SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT
TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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 0-16211
DENTSPLY International Inc.
(Exact name of registrant as specified in its charter)
Delaware 39-1434669
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
570 West College Avenue, York, Pennsylvania 17405-0872
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (717)845-7511
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None Not applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of class)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
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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. [ ]
As of February 22, 2002, the aggregate market value of
voting common stock held by non-affiliates of the registrant,
based upon the last reported sale price for the registrant's
Common Stock on the Nasdaq National Market on such date was
$2,597,726,348 (calculated by excluding shares owned
beneficially by directors and executive officers as a group
from total outstanding shares solely for the purpose of this
response).
The number of shares of the registrant's Common Stock
outstanding as of the close of business on February 22, 2002
was 77,924,485.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's annual report to
shareholders for fiscal year 2001 (the "2001 Annual Report to
Shareholders") are incorporated by reference into Parts I and
II of this Annual Report on Form 10-K to the extent provided
herein. Certain portions of the definitive Proxy Statement of
DENTSPLY International Inc. to be used in connection with the
2002 Annual Meeting of Stockholders (the "Proxy Statement") are
incorporated by reference into Part III of this Annual Report
on Form 10-K to the extent provided herein. Except as
specifically incorporated by reference herein, neither the 2001
Annual Report to Shareholders nor the Proxy Statement is to be
deemed filed as part of this Annual Report on Form 10-K.
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PART I
Item 1. Business
Certain statements made by the Company, including without
limitation, statements containing the words "plans",
"anticipates", "believes", "expects", or words of similar import
may be deemed to be forward-looking statements and are made
pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that forward-looking statements involve risks and
uncertainties which may materially affect the Company's
business and prospects.
History and Overview
DENTSPLY International Inc. ("DENTSPLY" or the "Company"), a
Delaware corporation, was created by a merger of Dentsply
International Inc. ("Old Dentsply") and GENDEX Corporation in
1993 (the "Merger"). Old Dentsply, founded in 1899, was a
manufacturer and distributor of artificial teeth, dental
equipment, and dental consumable products. GENDEX, founded in
1983, was a manufacturer of dental x-ray equipment and
handpieces. Today, DENTSPLY is the world's largest designer,
developer, manufacturer and marketer of a broad range of
products for the dental market. The Company's worldwide
headquarters and executive offices are located in York,
Pennsylvania.
The Company operates in a single reporting segment as a
designer, manufacturer and distributor of dental products in
two principal categories: dental consumables and small
equipment, and large equipment. Sales of the Company's dental
products accounted for approximately 97% of DENTSPLY's
consolidated sales for the year ended December 31, 2001.
The Company conducts its business in over 120 foreign
countries, principally through its foreign subsidiaries.
DENTSPLY has a long-established presence in Canada and in the
European market, particularly in Germany, Switzerland, France,
Italy and the United Kingdom. Through its recent acquisitions
the Company has also gained access to other European markets in
the Netherlands and Austria. The Company also has a significant
market presence in Central and South America including Brazil,
Mexico, Argentina, Colombia, and Chile; in South Africa; and in
the Pacific Rim including Australia, New Zealand, China
(including Hong Kong), Thailand, India, Philippines, Taiwan,
Korea, Vietnam, Indonesia and Japan. DENTSPLY has also
established marketing activities in Moscow, Russia to serve the
countries of the former Soviet Union.
For 2001, 2000 and 1999, the Company's sales outside the
United States, including export sales, accounted for
approximately 49%, 42% and 45%, respectively, of consolidated
net sales. The information about the Company's United States
and foreign sales and assets set forth in Note 4 of the Notes
to Consolidated Financial Statements in the Company's 2001
Annual Report to Shareholders is incorporated herein by
reference.
As a result of the Company's significant international
operations, DENTSPLY is subject to fluctuations in exchange
rates of various foreign currencies and other risks associated
with foreign trade. The impact of currency fluctuations in any
given period can be favorable or unfavorable. The impact of
foreign currency fluctuations of European currencies on
operating income is partially offset by sales in the United
States of products sourced from plants and third party
suppliers located overseas, principally in Germany and
Switzerland. The Company enters into forward foreign exchange
contracts to selectively hedge assets, liabilities and
purchases denominated in foreign currencies. The information
regarding foreign exchange risk management activities set forth
in Note 14 of the Notes to Consolidated Financial Statements in
the Company's 2001 Annual Report to Shareholders is
incorporated herein by reference.
DENTSPLY believes that the dental products industry is
experiencing substantial consolidation with respect to both
product manufacturing and distribution, although it continues
to be fragmented. Between January 1999 and December 2001,
DENTSPLY completed nine acquisitions (five in 2000 and four in
2001). The activity in 2001 includes three significant
acquisitions. In January 2001, the Company acquired the
outstanding shares of Friadent GmbH ("Friadent"), a global
dental implant manufacturer and marketer headquartered in
Mannheim, Germany. In March 2001, the Company acquired the
dental injectible anaesthetic assets of AstraZeneca ("AZ
Assets"). In October 2001, the Company acquired the Degussa
Dental Group ("Degussa Dental"), a manufacturer and seller of
dental products, including precious metal alloys, ceramics,
dental laboratory equipment and chairside products
headquartered in Hanau, Germany. Information about these
acquisitions and the other acquisition and divestiture
activities is set forth in Note 3 of the Notes to Consolidated
Financial Statements in the Company's 2001 Annual Report to
Shareholders and is incorporated herein by reference. These
acquisitions are intended to supplement DENTSPLY's core growth
and assure ongoing expansion of its business. In addition,
acquisitions continue to provide DENTSPLY with new technologies
and additional product breadth.
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The acquisitions made by DENTSPLY involve a substantial
degree of risk. They are expected to result in benefits to
DENTSPLY, including expanding the products and services offered
by DENTSPLY to its customers and potential customers and
enhancing DENTSPLY's presence in the European and Japanese
market for dental products. Achieving the benefits of the
acquisitions, however, will depend on a number of factors,
including the integration of the operations and personnel of
DENTSPLY and the acquired companies in a timely and efficient
manner. The integration will be complicated by the need to
integrate geographically diverse operations. In general,
DENTSPLY cannot offer any assurances that it can successfully
integrate or realize the anticipated benefits of the
acquisitions. Failure to do so could result in the loss of key
personnel and have a material adverse effect on the acquired
businesses and DENTSPLY's financial condition and operating
results. In addition, the attention and effort devoted to the
integration of the acquired companies could significantly
divert management's attention from other important tasks and
could seriously harm DENTSPLY. Other risks include
unanticipated expenses related to technology integration,
difficulties in maintaining uniform standards, controls,
procedures and policies, the impairment of relationships with
employees and customers as a result of any integration of new
management personnel and potential unknown liabilities
associated with acquired businesses.
Certain provisions of DENTSPLY's Certificate of
Incorporation and By-laws and of Delaware law could have the
effect of making it difficult for a third party to acquire
control of DENTSPLY. Such provisions include the division of
the Board of Directors of DENTSPLY into three classes, with the
three-year term of a class expiring each year, a provision
allowing the Board of Directors to issue preferred stock having
rights senior to those of the common stock and certain
procedural requirements which make it difficult for
stockholders to amend DENTSPLY's By-laws and which preclude
stockholders from calling special meetings of stockholders. In
addition, members of DENTSPLY's management and participants in
its Employee Stock Ownership Plan collectively own
approximately 11% of the outstanding common stock of DENTSPLY,
which may discourage a third party from attempting to acquire
control of DENTSPLY in a transaction that is opposed by
DENTSPLY's management and employees.
