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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, 2003

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 39-143466
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

221 West Philadelphia Street, 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 [ ]










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 1, 2004 was
80,239,253.

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the definitive Proxy Statement of
DENTSPLY International Inc. to be used in connection with the
2004 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 the Proxy Statement is not
deemed to be filed as part of this Annual Report on Form 10-K.





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. On December 11, 2003,
the Company entered into a definitive agreement to sell the x-ray
equipment business of the prior GENDEX Corporation to Danaher
Corporation for $102.5 million which was completed on February
27, 2004. Reference is made to the information about discontinued
operations set forth in Note 6 of the Notes to Consolidated
Financial Statements in this Annual Report on Form 10-K.

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 within five operating segments all of
which are primarily engaged in the design, manufacture and
distribution of dental products in three principal categories: 1)
Dental consumables, 2) Dental laboratory products, and 3)
Specialty dental products. Sales of the Company's dental products
accounted for approximately 98% of DENTSPLY's consolidated sales
for the year ended December 31, 2003. 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. 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 2003, 2002, and 2001, the Company's sales to customers
outside the United States, including export sales, accounted for
approximately 58%, 56% and 39%, respectively, of consolidated net
sales. Reference is made to the information about the Company's
United States and foreign sales by shipment origin and assets set
forth in Note 4 of the Notes to Consolidated Financial Statements
in this Annual Report on Form 10-K.

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.
Reference is made to the information regarding foreign exchange
risk management activities set forth in Quantitative and
Qualitative Disclosure About Market Risk under Item 7A and Note
17 of the Notes to Consolidated Financial Statements in this
Annual Report on Form 10-K.






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"). The
assets acquired in the business consisted primarily of an
exclusive, perpetual, royalty-free licensing rights to the dental
products and tradenames. In addition, certain limited equipment
was acquired, but no production facilities were acquired as part
of the transaction. 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 other acquisition and divestiture
activities is set forth in Note 3 of the Notes to Consolidated
Financial Statements in the Company's 2003 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 have provided 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 call
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 principal dental product categories are dental
consumables, dental laboratory products and dental specialty products. 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 ANKYLOS(R), AQUASIL(TM),
CAULK(R), CAVITRON(R), CERAMCO(R), CERCON(R), CITANEST(R), DELTON(R),
DENTSPLY(R), DETREY(R), ELEPHANT(R), ESTHET.X(R), FRIALIT(R), GAC
ORTHOWORKS(TM), GOLDEN GATE(R), IN-OVATION(TM), MAILLEFER(R), MIDWEST(R),
MYSTIQUE(TM), NUPRO(R), PEPGEN P-15(TM), POLOCAINE(R), PROFILE(R), PROTAPER(TM),
RINN(R), R&R(R), SANI-TIP(R), THERMAFIL(R), TRUBYTE(R) and XYLOCAINE(R).

Dental Consumables. Consumable products consist of dental
sundries used in dental offices in the treatment of patient and
small equipment used by the dental professional. DENTSPLY's
products in this category include dental anesthetics, prophylaxis
paste, dental sealants, impression materials, restorative
materials, tooth whiteners, and topical fluoride. The Company
manufactures thousands of different consumable 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. DENTSPLY's small equipment products
include high and low speed handpieces, intraoral curing light
systems and ultrasonic scalers and polishers. Sales of general
dental consumables accounted for approximately 35% of the
Company's consolidated sales for the year ended December 31, 2003.

Dental Laboratory Products. Laboratory products are used in
dental laboratories in the preparation of dental appliances.
DENTSPLY's products in this category include dental prosthetics,
including artificial teeth, precious metal dental alloys, dental
ceramics, and crown and bridge materials. Small equipment in
this category includes computer aided machining (CAM) ceramics
systems and porcelain furnaces. Sales of dental laboratory
products accounted for approximately 33% of the Company's
consolidated sales for the year ended December 31, 2003.






Dental Specialty Products. Specialty dental products are used
for specific purposes within the dental office and laboratory
settings. DENTSPLY's products in this category include
endodontic (root canal) instruments and materials, implants, and
orthodontic appliances and accessories. Sales of specialty
products accounted for approximately 30% of the Company's
consolidated sales for the year ended December 31, 2003.


Markets, Sales and Distribution

DENTSPLY distributes approximately 55% 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 dental
professional in some markets. No single customer accounted for
more than ten percent of consolidated net sales in 2003.

Reference is made to 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 this
Annual Report on Form 10-K.

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 throughout the world 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.

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 Company believes that the following trends support the
Company's confidence in its industry growth outlook:

o Increasing worldwide population.

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 400 scientists, Ph.D.'s, engineers and
technicians dedicated to research and product development.
Approximately $43.3 million, $39.9 million, and $27.3 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 2003, 2002,
and 2001, 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. Additionally, there is no assurance that
entirely new technology or approaches to dental treatment will
not be introduced that could obsolete the Company's products.


Operating and Technical Expertise

DENTSPLY believes that its manufacturing capabilities are
important to its success. 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.The Company continues to
automate its global manufacturing operations in order to remain a
low cost producer.






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 major dental anesthetic
filling plant outside Chicago. The Company believes that the
plant will become operational late in 2004, following the FDA
validation of manufacturing practices, at which time it will
begin to supply products to certain international markets. This
initiative is very important to the Company since the assets
acquired from AstraZeneca did not include production
facilities. The company has a contract with AstraZeneca to
produce the company's requirements at their facilities on a
contract manufacturing basis pending the completion of the
Company's manufacturing facility in Chicago, Illinois. The
contract with AstraZeneca has recently been renegotiated and
extended to March 2005, with further extensions available to
the Company with six months advance notice. Based on the
current contract manufacturing arrangement in place, the
Company believes that it has sufficient sources of supply and
contractual flexibility to ensure a continued source of supply
until the facilities in Chicago are completed.

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.
In an effort to improve customer service levels and reduce
costs, the Company is currently in the process of relocating
its European warehouse form Nijmegen, The Netherlands to
Radolfzell, Germany. This relocation is expected to be complete
by the first quarter of 2004.

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 is evaluating
the possible efficiency opportunities related to consolidating
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, 2003 was $790.2
million and the ratio of long-term debt to total capitalization
was 41.3%. This capitalization ratio is down from 54.3% at
December 31, 2001, the quarter in which the Degussa Dental
acquisition was completed. 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.






The Company has $21.1 million of long-term debt coming due in
the next year. Additional information about DENTSPLY's working
capital, liquidity and capital resources provided in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in this Annual Report on Form 10-K.


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 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. 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 accounts for
a significant percentage of DENTSPLY's raw material requirements.

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, 2003, the Company and its subsidiaries
employed approximately 7,600 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, 2008. Hourly workers at the Company's Midwest Dental
Products facility in Des Plaines, Illinois are represented by
International Association of Machinists and Aerospace Workers,
AFL-CIO in Chicago under a collective bargaining agreement that
expires on May 31, 2006. In addition, approximately 30% of
DeguDent, a German subsidiary, are 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.

Securities and Exchange Act Reports

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.






Item 2. Properties

The following is a current list of DENTSPLY's principal
manufacturing locations:



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

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

Maumee, Ohio Manufacture and distribution of investment Owned
casting products

York, Pennsylvania Manufacture and distribution of artificial teeth Owned
and other dental laboratory products;

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








Leased
Location Function or Owned


Bonsucesso, 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

Ivry 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

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








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. The trial in the government's case was held in April
and May 2002. On August 14, 2003, the Judge entered a decision
that the Company's tooth distribution practices do not violate
the antitrust laws. On October 14, 2003, the Department of
Justice appealed this decision to the U.S. Third Circuit Court of
Appeals. The parties are proceeding under the briefing schedule
issued by the Third Circuit.

Subsequent to the filing of the Department of Justice Complaint
in 1999, several private party class actions were filed based on
allegations similar to those in the Department of Justice case,
on behalf of laboratories, and denture patients in seventeen
states who purchased Trubyte teeth or products containing Trubyte
teeth. These cases were transferred to the U.S. District Court in
Wilmington, Delaware. 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. The Plaintiffs in the
laboratory case have filed a petition with the Third Circuit to
hear an interlocutory appeal of this decision. Also, private
party class actions on behalf of indirect purchasers were filed
in California and Florida state courts. The California and
Florida cases have been dismissed by the Plaintiffs following the
decision by the Federal District Court Judge issued in August
2003.

On March 27, 2002, a Complaint was filed in Alameda County,
California (which was transferred to Los Angeles County) by Bruce
Glover, D.D.S. alleging, inter alia, breach of express and
implied warranties, fraud, unfair trade practices and negligent
misrepresentation in the Company's manufacture and sale of
Advance(R) cement. The Complaint seeks damages in an unspecified
amount for costs incurred in repairing dental work in which the
Advance(R) product allegedly failed. In September 2003, the
Plaintiff filed a Motion for class certification, which the
Company opposed. Oral arguments were held in December 2003, and
in January, 2004, the Judge entered an Order granting class
certification only on the claims of breach of warranty and
fraud. In general, the Class is defined as California dentists
who purchased and used Advance(R) cement and were required, because
of failures of Advance(R), to repair or reperform dental
procedures. The Company has filed a Writ of Mandate in the
appellate court seeking reversal of the class certification. The
Advance(R) cement product was sold from 1994 through 2000 and total
sales in the United States during that period were approximately
$5.2 million.

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, 2004.


Name Age Position

Gerald K. Kunkle Jr. 57 Vice Chairman of the
Board and Chief Executive Officer
Thomas L. Whiting 61 President and Chief
Operating Officer
Christopher T. Clark 42 Senior Vice President
William R. Jellison 46 Senior Vice President
Rudolf Lehner 46 Senior Vice President
James G. Mosch 46 Senior Vice President
J. Henrik Roos 46 Senior Vice President
Bret W. Wise 43 Senior Vice President
and Chief Financial Officer
Brian M. Addison 49 Vice President,
Secretary and General Counsel

Gerald K. Kunkle Jr. was named Vice Chairman of the Board and
Chief Executive Officer of the Company effective January 1,
2004. Prior thereto, Mr. Kunkle served as President and Chief
Operating Officer since January, 1997. Prior to joining
DENTSPLY, 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 President and Chief Operating
Officer of the Company effective January 1, 2004. Prior thereto,
Mr. Whiting was appointed Executive Vice President since
November, 2002.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 Parke-Davis
Company.

Christopher T. Clark was named Senior Vice President effective
November 1, 2002 and oversees the following areas: North American
Group Marketing and Administration; Alliance and Government
Sales; and the Ransom and Randolph, DENTSPLY Sankin, L.D. Caulk,
and DeDent operating units. 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, Dentsply
Endodontics, including 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 various financial management positions including Vice
President of Finance, Treasurer and Corporate Controller for
Donnelly Corporation of Holland, Michigan since 1980. 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, Elephant Dental,
DENTSPLY France, DENTSPLY Italy, DENTSPLY Russia, DENTSPLY United
Kingdom, and Middle East/Africa. 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 Pharmaceutical, DENTSPLY Australia, DENTSPLY Brazil,
DENTSPLY Canada, DENTSPLY Latin America and DENTSPLY Mexico..
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.

Bret W. Wise was named Senior Vice President and Chief
Financial Officer of the Company effective December 1, 2002. In
this position, he is also responsible for Business Development,
Accounting, Treasury, Tax, Information Technology, Internal Audit
and the Rinn operating unit. 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" is filed as part of this Annual Report on Form 10-K.

Item 6. Selected Financial Data

The information set forth under the caption "Selected Financial
Data" is filed as part of this Annual Report on Form 10-K.

