to be
paid by us on the Swiss franc principal amount of 71.73 million is 4.40%.
Therefore, the net interest rate reduction on the cross currency debt swap
transaction is 1.39%.

INTEREST RATES

     We use interest rate swaps to reduce our exposure to interest rate
movements. Our net exposure to interest rate risk consists of floating rate
instruments whose interest rates are determined by the Eurodollar rate. Interest
rate risk management is accomplished by the use of swaps to create fixed
interest rate debt by resetting Eurodollar rate loans concurrently with the
rates applied to the swap agreements. At September 30, 2001, we had floating
rate debt of approximately $334.9 million of which a total of $205.2 million was
covered under our interest rate swap agreements. Under our SDS Credit Facility,
the net interest rate paid by us is approximately equal to the sum of the swap
agreement rates plus the applicable Eurodollar rate margin. As of September 30
2001, the Tranche A and Revolver Eurodollar rate margins were 2.75%. The Tranche
B Eurodollar rate margin was 3.75%. The model below quantifies our sensitivity
to interest rate movements as determined by the Eurodollar rate and the effect
of the interest rate swap agreements which reduce that risk. The model assumes:
(a) a base Eurodollar rate of 2.59% (the "Eurodollar Base Rate") which
approximates the September 30, 2001 three month Eurodollar rate, (b) our
floating rate debt is equal to our September 30, 2001 floating rate debt balance
of $334.9 million, (c) we pay interest on floating rate debt equal to the
Eurodollar Base Rate + 319 basis points, (d) we have interest rate swaps with
total notional amounts of $205.2 million, all in place as of September 30, 2001
(please see schedule in "Liquidity and Capital Resources" above for actual
effective dates), and (e) the Eurodollar Base Rate varies by 10% of the Base
Rate.

<Table>
<Caption>
                                                                INCREASE IN THE        DECREASE IN THE
INTEREST RATE EXPOSURE                                        EURODOLLAR BASE RATE   EURODOLLAR BASE RATE
----------------------                                        --------------------   --------------------
<S>                                                           <C>                    <C>
Without interest rate swaps:................................      $1.9 million          ($1.9 million)
With interest rate swaps:...................................      $0.7 million          ($0.7 million)
</Table>

                                        39
<PAGE>

     Cash Flow Hedge -- Interest Rate Exposure:  For fiscal year 2001, the total
net cost of converting from floating rate (3-month Libor) to fixed rate from a
portion of the principal amount of the debt obligation was $0.575 million. Below
is a table listing the interest expense exposure detail (in thousands):

<Table>
<Caption>
                                                                                       SWAP
                                                                              -----------------------                 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 ended September 30, 2001, a loss of approximately $9.1
million ($5.4 million, net of income tax) representing the fair value of
interest rate swaps, was recorded in accumulated other comprehensive income
(loss). Fair values of the interest rate swap agreements as of September 30,
2001 are as follows (in thousands):

<Table>
<Caption>
                                                                                       SWAP
                                                                              -----------------------
LOAN                                                 AMOUNT        TERM         TRADE       EFFECTIVE    MATURITY     FAIR VALUE
----                                                --------    ----------    ----------    ---------    ---------    -----------
<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>

                                        40
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                        SYBRON DENTAL SPECIALTIES, INC.

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Independent Auditors' Report................................   42
Consolidated Balance Sheets as of September 30, 2001 and
  2000......................................................   43
Consolidated Statements of Income for the years ended
  September 30, 2001, 2000 and 1999.........................   45
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income for the years ended September 30,
  2001, 2000 and 1999.......................................   47
Consolidated Statements of Cash Flows for the years ended
  September 30, 2001, 2000 and 1999.........................   49
Notes to Consolidated Financial Statements..................   51
</Table>

                                        41
<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/ KPMG LLP
                                     -------------------------------------------
                                                      KPMG LLP

Orange County, California
November 19, 2001

                                        42
<PAGE>

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                          SEPTEMBER 30, 2001 AND 2000

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
                                                                 (IN THOUSANDS)
<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)..................................    85,765      74,383
  Deferred income taxes (note 4)............................     4,801       8,977
  Prepaid expenses and other current assets (note 1)........    12,998       6,497
                                                              --------    --------
       Total current assets.................................   204,055     181,407
                                                              --------    --------
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)..............................    10,382       3,410
Other assets (note 11)......................................    13,111       6,967
                                                              --------    --------
       Total assets.........................................  $549,048    $545,577
                                                              ========    ========
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).............................     6,727       1,698
  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............................    93,897      69,876
                                                              --------    --------
</Table>

          See accompanying notes to consolidated financial statements.
                                        43
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
                          SEPTEMBER 30, 2001 AND 2000