Principal Products
The worldwide professional dental industry encompasses the
diagnosis, treatment and prevention of disease and ailments of
the teeth, gums and supporting bone. DENTSPLY's two principal
dental product lines are consumables and small equipment and
large equipment. These products are produced by the Company in
the United States and internationally and are distributed
throughout the world under some of the most well-established
brand names and trademarks in the industry, including ACUCAM(R),
ANKYLOS(R), AQUASIL(TM), CAULK(R), CAVITRON(R), CERAMCO(R), CERCON(R),
DELTON(R), DENOPTIX(TM), DENTSPLY(R), DETREY(R), ELEPHANT(R), ESTHET.X(R),
FRIALIT(R), GAC ORTHOWORKS(TM), GENDEX(R), IN-OVATION(TM), MAILLEFER(R),
MIDWEST(R), NUPRO(R), PEPGEN P-15(TM), PROFILE(R), RINN(R), R&R(R),
SANI-TIP(R), THERMAFIL(R) and TRUBYTE(R).
Consumables and Small Equipment. Consumable products
consist of dental sundries used in dental offices in the
treatment of patients and in dental laboratories in the
preparation of dental appliances. DENTSPLY's products in this
category include dental prosthetics, including artificial
teeth, endodontic (root canal) instruments and materials,
dental injectable anesthetics, prophylaxis paste, dental
sealants, implants, impression materials, restorative
materials, precious metal dental alloys, dental ceramics, crown
and bridge materials, tooth whiteners, topical fluoride,
cutting instruments, dental needles, and orthodontic appliances
and accessories. The Company manufactures thousands of
different consumable and laboratory products marketed under
more than a hundred brand names. Small equipment products
consist of various durable goods used in dental offices for
treatment of patients as well as in dental laboratories.
DENTSPLY's small equipment products include high and low speed
handpieces, intraoral lighting systems, ultrasonic scalers and
polishers, air abrasion systems and porcelain furnaces. Sales
of consumable and small equipment accounted for approximately
90% of the Company's consolidated sales for the year ended
December 31, 2001.
Large Equipment. Large equipment products consist of various
durable goods used in dental offices primarily for the
diagnosis of patients . DENTSPLY's large equipment product
lines include conventional and digital dental x-ray systems and
related support equipment and accessories, intraoral cameras,
computer imaging systems and related software. Sales of large
equipment accounted for approximately 7% of the Company's
consolidated sales for the year ended December 31, 2001.
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Markets, Sales and Distribution
DENTSPLY distributes approximately 50-60% of its dental
products through domestic and foreign distributors, dealers and
importers. However, certain highly technical products such as
precious metal dental alloys, dental ceramics, crown and bridge
porcelain products, endodontic instruments and materials,
orthodontic appliances, implants and bone substitute and
grafting materials are sold directly to the dental laboratory
or dentist in some markets. Sales to two customers, both
distributors, accounted for 11% and 9%, respectively, of
consolidated net sales in 2001.
The information about the Company's foreign and domestic
operations and export sales set forth in Note 4 of the Notes to
Consolidated Financial Statements in the Company's 2001 Annual
Report to Shareholders is incorporated herein by reference.
Although much of its sales are made to distributors,
dealers, and importers, DENTSPLY focuses its marketing efforts
on the dentists, dental hygienists, dental assistants, dental
laboratories and dental schools who are the end users of its
products. As part of this end-user "pull through" marketing
approach, DENTSPLY employs approximately 1,700 highly trained,
product-specific sales and technical staff to provide
comprehensive marketing and service tailored to the particular
sales and technical support requirements of the dealers and the
end users. The Company conducts extensive distributor and
end-user marketing programs and trains laboratory technicians
and dentists in the proper use of its products, introducing
them to the latest technological developments at its
Educational Centers located in key dental markets. The Company
also maintains ongoing relationships with various dental
associations and recognized worldwide opinion leaders in the
dental field.
DENTSPLY believes that demand in a given geographic market
for dental procedures and products varies according to the
stage of social, economic and technical development that the
market has attained. Geographic markets for DENTSPLY's dental
products can be categorized into the following three stages of
development:
The United States, Canada, Western Europe, the United
Kingdom, Japan, and Australia are highly developed markets that
demand the most advanced dental procedures and products and
have the highest level of expenditure on dental care. In these
markets, the focus of dental care is increasingly upon
preventive care and specialized dentistry. In addition to basic
procedures such as the excavation and filling of cavities and
tooth extraction and denture replacement, dental professionals
perform an increasing volume of preventive and cosmetic
procedures. These markets require varied and complex dental
products, utilize sophisticated diagnostic and imaging
equipment, and demand high levels of attention to protection
against infection and patient cross-contamination.
In certain countries in Central America, South America and
the Pacific Rim, dental care is often limited to the excavation
and filling of cavities and other restorative techniques,
reflecting more modest per capita expenditures for dental care.
These markets demand diverse products such as high and low
speed handpieces, restorative compounds, finishing devices and
custom restorative devices.
In the People's Republic of China, India, Eastern Europe,
the countries of the former Soviet Union, and other developing
countries, dental ailments are treated primarily through tooth
extraction and denture replacement. These procedures require
basic surgical instruments, artificial teeth for dentures and
bridgework, and anchoring devices such as posts.
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The Company offers products and equipment for use in markets
at each of these stages of development. The Company believes
that as each of these markets develop, demand for more
technically advanced products will increase. The Company also
believes that its recognized brand names, high quality and
innovative products, technical support services and strong
international distribution capabilities position it well to
take advantage of any opportunities for growth in all of the
markets that it serves.
The following trends support the Company's confidence in its
industry growth outlook:
o Increasing worldwide population - Population growth
continues throughout the world.
o Growth of the population 65 or older - The percentage of
the United States and European population over age 65 is
expected to nearly double by the year 2030. In addition to
having significant needs for dental care, the elderly are
well positioned to pay for the required procedures since
they control sizable amounts of discretionary income.
o Natural teeth are being retained longer - Individuals with
natural teeth are much more likely to visit a dentist in a
given year than those without any natural teeth remaining.
o The changing dental practice in developed countries -
Dentistry in developed countries has been transformed from a
profession primarily dealing with pain, infections and tooth
decay to one with increased emphasis on preventive care and
cosmetic dentistry. DENTSPLY's product lines are well
positioned to provide the new sophisticated solutions that
these advanced procedures require.
o Per capita and discretionary incomes are increasing in
emerging nations - As personal incomes continue to rise in
the emerging nations of the Pacific Rim and Latin America,
healthcare, including dental services, are a growing
priority.
o Growth in the field of aesthetic dentistry - Those among
the aging "Baby Boomer" population are not only keeping
their natural teeth longer but are interested in looking
their best, increasing the demand for tooth whitening and
other aesthetic procedures.