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" is filed as part of this Annual Report on Form 10-K.

Item 7A. Quantitative and Qualitative Disclosure About Market
Risk

The information set forth under the caption "Quantitative and
Qualitative Disclosure About Market Risk" is filed as part of
this Annual Report on Form 10-K.






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" is filed as part of this
Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures


(a) Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the
Company's Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the Company's disclosure controls
and procedures as of the end of the period covered by this
report. Based on that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company's
disclosure controls and procedures as of the end of the period
covered by this report 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 the
SEC's rules and forms. The Company believes that a controls
system, no matter how well designed and operated, cannot provide
absolute assurance that the objectives of the controls system 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) Change in Internal Control over Financial Reporting

No change in the Company's internal control over financial
reporting occurred during the Company's most recent fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial
reporting.

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 2004 Proxy Statement is incorporated herein by
reference.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics
that applies to the Chief Executive Officer and the Chief
Financial Officer and all of the Company's employees. This Code
of Business Conduct and Ethics is provided as Exhibit 99.1 of
this Annual Report on Form 10-K.






Item 11. Executive Compensation

The information set forth under the caption "Executive
Compensation" in the 2004 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 2004 Proxy
Statement is incorporated herein by reference.

Securities Authorized For Issuance Under Equity Compensation Plans

The following table provides information at December 31, 2003
regarding compensation plans and arrangements under which equity
securities of DENTSPLY are authorized for issuance.




Number of
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
Plan category warrants and rights and rights reflected in column (a))
(a) (b) (c)


Equity compensation plans approved
by security holders (1) 8,132,457 28.42 6,116,264 (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) 99,555 n/a n/a

Total 8,277,012



(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
(which includes shares already granted as options under the
plan) may 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 if greater than 7,000,000.

(3) Consists of the Burton C. Borgelt Nonstatutory Stock Option
Agreement granted on January 13, 1994. These options were
fully exercised in January 2004..

(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.







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 a cash with interest 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. Principal Accountant Fees and Services

The information set forth under the caption "Relationship with
Independent Auditors" in the 2004 Proxy Statement is incorporated
herein by reference.







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 are filed as part of this Annual Report on Form 10-K:

Report of Independent Auditors
Consolidated Statements of Income - Years ended December 31,
2003, 2002 and 2001
Consolidated Balance Sheets - December 31, 2003 and 2002
Consolidated Statements of Stockholders' Equity - Years
ended December 31, 2003, 2002 and 2001
Consolidated Statements of Cash Flows - Years ended December
31, 2003, 2002 and 2001
Notes to Consolidated Financial Statements

2 Financial Statement Schedules

The following financial statement schedule is
filed as part of this Annual Report on Form 10-K:

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.






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. (18)
(c) United States Commercial Paper Dealer Agreement dated as of April 30, 2002 between the Company and Credit Suisse
First Boston Corporation. (18)
(d) Euro Commercial Paper Note Agreement dated as of July 18, 2002 between the Company and Citibank International plc. (18)
(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. (18)
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. (18)
(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. (18)
(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. (18)
(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. (18)
(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. (18)
(h) Amendment to the 364-Day Competitive Advance, Revolving Credit and Guaranty Agreements dated as of May 23, 2003
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)
(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 (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)
10.6 Written Description of the Chairman's Agreement between the Company and John C. Miles II
10.7 Employment Agreement dated January 1, 1996 between the Company and W. William Weston (9)*
10.8 Employment Agreement dated January 1, 1996 between the Company and Thomas L. Whiting (9)*
10.9 Employment Agreement dated October 11,1996 between the Company and Gerald K. Kunkle Jr. (10)*
10.10 Employment Agreement dated April 20, 1998 between the Company and William R. Jellison (12)*
10.11 Employment Agreement dated September 10, 1998 between the Company and Brian M. Addison (12)*
10.12 Employment Agreement dated June 1, 1999 between the Company and J. Henrik Roos (13)*
10.13 Employment Agreement dated October 1, 2001 between the Company and Rudolf Lehner (16)*
10.14 Employment Agreement dated November 1, 2002 between the Company and Christopher T. Clark (18)*
10.15 Employment Agreement dated November 1, 2002 between the Company and James G. Mosch (18)*
10.16 Employment Agreement dated December 1, 2002 between the Company and Bret W. Wise (18)*
10.17 DENTSPLY International Inc. Directors' Deferred Compensation Plan effective January 1, 1997 (10)*
10.18 Supplemental Executive Retirement Plan effective January 1, 1999 (12)*
10.19 Written Description of Year 2003 Incentive Compensation Plan.
10.20(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)
(d) AZLAD Products Manufacturing Agreement, effective March 1, 2004 between AstraZeneca AB and Maillefer Instruments
Holdings, S.A.
10.21 Sale and Purchase Agreement of Gendex Equipment Business between the Company and Danaher Corporation Dated
December 11, 2003.
10.22(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)
21.1 Subsidiaries of the Company
23.1 Consent of Independent Auditors - PricewaterhouseCoopers LLP









31 Section 302 Certification Statements
32 Section 906 Certification Statement
99.1 DENTSPLY International Inc. Code of Business Conduct and Ethics




* 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.

(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).

(18) Incorporated by reference to exhibit included in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, File No. 0-16211.








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

On January 28, 2004, the Company filed a Form 8-K, under
item 12, furnishing the press release issued on January 27,
2004 regarding its fourth quarter 2003 sales and earnings.

On February 3, 2004, the Company filed a Form 8-K, under
item 12, furnishing a transcript of its January 28, 2004,
conference call regarding the Company's discussion of its
fourth quarter 2003 sales and earnings.

On March 1, 2004, the Company filed a Form 8-K, under item
5, furnishing a summary of the Company's quarterly results
of operations for the fiscal years 2003 and 2002, related to
its continuing and discontinued operations.







SCHEDULE II


DENTSPLY INTERNATIONAL INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 2003



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,
2001 $ 6,360 $ 2,844 $ 5,289 (a) $(1,638) $ (253) $ 12,602
2002 12,602 2,904 3,560 (b) (1,987) 1,413 18,492
2003 18,492 569 (29) (4,771) 2,041 16,302

Allowance for trade discounts:

For Year Ended December 31,
2001 1,629 555 - (1,194) (77) 913
2002 913 988 - (871) 61 1,091
2003 1,091 1,494 19 (1,681) 139 1,062

Inventory valuation reserves:

For Year Ended December 31,
2001 14,942 4,369 8,409 (c) (2,996) (365) 24,359
2002 24,359 4,855 4,671 (d) (5,581) 2,366 30,670
2003 30,670 2,845 (22) (3,418) 3,037 33,112


Deferred tax asset valuation allowance:

For Year Ended December 31,
2001 2,353 909 - (215) (183) 2,864
2002 2,864 3,431 - (1,129) 176 5,342
2003 5,342 5,764 - (2,596) 1,139 9,649
- ------------------



(a) Includes $389 from acquisition of Friadent and $4,900 from acquisition of Degussa Dental.
(b) Includes $797 from acquisition of Austenal and $2,763 related to the acquisition of Degussa Dental.
(c) Includes $1,580 from acquisition of Friadent and $6,829 from acquisition of Degussa Dental.
(d) Includes $588 from acquisition of Austenal and $4,083 related to the acquisition of Degussa Dental.










DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA


Year ended December 31,

2003 2002 2001 2000 1999
(dollars in thousands, except per share amounts)

Statement of Income Data:
Net sales $ 1,570,925 $ 1,417,600 $ 1,045,275 $ 810,409 $ 763,093
Net sales without precious metal content 1,365,890 1,230,511 994,630 810,409 763,093
Gross profit 773,201 704,411 542,838 438,728 406,933
Restructuring and other costs (income) 3,700 (2,732) 5,073 (56) -
Operating income 267,983 249,452 170,209 155,571 143,099
Income before income taxes 251,196 214,090 179,522 146,907 134,216

Net income from continuing operations (1) $ 169,853 $ 143,641 $ 117,714 $ 97,822 $ 87,586
Net income from discontinued operations 4,330 4,311 3,782 3,194 2,277
Total net income (1) $ 174,183 $ 147,952 $ 121,496 $ 101,016 $ 89,863

Earnings per common share - basic:
Continuing operations (1) $ 2.16 $ 1.84 $ 1.51 $ 1.26 $ 1.11
Discontinued operations 0.05 0.05 0.05 0.04 0.03
Total earnings per common share - basic (1) $ 2.21 $ 1.89 $ 1.56 $ 1.30 $ 1.14

Earnings per common share - diluted
Continuing operations (1) $ 2.11 $ 1.80 $ 1.49 $ 1.25 $ 1.10
Discontinued operations 0.05 0.05 0.05 0.04 0.03
Total earnings per common share - diluted (1) $ 2.16 $ 1.85 $ 1.54 $ 1.29 $ 1.13

Cash dividends declared per
common share $ 0.19700 $ 0.18400 $ 0.18333 $ 0.17083 $ 0.15417

Weighted Average Common Shares Outstanding:
Basic 78,823 78,180 77,671 77,785 79,131
Diluted 80,647 79,994 78,975 78,560 79,367

Balance Sheet Data:
Cash and cash equivalents $ 163,755 $ 25,652 $ 33,710 $ 15,433 $ 11,418
Total assets 2,445,587 2,087,033 1,798,151 866,615 863,730
Total debt 812,175 774,373 731,158 110,294 165,467
Stockholders' equity 1,122,069 835,928 609,519 520,370 468,872
Return on average stockholders' equity 17.8% 20.5% 21.5% 20.4% 20.4%
Long-term debt to total capitalization 41.3% 47.9% 54.3% 17.4% 23.7%

Other Data:
Depreciation and amortization $ 45,661 $ 41,352 $ 51,512 $ 39,170 $ 37,479
Capital expenditures 76,583 55,476 47,529 26,885 31,944
Property, plant and equipment, net 376,211 313,178 240,890 181,341 180,536
Goodwill and other intangibles, net 1,209,739 1,134,506 1,012,160 344,753 349,421
Interest expense, net 24,205 27,389 18,256 6,735 12,247
Cash flows from operating activities 257,992 172,983 211,068 145,622 125,622
Inventory days 93 100 93 114 122
Receivable days 50 49 46 52 52
Income tax rate 32.4% 32.9% 34.4% 33.4% 34.7%








(1) In the first and second quarters of 2003, the Company
recorded pre-tax charges of $4.1 million and $5.5 million,
respectively, related primarily to adjustments to inventory,
accounts receivable and prepaid expense accounts at one division
in the United States and two international subsidiaries. Of the
$9.6 million in total pre-tax charges, $2.4 million were
determined to be properly recorded as changes in estimates, $0.4
million were determined to be errors between the first and second
quarters of 2003, and the remaining $6.8 million ($4.6 million
after-tax) were determined to errors relating to prior periods.
In addition, the Company determined that $4.8 million of reserves
reversed in 2003 and $4.1 million of reserves reversed in 2001
and 2002 should have been reversed in earlier periods or had been
erroneously established. In the aggregate, had the charge and
reserve errors been recorded in the proper period, reported net
income would have increased by $0.8 million ($0.1 per basic and
diluted share) in 2000, increased by $1.2 million ($0.02 per
basic and diluted share) in 2001, and decreased by $3.4 million
($0.04 per basic and diluted share) in 2002. The effect of
recording the Charge Errors and Reserve Errors in 2003 reduced
net income by $1.3 million ($0.02 per basic and diluted share).
Following a quantitative and qualitative assessment of
materiality, Company concluded that the charges and reserve
errors were not material to the results of operations and
financial position of the Company for the years ended December
31, 2000, 2001, 2002 and 2003 and accordingly, the prior period
financial statements have not been restated. See Note 19 to the
consolidated financial statements for additional information
related to this matter.






MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

Certain statements made by the Company, including without
limitation, statements in the Overview section below and other
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, and should be read in
conjunction with the risk factors and uncertainties discussed
within Item I, Part I of this Annual Report on Form 10-K.


OVERVIEW

Dentsply International Inc. is the world's largest manufacturer
of professional dental products . The Company is headquartered
in the United States, and operates in more than 120 other
countries, principally through its foreign subsidiaries. While
the United States and Europe are the Company's largest markets,
the Company serves all of the major professional dental markets
worldwide. In 2003, sales to customers outside the United States
represented 58% of the Company's net sales.

There are several important aspects of its business which the
Company has commented on in the past. These include: (1)
internal growth in the United States, Europe and the Pacific Rim;
(2) the development and introduction of innovative new products;
(3) growth through acquisition; and (4) continued focus on
controlling costs and enhancing efficiency. We define "internal
growth" as the increase in our net sales from period to period,
excluding precious metal content, the impact of changes in
currency exchange rates, and the net sales, for a period of
twelve months following the transaction date, of businesses that
we have acquired or divested.

In 2003, overall economic conditions resulted in a slowing of
the Company's internal growth rate in the United States, the
largest dental market in the world. Our internal growth rate in
the United States slowed to 3.3% in 2003, down from rates of 9.0%
and 7.2% experienced in 2002 and 2001, respectively. Management
expects that economic conditions will improve in the United
States in 2004 and thus anticipates that our internal growth rate
will accelerate as economic conditions improve. In contrast to
the United States, the rate of internal growth in Europe in 2003
improved to 8.6%, compared to 6.6% and 5.0% in 2002 and 2001,
respectively. Management believes that this growth rate resulted
from strong market acceptance in Europe of our product portfolio
and our improved market presence stemming from the acquisitions
we completed throughout 2001. Management anticipates continued
strong growth in Europe in 2004. Japan represents the third
largest dental market in the world behind the United States and
Europe. Japan's dental market growth closely parallels its
economic growth. The Company views the Japanese market as an
important growth opportunity, both in terms of a recovery in the
Japanese economy and the opportunity to increase our market
share. In 2002 and early 2003, the growth rate in the dental
markets in Asia was among the highest in the world. The SARs
crisis experienced in 2003 caused substantial disruption in the
dental markets in several key Asian countries. Trends in late
2003 and early 2004 show a recovery in Asian dental market
conditions, but it is not yet clear whether this improvement is
sustainable. Although Asia, excluding Japan, represented only
3.3% of the Company's sales in 2003, management believes that the
Asian markets represent a long-term growth opportunity for the
industry and the Company.

Product innovation is an important element of the Company's
growth strategy. Management plans include an acceleration of
investment in research and development of approximately 20% in
2004 to support new and innovative products and technology.
Management believes that the Company's strategy of being a lead
innovator in the industry is an important element to the
long-term success of the Company.

Although the professional dental market in which the Company
operates has experienced consolidation, it is still a fragmented
industry. The Company continues to focus on opportunities to
expand the Company's product offerings through acquisition.
Management believes that there will continue to be adequate
opportunities to participate as a consolidator in the industry
for the foreseeable future.






The Company also remains focused on reducing costs and
improving competitiveness. Management expects to continue to
consolidate operations or functions and reduce the cost of those
operations and functions while improving service levels. The
Company believes that the benefits from these opportunities will
improve the cost structure and offset areas of rising costs such
as energy, benefits, regulatory oversight and compliance and
financial reporting in the United States.



FACTORS IMPACTING COMPARABILITY BETWEEN YEARS

Acquisitions

In January 2002, the Company acquired the partial denture
business of Austenal Inc. ("Austenal"), and in 2001 the Company
made three significant acquisitions. In January 2001, the
Company acquired the outstanding shares of Friadent GmbH
("Friadent"), a global dental implant manufacturer and marketer.
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. The details of these transactions are discussed in
Note 3 to the Consolidated Financial Statements. The results of
these acquired companies have been included in the consolidated
financial statements since the dates of acquisition. These
acquisitions, accounted for using the purchase method,
significantly impact the comparability between 2001 and 2002.

Accounting Charges and Reserve Reversals

In the first and second quarters of 2003, the Company recorded
pretax charges of $4.1 million and $5.5 million, respectively,
related primarily to adjustments to inventory, accounts
receivable, and prepaid expense accounts at one division in the
United States and two international subsidiaries. All of these
operating units had been involved in integrating one or more of
the acquisitions completed in 2001. Of the $9.6 million in total
pretax charges recorded in the first and second quarters of 2003,
$2.4 million were determined to be properly recorded as changes
in estimate, $0.4 million were determined to be errors between
the first and second quarters of 2003, and the remaining $6.8
million ($4.6 million after tax) were determined to be errors
relating in prior periods ("Charge Errors"). The Charge Errors
included $3.0 million related to inaccurate reconciliations and
valuation of inventory, $2.0 million related to inaccurate
reconciliations and valuation of accounts receivable, $1.3
million related to unrecoverable prepaid expenses and $0.5
million related to other accounts. Had the Charge Errors been
recorded in the proper period, net income as reported would have
been decreased by $0.6 million ($0.01 per diluted share) in 2001
and $4.0 million ($0.05 per diluted share) in 2002. Recording
the effect of the Charge Errors in 2003 reduced net income by
$4.6 million ($0.06 per diluted share).

In addition to the aforementioned, in the first and second
quarters of 2003, the Company determined that $4.8 million in
reserves reversed in 2003 and $4.1 million of reserves reversed
in 2001 and 2002 should have been reversed in earlier years or
had been erroneously established ("Reserve Errors). The Reserve
Errors occurred in 2000 through 2002 and related primarily to
asset valuation accounts and accrued liabilities, including (on a
pre-tax basis) $5.1 million related to product return provisions,
$1.1 million related to bonus accruals, $0.8 million related to
product warranties, $0.7 million related to inventory valuation
and $1.2 million related to other accounts. Had the Reserve
Errors been recorded in the proper period, they would have
increased net income as reported by $0.8 million ($0.01 per
diluted share) in 2000, $1.8 million ($0.02 per diluted share) in
2001 and $0.7 million ($0.01 per diluted share) in 2002.
Recording the effect of the Reserve Errors in 2003 increased net
income by $3.3 million ($0.04 per diluted share).






The above described charges (including the $2.4 million changes
in estimates) and Reserve Errors amounted to $19.9 million
(pre-tax) on an absolute basis and occurred from 2000 through the
second quarter of 2003. Included in this total, are $2.0 million
of Reserve Errors and $0.4 million of Charge Errors that
originated and reversed in different quarters of same year. In
the aggregate, had the Charge Errors and Reserve Errors described
above been recorded in the proper period, reported net income
would have increased by $0.8 million ($0.01 per diluted share) in
2000, $1.2 million ($0.02 per diluted share) in 2001 and
decreased by $3.4 million ($0.04 per diluted share) in 2002. The
effect of recording the Reserve Errors and Charge Errors in 2003
reduced net income by $1.3 million ($0.02 per diluted share).

The Company performed an analysis of the Charge Errors and
Reserve Errors on both a qualitative and quantitative basis and
concluded that the errors were not material to the results of
operations and financial position of the Company for the years
ended December 31, 2000, 2001, 2002 and 2003. Accordingly, prior
period financial statements have not been restated.

Discontinued Operations

In December 2003, the Company entered into an agreement to sell
its Gendex equipment business to Danaher Corporation.
Additionally, the Company announced to its dental needle
customers that it was discontinuing production of dental needles.
The sale of the Gendex business and discontinuance of dental
needle production have been accounted for as discontinued
operations pursuant to Statement of Financial Accounting Standard
No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets". The results of operations for all periods presented have
been restated to reclassify the results of operations for both
the Gendex equipment and the dental needle businesses to
discontinued operations.

Reclassifications

Certain other reclassifications have been made to prior years'
data in order to conform to current year presentation.


RESULTS OF CONTINUING OPERATIONS, 2003 COMPARED TO 2002

Net Sales

The discussions below summarize the Company's sales growth,
excluding precious metals, from internal growth and net
acquisition growth and highlights the impact of foreign currency
translation. These disclosures of net sales growth provide the
reader with sales results on a comparable basis between periods.

As the presentation of net sales excluding precious metal
content could be considered a measure not calculated in
accordance with generally accepted accounting principles (a
so-called non-GAAP measure), the Company provides the following
reconciliation of net sales to net sales excluding precious metal
content. Our definitions and calculations of net sales excluding
precious metal content and other operating measures derived using
net sales excluding precious metal content may not necessarily be
the same as those used by other companies.

Year Ended December 31,
2003 2002 2001
(in millions)
Net Sales $ 1,570.9 $ 1,417.6 $1,045.3
Precious Metal Content of Sales (205.0) (187.1) (50.7)
Net Sales Excluding Precious Metal Conten $ 1,365.9 $ 1,230.5 $ 994.6






Management believes that the presentation of net sales
excluding precious metal content provides useful information to
investors because a significant portion of DENTSPLY's net sales
is comprised of sales of precious metals generated through sales
of the Company's precious metal alloy products, which are used by
third parties to construct crown and bridge materials.

Due to the fluctuations of precious metal prices and because
the precious metal content of the Company's sales is largely a
pass-through to customers and has minimal effect on earnings,
DENTSPLY reports sales both with and without precious metal
content to show the Company's performance independent of precious
metal price volatility and to enhance comparability of
performance between periods.

The Company uses its cost of precious metal purchased as a
proxy for the precious metal content of sales, as the precious
metal content of sales is not separately tracked and invoiced to
customers. The Company believes that it is reasonable to use the
cost of precious metal content purchased in this manner since
precious metal alloy sale prices are adjusted when the prices of
underlying precious metals change.

Net sales in 2003 increased $153.3 million, or 10.8%, to
$1,570.9 million. Net sales, excluding precious metal content,
increased $135.4 million, or 11.0%, to $1,365.9 million. Sales
growth excluding precious metal content was comprised of 4.5%
internal growth, 6.6% foreign currency translation less 0.1% for
net acquisitions/divestitures. The 4.5% internal growth was
comprised of 8.6% in Europe, 3.3% in the United States and 0.4%
for all other regions combined.

The internal sales growth in 2003, excluding precious metal
content, was highest in Europe with strong growth in endodontic,
dental implant and certain laboratory products. In the United
States internal sales growth was strongest in endodontic and
orthodontic products and other chairside consumables, offset by a
softening in sales to dental laboratories. The market for dental
laboratory products tends to be the most sensitive to economic
cycles and contracted in the United States in 2003.


Gross Profit

Gross profit was $773.2 million in 2003 compared to $704.4
million in 2002, an increase of $68.8 million, or 9.8%. Gross
profit, including precious metal content, represented 49.2% of
net sales in 2003 compared to 49.7% in 2002. The gross profit for
2003, excluding precious metal content, represented 56.6% of net
sales compared to 57.2% in 2002. Gross profit as reported would
have been higher by $2.8 million in 2003 and lower by $5.4
million in 2002 had the Charge Errors and Reserve Errors been
recorded in the proper periods. In addition, geographic mix
negatively influenced gross margins in 2003 compared to 2002.