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Long-term debt (note 7, 8, 9 and 16)........................  $321,536    $298,482
Deferred income taxes (note 4)..............................    17,163      15,414
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..................................    74,661     164,648
Retained earnings...........................................    38,511          --
Accumulated other comprehensive loss........................   (13,905)    (11,678)
                                                              --------    --------
Total stockholders' equity (notes 1, 7, 10, 14, 16, 17).....    99,646     152,970
                                                              --------    --------
       Total liabilities and stockholders' equity...........  $549,048    $545,577
                                                              ========    ========
</Table>

          See accompanying notes to consolidated financial statements.
                                        44
<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)
<S>                                                           <C>        <C>        <C>
Net sales...................................................  $439,547   $423,140   $392,249
Cost of sales:
  Cost of product sold......................................   186,340    175,182    162,573
  Restructuring charges (note 12)...........................     1,291      8,646         --
                                                              --------   --------   --------
       Total cost of sales..................................   187,631    183,828    162,573
                                                              --------   --------   --------
Gross profit................................................   251,916    239,312    229,676
                                                              --------   --------   --------
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............................................   102,081     95,047     94,306
                                                              --------   --------   --------
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...........    66,169     69,936     78,144
Income taxes (note 4).......................................    26,522     28,339     30,850
                                                              --------   --------   --------
</Table>

          See accompanying notes to consolidated financial statements.
                                        45
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF INCOME -- (CONTINUED)
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                2001       2000       1999
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Income before extraordinary item............................  $ 39,647   $ 41,597   $ 47,294
Extraordinary item, net of tax (note 21)....................      (498)        --         --
                                                              --------   --------   --------
       Net income...........................................  $ 39,149   $ 41,597   $ 47,294
                                                              ========   ========   ========
Basic earnings per share (note 14):
  Basic earnings per share before extraordinary item........  $   1.10   $   1.18   $   1.35
  Extraordinary item (note 21)..............................     (0.01)        --         --
                                                              --------   --------   --------
  Basic earnings per share..................................  $   1.09   $   1.18   $   1.35
                                                              ========   ========   ========
Diluted earnings per share (note 14):
  Diluted earnings per share before extraordinary item......  $   1.07
  Extraordinary item (note 21)..............................     (0.01)
                                                              --------
  Diluted earnings per share................................  $   1.06
                                                              ========
</Table>

          See accompanying notes to consolidated financial statements.
                                        46
<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       TOTAL           TOTAL
                                   NUMBER OF                 PAID-IN     RETAINED      INCOME       STOCKHOLDERS'   COMPREHENSIVE
                                     SHARES     PAR VALUE    CAPITAL     EARNINGS      (LOSS)          EQUITY          INCOME
                                   ----------   ---------   ----------   --------   -------------   -------------   -------------
<S>                                <C>          <C>         <C>          <C>        <C>             <C>             <C>
Balance at September 30, 1998....          --     $ --       $133,143    $    --      $ (3,635)       $129,508
Comprehensive income (loss):
  Net income.....................          --       --             --     47,294            --          47,294         $47,294
  Translation adjustment.........          --       --             --         --        (2,615)         (2,615)         (2,615)
  Minimum pension liability
     adjustment..................          --       --             --         --         1,681           1,681           1,681
                                   ----------     ----       --------    -------      --------        --------         -------
       Total comprehensive
          income.................          --       --             --     47,294          (934)                        $46,360
                                                                                                                       =======
Capital contribution from Apogent
  (note 18)......................          --       --         16,210         --            --          16,210
Dividends paid to Apogent (note
  18)............................          --       --             --    (36,483)           --         (36,483)
                                   ----------     ----       --------    -------      --------        --------
Balance at September 30, 1999....          --       --        149,353     10,811        (4,569)        155,595
Comprehensive income (loss):
  Net income.....................          --       --             --     41,597            --          41,597         $41,597
  Translation adjustment.........          --       --             --         --        (7,109)         (7,109)         (7,109)
                                   ----------     ----       --------    -------      --------        --------         -------
       Total comprehensive
          income.................          --       --             --     41,597        (7,109)                        $34,488
                                                                                                                       =======
Capital contribution from Apogent
  (note 18)......................          --       --         21,399         --            --          21,399
Dividends paid to Apogent (note
  18)............................          --       --         (6,104)   (52,408)           --         (58,512)
                                   ----------     ----       --------    -------      --------        --------
Balance at September 30, 2000....          --       --        164,648         --       (11,678)        152,970
Comprehensive income (loss):
  Net income.....................          --       --            638     38,511            --          39,149         $39,149
  Translation adjustment.........          --       --             --         --         3,238           3,238           3,238
  Unrealized loss on derivative
     instruments (note 10).......          --       --             --         --        (5,465)         (5,465)         (5,465)
                                   ----------     ----       --------    -------      --------        --------         -------
       Total comprehensive
          income.................          --       --            638     38,511        (2,227)                        $36,922
                                                                                                                       =======
</Table>