Product Development
Technological innovation and successful product development
are critical to strengthening the Company's prominent position
in worldwide dental markets, maintaining its leadership
positions in product categories where it has a high market
share, and increasing market share in product categories where
gains are possible. While many of DENTSPLY's innovations
represent sequential improvements of existing products, the
Company also continues to successfully launch products that
represent fundamental change. Its research centers throughout
the world employ approximately 330 scientists, Ph.D.'s,
engineers and technicians dedicated to research and product
development. Approximately $28.3 million, $20.4 million, and
$18.5 million, respectively, was internally invested by the
Company in connection with the development of new products and
in the improvement of existing products in the years ended
2001, 2000 and 1999, respectively. There can be no assurance
that DENTSPLY will be able to continue to develop innovative
products and that regulatory approval of any new products will
be obtained, or that if such approvals are obtained, such
products will be accepted in the marketplace.
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Operating and Technical Expertise
DENTSPLY believes that its manufacturing capabilities are
important to its success. The Company continues to automate
its global manufacturing operations in order to remain a low
cost producer.
The manufacture of the Company's products requires
substantial and varied technical expertise. Complex materials
technology and processes are necessary to manufacture the
Company's products.
DENTSPLY has completed or has in progress a number of key
initiatives around the world that are focused on helping the
Company improve its operating margins.
o The Company's primary operational initiative over the next
1-2 years will be to successfully integrate the recent
acquisitions.
o The Company has recently acquired a plant site outside
Chicago, where it will establish a major dental anesthetic
filling plant. The Company believes that the plant will be
operational, which includes the FDA validation of the
manufacturing practices, at the end of 2003.
o The Company is creating a Corporate Quality and Purchasing
initiative to help ensure product quality and reduce
purchased product costs throughout the organization.
o The Company has centralized its warehousing and
distribution in North America and Europe. This will
minimize both inventory levels and multiple customer
shipments. It also helps improve product forecasting and
service to our customers.
o In the first quarter of 2001, DENTSPLY reorganized certain
functions within Europe, Brazil and North America with the
objective of consolidating duplicative functions and
improving efficiencies within these regions. These measures
have resulted in the elimination of approximately 310
administrative and manufacturing positions in Brazil and
Germany. Most aspects of this plan have been completed.
o The Company continues to focus on improving its
manufacturing processes at several of its manufacturing
locations, providing improved flexibility. This will allow
them to continue to reduce inventories and improve response
times to changes in customer demand.
o DENTSPLY has also completed its North American Shared
Service initiative focused on the consolidation and
centralization of the financial accounting support
functions.
o DENTSPLY is making significant improvements in Information
Technology as well. The new manufacturing and financial
accounting system was implemented in 1999 and provides the
Company with common software systems for nearly all of its
locations around the world excluding Friadent and Degussa
Dental. Worldwide telecommunications are currently a key
focus, as we continue to drive efficiencies.
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Financing
DENTSPLY's long-term debt at December 31, 2001 was $723.5
million and the related long-term debt to total capitalization
was 54.3%. DENTSPLY may incur additional debt in the future,
including the funding of additional acquisitions; however, the
Company's primary focus in 2002 is the integration of its
already competed acquisitions and the repayment of debt.
DENTSPLY's ability to make payments on its indebtedness, and to
fund its operations depends on its future performance and
financial results, which, to a certain extent, are subject to
general economic, financial, competitive, regulatory and other
factors that are beyond its control. There can be no assurance
that DENTSPLY's business will generate sufficient cash flow
from operations in the future to service its debt and operate
its business.
DENTSPLY's existing borrowing documentation contains a
number of covenants and financial ratios which it is required
to satisfy. Any breach of any such covenants or restrictions
would result in a default under the existing borrowing
documentation that would permit the lenders to declare all
borrowings under such documentation to be immediately due and
payable and, through cross default provisions, would entitle
DENTSPLY's other lenders to accelerate their loans. DENTSPLY
may not be able to meet its obligations under its outstanding
indebtedness in the event that any cross default provision is
triggered.
Additional information about DENTSPLY's working capital,
liquidity and capital resources is incorporated herein by
reference to the material under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 2001 Annual Report to Shareholders.
Competition
The Company conducts its operations, both domestic and
foreign, under highly competitive market conditions.
Competition in the dental products industry is based primarily
upon product performance, quality, safety and ease of use, as
well as price, customer service, innovation and acceptance by
professionals and technicians. DENTSPLY believes that its
principal strengths include its well-established brand names,
its reputation for high-quality and innovative products, its
leadership in product development and manufacturing, and its
commitment to customer service and technical support.
The size and number of the Company's competitors vary by
product line and from region to region. There are many
companies that produce some, but not all, of the same types of
products as those produced by the Company. Certain of
DENTSPLY's competitors may have greater resources than does the
Company in certain of its product offerings.
The worldwide market for dental supplies and equipment is
highly competitive. There can be no assurance that the Company
will successfully identify new product opportunities and
develop and market new products successfully, or that new
products and technologies introduced by competitors will not
render the Company's products obsolete or noncompetitive.
Regulation
The Company's products are subject to regulation by, among
other governmental entities, the United States Food and Drug
Administration (the "FDA"). In general, if a dental "device"
is subject to FDA regulation, compliance with the FDA's
requirements constitutes compliance with corresponding state
regulations. In order to ensure that dental products
distributed for human use in the United States are safe and
effective, the FDA regulates the introduction, manufacture,
advertising, labeling, packaging, marketing and distribution
of, and record-keeping for, such products.
Dental devices of the types sold by DENTSPLY are generally
classified by the FDA into a category that renders them subject
only to general controls that apply to all medical devices,
including regulations regarding alteration, misbranding,
notification, record-keeping and good manufacturing practices.
DENTSPLY's facilities are subject to periodic inspection by the
FDA to monitor DENTSPLY's compliance with these regulations.
There can be no assurance that the FDA will not raise
compliance concerns. Failure to satisfy FDA requirements can
result in FDA enforcement actions, including product seizure,
injunction and/or criminal or civil proceedings. In the
European Union, DENTSPLY's products are subject to the medical
devices laws of the various member states which are based on a
Directive of the European Commission. Such laws generally
regulate the safety of the products in a similar way to the FDA
regulations. DENTSPLY products in Europe bear the CE sign
showing that such products adhere to the European regulations.
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All dental amalgam filling materials, including those
manufactured and sold by DENTSPLY, contain mercury. Various
groups have alleged that dental amalgam containing mercury is
harmful to human health and have actively lobbied state and
federal lawmakers and regulators to pass laws or adopt
regulatory changes restricting the use, or requiring a warning
against alleged potential risks, of dental amalgams. The FDA's
Dental Devices Classification Panel, the National Institutes of
Health and the United States Public Health Service have each
indicated that no direct hazard to humans from exposure to
dental amalgams has been demonstrated. If the FDA were to
reclassify dental mercury and amalgam filling materials as
classes of products requiring FDA pre-market approval, there
can be no assurance that the required approval would be
obtained or that the FDA would permit the continued sale of
amalgam filling materials pending its determination. In Europe,
in particular in Scandinavia and Germany, the contents of
mercury in amalgam filling materials had been the subject of
public discussion. As a consequence, in 1994 the German health
authorities asked suppliers of dental amalgam to amend, as a
precautionary measure, the instructions for use for amalgam
filling materials. DENTSPLY adhered to this request. DENTSPLY
also manufactures and sells non-amalgam dental filling
materials that do not contain mercury.
