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, 2002
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 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. [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).
Yes [X] No [ ]
The aggregate market value of the voting common stock held by
non-affiliates of the registrant as of June 28, 2002 was $2,827,512,659.
The number of shares of the registrant's Common Stock outstanding as of
the close of business on March 3, 2003 was 78,458,951.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant's annual report to shareholders for
fiscal year 2002 (the "2002 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 2003 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 2002 Annual Report to Shareholders nor the Proxy Statement are
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 are
described in this Item 1 and 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. 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:
1). Dental consumables and small equipment, and 2). Large equipment. Sales
of the Company's dental products accounted for approximately 98% of
DENTSPLY's consolidated sales for the year ended December 31, 2002. The
remaining 2% of consolidated sales is primarily related to materials sold to
the investment casting industry.
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 established a stronger presence in
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 2002, 2001 and 2000, the Company's sales to customers outside the
United States, including export sales, accounted for approximately 55%, 49%
and 42%, 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 2002 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 Quantitative and
Qualitative Disclosure About Market Risk under Item 7A and Note 15 of the
Notes to Consolidated Financial Statements in the Company's 2002 Annual
Report to Shareholders is incorporated herein by reference.
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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 creating numerous
acquisition opportunities. As a result, during the past three years, the
Company has made numerous acquisitions including three significant
acquisitions made during 2001. In January 2001, the Company acquired the
outstanding shares of Friadent GmbH ("Friadent"), a global dental implant
manufacturer and marketer previously 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 previously 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 2002 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.
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 10% 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, computer
aided machining (CAM) ceramics systems, intraoral lighting systems,
ultrasonic scalers and polishers, air abrasion systems and porcelain
furnaces. Sales of consumable and small equipment accounted for
approximately 92% of the Company's consolidated sales for the year ended
December 31, 2002.
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 6% of the Company's consolidated
sales for the year ended December 31, 2002.
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Markets, Sales and Distribution
DENTSPLY distributes approximately 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. No customers accounted for more than ten percent of consolidated
net sales in 2002.
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 2002 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 expenditures 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.
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.
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The Company believes that 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, European and Japanese 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 the U.S. - Dentistry in North America
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.
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 The Company's business is less susceptible than other industries to
general downturns in the economies in which it operates. Many of the
products the Company offers relate to dental procedures that are
considered necessary by patients regardless of the economic environment.
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 350 scientists, Ph.D.'s,
engineers and technicians dedicated to research and product development.
Approximately $41.6 million, $28.3 million, and $20.4 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
2002, 2001 and 2000, 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.
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 is constructing a plant site outside Chicago, where it will
establish a major dental anesthetic filling plant. The Company believes
that the plant will become operational during 2004, which includes the
FDA validation of the manufacturing practices and the provision of
products to certain international markets. This initiative is very
important to the Company since AstraZeneca, the Company's current
supplier, will cease to supply product to certain markets by year-end
2004. As a result, this plant must be operational prior to that time to
avoid any disruption in supply.
o A Corporate Purchasing office has been established to leverage the
buying power of Dentsply around the world and reduce our product costs
through lower prices and reduced related overhead.
o The Company has centralized its warehousing and distribution in North
America and Europe. While the initial gains from this strategy have been
realized, ongoing efforts are in place to maximize additional
opportunities that can be gained through improving our functional
expertise in supply chain management.
o A Corporate Quality group is focused on improving manufacturing and
distribution processes throughout the Company with a goal to eliminate
non-value added activities, improving product quality and expanding
product margins.
o DENTSPLY has seen significant gains from the formation of a North
American Shared Services group. The Company has established a task force
to assess possible efficiency opportunities related to the accounting and
finance processes within Europe.
o Information technology initiatives are underway to standardize
worldwide telecommunications, implement improved manufacturing and
financial accounting systems and an ongoing training of IT users to
maximize the capabilities of global systems.
o DENTSPLY continues to pursue opportunities to leverage its assets by
consolidating business units where appropriate and to optimize its
diversity of worldwide manufacturing capabilities.
Financing
DENTSPLY's long-term debt at December 31, 2002 was $769.8 million and the
ratio of long-term debt to total capitalization was 47.9%. DENTSPLY may
incur additional debt in the future, including the funding of additional
acquisitions and capital expenditures. 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. Although the Management believes that the
Company has and will continue to have sufficient liquidity, 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 2002 Annual Report to Shareholders.