          See accompanying notes to consolidated financial statements.
                                        47
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                                                                     ACCUMULATED
                                        COMMON STOCK                                    OTHER
                                   ----------------------   ADDITIONAL              COMPREHENSIVE       TOTAL           TOTAL
                                   NUMBER OF                 PAID-IN     RETAINED      INCOME       STOCKHOLDERS'   COMPREHENSIVE
                                     SHARES     PAR VALUE    CAPITAL     EARNINGS      (LOSS)          EQUITY          INCOME
                                   ----------   ---------   ----------   --------   -------------   -------------   -------------
<S>                                <C>          <C>         <C>          <C>        <C>             <C>             <C>
Capital contribution from Apogent
  (note 18)......................          --     $ --       $  4,612    $    --      $     --        $  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)        --            --         (67,927)
Non-cash dividends to Apogent
  (note 18)......................          --       --        (78,167)        --            --         (78,167)
Issuance of common stock from
  options exercised..............     132,809        1          1,282         --            --           1,283
Proceeds from stock offering, net
  of offering costs (note 17)....   2,650,000       27         49,926         --            --          49,953
                                   ----------     ----       --------    -------      --------        --------
Balance at September 30, 2001....  37,891,458     $379       $ 74,661    $38,511      $(13,905)       $ 99,646
                                   ==========     ====       ========    =======      ========        ========
</Table>

          See accompanying notes to consolidated financial statements.
                                        48
<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)
<S>                                                           <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income................................................  $  39,149    $  41,597    $  47,294
  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...................................     (1,087)      11,006        4,427
     Deferred income taxes..................................        760          103        5,635
  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............      1,047          562       (9,378)
     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)
</Table>

          See accompanying notes to consolidated financial statements.
                                        49
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES
              CONSOLIDATED STATEMENTS OF CASH FLOWS -- (CONTINUED)
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                2001         2000         1999
                                                              ---------    ---------    ---------
                                                                        (IN THOUSANDS)
<S>                                                           <C>          <C>          <C>
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.
                                        50
<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.

     The subsidiaries of SDS are leading manufacturers of value-added products
for the professional dental, orthodontics, and infection control 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

     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. Certain domestic inventories of approximately $65,644
and $63,861 at September 30, 2001 and 2000, respectively, are valued on the
last-in, first-out (LIFO) method. The remaining inventories are valued on the
first-in, first-out (FIFO) method.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

 (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.

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

 (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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

 (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 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

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

(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..............................................   41,323    44,749
    Excess and obsolescence reserves............................   (1,544)   (4,347)
    LIFO reserve................................................    3,801     1,271
                                                                  -------   -------
                                                                  $85,765   $74,383
                                                                  =======   =======
</Table>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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......................................  $26,522   $28,339   $30,850
    Extraordinary items.........................................     (339)       --        --
                                                                  -------   -------   -------
                                                                  $26,183   $28,339   $30,850
                                                                  =======   =======   =======
</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.....................................  $12,954     $4,040     $16,994
      Foreign...................................................    9,359        169       9,528
                                                                  -------     ------     -------
                                                                  $22,313     $4,209     $26,522
                                                                  =======     ======     =======
    Year ended September 30, 2000:
      U.S., state and local.....................................  $18,380     $  159     $18,539
      Foreign...................................................    9,856        (56)      9,800
                                                                  -------     ------     -------
                                                                  $28,236     $  103     $28,339
                                                                  =======     ======     =======
    Year ended September 30, 1999:
      U.S., state and local.....................................  $14,768     $5,636     $20,404
      Foreign...................................................   10,564       (118)     10,446
                                                                  -------     ------     -------
                                                                  $25,332     $5,518     $30,850
                                                                  =======     ======     =======
</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...............................................  $40,259    $48,841    $53,904
    Foreign.....................................................   25,910     21,095     24,240
                                                                  -------    -------    -------
    Income before income taxes and extraordinary items..........  $66,169    $69,936    $78,144
                                                                  =======    =======    =======
</Table>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Income tax expense attributable to income from operations was $26,522,
$28,339 and $30,850 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:

