<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 22, 2000
------------------
SYBRON INTERNATIONAL CORPORATION
--------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 1-11091 22-2849508
--------- ------- ----------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
---------------------------
(Address of principal executive offices) (Zip Code)
(414) 274-6600
--------------
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On April 24, 2000, Sybron International Corporation ("Sybron
International" or the "Company") announced its intention to spin off its dental
business as a separate publicly traded company. The spin-off will be effected
by way of a pro rata dividend of the stock of SDS Holding Co. to the Company's
shareholders (the "Distribution"). SDS Holding Co. is a newly organized
Delaware subsidiary of the Company which will be renamed Sybron Dental
Specialties, Inc. ("SDS") in connection with the Distribution. SDS will own and
operate all of our dental group businesses, including those operated by the
subsidiary currently named Sybron Dental Specialties, Inc. This subsidiary will
be renamed Sybron Dental Management, Inc. ("SDM") in connection with the
Distribution, and will become a wholly owned subsidiary of SDS. Following the
Distribution, our shareholders will own shares of both Sybron International and
SDS. SDS will then be an independent public company operating the dental
business, which consists of Sybron International's Professional Dental,
Orthodontics and Infection Control Products business segments (the "Dental
Business"). Sybron International will continue to operate the Company's
laboratory business, which is composed of Sybron International's Labware and
Life Sciences, Clinical and Industrial, Diagnostics and Microbiology, and
Laboratory Equipment business segments (the "Laboratory Business"). As an
independent public company, SDS's stock is expected to trade on the New York
Stock Exchange ("NYSE") under the symbol "SYD". As previously announced, Sybron
International intends to change its name to Apogent Technologies Inc. in
connection with the Distribution. The name change requires shareholder
approval, which the Company will seek at its 2001 annual meeting. The Company
expects its stock to trade on the NYSE under the symbol "AOT" (instead of its
present symbol "SYB") in connection with the name change.
The Distribution is subject to a number of conditions, including (i)
receipt by the Company of a favorable ruling from the Internal Revenue Service
concerning the tax-free nature of the Distribution, (ii) appropriate stock
market conditions for the Distribution, (iii) obtaining adequate financing for
Sybron International and SDS as independent companies, (iv) completion of
certain internal restructuring steps, including the transfer of SDM and its
dental businesses to SDS, (v) receipt of approval to list SDS's common stock on
the NYSE, (vi) approval by Sybron International's board of directors of the
final terms of the Distribution, and the formal declaration of the Distribution,
and (vii) effectiveness of a registration statement on Form 10 registering the
stock of SDS under the Securities Exchange Act of 1934, including an information
statement that would be sent to the Company's shareholders in connection with
the Distribution.
The Company plans to obtain its financing separately from SDS by
refinancing its current credit facilities. The Company must complete the
refinancing (referred to herein as the "Refinancing") prior to or simultaneously
with the Distribution.
Immediately prior to the Distribution, SDM will pay a dividend (the
"Dividend") to Sybron International which will be used to settle all
intercompany loans and advances and to reflect an allocation of bank debt to
SDS. The allocation of bank debt to SDS is currently expected to be
approximately $375 million, but the actual amount allocated at the time of the
Distribution may be different depending on certain factors including, but not
limited to, SDS's equity at the time of the Distribution.
The following pro forma data gives effect to (1) the Distribution, (2)
the Refinancing and (3) the Dividend.
<PAGE> 3
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated statements of income for
fiscal 1999 and the nine months ended June 30, 2000 give effect to the
Distribution, Refinancing and Dividend as if they had occurred on the
first day of the period being referenced. The unaudited pro forma
consolidated balance sheet data give effect to the Distribution,
Refinancing and Dividend as if they had occurred on June 30, 2000.