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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. The anesthetic products sold by the Company are regulated as a
drug by the FDA and by all other similar regulatory agencies around the
world.
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.
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 has been the subject of public discussion. As a
consequence, in 1994 the German health authorities required suppliers of
dental amalgam to amend the instructions for use for amalgam filling
materials, to include a precaution against the use of amalgam for children
under eighteen years of age and to women of childbearing age. 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.
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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, 2002, the Company and its subsidiaries employed
approximately 7,800 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 Automobile
Mechanics' Local No. 701 in Chicago under a collective bargaining agreement
that expires on May 31, 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.
Website Materials
DENTSPLY makes available free of charge through its website at
www.dentsply.com its annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to these reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 as soon as reasonably practicable after such materials are filed
with or furnished to, the Securities and Exchange Commission.
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Item 2. Properties
The following is a list of DENTSPLY's principal manufacturing locations
as of December31, 2002:
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 and distribution of dental implant poducts
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
Elk Grove Village, Illinois Future manufacture of anesthetic products Owned and Leased
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
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 Owned
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
Sur-Seine, France Manufacture and distribution of investment Leased
casting products
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 endodontic Owned
instruments, plastic components and
packaging material
Le Creux, Switzerland Manufacture and distribution of endodontic Owned
instruments
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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. Most of the
various sites around the world that are used exclusively for sales and
distribution are leased.
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 it is
remote that pending litigation to which DENTSPLY is a party will 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 Court has granted the Company's
motion on the lack of standing of the laboratory and patient class actions
to pursue damage claims. 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. A similar private party action has been
filed in Florida. The trial in the government's case was held in April and
May 2002, the post-trial briefing occurred during the summer and the final
arguments were made in September of 2002. The case is pending a decision by
the Federal District Court Judge who heard the case. 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, 2003.
Name Age Position
John C. Miles II 61 Chairman of the Board and
Chief Executive Officer
Gerald K. Kunkle Jr. 56 President and Chief Operating
Officer
Thomas L. Whiting 60 Executive Vice President
Christopher T. Clark 41 Senior Vice President
William R. Jellison 45 Senior Vice President
Rudolf Lehner 45 Senior Vice President
James G. Mosch 46 Senior Vice President
J. Henrik Roos 45 Senior Vice President
W. William Weston 55 Senior Vice President
Bret W. Wise 42 Senior Vice President and Chief
Financial Officer
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.
Thomas L. Whiting was named Executive Vice President effective November
1, 2002 and directly oversees the following operating units: DENTSPLY
Anesthetics, DENTSPLY Sankin and ESP LLC. In addition, he oversees the
groups managed by Mr. Roos and Mr. Weston. Prior to this appointment, Mr.
Whiting served as Senior Vice President since early 1995. Prior to his
Senior Vice President appointment, Mr. Whiting was Vice President and
General Manager of the Company's L.D. Caulk Operating unit from March 1987
to early 1995. Prior to that time, Mr. Whiting held management positions
with Deseret Medical and the Parker-Davis Company.
Christopher T. Clark was named Senior Vice President effective November
1, 2002 and oversees the following areas: business development and strategic
planning; North American Group Marketing and Administration; Alliance and
Government Sales; and the Ransom and Randolph operating unit. Prior to this
appointment, Mr. Clark served as Vice President and General Manager of the
Gendex operating unit since June 1999. Prior to that time, he served as
Vice President and General Manager of the Trubyte operating unit since July
of 1996. Prior to that, Mr. Clark was Director of Marketing of the Trubyte
Operating Unit since September 1992 when he started with the Company.
William R. Jellison was named Senior Vice President effective November 1,
2002 and oversees the following operating units: DENTSPLY Asia, DENTSPLY
Professional, Maillefer, Tulsa Dental Products and Vereinigte Dentalwerke
("VDW"). Prior to this appointment, Mr. Jellison served as Senior Vice
President and Chief Financial Officer of the Company since April 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, Degussa
Dental Austria and Elephant Dental. 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.
James G. Mosch was named Senior Vice President effective November 1, 2002
and oversees the following operating units: DENTSPLY Australia, DENTSPLY
Brazil, DENTSPLY Canada, DENTSPLY Latin America, DENTSPLY Mexico, Gendex and
Rinn. Prior to this appointment, Mr. Mosch served as Vice President and
General Manager of the DENTSPLY Professional operating unit since July 1994
when he started with the Company.