<Table>
<Caption>
                                                                   2001      2000      1999
                                                                  -------   -------   -------
    <S>                                                           <C>       <C>       <C>
    Computed "expected" tax expense.............................  $23,159   $24,478   $27,350
    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..................................................    1,872        72       487
                                                                  -------   -------   -------
                                                                  $26,522   $28,339   $30,850
                                                                  =======   =======   =======
</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)..................................  $4,627    $  103    $6,402
    Decrease in the valuation allowance for deferred tax
      assets....................................................    (418)       --      (884)
                                                                  ------    ------    ------
                                                                  $4,209    $  103    $5,518
                                                                  ======    ======    ======
</Table>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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.................................     5,502       4,904
                                                                  --------    --------
         Total gross deferred tax assets........................    16,158      13,780
         Less valuation allowance...............................      (975)     (1,393)
                                                                  --------    --------
         Net deferred tax assets................................    15,183      12,387
                                                                  --------    --------
    Deferred tax liabilities:
    Depreciation................................................    (2,441)     (2,509)
    Purchase accounting.........................................   (13,562)    (12,320)
    Other.......................................................    (6,360)     (3,810)
                                                                  --------    --------
         Total gross deferred tax liabilities...................   (22,363)    (18,639)
                                                                  --------    --------
         Net deferred tax liabilities...........................  $ (7,180)   $ (6,252)
                                                                  ========    ========
</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.

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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:

<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

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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.

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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.

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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.

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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):

<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>
                                                                                                                       FAIR 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>

                                        66
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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:

<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>

                                        67
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<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>

                                        68
<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.

                                        69
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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:

<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>

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

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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
    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.

                                        71
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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

                                        72
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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.

     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.................................................   $39,149
    Pro forma net income:.......................................   $37,361
    Basic pro forma earnings per share:.........................   $  1.04
    Diluted pro forma earnings per share:.......................   $  1.01
</Table>

                                        73
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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:

<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>

                                        74
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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..........................  $39,647   $41,597   $47,294
      Extraordinary item........................................     (498)       --        --
                                                                  -------   -------   -------
    Numerator for basic and diluted net income per common
      share -- net income.......................................  $39,149   $41,597   $47,294
    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..........  $  1.10   $  1.18   $  1.35
      Extraordinary item........................................    (0.01)       --        --
                                                                  -------   -------   -------
    Basic net income per common share...........................  $  1.09   $  1.18   $  1.35
                                                                  =======   =======   =======
    Diluted net income per common share:
      Income from operations before extraordinary item..........  $  1.07
      Extraordinary item........................................    (0.01)
                                                                  -------
    Diluted net income per common share.........................  $  1.06
                                                                  =======
</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.

                                        75
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(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 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>

                                        76
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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>

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

                                        77
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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..................................................    $ 40,535         $ 43,419
    Earnings per share -- basic.................................    $   1.13         $   1.24
    Earnings per share -- fully diluted.........................    $   1.09
</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 to the common
stock unless and until they

                                        78
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

                                        79
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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>

     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.

                                        80
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     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................................................     129,870        106,070       15,976           --       251,916
Selling, general and admin..................................      69,432         67,225       13,178           --       149,835
Operating income............................................      60,438         38,845        2,798           --       102,081
Depreciation and amortization...............................       9,398          7,464        2,117           --        18,979
Interest expense............................................      17,739         15,719           --           --        33,458
Segment assets..............................................     325,170        174,930       48,948           --       549,048
Expenditures for property, plant and equipment..............       4,836          4,626        4,954           --        14,416
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................................................     121,965        105,286       12,061           --       239,312
Selling, general and admin..................................      65,894         66,741       11,630           --       144,265
Operating income............................................      56,071         38,545          431           --        95,047
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..............................................     250,020        231,997       63,560           --       545,577
Expenditures for property, plant and equipment..............       6,412          5,038          518           --        11,968
</Table>

                                        81
<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>
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................................................     107,781        107,602       14,293           --       229,676
Selling, general and admin..................................      64,223         60,481       10,666           --       135,370
Operating income............................................      43,558         47,121        3,627           --        94,306
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..............................................     229,670        222,204       63,440           --       515,314
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
                                                                  --------    --------    --------
</Table>

                                        82
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

(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................................................  $55,933    $ 64,023     $ 61,928      $ 70,032     $251,916
                                                              =======    ========     ========      ========     ========
Extraordinary item, net of tax..............................  $  (498)   $     --     $     --      $     --     $   (498)
                                                              =======    ========     ========      ========     ========
Net income..................................................  $ 7,179    $ 11,165     $  9,646      $ 11,159     $ 39,149
                                                              =======    ========     ========      ========     ========
Basic earnings per share....................................  $  0.22    $   0.32     $   0.27      $   0.29     $   1.09
                                                              =======    ========     ========      ========     ========
Diluted earnings per share..................................  $  0.20    $   0.31     $   0.26      $   0.28     $   1.06
                                                              =======    ========     ========      ========     ========
</Table>

                                        83
<PAGE>
                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                                               FIRST      SECOND        THIRD        FOURTH
                                                              QUARTER    QUARTER       QUARTER      QUARTER     TOTAL YEAR
                                                              -------    --------    -----------    --------    ----------
                                                                                     (UNAUDITED)      (B)
<S>                                                           <C>        <C>         <C>            <C>         <C>
2000
Net sales(a)................................................  $94,303    $109,450     $106,252      $113,135     $423,140
                                                              =======    ========     ========      ========     ========
Gross profit................................................  $55,036    $ 64,844     $ 61,907      $ 57,525     $239,312
                                                              =======    ========     ========      ========     ========
Net income..................................................  $ 9,963    $ 13,635     $ 11,275      $  6,724     $ 41,597
                                                              =======    ========     ========      ========     ========
Basic earnings per share(c).................................  $  0.28    $   0.39     $   0.32      $   0.19     $   1.18
                                                              =======    ========     ========      ========     ========
</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.