The unaudited pro forma consolidated financial statements have been
derived from the historical consolidated financial statements of Sybron
International. The pro forma adjustments, as described in the notes
that follow, are based upon available information and upon certain
assumptions that management believes are reasonable. This information
should be read in conjunction with Sybron International's consolidated
financial statements contained in the Company's 1999 Annual Report on
Form 10-K. The unaudited pro forma consolidated financial statements
are included for comparative purposes only and do not purport to be
indicative of the results of Sybron International in the future or what
the financial position and results of operations would have been had
Sybron International operated without the Dental Business during the
periods shown.
SYBRON INTERNATIONAL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
ELIMINATION OF
THE DENTAL PRO FORMA
HISTORICAL BUSINESS (a) OTHER 1999
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales ...................................................... $ 1,103,213 $ (388,176) $ -- $ 715,037
Cost of sales:
Cost of product sold ......................................... 534,059 (162,448) 917 (b) 372,528
Depreciation of purchase accounting adjustments .............. 659 (108) -- 551
----------- ----------- ----------- -----------
Total cost of sales ............................................ 534,718 (162,556) 917 373,079
----------- ----------- ----------- -----------
Gross profit ................................................... 568,495 (225,620) (917) 341,958
----------- ----------- ----------- -----------
Selling, general and administrative expenses ................... 270,304 (118,193) (4,228) (c) 147,883
Sybron International charges ................................... -- (4,228) 4,228 (c) --
Merger, transaction and integration expenses ................... 2,569 (2,569) -- --
Restructuring charge ........................................... (932) 1,177 -- 245
Depreciation and amortization of purchase accounting
adjustments .................................................. 32,205 (7,501) -- 24,704
----------- ----------- ----------- -----------
Total selling, general and administrative expenses ............. 304,146 (131,314) -- 172,832
----------- ----------- ----------- -----------
Operating income ............................................... 264,349 (94,306) (917) 169,126
----------- ----------- ----------- -----------
Other income (expense):
Interest expense ............................................. (57,147) 17,074 504 (d) (39,569)
Interest income: Sybron International ........................ -- (1,151) 1,151 (e) --
Amortization of deferred financing fees ...................... (378) 154 (226)(f) (450)
Other, net ................................................... (371) 85 -- (286)
----------- ----------- ----------- -----------
Income from continuing operations before income taxes ......... 206,453 (78,144) 512 128,821
Income taxes ................................................... 81,198 (28,370) 205 (g) 53,033
----------- ----------- ----------- -----------
Income from continuing operations .............................. 125,255 (49,774) 307 75,788
=========== =========== =========== ===========
Basic earnings per share ....................................... $ 1.21 $ .73
=========== ===========
Diluted earnings per share ..................................... $ 1.18 $ .72
=========== ===========
Basic shares outstanding ....................................... 103,412 -- -- 103,412
Effect of assumed conversion of employee stock options ......... 3,158 (930)(h) -- 2,228
----------- ----------- ----------- -----------
Diluted shares outstanding ..................................... 106,570 (930) -- 105,640
=========== =========== =========== ===========
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 4
SYBRON INTERNATIONAL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED JUNE 30, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
ELIMINATION OF
--------------
THE DENTAL PRO FORMA
---------- JUNE 30,
HISTORICAL BUSINESS (a) OTHER 2000
---------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Net sales ............................................ $ 941,651 $(306,665) $ -- $ 634,986
Cost of sales:
Cost of product sold ............................... 450,058 (128,133) -- 321,925
Depreciation of purchase accounting adjustments .... 476 (80) -- 396
--------- --------- --------- ---------
Total cost of sales .................................. 450,534 (128,213) -- 322,321
--------- --------- --------- ---------
Gross profit ......................................... 491,117 (178,452) 312,665