The introduction and sale of dental products of the types
produced by the Company are also subject to government
regulation in the various foreign countries in which they are
produced or sold. Some of these regulatory requirements are
more stringent than those applicable in the United States.
DENTSPLY believes that it is in substantial compliance with the
foreign regulatory requirements that are applicable to its
products and manufacturing operations.
Sources and Supply of Raw Materials
All of the raw materials used by the Company in the
manufacture of its products are purchased from various
suppliers and are available from numerous sources. No single
supplier, except for the supplier of precious metal raw
materials, accounts for a significant percentage of DENTSPLY's
raw material requirements. There are alternative suppliers of
precious metal raw materials readily available.
Intellectual Property
Products manufactured by DENTSPLY are sold primarily under
its own trademarks and trade names. DENTSPLY also owns and
maintains more than 1,000 patents throughout the world and is
licensed under a small number of patents owned by others.
DENTSPLY's policy is to protect its products and technology
through patents and trademark registrations in the United
States and in significant international markets for its
products. The Company carefully monitors trademark use
worldwide, and promotes enforcement of its patents and
trademarks in a manner that is designed to balance the cost of
such protection against obtaining the greatest value for the
Company. DENTSPLY believes its patents and trademark
properties are important and contribute to the Company's
marketing position but it does not consider its overall
business to be materially dependent upon any individual patent
or trademark.
Employees
As of December 31, 2001, the Company and its subsidiaries
employed approximately 7,500 employees. A small percentage of
the Company's employees are represented by labor unions.
Hourly workers at the Company's Ransom & Randolph facility in
Maumee, Ohio are represented by Local No. 12 of the
International Union, United Automobile, Aerospace and
Agriculture Implement Workers of America under a collective
bargaining agreement that expires on January 31, 2004. Hourly
workers at the Company's Midwest Dental Products facility in
Des Plaines, Illinois are represented by Tool & Die Makers
Local 113 of the International Association of Machinists and
Aerospace Workers under a collective bargaining agreement that
expires on June 1, 2003. In addition, approximately 20% of
Degussa Dental Germany's workforce is represented by labor
unions. The Company believes that its relationship with its
employees is good.
The Company's success is dependent upon its management and
employees. The loss of senior management employees or any
failure to recruit and train needed managerial, sales and
technical personnel could have a material adverse effect on the
Company.
Environmental Matters
DENTSPLY believes that its operations comply in all material
respects with applicable environmental laws and regulations.
Maintaining this level of compliance has not had, and is not
expected to have, a material effect on the Company's capital
expenditures or on its business.
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Item 2. Properties
The following is a list of DENTSPLY's principal
manufacturing locations as of December31, 2001:
Leased
Location Function or Owned
United States:
Los Angeles, California Manufacture and distribution of investment Leased
casting products
Yucaipa , California, Manufacture and distribution of dental Owned
laboratory products and dental ceramics
Lakewood, Colorado Manufacture and distribution of bone grafting Leased
materials and hydroxylapatite plasma-feed
coating materials
Milford, Delaware Manufacture of consumable dental products Owned
Des Plaines, Illinois Manufacture and assembly of dental handpieces Leased
and components and dental x-ray equipment
Elgin, Illinois Manufacture of dental x-ray film holders, film Owned
mounts and accessories
Franklin Park, Illinois Manufacture and distribution of needles and Owned
needle-related products, primarily for the dental
profession
Columbus, Indiana Manufacture and distribution of orthodontic Leased
accessories
Maumee, Ohio Manufacture and distribution of investment Owned
casting products
York, Pennsylvania Manufacture and distribution of artificial teeth Owned
and other dental laboratory products;
corporate headquarters
York, Pennsylvania Manufacture of small dental equipment and Owned
preventive dental products
Johnson City, Tennessee Manufacture and distribution of endodontic Leased
instruments and materials
Foreign:
Catanduva, Brazil Manufacture and distribution of consumable Leased
dental products
Petropolis, Brazil Manufacture and distribution of artificial teeth Owned
and consumable dental products
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Leased
Location Function or Owned
Petropolis, Brazil Manufacture and distribution of dental Owned
anesthetics
Tianjin, China Manufacture and distribution of dental products Leased
Plymouth, England Manufacture of dental hand instruments Leased
Bohmte, Germany Manufacture and distribution of dental Owned
laboratory products
Hanau, Germany Manufacture and distribution of precious metal Owned
dental alloys, dental ceramics and dental
implant products
Konstanz, Germany Manufacture and distribution of consumable Owned
dental products
Mannheim, Germany Manufacture and distribution of dental Owned
implant products
Munich, Germany Manufacture and distribution of endodontic Owned
instruments and materials
Rosbach, Germany Manufacture and distribution of dental ceramics Owned
New Delhi, India Manufacture and distribution of dental products Leased
Milan, Italy Manufacture and distribution of dental Leased
x-ray equipment
Nasu, Japan Manufacture and distribution of precious metal Owned
dental alloys, consumable dental products and
orthodontic products
Hoorn, Netherlands Manufacture and distribution of precious metal Owned
dental alloys and dental ceramics
Las Piedras, Puerto Rico Manufacture of crown and bridge materials Owned
Ballaigues, Switzerland Manufacture and distribution of endodontic Owned
instruments
Ballaigues, Switzerland Manufacture and distribution of plastic Owned
components and packaging material
Le Creux, Switzerland Manufacture and distribution of endodontic Owned
instruments
D1
In addition, the Company maintains sales and distribution
offices at certain of its foreign and domestic manufacturing
facilities, as well as at various other United States and
international locations. Of the various sites around the world
that are used exclusively for sales and distribution, all but
three are leased. The Company also maintains sales offices in
various countries throughout the world.
DENTSPLY believes that its properties and facilities are
well maintained and are generally suitable and adequate for the
purposes for which they are used.
Item 3. Legal Proceedings
DENTSPLY and its subsidiaries are from time to time parties
to lawsuits arising out of their respective operations. The
Company believes that pending litigation to which DENTSPLY is a
party will not have a material adverse effect upon its
consolidated financial position or results of operations.
In June 1995, the Antitrust Division of the United States
Department of Justice initiated an antitrust investigation
regarding the policies and conduct undertaken by the Company's
Trubyte Division with respect to the distribution of artificial
teeth and related products. On January 5, 1999 the Department
of Justice filed a complaint against the Company in the U.S.
District Court in Wilmington, Delaware alleging that the
Company's tooth distribution practices violate the antitrust
laws and seeking an order for the Company to discontinue its
practices. Three follow on private class action suits on
behalf of dentists, laboratories and denture patients in
seventeen states, respectively, who purchased Trubyte teeth or
products containing Trubyte teeth, were filed and transferred
to the U.S. District Court in Wilmington, Delaware. The class
action filed on behalf of the dentists has been dismissed by
the plaintiffs. The private party suits seek damages in an
unspecified amount. The Company filed motions for summary
judgment in all of the above cases, which were argued to the
court in December 2000. The Court denied the Company's motion
for summary judgment regarding the Department of Justice
action, granted the motion on the lack of standing of the
patient class action and granted the motion on the lack of
standing of the laboratory class action to pursue damage
claims. In an attempt to avoid the effect of the Court's
ruling, the attorneys for the laboratory class action filed a
new complaint naming DENTSPLY and its dealers as
co-conspirators with respect to DENTSPLY's distribution policy.