(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.

                                        84
<PAGE>

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information called for by Item 10 of Form 10-K with respect to
directors and executive officers is incorporated herein by reference to such
information included in the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held February 8, 2002 (the "2002 Annual Meeting Proxy
Statement"), under the captions "Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance", and to the information under the
caption "Executive Officers of the Registrant" in Part I hereof.

ITEM 11.  EXECUTIVE COMPENSATION

     The information called for by Item 11 of Form 10-K is incorporated herein
by reference to such information included in the 2002 Annual Meeting Proxy
Statement under the captions "Executive Compensation" and "Election of
Directors -- Directors' Compensation."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information called for by Item 12 of Form 10-K is incorporated herein
by reference to such information included in the 2002 Annual Meeting Proxy
Statement under the caption "Security Ownership of Certain Beneficial Owners and
Management."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Any information called for by Item 13 of Form 10-K is incorporated herein
by reference to such information included in the 2002 Annual Meeting Proxy
Statement under the captions "Election of Directors" or "Certain Relationships
and Related Transactions."

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a) Documents Filed.  The following documents are filed as part of this
Annual Report or incorporated by reference as indicated:

     1. The consolidated financial statements of Sybron Dental Specialties, Inc.
and its subsidiaries filed under Item 8:

<Table>
<Caption>
                                                               PAGE
                                                               ----
<S>                                                            <C>
Independent Auditors' Report................................    42
Consolidated Balance Sheets as of September 30, 2001 and
  2000......................................................    43
Consolidated Statements of Income for the years ended
  September 30, 2001, 2000 and 1999.........................    45
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income for the years ended September 30,
  2001, 2000 and 1999.......................................    47
Consolidated Statements of Cash Flows for the years ended
  September 30, 2001, 2000 and 1999.........................    49
Notes to Consolidated Financial Statements..................    51
</Table>

                                        85
<PAGE>

     2. Financial Statement Schedules.

     The following report and financial statement schedule should be read in
conjunction with the consolidated financial statements set forth in Item 8:

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Independent Auditors' Report................................  S-1
Schedule II -- Valuation and Qualifying Accounts............  S-2
</Table>

     Schedules other than those listed above are omitted because they are not
applicable or because the required information is given in the consolidated
financial statements and notes thereto.

     3. Exhibits and Exhibit Index.

     See the Exhibit Index included as the last part of this report, which is
incorporated herein by reference. Each management contract and compensatory plan
or arrangement required to be filed as an exhibit to this report is identified
in the Exhibit Index by an asterisk following its exhibit number.

     (b) Reports on Form 8-K.

     No reports on Form 8-K were filed during the last quarter of the year for
which this report is filed.

                                        86
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

     December 21, 2001

                                              SYBRON DENTAL SPECIALTIES, INC.

                                              By:/s/ FLOYD W. PICKRELL, JR.
                                               ---------------------------------
                                                    Floyd W. Pickrell, Jr.,
                                                 President and Chief Executive
                                                             Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
           SIGNATURE                                         TITLE                                   DATE
           ---------                                         -----                                   ----
<C>                               <S>                                                          <C>
Principal Executive Officer:

   /s/ FLOYD W. PICKRELL, JR.     President and Chief                                          December 21, 2001
--------------------------------  Executive Officer
     Floyd W. Pickrell, Jr.

Principal Financial Officer and
Principal Accounting Officer:

     /s/ GREGORY D. WALLER        Vice President -- Finance, Chief                             December 21, 2001
--------------------------------  Financial Officer and Treasurer
       Gregory D. Waller

All of the members of the
Board of Directors:

        DENNIS B. BROWN*
--------------------------------
        Dennis B. Brown

        DONALD N. ECKER*
--------------------------------
        Donald N. Ecker

       ROBERT W. KLEMME*
--------------------------------
        Robert W. Klemme

        JAMES R. PARKS*
--------------------------------
         James R. Parks
</Table>

                                        87
<PAGE>

<Table>
<Caption>
           SIGNATURE                                         TITLE                                   DATE
           ---------                                         -----                                   ----

<C>                               <S>                                                          <C>
    FLOYD W. PICKRELL, JR.*
--------------------------------
     Floyd W. Pickrell, Jr.