--------- --------- --------- ---------
Selling, general and administrative expenses ......... 231,333 (92,542) (2,936) (c) 135,855
Sybron International charges ......................... -- (2,936) 2,936 (c) --
Depreciation and amortization of purchase accounting
adjustments......................................... 32,838 (6,260) -- 26,578
--------- --------- --------- ---------
Total selling, general and administrative expenses ... 264,171 (101,738) -- 162,433
--------- --------- --------- ---------
Operating income ..................................... 226,946 (76,714) -- 150,232
--------- --------- --------- ---------
Other income (expense):
Interest expense ................................... (54,951) 18,800 504 (d) (35,647)
Interest income: Sybron International .............. -- (564) 564 (e) --
Amortization of deferred financing fees ............ (608) 210 61 (f) (337)
Other, net ......................................... 1,417 (240) -- 1,177
--------- --------- --------- ---------
Income from continuing operations before income taxes 172,804 (58,508) 1,129 115,425
Income taxes ......................................... 68,187 (21,557) 452 (g) 47,082
--------- --------- --------- ---------
Income from continuing operations .................... 104,617 (36,951) 677 68,343
========= ========= ========= =========
Basic earnings per share ............................. $ 1.00 $ .65
========= =========
Diluted earnings per share ........................... $ .98 $ .64
========= =========
Basic shares outstanding ............................. 104,363 -- 104,363
Effect of assumed conversion of employee stock
options ............................................ 2,589 (578)(h) 2,011
--------- --------- ---------
Diluted shares outstanding ........................... 106,592 (578) 106,374
========= ========= =========
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 5
SYBRON INTERNATIONAL CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
ELIMINATION OF
--------------
THE DENTAL
---------- PRO FORMA
HISTORICAL BUSINESS(a) OTHER JUNE 30, 2000
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents ........................ $ 17,901 $ (5,672) $ -- $ 12,229
Accounts receivable, net ......................... 236,397 (75,451) -- 160,946
Inventories ...................................... 231,419 (84,128) -- 147,291
Deferred income taxes ............................ 24,999 (4,638) -- 20,361
Prepaid expenses and other current assets ........ 26,452 (8,999) -- 17,453
---------- ---------- ---------- ----------
Total current assets ..................... 537,168 (178,888) -- 358,280
---------- ---------- ---------- ----------
Available for sale security ........................ 52,150 -- -- 52,150
Advances to Sybron International ................... -- (124,256) 124,256 (i) --
Property, plant and equipment, net ................. 255,657 (52,518) -- 203,139
Intangible assets .................................. 1,155,009 (221,277) -- 933,732
Deferred income taxes .............................. 12,602 (3,394) -- 9,208
Other assets ....................................... 10,661 (6,359) -- 4,302
---------- ---------- ---------- ----------
Total assets ............................. $2,023,247 (586,692) $ 124,256 $1,560,811
========== ========== ========== ==========
Current liabilities:
Accounts payable ................................. $ 52,349 (8,751) $ -- $ 43,598
Current portion of long-term debt ................ 4,118 (634) (450)(i) 3,034
Income taxes payable ............................. 21,679 (4,217) -- 17,462
Accrued payroll and employee benefits ............ 44,261 (14,830) -- 29,431
Deferred income taxes ............................ 3,819 (3,470) -- 349
Other current liabilities ........................ 31,984 (7,982) -- 24,002
---------- ---------- ---------- ----------
Total current liabilities ................ 158,210 (39,884) (450) 117,876
---------- ---------- ---------- ----------
Long-term debt ..................................... 972,418 (308,937) (73,478) 590,003
Securities lending agreement ....................... 52,150 -- -- 52,150
Deferred income taxes .............................. 98,145 (14,525) -- 83,620
Other liabilities .................................. 9,532 (8,563) -- 969
Commitments and contingent liabilities
Shareholders' equity ............................. 732,792 (214,783) 198,184 (i) 716,193
---------- ---------- ---------- ----------
Total liabilities and shareholders'
equity ................................. $2,023,247 (586,692) $ 124,256 $1,560,811
========== ========== ========== ==========
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE> 6
SYBRON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) Reflects the Distribution.