J. Henrik Roos was named Senior Vice President effective June 1, 1999 and
oversees the following operating units: Ceramco, CeraMed, Friadent, GAC, 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 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.
D1
Bret W. Wise was named Senior Vice President and Chief Financial Officer
of the Company effective December 1, 2002. Prior to that time, Mr. Wise was
Senior Vice President and Chief Financial Officer with Ferro Corporation of
Cleveland, OH. Prior to joining Ferro Corporate in 1999, Mr. Wise held the
position of Vice President and Chief Financial Officer at WCI Steel, Inc.,
of Warren, OH, from 1994 to 1999. Prior to joining WCI Steel, Inc., Mr. Wise
was a partner with KPMG LLP. Mr. Wise is a Certified Public Accountant.
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.
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 2002 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 2002 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
2002 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 2002 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
2002 Annual Report to Shareholders is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the 2003 Proxy Statement is
incorporated herein by reference.
D1
Item 11. Executive Compensation
The information set forth under the caption "Executive Compensation" in
the 2003 Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" in the 2003 Proxy Statement is
incorporated herein by reference.
Securities Authorized For Issuance Under Equity Compensation Plans
The following table provides information at December 31, 2002 regarding
compensation plans and arrangements under which equity securities of
DENTSPLY are authorized for issuance.
Number of securities
Number of securities Weighted average securities remaining
to be issued upon exercise price available for future issuance
exercise of of outstanding under equity compensation
outstanding options, options, warrants plans (excluding securities
warrants and rights and rights reflected in column (a))
(a) (b) (c)
Equity compensation plans approved
by security holders (1) 7,646,589 24.56 7,253,405 (2)
Equity compensation plans not approved
by security holders (3) 45,000 14.83 n/a
Other equity compensation plans not approved
by security holders (4) 108,147 n/a n/a
Total 7,799,736
(1) Consists of the DENTSPLY International Inc. 1993 Stock Option Plan,
1998 Stock Option Plan and 2002 Stock Option Plan.
(2) The maximum number of shares available for issuance under the 2002
Stock Option Plan is 7,000,000 shares of common stock (plus any shares
of common stock covered by any unexercised portion of canceled or
terminated stock options granted under the 1993 Stock Option Plan or
1998 Stock Option Plan) (the "Maximum Number"). The Maximum Number
shall be increased on January 1 of each calendar year during the term
of the 2002 Stock Option Plan to equal 7% of the outstanding shares of
common stock on such date, prior to such increase.
(3) Consists of the Burton C. Borgelt Nonstatutory Stock Option Agreement
as further described below.
(4) See below for a description of the Directors' Deferred Compensation
Plan and the Supplemental Executive Retirement Plan pursuant to which
shares of common stock may be issued to outside directors and certain
management employees.
Burton C. Borgelt Nonstatutory Stock Option Agreement
On January 13, 1994, the Company entered an agreement with Mr. Burton C.
Borgelt granting Mr. Borgelt an option to acquire 45,000 shares of the
Company's common stock at the exercise price of $14.83 (as effected by
subsequent stock dividends). At the time of the grant, Mr. Borgelt was
serving as the Company's Chairman of its Board of Directors. The option was
granted to provide an additional incentive to Mr. Borgelt to devote his
efforts to the future success of the Company.
D1
Directors Deferred Compensation Plan
Effective January 1, 1997, the Company established a Directors'
Deferred Compensation Plan (the "Deferred Plan"). The Deferred Plan permits
non-employee directors to elect to defer receipt of directors fees or other
compensation for their services as directors. Non-employee directors can
elect to have their deferred payments administered as a cash with interest
account or a stock unit account. Distributions to a director under the
Deferred Plan will not be made to any non-employee director until the
non-employee director ceases to be a member of the Board of Directors. Upon
ceasing to be a member of the Board of Directors, the deferred non-employee
director fees are paid based on an earlier election to have their accounts
distributed immediately or in annual installments for up to ten (10) years.
Supplemental Executive Retirement Plan
Effective January 1, 1999, the Board of Directors of the Company
adopted a Supplemental Executive Retirement Plan (the "Plan"). The purpose
of the Plan is to provide additional retirement benefits for a limited group
of management employees whom the Board concluded were not receiving
competitive retirement benefits. No actual benefits are put aside for
participants and the participants are general creditors of the Company for
payment of the benefits upon retirement or termination from the Company.
Participants can elect to have these benefits administered as an interest
bearing cash or stock unit account. Upon retirement/termination, the
participant is paid the benefits in their account based on an earlier
election to have their accounts distributed immediately or in annual
installments for up to five (5) years.