The Company filed a motion to dismiss this re-filed complaint.
The Court again granted DENTSPLY's motion on the lack of
standing of the laboratory class action to pursue damage
claims. The attorneys for the patient class have also filed a
new action to avoid the effect of the Court's ruling. This
action is filed in the U.S. District Court in Delaware. Four
private party class actions on behalf of indirect purchasers
were filed in California state court. These cases are based on
allegations similar to those in the Department of Justice
case. In response to the Company's motion, these cases have
been consolidated in one Judicial District in Los Angeles. It
is the Company's position that the conduct and activities of
the Trubyte division do not violate the antitrust laws.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Executive Officers of the Registrant
The following table sets forth certain information regarding
the executive officers of the Company as of February 28, 2001.
Name Age Position
John C. Miles II 60 Chairman of the Board and
Chief Executive Officer
Gerald K. Kunkle Jr. 55 President and Chief
Operating Officer
William R. Jellison 44 Senior Vice President
and Chief Financial Officer
Rudolf Lehner 44 Senior Vice President
J. Henrik Roos 44 Senior Vice President
W. William Weston 54 Senior Vice President
Thomas L. Whiting 59 Senior Vice President
Brian M. Addison 48 Vice President, Secretary
and General Counsel
D1
John C. Miles II was named Chairman of the Board effective
May 20, 1998. Prior thereto, he was Vice Chairman of the Board
since January 1, 1997. He was named Chief Executive Officer of
the Company upon the resignation of Burton C. Borgelt from that
position on January 1, 1996. Prior to that he was President and
Chief Operating Officer and a director of the Company since the
Merger. Prior to that he served as President and Chief
Operating Officer and a director of Old Dentsply commencing in
January 1990.
Gerald K. Kunkle Jr. was named President and Chief Operating
Officer effective January 1, 1997. Prior thereto, Mr. Kunkle
served as President of Johnson and Johnson's Vistakon Division,
a manufacturer and marketer of contact lenses, from January
1994 and, from early 1992 until January 1994, was President of
Johnson and Johnson Orthopaedics, Inc., a manufacturer of
orthopaedic implants, fracture management products and trauma
devices.
William R. Jellison was named Senior Vice President and
Chief Financial Officer of the Company effective April 20,
1998. Prior to that time, Mr. Jellison held the position of
Vice President of Finance, Treasurer and Corporate Controller
for Donnelly Corporation of Holland, Michigan since 1994. From
1991 to 1994, Mr. Jellison was Donnelly's Vice President of
Financial Operations, Treasurer and Corporate Controller.
Prior to that, he served one year as Treasurer and Corporate
Controller and in other financial management positions for
Donnelly. Mr. Jellison is a Certified Management Accountant.
Rudolf Lehner was named Senior Vice President effective
December 12, 2001 and oversees the following operating units:
Degussa Dental Germany, DENTSPLY Austria, DENTSPLY Sankin,
Detech, Elephant Dental and Friadent. Prior to that time, Mr
Lehner was Chief Operating Officer of Degussa Dental since
mid-2000. From 1999 to mid 2000, he had the overall
responsibilities for Sales & Marketing at Degussa Dental. From
1994 to 1999, Mr. Lehner held the position of Chief Executive
Officer of Elephant Dental. From 1990 to 1994, he had overall
responsibility for international activities at Degussa Dental.
Prior to that, Mr Lehner held various positions at Degussa
Dental and its parent, Degussa AG, since starting in 1984.
J. Henrik Roos was named Senior Vice President effective
June 1, 1999 and oversees the following operating units:
Ceramco, CeraMed, DENTSPLY Argentina, DENTSPLY Brazil, DENTSPLY
Canada, DENTSPLY Latin America, DENTSPLY Mexico, DENTSPLY
Professional, Ransom & Randolph and Trubyte. Prior to his
Senior Vice President appointment, Mr. Roos served as Vice
President and General Manager of the Company's Gendex division
from June 1995 to June 1999. Prior to that, he served as
President of Gendex European operations in Frankfurt, Germany
since joining the Company in August 1993.
W. William Weston was named Senior Vice President effective
January 1, 1996 and oversees the following operating units:
DeDent, DENTSPLY Asia, DENTSPLY Australia, DENTSPLY France,
DENTSPLY Italy, DENTSPLY Russia, DENTSPLY United Kingdom, L.D.
Caulk, and Middle East/Africa. Prior to his Senior Vice
President appointment, Mr. Weston served as the Vice President
and General Manager of DENTSPLY's DeDent Operations in Europe
from October 1, 1990 to January 1, 1996. Prior to that time he
was Pharmaceutical Director for Pfizer in Germany.
Thomas L. Whiting was named Senior Vice President effective
in early 1995 and oversees the following operating units:
DENTSPLY Anesthetics, ESP LLC, GAC, Gendex, Maillefer, MPL,
Rinn, Tulsa Dental Products and Vereinigte Dentalwerke
("VDW"). Prior to his Senior Vice President appointment, Mr.
Whiting was Vice President and General Manager of the Company's
L.D. Caulk Division from March 1987 to early 1995. Prior to
that time, Mr. Whiting held management positions with Deseret
Medical and the Parker-Davis Company.
Brian M. Addison has been Vice President, Secretary and
General Counsel of the Company since January 1, 1998. Prior to
that he was Assistant Secretary and Corporate Counsel since
December 1994. From August 1994 to December 1994 he was a
Partner at the Harrisburg, Pennsylvania law firm of McNees,
Wallace & Nurick. Prior to that he was Senior Counsel at
Hershey Foods Corporation.
D1
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The information set forth under the caption "Supplemental
Stock Information" in the Company's 2001 Annual Report to
Shareholders is incorporated herein by reference.
Item 6. Selected Financial Data
The information set forth under the caption "Selected
Financial Data" in the Company's 2001 Annual Report to
Shareholders is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's 2001 Annual Report to Shareholders
is incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosure About Market
Risk
The information set forth under the caption "Quantitative
and Qualitative Disclosure About Market Risk" in the Company's
2001 Annual Report to Shareholders is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
The information set forth under the captions "Management's
Financial Responsibility," "Report of Independent Accountants,"
"Consolidated Statements of Income," "Consolidated Balance
Sheets," "Consolidated Statements of Stockholders' Equity,"
"Consolidated Statements of Cash Flows," and "Notes to
Consolidated Financial Statements" in the Company's 2001 Annual
Report to Shareholders is incorporated herein by reference. The
Report of KPMG, LLP for the Company's fiscal year ended
December 31, 1999 is attached hereto as Exhibit 99.1.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Previously reported.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information (i) set forth under the caption "Executive
Officers of the Registrant" in Part I of this Annual Report on
Form 10-K and (ii) set forth under the captions "Election of
Directors," "Section 16(a) Beneficial Ownership Reporting
Compliance" and "Other Matters" in the 2002 Proxy Statement is
incorporated herein by reference.