      WILLIAM E.B. SIART*
--------------------------------
       William E.B. Siart

       KENNETH F. YONTZ*
--------------------------------
        Kenneth F. Yontz

   *By: /s/ GREGORY D. WALLER                                                                  December 21, 2001
--------------------------------
       Gregory D. Waller

  Attorney and Agent for each
      member of the Board of
    Directors of Sybron Dental
  Specialties, Inc. under Powers
  of Attorney dated December 7,
               2001
</Table>

                                        88
<PAGE>

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

     On November 19, 2001, we reported on the 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, which are included in this Annual Report on
Form 10-K. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement schedule
as listed in Item 8. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statement schedule based on our audits.

     In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

                                                        /s/ KPMG LLP
                                                --------------------------------
                                                            KPMG LLP

Orange County, California
November 19, 2001

                                       S-1
<PAGE>

                                                                     SCHEDULE II

                SYBRON DENTAL SPECIALTIES, INC. AND SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS
             FOR THE YEARS ENDED SEPTEMBER 30, 2001, 2000 AND 1999

<Table>
<Caption>
                                                                                   ADDITIONS
                                                                            ------------------------
                                                              BALANCE AT    CHARGED TO    CHARGED TO
                                                              BEGINNING      COST AND       OTHER                     BALANCE AT
DESCRIPTION                                                    OF YEAR       EXPENSES      ACCOUNTS     DEDUCTIONS    END OF YEAR
-----------                                                   ----------    ----------    ----------    ----------    -----------
                                                                                        (IN THOUSANDS)
<S>                                                           <C>           <C>           <C>           <C>           <C>
YEAR ENDED SEPTEMBER 30, 2001
Deducted from asset accounts:
  Allowance for doubtful receivables........................    $2,056       $ 1,259         $381(d)      $2,039(a)     $1,657
                                                                ======       =======         ====         ======        ======
  Inventory reserves........................................    $4,347       $ 1,442         $578(d)      $4,823(b)     $1,544
                                                                ======       =======         ====         ======        ======
Legal reserves..............................................    $  224       $ 1,023         $ --         $  584(c)     $  663
                                                                ======       =======         ====         ======        ======
Restructuring reserve.......................................    $2,403       $ 2,379         $ --         $2,007(e)     $2,775
                                                                ======       =======         ====         ======        ======
YEAR ENDED SEPTEMBER 30, 2000
Deducted from asset accounts:
  Allowance for doubtful receivables........................    $2,578       $   936         $ 16(d)      $1,474(a)     $2,056
                                                                ======       =======         ====         ======        ======
  Inventory reserves........................................    $3,211       $ 2,642         $ --         $1,506(b)     $4,347
                                                                ======       =======         ====         ======        ======
Legal reserves..............................................    $  284       $   106         $ --         $  166(c)     $  224
                                                                ======       =======         ====         ======        ======
Restructuring reserve.......................................    $1,345       $ 9,328         $ --         $8,270(g)     $2,403
                                                                ======       =======         ====         ======        ======
YEAR ENDED SEPTEMBER 30, 1999
Deducted from asset accounts:
  Allowance for doubtful receivables........................    $3,614       $   819         $313(d)      $2,168(a)     $2,578
                                                                ======       =======         ====         ======        ======
  Inventory reserves........................................    $4,424       $ 5,317         $ --         $6,530(b)     $3,211
                                                                ======       =======         ====         ======        ======
Legal reserves..............................................    $  546       $  (109)        $ --         $  153(c)     $  284
                                                                ======       =======         ====         ======        ======
Restructuring reserve.......................................    $5,037       $(1,177)        $ --         $2,515(f)     $1,345
                                                                ======       =======         ====         ======        ======
</Table>

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

Note: Above additions and deductions include the effects of foreign currency
rate changes.

(a) Non-collectable accounts written off, net of recoveries.

(b) Inventory written off.

(c) Net disbursements.

                                       S-2
<PAGE>

(d) Reserves of acquired businesses.

(e) Net disbursements include the write-off $250 for fixed assets.

(f) Net disbursement including an adjustment of $1,200 for unused severance.

(g) Net disbursements, including write-off of $7,600 and $200 for inventory and
    fixed assets, respectively.