Item 13. Certain Relationships and Related Transactions
No relationships or transactions are required to be reported.
Item 14. Controls and Procedures
(a) As of March 12, 2003, the Company carried out an evaluation under the
supervision and with the participation of the Company's management,
including the Chief Executive Officer ("CEO") and Chief Financial
Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures. Based on that evaluation, the CEO and CFO
concluded that the Company's disclosure controls and procedures have
been designed and are functioning effectively to provide reasonable
assurance that the information required to be disclosed by the Company
in reports filed under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms. A controls system,
no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the controls systems are met, and no
evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been
detected.
(b) Subsequent to the date of the most recent evaluation of the Company's
internal controls, there were no significant changes in the Company's
internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
D1
PART IV
Item 15. 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 2002 Annual Report to Shareholders are
incorporated herein by reference:
Report of Independent Accountants
Consolidated Statements of Income - Years ended December 31, 2002, 2001
and 2000
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Stockholders' Equity - Years ended December
31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows - Years ended December 31, 2002,
2001 and 2000
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 (17)
3.2 By-Laws, as amended (16)
4.1. (a) United States Commercial Paper Issuing and paying Agency Agreement dated as of August 12,1999 between
the Company and the Chase Manhattan Bank. (13)
(b) United States Commercial Paper Dealer Agreement dated as of March 28, 2002 between the Company and
Salomon Smith Barney Inc.
(c) United States Commercial Paper Dealer Agreement dated as of April 30, 2002 between the Company and
Credit Suisse First Boston Corporation.
(d) Euro Commercial Paper Note Agreement dated as of July 18, 2002 between the Company and
Citibank International plc.
(e) Euro Commercial Paper Dealer Agreement dated as of July 18, 2002 between the Company and Citibank
International plc and Credit Suisse First Boston (Europe) Limited.
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. (16)
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. (16)
(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. (16)
(c) Amendment to the 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.
(d) Amendment to the 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.
(e) Amendment to the 5-Year Competitive Advance, Revolving Credit and Guaranty Agreements dated as
of August 30, 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.
(f) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreements dated as
of August 30, 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.
(g) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreements dated
as of May 24, 2002 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.
4.4 Private placement note dated December 28, 2001 between the Company and Massachusetts Mutual Life
Insurance Company and Nationwide Life Insurance Company. (16)
4.5 (a) Eurobonds Agency Agreement dated December 13, 2001 between the Company and Citibank, N.A. (16)
(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). (16)
D1
(c) Pages 4 through 16 of the Company's Eurobond Offering Circular dated December 11, 2001. (16)
10.1 1993 Stock Option Plan (2)
10.2 1998 Stock Option Plan (1)
10.3 2002 Stock Option Plan (17)
10.4 Nonstatutory Stock Option Agreement between the Company and Burton C. Borgelt (3)
10.5 Employee Stock Ownership Plan, as amended, restated as of January 1, 1997
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)
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 January 1, 1996 between the Company and W. William Weston (9)*
10.9 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)*
10.10 Employment Agreement dated October 11,1996 between the Company and Gerald K. Kunkle Jr. (10)*
10.11 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)*
10.12 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)*
10.13 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos (13)*
10.14 Employment Agreement dated October 1, 2001 between the Company and Rudolf Lehner (16)*
10.15 Employment Agreement dated November 1, 2002 between the Company and Christopher T. Clark*
10.16 Employment Agreement dated November 1, 2002 between the Company and James G. Mosch*
10.17 Employment Agreement dated December 1, 2002 between the Company and Bret W. Wise*
10.18 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective
January 1, 1997 (10)*
10.19 Supplemental Executive Retirement Plan effective January 1, 1999 (12)*
10.20 Written Description of Year 2002 Incentive Compensation Plan.
10.21 (a) AZLAD Products Agreement, dated January 18, 2001 between AstraZeneca AB and
Maillefer Instruments Holdings, S.A. (a subsidiary of the Company). (14)
(b) AZLAD Products Manufacturing Agreement, dated January 18, 2001 between AstraZeneca AB
and Maillefer Instruments Holdings, S.A. (14)
(c) AZ Trade Marks License Agreement, dated January 18, 2001 between AstraZeneca AB
and Maillefer Instruments Holdings, S.A. (14)
10.22 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)
10.23 (a) Precious metal inventory Purchase and Sale Agreement dated November 30, 2001 between
Fleet Precious Metal Inc. and the Company. (16)
(b) Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between
JPMorgan Chase Bank and the Company. (16)
(c) Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between
Mitsui & Co., Precious Metals Inc. and the Company. (16)
13 Pages 9 through 47 of the Company's Annual Report to Shareholders for fiscal year 2002
(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
99.1 Chief Executive Officer Certification Statement.
99.2 Chief Financial Officer Certification Statement.
* Management contract or compensatory plan.