Item 11. Executive Compensation
The information set forth under the caption "Executive
Compensation" in the 2002 Proxy Statement is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the caption "Security
Ownership of Certain Beneficial Owners and Management" in the
2002 Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information set forth under the subcaptions
"Compensation of Directors", "Human Resources Committee
Interlocks and Insider Participation" and "Human Resources
Committee Report on Executive Compensation" in the 2002 Proxy
Statement is incorporated herein by reference.
D1
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K
(a) Documents filed as part of this Report
1 Financial Statements
The following consolidated financial statements of the
Company set forth in the Company's 2001 Annual Report to
Shareholders are incorporated herein by reference:
Report of Independent Accountants
Consolidated Statements of Income - Years ended December
31, 2001, 2000 and 1999
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Stockholders' Equity - Years
ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows - Years ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
2 Financial Statement Schedules
The following financial statement schedule and the Report
of Independent Accountants on Financial Statement Schedule
are filed as part of this Annual Report on Form 10-K:
Report of Independent Accountants on Financial Statement
Schedule
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and
Exchange Commission are not required to be included herein
under the related instructions or are inapplicable and,
therefore, have been omitted.
D1
3 Exhibits. The Exhibits listed below are filed or
incorporated by reference as part of this Annual
Report on Form 10-K.
Exhibit
Number Description
3.1 Restated Certificate of
Incorporation (1)
3.2 By-Laws, as amended
4.1. (a) Commercial Paper Issuing and
paying Agency Agreement
dated as of August 12,1999
between the Company and the
Chase Manhattan Bank (13)
(b) Commercial Paper Dealer
Agreement dated as of August 12,
1999 between the Company and
Goldman, Sachs & Co. (13)
4.2 (a) Note Agreement (governing Series
A, Series B and Series C Notes)
dated March 1, 2001 between the
Company and Prudential Insurance
Company of America (14)
(b) First Amendment to Note
Agreement dated September 1, 2001
between the Company and
Prudential Insurance Company of
America.
4.3 (a) 5-Year Competitive Advance,
Revolving Credit and Guaranty
Agreements dated as of May 25,
2001 among the Company, the
guarantors named therein, the
banks named therein, the ABN
Amro Bank, N.V as Administrative
Agent, and First Union National
Bank and Harris Trust and
Savings Bank as Documentation
Agents as Documentation Agents.
(b) 364-Day Competitive Advance,
Revolving Credit and Guaranty
Agreements dated as of May 25,
2001 among the Company, the
guarantors named therein, the
banks named therein, the ABN
Amro Bank, N.V as Administrative
Agent, and First Union National
Bank and Harris Trust and
Savings Bank as Documentation
Agents as Documentation Agents.
4.4 Private placement note dated
December 28, 2001 between the
Company and Massachusetts Mutual
Life Insurance Company and
Nationwide Life Insurance
Company.
4.5 (a) Eurobonds Agency Agreement dated
December 13, 2001 between the
Company and Citibank, N.A.
(b) Eurobond Subscription Agreement
dated December 11, 2001 between
the Company and Credit Suisse
First Boston (Europe) Limited,
UBS AG, ABN AMRO Bank N.V.,
First Union Securities, Inc.;
and Tokyo-Mitsubishi International
plc (the Managers).
(c) Pages 4 through 16 of the
Company's Eurobond Offering
Circular dated December 11, 2001.
10.1 1992 Stock Option Plan adopted
May 26, 1992 (4)
10.2 1993 Stock Option Plan (2)
10.3 1998 Stock Option Plan (1)
10.4 Nonstatutory Stock Option
Agreement between the Company
and Burton C. Borgelt (3)
10.5 (a) Employee Stock Ownership Plan as
amended effective as of December
1, 1982 restated as of January
1, 1991 (7)
(b) Second amendment to the DENTSPLY
Employee Stock Ownership Plan
(10)
(c) Third Amendment to the DENTSPLY
Employee Stock Ownership Plan
(12)
10.6 (a) Trust Agreement for the
Company's Employee Stock
Ownership Plan between the
Company and T. Rowe Price Trust
Company dated as of November 1,
2000. (14)
(b) Plan Recordkeeping Agreement for
the Company's Employee Stock
Ownership Plan between the
Company and T. Rowe Price Trust
Company dated as of November 1,
2000. (14)
D1
10.7 (a) Employment Agreement dated as of
December 31, 1987 between the
Company and John C. Miles II (5)*
(b) Amendment to Employment
Agreement between the Company
and John C. Miles II dated
February 16, 1996, effective
January 1, 1996 (9)*
10.8 Employment Agreement dated as of
December 10, 1992 between the
Company and Michael R. Crane (5)*
10.9 Employment Agreement dated
January 1, 1996 between the
Company and W. William Weston
(9)*
10.10 Employment Agreement dated
January 1, 1996 between the
Company and Thomas L. Whiting
(9)*
10.11 Employment Agreement dated
October 11,1996 between the
Company and Gerald K. Kunkle Jr.
(10)*
10.12 Employment Agreement dated April
20, 1998 between the Company and
William R. Jellison (12)*
10.13 Employment Agreement dated
September 10, 1998 between the
Company and Brian M. Addison
(12)*
10.14 Employment Agreement dated June
1, 1999 between the Company and
J. Henrik Roos (13)*
10.15 Employment Agreement dated
October 1, 2001 between the
Company and Rudolf Lehner*
10.16 DENTSPLY International Inc.
Directors' Deferred Compensation
Plan effective January 1, 1997
(10)*
10.17 Supplemental Executive
Retirement Plan effective
January 1, 1999 (12)*
10.18 Written Description of Year 2001
Incentive Compensation Plan.
10.19 Sale and Purchase Agreement for
all the shares of Friadent Gmbh,
dated December 28, 2000 by and
between Neptuno Verwaltungs und
Treuhand - Gersellschaft GmbH,
Dr. Eberhard Braun and Fria Nu
GmbH (a subsidiary of the
Company). (14)
10.20(a) AZLAD Products Agreement, dated
January 18, 2001 between
AstraZenaca AB and Maillefer
Instruments Holdings, S.A. (a
subsidiary of the Company). (14)
(b) AZLAD Products Manufacturing
Agreement, dated January 18,
2001 between AstraZenaca AB and
Maillefer Instruments Holdings,
S.A. (14)
(c) AZ Trade Marks License
Agreement, dated January 18,
2001 between AstraZenaca AB and
Maillefer Instruments Holdings,
S.A. (14)
10.21 Degussa Dental Group Sale and
Purchase Agreement, dated May
28/29, 2001 between Degussa AG
(Seller) and Dentsply Hanau GmbH
& Co. KG, Dentsply Research &
Development Corporation and
Dentsply EU S.a.r.l. (Purchasers
and subsidiaries of the
Company). (15)
10.22(a) Precious metal inventory
Purchase and Sale Agreement
dated November 30, 2001 between
Fleet Precious Metal Inc. and
the Company.
(b) Precious metal inventory
Purchase and Sale Agreement
dated December 20, 2001 between
JPMorgan Chase Bank and the
Company.
(c) Precious metal inventory
Purchase and Sale Agreement
dated December 20, 2001 between
Mitsui & Co., Precious Metals
Inc. and the Company.