Operating Expenses


Selling, general and administrative ("SG&A") expense increased
$43.8 million, or 9.6%, to $501.5 million in 2003 from $457.7
million in 2002. The 9.6% increase in expenses, as reported,
reflects increases for the translation impact from a weaker U.S.
dollar of approximately $35.3 million. As a percentage of sales,
including precious metal content, SG&A expenses decreased to
31.9% compared to 32.3% in 2002. As a percentage of sales,
excluding precious metal content, SG&A expenses decreased to
36.7% compared to 37.2% in 2002. SG&A would have been higher by
$0.8 million in 2003 and lower by $0.3 million in 2002, had the
Charge Errors and Reserve Errors been recorded in the proper
periods. The leveraging of general and administrative expenses
was the primary reason for the percentage decrease in SG&A
expenses from 2002 to 2003.

During 2003, the Company recorded restructuring and other costs
of $3.7 million. The largest portion of this was an impairment
charge related to certain investments made in emerging
technologies that the Company no longer views as recoverable. In
addition, in December 2003, the Company announced the
consolidation of its U.S. laboratory businesses and recorded a
charge for a portion of the costs to complete the consolidation.
Based on the restructuring activities undertaken in 2003, the
U.S. laboratory businesses are expected to incur additional
restructuring costs of approximately $2.5 million in 2004 to
complete the plan. The Company made the decision to consolidate
these laboratory businesses in order to improve operational
efficiencies, to broaden customer penetration and to strengthen
customer service. Upon completion, which is expected in late
2004, this plan is projected to result in future annual expense
reductions of approximately $1.5 million, primarily within SG&A.






During 2002, the Company recorded restructuring and other
income of $2.7 million, including a $3.7 million benefit which
resulted from changes in estimates related to prior period
restructuring initiatives, offset somewhat by a restructuring
charge for the combination of the CeraMed and U.S. Friadent
divisions of $1.7 million. In addition, the Company recognized a
gain of $0.7 million related to the insurance settlement for fire
damages sustained at the Company's Maillefer facility. (see Note
16 to the Consolidated Financial Statements).

Other Income and Expenses

Net interest expense and other expenses were $16.8 million in
2003 compared to $35.4 million in 2002. The year 2003 included
$24.2 million of net interest expense, less $7.4 million of
income from PracticeWorks, Inc., including a $5.8 million pre-tax
gain realized and recognized in the fourth quarter of 2003 on the
sale of the Company's interest in PracticeWorks, Inc. The year
2002 included: $27.4 million of net interest; $3.5 million of
currency transaction losses; a $1.1 million loss realized on the
share exchange with PracticeWorks, Inc.; and a $2.5 million
mark-to-market loss related to PracticeWorks warrants.

Earnings

The effective tax rate decreased to 32.4% in 2003 from 32.9% in
2002.

Income from continuing operations increased $26.3 million, or
18.3%, to $169.9 million in 2003 from $143.6 million in 2002.
Fully diluted earnings per share from continuing operations were
$2.11 in 2003, an increase of 17.2% from $1.80 in 2002. Had the
Charge Errors and Reserve Errors described above been recorded in
the proper periods, income from continuing operations would have
been higher by $1.3 million ($.02 per diluted share) in 2003 and
lower by $3.4 million ($.04 per diluted share) in 2002.

Discontinued Operations

The Company entered into an agreement to sell its Gendex
equipment business to Danaher Corporation in December, 2003, and
completed the transaction in the first quarter of 2004. In
addition, the Company announced to its dental needle customers
that it was discontinuing production of dental needles.
Accordingly, the Gendex equipment and needle businesses have been
reported as discontinued operations for all periods presented.

Income from discontinued operations was $4.3 million in both
2003 and 2002. Fully diluted earnings per share from
discontinued operations were $.05 in both 2003 and 2002.

Operating Segment Results

The Company has five operating groups, which are managed by
five Senior Vice Presidents and equate to our operating
segments. Each of these operating groups covers a wide range of
product categories and geographic regions. The product
categories and geographic regions often overlap across the
groups. Further information regarding the details of each group
is presented in Note 4 of the Consolidated Financial Statements.
The management of each group is evaluated for performance and
incentive compensation purposes on the net third party sales,
excluding precious metal content and segment operating income.

Dental Consumables--U.S. and Europe/Japan/Non-dental

Net sales for this group were $264.6 million in 2003, a 9.3%
increase compared to $242.1 million in 2002. Internal growth was
2.8% and currency translation added 6.5% to sales in 2003. The
U.S. consumables business had the highest growth in the group,
which was offset by lower sales in the Japanese market and low
growth in the non-dental business.






Operating profit increased $11.5 million to $82.4 million from
$70.9 million in 2002. Sales growth in the U.S. dental
consumable business and gross margin improvement in the European
dental consumable business were the most significant contributors
to the increase. Operating profit benefited from currency
translation. Operating profit would have been lower by $2.7
million in 2003 and higher by $1.6 million in 2002 if the Reserve
Errors had been recorded in the proper period.

Endodontics/Professional Division Dental Consumables/Asia

Net sales for this group increased $23.9 million, or 6.7%, up
from $357.6 million in 2002. Internal growth was 3.8% and
currency translation added 2.9% to 2003 sales. Sales growth was
strongest in the endodontic business. This was offset by lower
sales in the dental consumables business due to aggressive
competitive pressures in the U.S. market.

Operating profit was $154.0 million, an increase of $12.4
million from $141.6 million in 2002. Continued growth in the
endodontic business was primarily responsible for the increase.
In addition, operating profit benefited from currency translation
partially offset by the negative currency impact of intercompany
transactions. Operating profit would have been lower by $0.7
million in 2003 and lower by $0.6 million in 2002 if the Reserve
Errors had been recorded in the proper period.

Dental Consumables--United Kingdom, France, Italy, CIS, Middle
East, Africa/European Dental Laboratory Business

Net sales for this group were $307.0 million in 2003, a 27.3%
increase compared to $241.1 million in 2002. Internal growth was
7.0% and currency translation added 19.9% to sales in 2003. The
primary reason for the sales growth was strong sales performance
in Germany, France, CIS and Africa.

Operating profit increased $19.2 million to $30.6 million from
$11.4 million in 2002. The primary reason for the profit
improvement was sales increases and margin improvement in the
European dental laboratory business including improvements from
the consolidation of the historical Dentsply tooth business in
Europe into the DeguDent business. In addition, operating profit
benefited from currency translation. Operating profit would have
been lower by $0.3 million in 2003 if the Charge Errors and
Reserve Errors had been recorded in the proper period.

Australia/Canada/Latin America/Pharmaceutical

Net sales for this group increased $4.8 million, or 4.4%,
compared to $108.5 million in 2002. Internal growth was 3.6% and
currency translation added 0.8% to 2003 sales. Sales were
strongest in the U.S. pharmaceutical business and in Latin
America. Canada and Australia experienced slower sales growth.

Operating profit was $12.0 million, a $2.8 million decrease
from $14.8 million in 2002. Lower operating margins in Latin
America hurt profitability. Operating profit would have been
higher by $1.0 million in 2003 and lower by $0.7 million in 2002
if the Charge Errors and Reserve Errors had been recorded in the
proper period.

U.S. Dental Laboratory Business/Implants/Orthodontics

Net sales for this group were $278.7 million in 2003, a 6.9%
increase compared to $260.7 million in 2002. Internal growth was
3.2% and currency translation added 3.7% to sales in 2003. Sales
growth was adversely impacted by the soft U.S. dental laboratory
market. Sales growth for implants in Europe and the orthodontic
business showed continued strong sales growth.






Operating profit decreased $8.8 million to $41.4 million from
$50.2 million in 2002. The soft U.S. dental laboratory market
and the negative currency impact of intercompany transactions
adversely impacted operating profit. Operating profit would have
been higher by $4.7 million in 2003 and lower by $5.3 million in
2002 if the Charge Errors and Reserve Errors had been booked in
the proper period.


RESULTS OF CONTINUING OPERATIONS, 2002 COMPARED TO 2001

Net Sales

Net sales in 2002 increased $372.3 million, or 35.6%, to
$1,417.6 million. Net sales, excluding precious metal content,
increased $235.9 million, or 23.7%, to $1,230.5 million. The
growth in sales, excluding precious metal content, was driven by
internal growth of 6.7%, 15.8% growth from acquisitions and a
1.2% positive impact from currency translation as several major
currencies strengthened against the U.S. dollar during the year.
The 6.7% of internal growth was comprised of 9.0% in the United
States, 6.6% in Europe, and 1.1% for all other regions combined.
Internal growth for the dental business was 7.1% excluding
precious metal content.

The internal sales growth in 2002, excluding precious metal
content, was highest in United States, with strong growth in
endodontic and orthodontic products and other chairside
consumable products. In Europe internal sales growth was 6.6%
with strong sales gains in endodontic and orthodontic products,
implants, and other chairside consumable products. The internal
sales growth, excluding precious metal content, in all other
regions was 1.1%, with strong sales growth in Canada and Japan
offset by softening sales in Latin America and the Middle East
regions.

Gross Profit

Gross profit was $704.4 million in 2002 compared to $542.8
million in 2001, an increase of $161.6 million, or 29.8%. Gross
profit, including precious metal content, represented 49.7% of
net sales in 2002 compared to 51.9% in 2001. The decline in 2002
is due to the inclusion of the Degussa Dental business for a full
year versus just one quarter in 2001 and the corresponding
relatively high precious metal content of Degussa Dental's sales.
Gross profit for 2002, excluding precious metal content,
represented 57.2% of net sales compared to 54.6% in 2001. The
gross profit margin in 2002, excluding the precious metal content
pass through, benefited from new product introductions, a
favorable product mix, and the integration and restructuring
benefits related to acquisitions completed over the past several
years. The 2001 period included the negative impact of the
amortization of the Friadent and Degussa Dental inventory
step-ups recorded in connecton with purchase price accounting.
Gross profit as reported would have been lower by $5.4 million in
2002 and higher by $1.8 million in 2001 had the Charge Errors and
Reserve Errors been recorded in the proper periods.

Operating Expenses

Selling, general and administrative ("SG&A") expense increased
$90.1 million, or 24.5%, to $457.7 million in 2002 from $367.6
million in 2001. As a percentage of sales, including precious
metal content, SG&A expenses decreased to 32.3% compared to 35.2%
in 2001. This decrease is mainly due to the discontinuation of
goodwill and indefinite-lived intangible asset amortization in
2002, which in 2001 amounted to $17.6 million ($13.8 million, net
of tax). As a percentage of sales, excluding precious metal
content, SG&A expenses increased to 37.2% compared to 37.0% in
2001. This increase was primarily driven by the inclusion of the
Degussa Dental business, and its higher SG&A expense ratio
(excluding precious metal content), for a full year versus one
quarter in 2001, offset by the discontinuation of goodwill and
indefinite-lived intangible asset amortization in 2002. This
increase was also reflective of higher insurance and legal
expenses in 2002. SG&A would have been lower by $0.3 million in
2002 and lower by $0.1 million in 2001, had the Charge Errors and
Reserve Errors been recorded in the proper periods.