                                       S-3
<PAGE>

                        SYBRON DENTAL SPECIALTIES, INC.
                               (THE "REGISTRANT")
                         (COMMISSION FILE NO. 1-16057)

                                 EXHIBIT INDEX
                                       TO
                        2001 ANNUAL REPORT ON FORM 10-K

<Table>
<Caption>
EXHIBIT                                                        INCORPORATED HEREIN                FILED
NUMBER                       DESCRIPTION                         BY REFERENCE TO                 HEREWITH
-------                      -----------                       -------------------               --------
<C>       <S>                                                  <C>                    <C>
   2.1    Contribution Agreement, Plan and Agreement of        Exhibit 2.1 to the
          Reorganization and Distribution, dated as of         Registrant's Form
          November 28, 2000, between Sybron International      10-K for the fiscal
          Corporation ("Sybron International"), the            year ended September
          Registrant and Sybron Dental Management, Inc.        30, 2000 (the "2000
          (excluding the forms of the ancillary agreements     10-K")
          attached thereto as exhibits, definitive copies of
          which are filed as Exhibits 2.2 through 2.8 below)
   2.2    General Assignment, Assumption and Agreement         Exhibit 2.2 to the
          Regarding Litigation, Claims and Other               2000 10-K
          Liabilities, dated as of December 11, 2000,
          between Sybron International and the Registrant
   2.3    Trade Name Assignment and Transitional Trade Name    Exhibit 2.3 to the
          Use and License Agreement, dated as of December      2000 10-K
          11, 2000, between Sybron International and the
          Registrant
   2.4    Insurance Matters Agreement, dated as of December    Exhibit 2.4 to the
          11, 2000, between Sybron International and the       2000 10-K
          Registrant
   2.5    Employee Benefits Agreement, dated as of December    Exhibit 2.5 to the
          11, 2000, between Sybron International and the       2000 10-K
          Registrant
   2.6    Tax Sharing and Indemnification Agreement, dated     Exhibit 2.6 to the
          as of December 11, 2000, between Sybron              2000 10-K
          International and the Registrant
   2.7    Interim Administrative Services Agreement, dated     Exhibit 2.7 to the
          as of December 11, 2000, between Sybron              2000 10-K
          International and the Registrant
   2.8    Confidentiality and Nondisclosure Agreement, dated   Exhibit 2.8 to the
          as of December 11, 2000, between Sybron              2000 10-K
          International and the Registrant
   3.1    (a) Restated Certificate of Incorporation of the     Exhibit 3.1 to
          Registrant                                           Amendment No. 2 to
                                                               the Registrant's
                                                               Registration
                                                               Statement on Form
                                                               10/A filed on
                                                               November 9, 2000
                                                               (File No. 1-16057)
                                                               (the "Form 10/A No.
                                                               2")
          (b) Certificate of Designation, Preferences and      Exhibit 3.1(b) to
          Rights of Series A Preferred Stock                   the 2000 10-K
   3.2    Bylaws of the Registrant                             Exhibit 3.2 to the
                                                               Form 10/A No. 2
   4.1    Restated Certificate of Incorporation and Bylaws     Exhibits 3.1 and 3.2
          of the Registrant                                    hereto
</Table>

                                       EI-1
<PAGE>

<Table>
<Caption>
EXHIBIT                                                        INCORPORATED HEREIN                FILED
NUMBER                       DESCRIPTION                         BY REFERENCE TO                 HEREWITH
-------                      -----------                       -------------------               --------
<C>       <S>                                                  <C>                    <C>
   4.2    Rights Agreement, dated as of December 8, 2000,      Exhibit 4 to the
          between the Registrant and EquiServe Trust           Registrant's Current
          Company, N.A., as Rights Agent, including the Form   Report on Form 8-K
          of Certificate of Designation, Preferences and       dated December 8,
          Rights of Series A Preferred Stock (Exhibit A),      2000 and filed on
          Form of Rights Certificate (Exhibit B) and Form of   December 12, 2000
          Summary of Rights (Exhibit C)
   4.3    (a) Credit Agreement dated as of November 28, 2000   Exhibit 4.3 to the
          (the "Credit Agreement") by and among Sybron         2000 10-K
          Dental Management, Inc. ("SDM"), the Subsidiary
          Swing Line Borrowers from time to time parties
          thereto, Kerr Corporation ("Kerr"), Ormco
          Corporation ("Ormco"), the Registrant, the
          institutions from time to time parties thereto as
          Lenders, ABN AMRO Bank N.V. (the "Administrative
          Agent"), The Chase Manhattan Bank, as Syndication
          Agent, and First Union National Bank, as
          Documentation Agent
          (b) First Amendment and Consent dated as of April    Exhibit 4 to the
          18, 2001 to the Credit Agreement.                    Registrant's Form
                                                               10-Q for the quarter
                                                               ended June 30, 2001
   4.4    Guaranty dated as of December 11, 2000 by SDM,       Exhibit 4.4 to the
          Kerr, Ormco, Metrex Research Corporation             2000 10-K
          ("Metrex") and Pinnacle Products, Inc.
          ("Pinnacle") in favor of the Administrative Agent
   4.5    Security Agreement dated as of December 11, 2000     Exhibit 4.5 to the
          by the Registrant, SDM, Kerr, Ormco, Metrex and      2000 10-K
          Pinnacle in favor of the Administrative Agent
   4.6    Pledge Agreement dated as of December 11, 2000 by    Exhibit 4.6 to the
          the Registrant, SDM, Pinnacle, LRS Acquisition       2000 10-K
          Corp. and Kerr to the Administrative Agent
   4.7    Patent Security Agreements dated as of December      Exhibit 4.7 to the
          11, 2000 by each of Kerr, Ormco, Pinnacle and        2000 10-K
          Metrex in favor of the Administrative Agent
   4.8    Trademark Security Agreements dated as of December   Exhibit 4.8 to the
          11, 2000 by each of Kerr, Ormco, Pinnacle and        2000 10-K
          Metrex in favor of the Administrative Agent
   4.9    Fee Mortgage dated as of December 11, 2000 by        Exhibit 4.9 to the
          Metrex in favor of the Administrative Agent          2000 10-K
   4.10   Fee Mortgage dated as of December 11, 2000 by        Exhibit 4.10 to the
          Pinnacle in favor of the Administrative Agent        2000 10-K
   4.11   Fee Mortgage dated as of December 11, 2000 by        Exhibit 4.11 to the
          Ormco in favor of the Administrative Agent           2000 10-K
  10.1*   2000 Long-Term Incentive Plan                        Exhibit 10.1 to the
                                                               Form 10/A No. 2
</Table>