13 Pages 9 through 44 of the
Company's Annual Report to
Shareholders for fiscal year
2001 (only those portions of the
Annual Report incorporated by
reference in this report are
deemed "filed")
21.1 Subsidiaries of the Company
23.1 Consent of Independent
Accountants - PricewaterhouseCoopers LLP
23.2 Consent of Independent Auditors - KPMG LLP
99.1 Audit Report of KPMG LLP
D1
* Management contract or compensatory plan.
(1) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
333-56093).
(2) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-71792).
(3) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-79094).
(4) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-52616).
(5) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1993, File No. 0-16211.
(6) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, File No. 0-16211.
(7) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
December 31, 1994, File No. 0-16211.
(8) Incorporated by reference to exhibit included in the
Company's Current Report on Form 8-K dated January 10,
1996, File No. 0-16211.
(9) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, File No. 0-16211.
(10) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 0-16211.
(11) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 0-16211.
(12) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 0-16211.
(13) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 0-16211.
(14) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, File No. 0-16211.
(15) Incorporated by reference to exhibit included in the
Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2001, File No. 0-16211.
D1
Loan Documents
The Company and certain of its subsidiaries have entered
into various loan and credit agreements and issued various
promissory notes and guaranties of such notes, listed below,
the aggregate principal amount of which is less than 10% of its
assets on a consolidated basis. The Company has not filed
copies of such documents but undertakes to provide copies
thereof to the Securities and Exchange Commission
supplementally upon request.
(1) Master Grid Note dated November 4, 1996 executed in
favor of The Chase Manhattan Bank in connection with a
line of credit up to $20,000,000 between the Company and
The Chase Manhattan Bank.
(2) Agreement dated February 26, 1999 between Midland
Bank PLC and Dentsply Limited for GBP 3,000,000 overdraft
and $2,500,000 foreign exchange facility.
(3) Agreement dated June 21, 2001 in the principal
amount of $6,000,000 between Dentsply Research and
Development Corp, Hong Kong Branch and Bank of Tokyo
Mitsubishi.
(4) Form of "comfort letters" to various foreign
commercial lending institutions having a lending
relationship with one or more of the Company's
international subsidiaries.
(b) Reports on Form 8-K
On October 17, 2001, the Company filed a Form 8-K, under
item 2 reporting that it had acquired the Degussa Dental
Group. On December 17, 2001, Amendment 1 to this Form 8-K
was filed on Form 8-K/A. This amendment contained the
financial information required under this form.
On November 23, 2001, the Company furnished a Form 8-K,
under item 9. This report (which is not deemed filed under
the Securities Exchange Act) disclosed financial
information related to the recently-acquired Degussa
Dental Group that was provided in a preliminary offering
circular to prospective purchasers in connection with the
marketing of the Company's planned Eurobond Offering.
D1
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors of
DENTSPLY International Inc.
Our audits of the consolidated financial statements referred to
in our report dated January 21, 2002, except for Note 16, as to
which the date is January 31, 2002 appearing in the 2001 Annual
Report to Shareholders of DENTSPLY International Inc. (which
report and consolidated financial statements are incorporated
by reference in this Annual Report on Form 10-K) also included
an audit of the financial statement schedule listed in Item
14(a)(2) of the Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material respects,
the information set forth therein when read in conjunction with
the related consolidated financial statements.
PricewaterhouseCoopers LLP
Philadelphia, PA
March 28, 2002
D1
SCHEDULE II
DENTSPLY INTERNATIONAL INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 2001
Additions
-----------------------
Charged
Balance at (Credited) Charged to Write-offs Balance
Beginning To Costs Other Net of Translation at End
Description of Period And Expenses Accounts Recoveries Adjustment of Period
(in thousands)
Allowance for doubtful accounts:
For Year Ended December 31,
1999 $ 7,891 $ 1,418 $ 541 (a) $ (1,294) $ (404) $ 8,152
2000 8,152 397 34 (b) (2,078) (145) 6,360
2001 6,360 2,844 5,289 (c) (1,638) (253) 12,602
Allowance for trade discounts:
For Year Ended December 31,
1999 1,954 2,061 - (1,538) (183) 2,294
2000 2,294 2,169 - (1,732) (102) 2,629
2001 2,629 555 - (1,194) (124) 1,866
Inventory valuation reserves:
For Year Ended December 31,
1999 12,315 2,116 2,679 (d) (1,209) (537) 15,364
2000 15,364 5,584 52 (e) (5,741) (317) 14,942
2001 14,942 4,369 8,409 (f) (2,996) (365) 24,359
(a) Includes $62 from acquisition of Vereinigte Dentalwerke and $479 for the New Image restructuring.
(b) Includes $34 from acquisition of Midwest Orthodontic Manufacturing.
(c) Includes $389 from acquisition of Friadent and $4,900 from acquisition of Degussa Dental.
(d) Includes $2,679 from acquisition of Vereinigte Dentalwerke and Herpo Productos Dentarios.
(e) Includes $52 from acquisition of Midwest Orthodontic Manufacturing.
(f) Includes $1,580 from acquisition of Friadent and $6,829 from acquisition of Degussa Dental.
D1
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.
DENTSPLY INTERNATIONAL INC.
By:/s/ John C. Miles II
-----------------------
John C. Miles II
Chairman of the Board
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.
/s/ John C. Miles II March 28, 2002
- ------------------------- --------------------
John C. Miles II Date
Chairman of the Board and
Chief Executive Officer and a Director
(Principal Executive Officer)
/s/ Gerald K. Kunkle, Jr. March 28, 2002
- ------------------------- --------------------
Gerald K. Kunkle, Jr. Date
President and Chief
Operating Officer and a Director
/s/ William R. Jellison March 28, 2002
- ------------------------- --------------------
William R. Jellison Date
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Dr. Michael C. Alfano March 28, 2002
- ------------------------- --------------------
Dr. Michael C. Alfano Date
Director
/s/ Burton C. Borgelt March 28, 2002
- ------------------------- --------------------
Burton C. Borgelt Date
Director
D1
/s/ Douglas K. Chapman March 28, 2002
- ------------------------- --------------------
Douglas K. Chapman Date
Director
/s/ Paula H. Cholmondeley March 28, 2002
- ------------------------- --------------------
Paula H. Cholmondeley Date
Director
/s/ Michael J. Coleman March 28, 2002
- ------------------------- --------------------
Michael J. Coleman Date
Director
/s/ C. Frederick Fetterolf March 28, 2002
- ------------------------- --------------------
C. Frederick Fetterolf Date
Director
/s/ William F. Hecht March 28, 2002
- ------------------------- --------------------
William F. Hecht Date
Director
/s/ Leslie A. Jones March 28, 2002
- ------------------------- --------------------
Leslie A. Jones Date
Director
/s/ Betty Jane Scheihing March 28, 2002
- ------------------------- --------------------
Betty Jane Scheihing Date
Director
/s/Edgar H. Schollmaier March 28, 2002
- ------------------------- --------------------
Edgar H. Schollmaier Date
Director
/s/ W. Keith Smith March 28, 2002
- ------------------------- --------------------
W. Keith Smith Date
Director
D1
EXHIBIT INDEX
Exhibit Exhibit
Number Description Reference
3.1 Restated Certificate of
Incorporation (1)
3.2 By-Laws, as amended D2
4.1. (a) Commercial Paper Issuing and
paying Agency Agreement
dated as of August 12,1999
between the Company and the
Chase Manhattan Bank (13)
(b) Commercial Paper Dealer
Agreement dated as of August 12,
1999 between the Company and
Goldman, Sachs & Co. (13)
4.2 (a) Note Agreement (governing Series
A, Series B and Series C Notes)
dated March 1, 2001 between the
Company and Prudential Insurance
Company of America (14)
(b) First Amendment to Note
Agreement dated September 1, 2001
between the Company and
Prudential Insurance Company of
America. D3
4.3 (a) 5-Year Competitive Advance,
Revolving Credit and Guaranty
Agreements dated as of May 25,
2001 among the Company, the
guarantors named therein, the
banks named therein, the ABN
Amro Bank, N.V as Administrative
Agent, and First Union National
Bank and Harris Trust and
Savings Bank as Documentation
Agents as Documentation Agents. D4
(b) 364-Day Competitive Advance,
Revolving Credit and Guaranty
Agreements dated as of May 25,
2001 among the Company, the
guarantors named therein, the
banks named therein, the ABN
Amro Bank, N.V as Administrative
Agent, and First Union National
Bank and Harris Trust and
Savings Bank as Documentation
Agents as Documentation Agents. D5
4.4 Private placement note dated
December 28, 2001 between the
Company and Massachusetts Mutual
Life Insurance Company and
Nationwide Life Insurance
Company. D6
4.5 (a) Eurobonds Agency Agreement dated
December 13, 2001 between the
Company and Citibank, N.A. D7
(b) Eurobond Subscription Agreement
dated December 11, 2001 between
the Company and Credit Suisse
First Boston (Europe) Limited,
UBS AG, ABN AMRO Bank N.V.,
First Union Securities, Inc.;
and Tokyo-Mitsubishi International
plc (the Managers). D8
(c) Pages 4 through 16 of the
Company's Eurobond Offering
Circular dated December 11, 2001.