During 2002, the Company recorded restructuring and other
income of $2.7 million, including $3.7 million which resulted
from changes in estimates related to prior period restructuring
initiatives, offset somewhat by a restructuring charge for the
combination of the CeraMed and U.S. Friadent divisions of $1.7
million. In addition, the Company recognized a gain of $0.7
million related to the insurance settlement for fire damages
sustained at the Company's Maillefer facility. The 2001 period
included a restructuring charge of $5.5 million to improve
efficiencies in Europe, Brazil and North America and $11.5
million of restructuring and other costs primarily related to the
Degussa Dental acquisition and its integration with DENTSPLY. An
additional cost of $2.4 million was recorded for a payment made
at the point of regulatory filings related to Oraqix, a product
for which the Company acquired rights in the AZ Asset
acquisition. These charges were offset by a gain of $8.5 million
related to the restructuring of the Company's U.K. pension
arrangements and a gain of $5.8 million for an insurance
settlement for equipment destroyed in the fire at the Company's
Maillefer facility in Switzerland. The above items in 2001, on a
net basis, amount to charges of $5.1 million (see Note 16 to the
Consolidated Financial Statements).

Other Income and Expenses

Net interest expense increased $9.1 million in 2002 due to
higher debt levels associated with the acquisition activities in
2002 and 2001. Other income decreased $35.5 million in 2002, due
primarily to income recognized in 2001 of $24.5 million ($15.1
million, net of tax) which included a $23.1 million gain from the
sale of Infosoft, LLC and a $1.4 million minority interest
benefit related to an intangible impairment charge included in
restructuring and other costs. Other income and expense in 2002
also included a $4.7 million unfavorable change in currency
transaction gain/loss resulting from the significant weakening of
the U.S. dollar in 2002, a $1.1 million loss realized on the
share exchange with PracticeWorks, Inc. and a net loss of $2.5
million on mark-to-market adjustment for the warrants received in
the transaction. Also contributing to the decrease in other
income in 2002 was a decrease of $0.8 million in accrued
dividends related to the PracticeWorks, Inc. preferred stock
prior to the time of the PracticeWorks share exchange.

Earnings

The effective tax rate decreased to 32.9% in 2002 from 34.4% in
2001. This decrease was largely related to the discontinuance of
goodwill amortization in 2002, which in the past negatively
impacted the effective tax rate since much of this amortization
was non-deductible for tax purposes.

Net income from continuing operations increased $25.9 million,
or 22.0%, to $143.6 million in 2002 from $117.7 million in 2001.
Fully diluted earnings per share from continuing operations were
$1.80 in 2002, an increase of 20.8% from $1.49 in 2001. Had the
Charge Errors and Reserve Errors described above been recorded in
the proper periods, net income from continuing operations would
have been lower by $3.4 million ($.04 per diluted share) in 2002
and higher by $1.2 million ($.02 per diluted share) in 2001.

Discontinued Operations

Net income from discontinued operations was $4.3 million in
2002 compared to $3.8 million in 2001. Fully diluted earnings
per share from discontinued operations were $.05 in both 2002 and
2001.

Operating Segment Results

Dental Consumables--U.S. and Europe/Japan/Non-dental

Net sales for the group were $242.1 million in 2002, a 27.0%
increase compared to $190.7 million in 2001. Internal growth was
6.3%, currency translation added 6.3% and acquisitions added
14.4% to sales in 2002. Sales of dental consumables in the U.S.
and Europe and sales in Japan had strong growth. This was
partially offset by soft sales of non-dental products.






Operating profit increased $11.1 million to $70.9 million from
$59.8 million in 2001. The two primary reasons for this increase
are the higher margins associated with the dental consumables
sales increase and a full year of sales in 2002 for the Sankin
business in Japan which was acquired as part of the Degussa
Dental acquisition on October 1, 2001. Operating profit would
have been higher by $1.6 million in 2002 and higher by $0.5
million in 2001 if the Reserve Errors had been recorded in the
proper period.

Endodontics/Professional Division Dental Consumables/Asia

Net sales for this group increased $41.3 million, or 13.1%, up
from $316.3 million in 2001. Internal growth was 11.1%, currency
translation added 1.5% and acquisitions added 0.5% to 2002
sales. The endodontics business experienced substantial growth
during 2002, especially in the U.S. and Europe.

Operating profit was $141.6 million, an increase of $31.5
million from $110.1 million in 2002. The increase was a result
of the strong growth in high margin endodontic products. In
addition, operating profit benefited from currency translation.
Operating profit would have been lower by $0.6 million in 2002
and higher by $1.3 million in 2001 if the Reserve Errors had been
recorded in the proper period.

Dental Consumables--United Kingdom, France, Italy, CIS, Middle
East, Africa/European Dental Laboratory Business

Net sales for this group were $241.1 million in 2002, a 72.8%
increase compared to $139.5 million in 2001. Internal growth was
0.6%, currency translation added 1.9% and acquisitions added
70.3% to 2002 sales. The Company acquired the Degussa Dental
business in October, 2001, which competes primarily in the
European dental laboratory market. This market was soft during
2002.

Operating profit increased to $11.4 million in 2002 from
breakeven in 2001. The increase was primarily due to improved
margins and a full year of operations in 2002 for the Degussa
Dental business compared to three months in 2001. In addition,
operating profit benefited from currency translation. Operating
profit would have been higher by $0.3 in 2001 if the Charge
Errors and Reserve Errors had been recorded in the proper period.

Australia/Canada/Latin America/Pharmaceutical

Net sales for this group decreased $13.5 million, or 11.1%,
compared to $122.0 million in 2001. Internal growth was 4.7%,
acquisitions added 6.8%, while currency translation had a
negative impact of 22.6% on sales mainly due to the devaluation
in the currencies of Latin America. Internal growth came mainly
from the Canadian, Australian and U.S. pharmaceutical businesses
offset partially by the softening Latin American economies.

Operating profit was $14.8 million, a $5.4 million decrease
from $20.2 million in 2001. The main reason for the decrease was
the redistribution in 2002 of the non-U.S. pharmaceutical
business across the other operating groups. In 2001, the
worldwide pharmaceutical business was accounted for in this
group. In addition, operating profit was negatively impacted
from currency translation as a result of the devalued Latin
American currencies. Operating profit would have been lower by
$0.7 million in 2002 and lower by $0.5 million in 2001 had the
Charge Errors and Reserve Errors been recorded in the proper
period.

U.S. Dental Laboratory Business/Implants/Orthodontics

Net sales for this group were $260.7 million in 2002, a 24.6%
increase compared to $209.2 million in 2001. Internal growth was
7.4%, currency translation added 6.1% and acquisitions added
11.1% to 2002 sales. The internal growth came mainly from
significant growth in both the implant and orthodontic
businesses. Acquisition growth came from the acquisition of
Degussa Dental in October, 2001.






Operating profit increased $8.2 million to $50.2 million from
$42.0 million in 2001. The increase primarily came from the
significant increase in sales of the implant and orthodontic
businesses. In addition, operating profit benefited from currency
translation. Operating profit would have been lower by $5.3
million in 2002 and higher by $0.2 million in 2001 had the Charge
Errors and Reserve Errors been reported in the proper period.



FOREIGN CURRENCY

Since approximately 55% of the Company's 2003 revenues were
generated in currencies other than the U.S. dollar, the value of
the U.S. dollar in relation to those currencies affects the
results of operations of the Company. 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 U.S. of products sourced from plants and third party
suppliers located overseas, principally in Germany, Switzerland,
and the Netherlands. On a net basis, net income benefited from
changes in currency translation in both 2003 and 2002 compared to
the prior year.

CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

The Company has identified below the accounting estimates
believed to be critical to its business and results of
operations. These critical estimates represent those accounting
policies that involve the most complex or subjective decisions or
assessments.

Goodwill and Other Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill
and Other Intangible Assets". This statement requires that the
amortization of goodwill and indefinite-lived intangible assets
be discontinued and instead an annual impairment approach be
applied. The Company performed the annual impairment tests during
2002 and 2003, as required, and no impairment was identified.
These impairment tests are based upon a fair value approach
rather than an evaluation of the undiscounted cash flows. If
impairment is identified under SFAS 142, the resulting charge is
determined by recalculating goodwill through a hypothetical
purchase price allocation of the fair value and reducing the
current carrying value to the extent it exceeds the recalculated
goodwill. If impairment is identified on indefinite-lived
intangibles, the resulting charge reflects the excess of the
asset's carrying cost over its fair value.

Other long-lived assets, such as identifiable intangible assets
and fixed assets, are amortized or depreciated over their
estimated useful lives. These assets are reviewed for impairment
whenever events or circumstances provide evidence that suggest
that the carrying amount of the asset may not be recoverable with
impairment being based upon an evaluation of the identifiable
undiscounted cash flows. If impaired, the resulting charge
reflects the excess of the asset's carrying cost over its fair
value.

If market conditions become less favorable, future cash flows,
the key variable in assessing the impairment of these assets, may
decrease and as a result the Company may be required to recognize
impairment charges. The Company's impairment tests relating to
the perpetual license rights to the trademarks and formulations
for dental anaesthetic products acquired from Astra Zeneca in
2001 are highly sensitive to cash flow assumptions resulting from
the sale of these products and the Company's success in
completing and starting up a greenfield sterile filling plant to
produce these products in the United States.






Inventories

Inventories are stated at the lower of cost or market. The
cost of inventories is determined primarily by the first-in,
first-out ("FIFO") or average cost methods, with a small portion
being determined by the last-in, first-out ("LIFO") method. The
Company establishes reserves for inventory estimated to be
obsolete or unmarketable equal to the difference between the cost
of inventory and estimated market value based upon assumptions
about future demand and market conditions. If actual market
conditions are less favorable than those anticipated, additional
inventory reserves may be required.

Accounts Receivable

The Company sells dental equipment and supplies primarily
through a worldwide network of distributors, although certain
product lines are sold directly to the end user. For customers on
credit terms, the Company performs ongoing credit evaluation of
those customers' financial condition and generally does not
require collateral from them. The Company establishes allowances
for doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. If the
financial condition of the Company's customers were to
deteriorate, their ability to make required payments may become
impaired, and increases in these allowances may be required. In
addition, a negative impact on sales to those customers may
occur.

Accruals for Product Returns, Customer Rebates and Product
Warranties

The Company makes provisions for customer returns, customer
rebates and for product warranties at the time of sale. These
accruals are based on past history, projections of customer
purchases and sales and expected product performance in the
future. Because the actual results for product returns, rebates
and warranties are dependent in part on future events, these
matters require the use of estimates. The Company has a long
history of product performance in the dental industry and thus
has an extensive knowledge base from which to draw in measuring
these estimates.

Income Taxes

Income taxes are determined in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), which
requires recognition of deferred income tax liabilities and
assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
Under this method, deferred income tax liabilities and assets are
determined based on the difference between financial statements
and tax bases of liabilities and assets using enacted tax rates
in effect for the year in which the differences are expected to
reverse. SFAS 109 also provides for the recognition of deferred
tax assets if it is more likely than not that the assets will be
realized in future years. A valuation allowance has been
established for deferred tax assets for which realization is not
likely. In assessing the valuation allowance, the Company has
considered future taxable income and ongoing tax planning
strategies. Changes in these circumstances, such as a decline in
future taxable income, may result in an additional valuation
allowance being required. As of December 31, 2003, the Company
had recorded a valuation allowance of $9.6 million on net
operating carryforwards of its foreign subsidiaries, essentially
fully reserving these losses. If profitability improves in
those foreign subsidiaries in the future, some, or all, of the
valuation allowance may be reversed to income. Except for
certain earnings that the Company intends to reinvest
indefinitely, provision has been made for the estimated U.S.
federal income tax liabilities applicable to undistributed
earnings of affiliates and associated companies. Judgement is
required in assessing the future tax consequences of events that
have been recognized in our financial statements or tax returns.
If the outcome of these future tax consequences differs from our
estimates the outcome could materially impact our financial
position or our results of operations. In addition, we operate
within multiple taxing jurisdictions and are subject to audit in
these jurisdictions. We record accruals for the estimated
outcomes of these audits and the accruals may change in the
future due to the outcome of these audits.