                                       EI-2
<PAGE>

<Table>
<Caption>
EXHIBIT                                                        INCORPORATED HEREIN                FILED
NUMBER                       DESCRIPTION                         BY REFERENCE TO                 HEREWITH
-------                      -----------                       -------------------               --------
<C>       <S>                                                  <C>                    <C>
  10.2*   Form of Nonqualified Stock Option Agreement under    Exhibit 10.2 to the
          the 2000 Long-Term Incentive Plan                    2000 10-K
  10.3*   2000 Outside Directors' Stock Option Plan            Exhibit 10.2 to the
                                                               Form 10/A No. 2
  10.4*   Form of Director Nonqualified Stock Option           Exhibit 10.4 to the
          Agreement under the 2000 Outside Directors' Stock    2000 10-K
          Option Plan
  10.5*   Senior Executive Incentive Compensation Plan         Exhibit 10.3 to the
                                                               Form 10/A No. 2
  10.6*   Form of Executive Employment Agreement with          Exhibit 10.4 to the
          executive officers                                   Form 10/A No. 2
  10.7*   Form of Indemnification Agreement for directors      Exhibit 10.5 to the
          and executive officers                               Form 10/A No. 2
  10.8*   Promissory Note in favor of Sybron Dental            Exhibit 10.8 to the
          Specialties, Inc. from Stephen J. Tomassi            2000 10-K
  10.9    Lease Agreement dated December 21, 1988 between      Exhibit 10(bb) to
          CPA:7 and CPA:8, as landlord, and Ormco              Sybron Corporation's
          Corporation; as tenant                               Registration
                                                               Statement on Form
                                                               S-1 (No. 33-24640)
  10.10   Lease Agreement dated December 21, 1988 between      Exhibit 10(dd) to
          CPA:7 and CPA:8, as landlord, and Kerr               Sybron Corporation's
          Manufacturing Company, as tenant                     Registration
                                                               Statement on Form
                                                               S-1 (No. 33-24640)
  10.11   Tenant Agreement dated December 21, 1988 between     Exhibit 10(rr) to
          New England Mutual Life Insurance Company, as        Sybron Corporation's
          lender, and CPA:7 and CPA:8, as landlord, and        Registration
          Ormco Corporation, as tenant                         Statement on Form
                                                               S-1 (No. 33-24640)
  10.12   Environmental Risk Agreement dated December 21,      Exhibit 10(xx) to
          1988 from Sybron Corporation and Ormco               Sybron Corporation's
          Corporation, as indemnitors, to New England Mutual   Registration
          Life Insurance Company, as lender, and CPA:7 and     Statement on Form
          CPA:8, as Borrowers                                  S-1 (No. 33-24640)
  10.13   Environmental Risk Agreement dated December 21,      Exhibit 10(zz) to
          1988 from Sybron Corporation and Kerr                Sybron Corporation's
          Manufacturing Company, as indemnitors, to New        Registration
          England Mutual Life Insurance Company, as lender,    Statement on Form
          and CPA:7 and CPA:8, as Borrowers                    S-1 (No. 33-24640)
  21      Subsidiaries of the Registrant                                                            X
  23      Consent of KPMG LLP                                                                       X
  24      Powers of Attorney of directors of the Registrant                                         X
</Table>

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* Denotes management contract or executive compensation plan or arrangement
  required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.

                                       EI-3