10.1 1992 Stock Option Plan adopted. D9
May 26, 1992 (4)
10.2 1993 Stock Option Plan (2)
10.3 1998 Stock Option Plan (1)
10.4 Nonstatutory Stock Option
Agreement between the Company
and Burton C. Borgelt (3)
10.5 (a) Employee Stock Ownership Plan as
amended effective as of December
1, 1982 restated as of January
1, 1991 (7)
(b) Second amendment to the DENTSPLY
Employee Stock Ownership Plan
(10)
(c) Third Amendment to the DENTSPLY
Employee Stock Ownership Plan
(12)
10.6 (a) Trust Agreement for the
Company's Employee Stock
Ownership Plan between the
Company and T. Rowe Price Trust
Company dated as of November 1,
2000. (14)
(b) Plan Recordkeeping Agreement for
the Company's Employee Stock
Ownership Plan between the
Company and T. Rowe Price Trust
Company dated as of November 1,
2000. (14)
D1
10.7 (a) Employment Agreement dated as of
December 31, 1987 between the
Company and John C. Miles II (5)*
(b) Amendment to Employment
Agreement between the Company
and John C. Miles II dated
February 16, 1996, effective
January 1, 1996 (9)*
10.8 Employment Agreement dated as of
December 10, 1992 between the
Company and Michael R. Crane (5)*
10.9 Employment Agreement dated
January 1, 1996 between the
Company and W. William Weston
(9)*
10.10 Employment Agreement dated
January 1, 1996 between the
Company and Thomas L. Whiting
(9)*
10.11 Employment Agreement dated
October 11,1996 between the
Company and Gerald K. Kunkle Jr.
(10)*
10.12 Employment Agreement dated April
20, 1998 between the Company and
William R. Jellison (12)*
10.13 Employment Agreement dated
September 10, 1998 between the
Company and Brian M. Addison
(12)*
10.14 Employment Agreement dated June
1, 1999 between the Company and
J. Henrik Roos (13)*
10.15 Employment Agreement dated
October 1, 2001 between the
Company and Rudolf Lehner* D10
10.16 DENTSPLY International Inc.
Directors' Deferred Compensation
Plan effective January 1, 1997
(10)*
10.17 Supplemental Executive
Retirement Plan effective
January 1, 1999 (12)*
10.18 Written Description of Year 2001
Incentive Compensation Plan. D11
10.19 Sale and Purchase Agreement for
all the shares of Friadent Gmbh,
dated December 28, 2000 by and
between Neptuno Verwaltungs und
Treuhand - Gersellschaft GmbH,
Dr. Eberhard Braun and Fria Nu
GmbH (a subsidiary of the
Company). (14)
10.20(a) AZLAD Products Agreement, dated
January 18, 2001 between
AstraZenaca AB and Maillefer
Instruments Holdings, S.A. (a
subsidiary of the Company). (14)
(b) AZLAD Products Manufacturing
Agreement, dated January 18,
2001 between AstraZenaca AB and
Maillefer Instruments Holdings,
S.A. (14)
(c) AZ Trade Marks License
Agreement, dated January 18,
2001 between AstraZenaca AB and
Maillefer Instruments Holdings,
S.A. (14)
10.21 Degussa Dental Group Sale and
Purchase Agreement, dated May
28/29, 2001 between Degussa AG
(Seller) and Dentsply Hanau GmbH
& Co. KG, Dentsply Research &
Development Corporation and
Dentsply EU S.a.r.l. (Purchasers
and subsidiaries of the
Company). (15)
10.22(a) Precious metal inventory
Purchase and Sale Agreement
dated November 30, 2001 between
Fleet Precious Metal Inc. and
the Company. D12
(b) Precious metal inventory
Purchase and Sale Agreement
dated December 20, 2001 between
JPMorgan Chase Bank and the
Company. D13
(c) Precious metal inventory
Purchase and Sale Agreement
dated December 20, 2001 between
Mitsui & Co., Precious Metals
Inc. and the Company. D14
13 Pages 9 through 44 of the
Company's Annual Report to
Shareholders for fiscal year
2001 (only those portions of the
Annual Report incorporated by
reference in this report are
deemed "filed"). D15
21.1 Subsidiaries of the Company D16
23.1 Consent of Independent
Accountants - PricewaterhouseCoopers LLP D17
23.2 Consent of Independent Auditors - KPMG LLP D18
99.1 Audit Report of KPMG LLP D19
D1
* Management contract or compensatory plan.
(1) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
333-56093).
(2) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-71792).
(3) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-79094).
(4) Incorporated by reference to exhibit included in the
Company's Registration Statement on Form S-8 (No.
33-52616).
(5) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1993, File No. 0-16211.
(6) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993, File No. 0-16211.
(7) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
December 31, 1994, File No. 0-16211.
(8) Incorporated by reference to exhibit included in the
Company's Current Report on Form 8-K dated January 10,
1996, File No. 0-16211.
(9) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, File No. 0-16211.
(10) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 0-16211.
(11) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 0-16211.
(12) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, File No. 0-16211.
(13) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1999, File No. 0-16211.
(14) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2000, File No. 0-16211.
(15) Incorporated by reference to exhibit included in the
Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2001, File No. 0-16211.
Company's Quarterly Report on Form 10-Q for the period
ended June 30, 2001, File No. 0-16211.
D1