Litigation

The Company and its subsidiaries are from time to time parties
to lawsuits arising out of their respective operations. The
Company records liabilities when a loss is probable and can be
reasonably estimated. These estimates made by management are
based on an analysis made by internal and external legal counsel
which considers information known at the time. The Company
believes it has estimated any liabilities for probable losses
well in the past; however, the unpredictability of court
decisions could cause liability to be incurred in excess of
estimates.


LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities during the year ended
December 31, 2003 were $258.0 million compared to $173.0 million
during the year ended December 31, 2002. The increase of $85.0
million results primarily from increased earnings and deferred
taxes and more favorable working capital changes versus the prior
year specifically with respect to accounts receivable,
inventories and accounts payable.

Investing activities, for the year ended December 31, 2003,
include capital expenditures of $76.6 million. The Company
expects that capital expenditures will be approximately $65
million in 2004. Net acquisition activity for the year ended
December 31, 2003 was $17.4 million which relates to the purchase
of one of the Company's suppliers, additional investments in
partially owned subsidiaries, a payment related to the Oraqix
agreement and the final payment related the Degussa Dental
acquisition. In December 2003, final payments of $16.0 million
became due to AstraZeneca upon the approval of Oraqix by the Food
and Drug Administration in the United States, and accordingly,
the Company accrued the payments in December 2003 and made the
payments in January 2004 (see Note 3 to the Consolidated
Financial Statements). In addition, during the fourth quarter,
the Company received $23.5 million in proceeds from its common
stock and warrant holdings in PracticeWorks as a result of the
Eastman Kodak acquisition. In February 2004, the Company
completed the sale of its Gendex equipment business and received
cash proceeds of $102.5 million.

The Company's long-term debt increased by $20.4 million during
the year ended December 31, 2003 to $790.2 million. This net
change included an increase of $109.8 million due to exchange
rate fluctuations on debt denominated in foreign currencies and
changes in the value of interest rate swaps, net of $70.1 million
of debt payments made during the year. During the year ended
December 31, 2003, the Company's ratio of long-term debt to total
capitalization decreased to 41.3% compared to 47.9% at December
31, 2002.

Under its multi-currency revolving credit agreement, the
Company is able to borrow up to $250 million through May 2006
("the five-year facility") and $250 million through May 2004 ("the
364 day facility"). The 364-day facility terminates in May 2004,
but may be extended, subject to certain conditions, for
additional periods of 364 days. This revolving credit agreement
is unsecured and contains various financial and other covenants.
The Company also has available an aggregate $250 million under
two commercial paper facilities; a $250 million U.S. facility and
a $250 million U.S. dollar equivalent European facility ("Euro CP
facility"). Under the Euro CP facility, borrowings can be
denominated in Swiss francs, Japanese yen, Euros, British pounds
and U.S. dollars. The 364-day facility serves as a back-up to
these commercial paper facilities. The total available credit
under the commercial paper facilities and the 364-day facility in
the aggregate is $250 million and no debt was outstanding under
these facilities at December 31, 2003.

The Company also has access to $88.0 million in uncommitted
short-term financing under lines of credit from various financial
institutions. The lines of credit have no major restrictions and
are provided under demand notes between the Company and the
lending institutions.

The Company had unused lines of credit of $472.0 million
available at December 31, 2003 contingent upon the Company's
compliance with certain affirmative and negative covenants
relating to its operations and financial condition. The most
restrictive of these covenants pertain to asset dispositions,
maintenance of certain levels of net worth, and prescribed ratios
of indebtedness to total capital and operating income plus
depreciation and amortization to interest expense. At December
31, 2003, the Company was in compliance with these covenants.







The following table presents the Company's scheduled contractual cash
obligations at December 31, 2003:



Greater
Less Than 1-3 3-5 Than
Contractual Obligations 1 Year Years Years 5 Years Total
(in thousands)

Long-term debt $ 22,780 $743,831 $ 44,727 $ -- $811,338
Operating leases 18,115 19,633 7,385 6,830 $ 51,963
Precious metal consignment agreements 61,300 -- -- -- $ 61,300
$102,195 $763,464 $ 52,112 $ 6,830 $924,601


Upon acquiring Degussa Dental in October 2001, Dentsply
management changed Degussa Dental's practice of holding a long
position in precious metals used in the production of precious
metal alloy products, to holding the precious metal on a
consignment basis from various financial institutions. In
connection with this change in practice, the Company sold certain
precious metals to various financial institutions in the fourth
quarter of 2001 for a value of $41.8 million and in the first
quarter of 2002 for a value of $6.8 million. These transactions
effectively transferred the price risk on the precious metals to
the financial institutions and allow the Company to acquire the
precious metal at approximately the same time and for the same
price as alloys are sold to the Company's customers. In the event
that the financial institutions would discontinue offering these
consignment arrangements, and if the Company could not obtain
other comparable arrangements, the Company may be required to
obtain financing to fund an ownership position in the required
precious metal inventory levels. At December 31, 2003, the value
of the consigned precious metals held by the Company was $61.3
million.

The Company's cash increased $138.1 million during the year
ended December 31, 2003 to $163.8 million. The Company
accumulated cash in 2003 rather than reduce debt due to
pre-payment penalties that would be incurred in retiring debt and
the related interest rate swap agreements. The Company
anticipates that cash will continue to build throughout 2004.

The Company expects on an ongoing basis, to be able to finance
cash requirements, including capital expenditures, stock
repurchases, debt service, operating leases and potential future
acquisitions, from the funds generated from operations and
amounts available under its existing credit facilities.


NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the Financial Accounting Standards Board
("FASB") issued Interpretation No. 46 ("FIN 46"), "Consolidation
of Variable Interest Entities, an interpretation of ARB 51". The
primary objectives of this interpretation are to provide guidance
on the identification of entities for which control is achieved
through means other than through voting rights ("variable
interest entities") and how to determine when and which business
enterprise should consolidate the variable interest entity (the
"primary beneficiary"). This new model for consolidation applies
to an entity which either (1) the equity investors (if any) do
not have a controlling financial interest or (2) the equity
investment at risk is insufficient to finance that entity's
activities without receiving additional subordinated financial
support from other parties. In addition, FIN 46 requires that
both the primary beneficiary and all other enterprises with a
significant variable interest in a variable interest entity make
additional disclosures. Certain disclosure requirements of FIN 46
are effective for financial statements issued after January 31,
2003. The remaining provisions of FIN 46 are effective
immediately for all variable interests in entities created after
January 31, 2003. Adoption of this provision did not have an
effect on the Company. In December 2003, the FASB released a
revised version of FIN 46, FIN 46R, to clarify certain aspects of
FIN 46 and to provide certain entities with exemptions from the
requirements of FIN 46. FIN 46R requires the application of
either FIN 46 or FIN 46R to all Special Purpose Entitied
("SPE's") created prior to February 1, 2003 at the end of the
first interim or annual reporting period ending after December
15, 2003. Adoption of this provision did not have an effect on
the Company. FIN 46R will be applicable to all non-SPE entities
created prior to February 1, 2003 at the end of the first interim
or annual reporting period ending after March 15, 2004. The
Company does not expect the application of this portion of FIN
46R to have a material impact on the Company's financial
statements.






In April 2003, the FASB issued Statement of Financial
Accounting Standards No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". The statement
amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging
Activities". Specifically, the statement clarifies under what
circumstances a contract with an initial net investment meets the
characteristic of a derivative. In addition, it clarifies when a
derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS 149 is effective
for contracts entered into or modified after June 30, 2003. The
Application of this standard has not had a material impact on the
Company's financial statements.

In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150 ("SFAS 150"), " Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity". This Statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that
an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. Adoption
of the provisions of SFAS No. 150 in the third quarter of 2003
related to mandatorily redeemable financial instruments had no
effect on the Company's financial statements. In November 2003,
the FASB issued FSP No. 150-3, "Effective Date, Disclosures and
Transition for Mandatorily Redeemable Financial Instruments of
Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests under FASB Statement No. 150, Accounting
for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity". For public companies, FSP 150-3 deferred
the provisions of SFAS 150 related to classification and
measurement of certain mandatorily redeemable noncontrolling
interests issued prior to November 5, 2003. For mandatorily
redeemable noncontrolling interests issued after November 5,
2003, SFAS 150 applies without any deferral. The Company
continues to analyze the provisions of SFAS 150 related to
mandatorily redeemable noncontrolling interests, but does not
believe that application of these provisions will have a material
impact on the Company's financial statements.

In January 2004, the FASB released FASB Staff Position ("FSP")
No. 106-1, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003." SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" requires a company to consider
current changes in applicable laws when measuring its
postretirement benefit costs and accumulated postretirement
benefit obligation. However, because of uncertainties of the
effect of the provisions of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the "Act") on plan
sponsors and certain accounting issues raised by the Act, FSP
106-1 allows plan sponsors to elect a one-time deferral of the
accounting for the Act. The Company is electing the deferral
provided by FSP 106-1 to analyze the impact of the Act on
prescription drug coverage provided to a limited number of
retirees from one of its business units. The Company does not
expect the Act to have a material impact on the Company's
postretiremenent benefits liabilities or the Company's financial
statements.







QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


The information below provides information about the Company's
market sensitive financial instruments and includes
"forward-looking statements" that involve risks and
uncertainties. Actual results could differ materially from those
expressed in the forward-looking statements. The Company's major
market risk exposures are changing interest rates, movements in
foreign currency exchange rates and potential price volatility of
commodities used by the Company in its manufacturing processes.
The Company's policy is to manage interest rates through the use
of floating rate debt and interest rate swaps to adjust interest
rate exposures when appropriate, based upon market conditions. A
portion of the Company's borrowings are denominated in foreign
currencies which expose the Company to market risk associated
with exchange rate movements. The Company's policy generally is
to hedge major foreign currency exposures through foreign
exchange forward contracts. These contracts are entered into
with major financial institutions thereby minimizing the risk of
credit loss. In order to limit the unanticipated earnings
fluctuations from volatility in commodity prices, the Company
selectively enters into commodity price swaps to convert variable
raw material costs to fixed costs. The Company does not hold or
issue derivative financial instruments for speculative or trading
purposes. The Company is subject to other foreign exchange
market risk exposure in addition to the risks on its financial
instruments, such as possible impacts on its pricing and
production costs, which are difficult to reasonably predict, and
have therefore not been included in the table below. All items
described are non-trading and are stated in U.S. dollars.

Financial Instruments
The fair value of financial instruments is determined by
reference to various market data and other valuation techniques
as appropriate. The Company believes the carrying amounts of cash
and cash equivalents, accounts receivable (net of allowance for
doubtful accounts), prepaid expenses and other current assets,
accounts payable, accrued liabilities, income taxes payable and
notes payable approximate fair value due to the short-term nature
of these instruments. The Company estimates the fair value of
its total long-term debt was $815.8 million versus its carrying
value of $811.3 million as of December 31, 2003. The fair value
approximated the carrying value since much of the Company's debt
is variable rate and reflects current market rates. The fixed
rate Eurobonds are effectively converted to variable rate as a
result of an interest rate swap and the interest rates on
revolving debt and commercial paper are variable and therefore
the fair value of these instruments approximates their carrying
values. The Company has fixed rate Swiss franc and Japanese yen
denominated notes with estimated fair values that differ from
their carrying values. At December 31, 2003, the fair value of
these instruments was $241.8 million versus their carrying values
of $237.4 million. The fair values differ from the carrying
values due to lower market interest rates at December 31, 2003
versus the rates at issuance of the notes.