D1
(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.
(16) Incorporated by reference to exhibit included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, File
No. 0-16211.
(17) Incorporated by reference to exhibit included in the Company's
Registration Statement on Form S-8 (No. 333-101548).
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 June 13, 2001 between Midland Bank PLC and
Dentsply Limited for GBP 3,000,000 overdraft and $2,000,000 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
None
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 23, 2003 appearing in the 2002 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 15(a) 2 of this 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.
/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
January 23, 2003
D1
SCHEDULE II
DENTSPLY INTERNATIONAL INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 2002
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,
2000 $ 8,152 $ 397 $ 34 (a) $ (2,078) $ (145) $ 6,360
2001 6,360 2,844 5,289 (b) (1,638) (253) 12,602
2002 12,602 2,904 3,560 (c) (1,987) 1,413 18,492
Allowance for trade discounts:
For Year Ended December 31,
2000 1,388 1,318 - (1,031) (46) 1,629
2001 1,629 555 - (1,194) (77) 913
2002 913 988 - (871) 61 1,091
Inventory valuation reserves:
For Year Ended December 31,
2000 15,364 5,584 52 (d) (5,741) (317) 14,942
2001 14,942 4,369 8,409 (e) (2,996) (365) 24,359
2002 24,359 4,855 4,671 (f) (5,581) 2,366 30,670
- ------------------
(a) Includes $34 from acquisition of Midwest Orthodontic Manufacturing.
(b) Includes $389 from acquisition of Friadent and $4,900 from acquisition of Degussa Dental.
(c) Includes $797 from acquisition of Austenal and $2,763 related to the acquisition of Degussa Dental.
(d) Includes $52 from acquisition of Midwest Orthodontic Manufacturing.
(e) Includes $1,580 from acquisition of Friadent and $6,829 from acquisition of Degussa Dental.
(f) Includes $588 from acquisition of Austenal and $4,083 related to the 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, 2003
- ------------------------- --------------------
John C. Miles II Date
Chairman of the Board and
Chief Executive Officer and a Director
(Principal Executive Officer)
/s/ Gerald K. Kunkle March 28, 2003
- ------------------------- --------------------
Gerald K. Kunkle Date
President and Chief
Operating Officer and a Director
/s/ Bret W. Wise March 28, 2003
- ------------------------- --------------------
Bret W. Wise Date
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Dr. Michael C. Alfano March 28, 2003
- ------------------------- --------------------
Dr. Michael C. Alfano Date
Director
/s/ Burton C. Borgelt March 28, 2003
- ------------------------- --------------------
Burton C. Borgelt Date
Director
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/s/ Paula H. Cholmondeley March 28, 2003
- ------------------------- --------------------
Paula H. Cholmondeley Date
Director
/s/ Michael J. Coleman March 28, 2003
- ------------------------- --------------------
Michael J. Coleman Date
Director
/s/ William F. Hecht March 28, 2003
- ------------------------- --------------------
William F. Hecht Date
Director
/s/ Leslie A. Jones March 28, 2003
- ------------------------- --------------------
Leslie A. Jones Date
Director
/s/ Betty Jane Scheihing March 28, 2003
- ------------------------- --------------------
Betty Jane Scheihing Date
Director
/s/Edgar H. Schollmaier March 28, 2003
- ------------------------- --------------------
Edgar H. Schollmaier Date
Director
/s/ W. Keith Smith March 28, 2003
- ------------------------- --------------------
W. Keith Smith Date
Director
D1
Section 302 Certifications Statement
I, John C. Miles II, certify that:
1. I have reviewed this annual report on Form 10-K of DENTSPLY International
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 28, 2003
/s/ John C. Miles II
Chairman and Chief Executive Officer
D1
Section 302 Certifications Statement
I, Bret W. Wise, certify that:
1. I have reviewed this annual report on Form 10-K of DENTSPLY International
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 28, 2003
/s/ Bret W. Wise
Senior Vice President and Chief Financial Officer
D1
EXHIBIT INDEX
Exhibit Exhibit
Number Description Reference
3.1 Restated Certificate of Incorporation (17)
3.2 By-Laws, as amended (16)
4.1. (a) United States Commercial Paper Issuing and paying Agency Agreement dated as of August 12,1999 between
the Company and the Chase Manhattan Bank. (13)
(b) United States Commercial Paper Dealer Agreement dated as of March 28, 2002 between the Company and
Salomon Smith Barney Inc. D2