(b) Reflects an adjustment to the historical cost of sales for the
effect of capitalizing variances in inventories in 1999 and
expensing such variances in prior years. Amounts were recorded in
the separate financial statements of Sybron Dental Specialties,
Inc. and Affiliates but not in the Sybron International financial
statements due to immateriality.
(c) To remove the allocation of corporate expenses that were
previously incurred on behalf of and charged to the Dental
Business. Expense reductions from the elimination of the expenses
incurred on behalf of the Dental Business are expected to
approximately equal the amounts historically charged to the Dental
Business.
(d) To record interest expense savings on the funds assumed to be
borrowed after the Distribution. In the historical periods ended
September 30, 1999 and June 30, 2000, interest was allocated to
the Dental Business based upon borrowings by the subsidiaries
under the Company's credit facilities. In connection with the
Distribution, the debt of Sybron International (inclusive of debt
previously allocated to the Dental Business) is expected to
decrease by $382,415 at both September 30, 1999 and June 30, 2000,
respectively, as a result of the Dividend. Weighted-average
interest rates for the Refinancing were assumed to be 7.9% in both
fiscal 1999 and the nine months ended June 30, 2000. These rates
are estimates, but actual rates ultimately paid by Sybron
International may be different and will depend on a number of
factors. These factors include market conditions at the time of
the Distribution and thereafter, the Company's credit profile, the
type of financing employed by the Company, and the Company's
financial performance. Pro forma weighted average bank debt at
Sybron International for the year ended September 30, 1999 and the
nine-month period ended June 30, 2000 was $412.4 million and
$552.0 million, respectively. The following table reflects the
effect on the pro forma combined statements of income of an
increase or decrease of 10% from the current estimated interest
rates on an annualized basis.
<TABLE>
<CAPTION>
Year ended Nine months
September 30, 1999 ended June 30, 2000
------------------ -------------------
(In thousands, except share data)
<S> <C> <C>
Change in income from continuing operations before taxes $3,258 $3,270
====== ======
Change in income from continuing operations $1,954 $1,962
====== ======
Change in pro forma diluted earnings per share
from continuing operations $ .02 $ .02
====== ======
</TABLE>
(e) To eliminate intercompany interest paid to the Dental Business.
(f) To record increase in deferred financing fees as a result of the
Refinancing.
(g) To record income tax expenses or benefits relating to (b), (c),
(d), (e) and (f) above.
(h) To reflect common stock equivalents attributable to SDS.
<PAGE> 7
(i) To record the Dividend from the Dental Business to Sybron
International, anticipated to aggregate $198.2 million, which will
be applied to settle all intercompany loans and advances, and to
allocate to the Dental Business $375.0 million of Sybron
International's bank debt, as follows:
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(In thousands)
<S> <C> <C> <C>
Current portion of bank term loan $ 450 $ (450) $ --
Other current debt 3,668 (634) 3,034
--------- --------- ---------
Total current portion of long-term debt 4,118 (1,084) 3,034
========= ========= =========
Long term portion of bank term loan $ 569,891 $(569,891) $ --
Revolving bank credit facility 352,000 (352,000) --
New credit facility -- 550,579 550,579
Other long-term debt 50,527 (11,103) 39,424
--------- --------- ---------
Total long-term debt $ 972,418 $(382,415) $ 590,003
========= ========= =========
</TABLE>
Although the bank debt allocated to the Dental Business is currently
expected to be approximately $375 million, the actual amount allocated
at the time of the Distribution may be different depending on certain
factors including, but not limited to, the Dental Business's equity at
the time of the Distribution.
(j) In connection with the Distribution, Sybron estimates fees and
expenses not included in these pro forma financial statements to
approximate $6.0 million.
<PAGE> 8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYBRON INTERNATIONAL CORPORATION
Date: September 22, 2000 By: /s/Dennis Brown
-----------------------------------
Dennis Brown
Vice President - Finance, Chief
Financial Officer & Treasurer