Derivative Financial Instruments
The Company employs derivative financial instruments to hedge
certain anticipated transactions, firm commitments, or assets and
liabilities denominated in foreign currencies. Additionally, the
Company utilizes interest rate swaps to convert floating rate
debt to fixed rate, fixed rate debt to floating rate, cross
currency basis swaps to convert debt denominated in one currency
to another currency and commodity swaps to fix its variable raw
materials.

Foreign Exchange Risk Management The Company enters into
forward foreign exchange contracts to selectively hedge assets
and liabilities denominated in foreign currencies. Market
value gains and losses are recognized in income currently and
the resulting gains or losses offset foreign exchange gains or
losses recognized on the foreign currency assets and
liabilities hedged. Determination of hedge activity is based
upon market conditions, the magnitude of the foreign currency
assets and liabilities and perceived risks. The Company's
significant contracts outstanding as of December 31, 2003 are
summarized in the table that follows. These foreign exchange
contracts generally have maturities of less than twelve months
and counterparties to the transactions are typically large
international financial institutions.






The Company has numerous investments in foreign
subsidiaries. The net assets of these subsidiaries are exposed
to volatility in currency exchange rates. Currently, the
Company uses both non-derivative financial instruments,
including foreign currency denominated debt held at the parent
company level and long-term intercompany loans, for which
settlement is not planned or anticipated in the foreseeable
future and derivative financial instruments to hedge some of
this exposure. Translation gains and losses related to the net
assets of the foreign subsidiaries are offset by gains and
losses in the non-derivative and derivative financial
instruments designated as hedges of net investments.

At December 31, 2003 and 2002, the Company had Swiss
franc-denominated and Japanese yen-denominated debt (at the
parent company level) to hedge the currency exposure related to
a designated portion of the net assets of its Swiss and
Japanese subsidiaries. At December 31, 2003, the Company also
had Euro-denominated debt designated as a hedge of a designated
portion of the net assets of its European subsidiaries, due to
the change in the cross-currency element of the integrated
transaction discussed below. At December 31, 2003 and 2002,
the accumulated translation losses related
to foreign currency denominated-debt included in Accumulated
Other Comprehensive income (loss) were $83.5 million and $26.4
million, respectively.

Interest Rate Risk Management The Company uses interest rate
swaps to convert a portion of its variable rate debt to fixed
rate debt. As of December 31, 2003, the Company has two groups
of significant variable rate to fixed rate interest rate
swaps. One of the groups of swaps was entered into in January
2000 and February 2001, has a notional amount totaling 180
million Swiss francs, and effectively converts the underlying
variable interest rates on the debt to a fixed rate of 3.3% for
a period of approximately four years. The other significant
group of swaps entered into in February 2002, has notional
amounts totaling 12.6 billion Japanese yen, and effectively
converts the underlying variable interest rates to an average
fixed rate of 1.6% for a term of ten years. As part of
entering into the Japanese yen swaps in February 2002, the
Company entered into reverse swap agreements with the same
terms to offset 115 million of the 180 million of Swiss franc
swaps. Additionally, in the third quarter of 2003, the Company
exchanged the remaining portion of the Swiss franc swaps, 65
million Swiss francs, for a forward-starting variable to fixed
interest rate swap. Completion of this exchange allowed the
Company to pay down debt and the forward-starting interest rate
swap locks in the rate of borrowing for future Swiss franc
variable rate debt, that will arise upon the maturity of the
Company's fixed rate Swiss franc notes in 2005, at 4.2% for a
term of seven years.

The Company uses interest rate swaps to convert a portion of
its fixed rate debt to variable rate debt. In December 2001,
the Company issued 350 million in Eurobonds at a fixed rate of
5.75% maturing in December 2006 to partially finance the
Degussa Dental acquisition. Coincident with the issuance of
the Eurobonds, the Company entered into two integrated
transactions: (a) an interest rate swap agreement with
notional amounts totaling Euro 350 million which converted the
5.75% fixed rate Euro-denominated financing to a variable rate
(based on the London Interbank Borrowing Rate) Euro-denominated
financing; and (b) a cross-currency basis swap which converted
this variable rate Euro-denominated financing to variable rate
U.S. dollar-denominated financing.

The Euro 350 million interest rate swap agreement was
designated as a fair value hedge of the Euro 350 million in
fixed rate debt pursuant to SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS No. 133).
In accordance with SFAS No. 133, the interest rate swap and
underlying Eurobond have been marked-to-market via the income
statement. As of December 31, 2003 and 2002, the accumulated
fair value of the interest rate swap was $14.1 million and
$10.9 million, respectively, and was recorded in Other
Noncurrent Assets. The notional amount of the underlying
Eurobond was increased by a corresponding amount at December
31, 2003 and 2002.

From inception through the first quarter of 2003, the
cross-currency element of the integrated transaction was not
designated as a hedge and changes in the fair value of the
cross-currency element of the integrated transaction were
marked-to-market in the income statement, offsetting the impact
of the change in exchange rates on the Eurobonds that were also
recorded in the income statement. As of December 31, 2003 and
2002, the accumulated fair value of the cross-currency element
of the integrated transaction was $56.6 million and $52.3
million, respectively, and was recorded in Other Noncurrent
Assets. The notional amount of the underlying Eurobond was
increased by a corresponding amount at December 31, 2003 and
2002.See Hedges of Net Investments in Foreign Operations below
for further information related to the cross-currency element
of the integrated transaction.






In the first quarter of 2003, the Company amended the
cross-currency element of the integrated transaction to realize
the $ 51.8 million of accumulated value of the cross-currency
swap. The amendment eliminated the final payment (at a fixed
rate of $.90) of $315 million by the Company in exchange for
the final payment of Euro 350 million by the counterparty in
return for the counterparty paying the Company LIBOR plus 4.29%
for the remaining term of the agreement or approximately $14.0
million on an annual basis. Other cash flows associated with
the cross-currency element of the integrated transaction,
including the Company's obligation to pay on $315 million LIBOR
plus approximately 1.34% and the counterparty's obligation to
pay on Euro 350 million LIBOR plus approximately 1.47%,
remained unchanged by the amendment. Additionally, the
cross-currency element of the integrated transaction continue
to be marked-to-market.

No gain or loss was recognized upon the amendment of the
cross currency element of the integrated transaction, as the
interest rate of LIBOR plus 4.29% was established to ensure
that the fair value of the cash flow streams before and after
amendment were equivalent.

Since, as a result of the amendment, the Company became
economically exposed to the impact of exchange rates on the
final principal payment on the Euro 350 million Eurobonds, the
Company designated the Euro 350 million Eurobonds as a hedge of
net investment, on the date of the amendment. Since March
2003, the effect of currency on the Euro 350 million Eurobonds
of $ 35.2 million has been recorded as part of Accumulated
Other Comprehensive income (loss).

The fair value of these swap agreements is the estimated
amount the Company would receive (pay) at the reporting date,
taking into account the effective interest rates and foreign
exchange rates. As of December 31, 2003 and 2002, the estimated
net fair values of the swap agreements was $63.1 million and
$52.4 million, respectively.

Commodity Price Risk Management The Company selectively
enters into commodity price swaps to effectively fix certain
variable raw material costs. These swaps are used purely to
stabilize the cost of components used in the production of
certain of the Company's products. The Company generally
accounts for the commodity swaps as cash flow hedges under SFAS
133. As a result, the Company records the fair value of the
swap primarily through other comprehensive income based on the
tested effectiveness of the commodity swap. Realized gains or
losses in other comprehensive income are released and recorded
to costs of products sold as the products associated with the
commodity swaps are sold. At December 31, 2003, the Company
had no commodity swaps in place.

Consignment Arrangements
The Company consigns the precious metals used in the
production of precious metal alloy products from various
financial institutions. Under these consignment arrangements,
the banks own the precious metal, and, accordingly, the Company
does not report this consigned inventory as part of its
inventory on its consolidated balance sheet. The consignment
agreements allow the Company to take ownership of the metal at
approximately the same time customer orders are received and to
closely match the price of the metal acquired to the price
charged to the customer (i.e., the price charged to the
customer is largely a pass through).

As precious metal prices fluctuate, the Company evaluates
the impact of the precious metal price fluctuation on its
target gross margins for precious metal alloy products and
revises the prices customers are charged for precious metal
alloy products accordingly, depending upon the magnitude of the
fluctuation. While the Company does not separately invoice
customers for the precious metal content of our precious metal
alloy products, the underlying precious metal content is the
primary component of the cost and sales price of the precious
metal alloy products. For practical purposes, if the precious
metal prices go up or down by a small amount, the Company will
not immediately modify prices, as long as the cost of precious
metals embedded in the Company's precious metal alloy price
closely approximates the market price of the precious metal.
If there is a significant change in the price of precious
metals, the Company adjusts the price for the precious metal
alloys, maintaining its margin on the products.

At December 31, 2003, the Company had 149,097 troy ounces of
precious metal, primarily gold, platinum and palladium) on
consignment for periods of less than one year with a market
value of $61.3 million. Under the terms of the consignment
agreements, the Company also makes compensatory payments to the
consignor banks based on a percentage of the value of the
consigned precious metals inventory. At December 31, 2003, the
average annual rate charged by the consignor banks was 2.5%.
These compensatory payments are considered to be a cost of the
metals purchased and are recorded as cost of products sold.







EXPECTED MATURITY DATES DECEMBER 31, 2003
(represents notional amounts for derivative financial instruments)

2009 and Carrying Fair
2004 2005 2006 2007 2008 beyond Value Value
(dollars in thousands)
Financial Instruments

Notes Payable:

Denmark krone denominated $ 59 $ - $ - $ - $ - $ - $ 59 $ 59
Average interest rate 6.50% 6.50%
Euro denominated 623 - - - - - 623 623
Average interest rate 5.46% 5.46%
Japanese yen denominated 155 - - - - - 155 155
Average interest rate 1.38% 1.38%
---------------------------------------------------------------------------------------------
837 - - - - - 837 837
4.78% 4.78%

Current Portion of
Long-term Debt:
U.S. dollar denominated 408 - - - - - 408 408
Average interest rate 4.01% 4.01%
Japanese yen denominated 20,728 - - - - - 20,728 20,847
Average interest rate 1.44% 1.44%
---------------------------------------------------------------------------------------------
21,136 - - - - - 21,136 21,255
1.49% 1.49%

Long Term Debt:
U.S. dollar denominated - 329 310 27 - - 666 666
Average interest rate 3.59% 3.42% 3.40% 3.50%
Swiss franc denominated - 44,701 109,321 44,700 - - 198,722 202,939
Average interest rate 4.49% 4.77% 4.49% 4.64%
Japanese yen denominated 1,505 19,708 116,659 - - - 137,872 137,991
Average interest rate 0.03% 1.40% 0.56% 0.67%
Euro denominated - - 452,712 - - - 452,712 452,712
Average interest rate 5.75% 5.75%
Thai baht denominated 139 - - - - - 139 139
Average interest rate 2.75% 2.75%
Chile peso denominated - - 91 - - - 91 91
Average interest rate 6.80% 6.80%
---------------------------------------------------------------------------------------------
1,644 64,738 679,093 44,727 - - 790,202 794,538
0.26% 3.54% 4.70% 4.49% 4.58%
Derivative Financial Instruments

Foreign Exchange
Forward Contracts:
Forward sale, 9.9 million
Australian dollars 7,444 - - - - - 63 63
Forward sale, 0.8 million
Swedish krone 117 - - - - - 1 1
Forward sale, 3.0 billion
Japanese yen 28,851 - - - - - 248 248
Forward sale, 6.1 million
British pounds 10,869 - - - - - 12 12
Forward sale, 0.3 million
US Dollar 300 - - - - - 19 19
Forward purchase, 13.5 million
Canadian dollars 10,526 - - - - - (70) (70)

Interest Rate Swaps:
Interest rate swaps - U.S. dollar,
terminated 2/2001 (33) (21) - - - - (54) (54)
Interest rate swaps - Japanese yen - - - - - 116,767 (3,717) (3,717)
Average interest rate 1.6%
Interest rate swaps - Swiss francs - - - - - 52,242 (3,868) (3,868)
Average interest rate 4.2%
Interest rate swaps - Euro - - 329,092 - - - 14,092 14,092
Average interest rate 3.6%
Basis swap - Euro-U.S. Dollar - - 315,000 - - - 56,620 56,620
Average interest rate 2.5%







Management's Financial Responsibility

The management of DENTSPLY International Inc. is responsible
for the preparation and integrity of the consolidated financial
statements and all other information contained in this Annual
Report. The financial statements were prepared in accordance
with generally accepted accounting principles and include amounts
that are based on management's informed estimates and judgments.