(c) United States Commercial Paper Dealer Agreement dated as of April 30, 2002 between the Company and
Credit Suisse First Boston Corporation. D3
(d) Euro Commercial Paper Note Agreement dated as of July 18, 2002 between the Company and
Citibank International plc. D4
(e) Euro Commercial Paper Dealer Agreement dated as of July 18, 2002 between the Company and Citibank
International plc and Credit Suisse First Boston (Europe) Limited. D5
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. (16)
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. (16)
(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. (16)
(c) Amendment to the 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. D6
(d) Amendment to the 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. D7
(e) Amendment to the 5-Year Competitive Advance, Revolving Credit and Guaranty Agreements dated as
of August 30, 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. D8
(f) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreements dated as
of August 30, 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. D9
(g) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreements dated
as of May 24, 2002 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. D10
4.4 Private placement note dated December 28, 2001 between the Company and Massachusetts Mutual Life
Insurance Company and Nationwide Life Insurance Company. (16)
4.5 (a) Eurobonds Agency Agreement dated December 13, 2001 between the Company and Citibank, N.A. (16)
(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). (16)
D1
(c) Pages 4 through 16 of the Company's Eurobond Offering Circular dated December 11, 2001. (16)
10.1 1993 Stock Option Plan (2)
10.2 1998 Stock Option Plan (1)
10.3 2002 Stock Option Plan (17)
10.4 Nonstatutory Stock Option Agreement between the Company and Burton C. Borgelt (3)
10.5 Employee Stock Ownership Plan, as amended, restated as of January 1, 1997 D11
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)
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 January 1, 1996 between the Company and W. William Weston (9)*
10.9 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)*
10.10 Employment Agreement dated October 11,1996 between the Company and Gerald K. Kunkle Jr. (10)*
10.11 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)*
10.12 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)*
10.13 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos (13)*
10.14 Employment Agreement dated October 1, 2001 between the Company and Rudolf Lehner (16)*
10.15 Employment Agreement dated November 1, 2002 between the Company and Christopher T. Clark* D12
10.16 Employment Agreement dated November 1, 2002 between the Company and James G. Mosch* D13
10.17 Employment Agreement dated December 1, 2002 between the Company and Bret W. Wise* D14
10.18 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective
January 1, 1997 (10)*
10.19 Supplemental Executive Retirement Plan effective January 1, 1999 (12)*
10.20 Written Description of Year 2002 Incentive Compensation Plan. D15
10.21 (a) AZLAD Products Agreement, dated January 18, 2001 between AstraZeneca AB and
Maillefer Instruments Holdings, S.A. (a subsidiary of the Company). (14)
(b) AZLAD Products Manufacturing Agreement, dated January 18, 2001 between AstraZeneca AB
and Maillefer Instruments Holdings, S.A. (14)
(c) AZ Trade Marks License Agreement, dated January 18, 2001 between AstraZeneca AB
and Maillefer Instruments Holdings, S.A. (14)
10.22 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)
10.23 (a) Precious metal inventory Purchase and Sale Agreement dated November 30, 2001 between
Fleet Precious Metal Inc. and the Company. (16)
(b) Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between
JPMorgan Chase Bank and the Company. (16)
(c) Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between
Mitsui & Co., Precious Metals Inc. and the Company. (16)
13 Pages 9 through 47 of the Company's Annual Report to Shareholders for fiscal year 2002
(only those portions of the Annual Report incorporated by reference in this report
are deemed "filed") D16
21.1 Subsidiaries of the Company D17
23.1 Consent of Independent Accountants - PricewaterhouseCoopers LLP D18
99.1 Chief Executive Officer Certification Statement. D19
99.2 Chief Financial Officer Certification Statement. D20
D1
(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.
(16) Incorporated by reference to exhibit included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2001, File
No. 0-16211.
(17) Incorporated by reference to exhibit included in the Company's
Registration Statement on Form S-8 (No. 333-101548).
D1