In fulfilling its responsibility for the integrity of financial
information, management has established a system of internal
accounting controls supported by written policies and
procedures. This provides reasonable assurance that assets are
properly safeguarded and accounted for and that transactions are
executed in accordance with management's authorization and
recorded and reported properly.

The financial statements have been audited by our independent
auditors, PricewaterhouseCoopers LLP, whose unqualified report is
presented below. The independent accountants perform audits of
the financial statements in accordance with generally accepted
auditing standards, which includes consideration of the system of
internal accounting controls to determine the nature, timing and
extent of audit procedures to be performed.

The Audit and Information Technology Committee (the
"Committee") of the Board of Directors, consisting solely of
outside Directors, meets with the independent accountants with
and without management to review and discuss the major audit
findings, internal control matters and quality of financial
reporting. The independent accountants also have access to the
Committee to discuss auditing and financial reporting matters
with or without management present.


/s/ Gerald K. Kunkle, Jr. /s/ Thomas L. Whiting /s/Bret W. Wise
Gerald K. Kunkle, Jr. Thomas L. Whiting Bret W. Wise
Vice Chairman and President and Senior Vice President
Chief Executive Officer Chief Operating and Chief Financial
Officer Officer

Report of Independent Auditors

To the Board of Directors and Shareholders
of DENTSPLY International Inc.:


In our opinion, the consolidated financial statements listed in
the index appearing under Item 15(a)(1) present fairly, in all
material respects, the financial position of DENTSPLY
International Inc. and its subsidiaries at December 31, 2003 and
2002, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2003
in conformity with accounting principles generally accepted in
the United States of America. In addition, in our opinion, the
financial statement schedule listed in the index appearing under
Item 15 (a)(2) presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements. These financial
statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is
to express an opinion on these financial statements and the
financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing
standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

As discussed in Notes 1 and 9 to the consolidated financial
statements, on January 1, 2002 the Company adopted Statement of
Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets".

PricewaterhouseCoopers LLP

Philadelphia, PA
March 15, 2004






DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME



Year Ended December 31,

2003 2002 2001
(in thousands, except per share amounts)


Net sales (Note 4) $ 1,570,925 $ 1,417,600 $ 1,045,275
Cost of products sold 797,724 713,189 502,437

Gross profit 773,201 704,411 542,838
Selling, general and administrative expenses 501,518 457,691 367,556
Restructuring and other costs (income) (Note 16) 3,700 (2,732) 5,073

Operating income 267,983 249,452 170,209

Other income and expenses:
Interest expense 26,079 29,242 19,358
Interest income (1,874) (1,853) (1,102)
Other (income) expense, net (Note 5) (7,418) 7,973 (27,569)

Income before income taxes 251,196 214,090 179,522
Provision for income taxes (Note 14) 81,343 70,449 61,808

Income from continuing operations 169,853 143,641 117,714


Income from discontinued operations, net of tax (Note 6) 4,330 4,311 3,782

Net income $ 174,183 $ 147,952 $ 121,496

Earnings per common share - basic (Note 2)
Continuing operations $ 2.16 $ 1.84 $ 1.51
Discontinued operations 0.05 0.05 0.05
Total earnings per common share - basic $ 2.21 $ 1.89 $ 1.56

Earnings per common share - diluted (Note 2)
Continuing operations $ 2.11 $ 1.80 $ 1.49
Discontinued operations 0.05 0.05 0.05
Total earnings per common share - diluted $ 2.16 $ 1.85 $ 1.54


Cash dividends declared per common share $ 0.19700 $ 0.18400 $ 0.18333


Weighted average common shares outstanding (Note 2):
Basic 78,823 78,180 77,671
Diluted 80,647 79,994 78,975




The accompanying notes are an integral part of these financial statements.







DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


December 31,

2003 2002
(in thousands)

Assets
Current Assets:
Cash and cash equivalents $ 163,755 $ 25,652
Accounts and notes receivable-trade, net (Note 1) 241,385 221,262
Inventories, net (Notes 1 and 7) 205,587 214,492
Prepaid expenses and other current assets 88,463 79,595
Assets held for sale (Note 6) 28,262 --

Total Current Assets 727,452 541,001

Property, plant and equipment, net (Notes 1 and 8) 376,211 313,178
Identifiable intangible assets, net (Notes 1 and 9) 246,475 236,009
Goodwill, net (Notes 1 and 9) 963,264 898,497
Other noncurrent assets 114,736 98,348
Noncurrent assets held for sale (Note 6) 17,449 --

Total Assets $ 2,445,587 $ 2,087,033

Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 86,338 $ 66,625
Accrued liabilities (Note 10) 172,684 190,783
Income taxes payable 36,483 35,907
Notes payable and current portion
of long-term debt (Note 11) 21,973 4,550
Liabilities of discontinued operations (Note 6) 20,206 --

Total Current Liabilities 337,684 297,865

Long-term debt (Note 11) 790,202 769,823
Deferred income taxes 51,241 27,039
Other noncurrent liabilities (Note 12) 142,704 155,119
Noncurrent liabilities of discontinued operations (Note 6) 1,269 --
Total Liabilities 1,323,100 1,249,846

Minority interests in consolidated subsidiaries 418 1,259

Commitments and contingencies (Note 18)

Stockholders' Equity:
Preferred stock, $.01 par value; .25 million
shares authorized; no shares issued -- --
Common stock, $.01 par value; 200 million shares authorized;
81.4 million shares issued at December 31, 2003 and December 31, 2002 814 814
Capital in excess of par value 166,952 156,898
Retained earnings 889,601 730,971
Accumulated other comprehensive income 104,920 1,624
Unearned ESOP compensation (380) (1,899)
Treasury stock, at cost, 2.1 million shares at December 31, 2003
and 3.0 million shares at December 31, 2002 (39,838) (52,480)

Total Stockholders' Equity 1,122,069 835,928

Total Liabilities and Stockholders' Equity $ 2,445,587 $ 2,087,033


The accompanying notes are an integral part of these financial statements.







DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY



Accumulated Total
Capital in Other Unearned Stock-
Common Excess of Retained Comprehensive ESOP Treasury holders'
Stock Par Value Earnings Income (Loss) Compensation Stock Equity
(in thousands)

Balance at December 31, 2000 $ 543 $ 151,899 $ 490,167 $ (49,296) $ (4,938) $ (68,005) $ 520,370

Comprehensive Income:
Net income - - 121,496 - - - 121,496
Other comprehensive loss, net of tax:
Foreign currency translation adjustment - - - (26,566) - - (26,566)
Cumulative effect of change in accounting
principle for derivative and hedging
activities (SFAS 133) - - - (503) - - (503)
Net loss on derivative financial
instruments - - - (810) - - (810)
Minimum pension liability adjustment - - - (213) - - (213)

Comprehensive Income 93,404

Exercise of stock options - (45) - - - 8,062 8,017
Tax benefit from stock options exercised - 1,333 - - - - 1,333
Repurchase of common stock, at cost - - - - - (875) (875)
Cash dividends ($0.18333 per share) - - (14,249) - - - (14,249)
Decrease in unearned ESOP compensation - - - - 1,519 - 1,519
Three-for-two common stock split 271 (271) - - - - -

Balance at December 31, 2001 814 152,916 597,414 (77,388) (3,419) (60,818) 609,519

Comprehensive Income:
Net income - - 147,952 - - - 147,952
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment - - - 88,739 - - 88,739
Unrealized loss on available-for-sale
securities - - - (4,854) - - (4,854)
Net loss on derivative financial
instruments - - - (4,670) - - (4,670)
Minimum pension liability adjustment - - - (203) - - (203)

Comprehensive Income 226,964

Exercise of stock options - 715 - - - 8,338 9,053
Tax benefit from stock options exercised - 3,320 - - - - 3,320
Cash dividends ($0.184 per share) - - (14,395) - - - (14,395)
Decrease in unearned ESOP compensation - - - - 1,520 - 1,520
Fractional share payouts - (53) - - - - (53)

Balance at December 31, 2002 814 156,898 730,971 1,624 (1,899) (52,480) 835,928

Comprehensive Income:
Net income - - 174,183 - - - 174,183
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment - - - 95,984 - - 95,984
Unrealized gain on available-for-sale
securities - - - 5,005 - - 5,005
Net gain on derivative financial
instruments - - - 2,430 - - 2,430
Minimum pension liability adjustment - - - (123) - - (123)

Comprehensive Income 277,479

Exercise of stock options - 4,229 - - - 12,642 16,871
Tax benefit from stock options exercised - 5,825 - - - - 5,825
Cash dividends ($0.197 per share) - - (15,553) - - - (15,553)
Decrease in unearned ESOP compensation - - - - 1,519 - 1,519

Balance at December 31, 2003 $ 814 $ 166,952 $ 889,601 $ 104,920 $ (380) $ (39,838) $1,122,069


The accompanying notes are an integral part of these financial statements.







DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,
-------------------------------

2003 2002 2001
(in thousands)

Cash flows from operating activities:

Net income from continuing operations $ 169,853 $ 143,641 $ 117,714

Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 36,897 32,338 23,702
Amortization 8,764 9,014 27,810
Deferred income taxes 32,411 (8,435) 7,021
Restructuring and other (income) costs 3,700 (2,732) 5,073
Other non-cash costs (income) (1,173) 9,281 (3,849)
Gain on sale of business -- -- (23,121)
Loss on disposal of property, plant and equipment 459 1,703 54
Gain on sale of PracticeWorks securities (5,806) -- --
Non-cash ESOP compensation 1,519 1,520 1,519
Changes in operating assets and liabilities, net of
acquisitions and divestitures:
Accounts and notes receivable-trade, net (4,899) (13,030) (3,783)
Inventories, net 15,197 (5,686) 16,241
Prepaid expenses and other current assets 4,894 (1,601) --
Accounts payable 16,538 (7,698) 8,416
Accrued liabilities (26,561) (12,922) 24,679
Income taxes (271) 20,425 3,608
Other, net (657) 3,712 (4,004)
Cash flows from discontinued operating activities 7,127 3,453 9,988

Net cash provided by operating activities 257,992 172,983 211,068

Cash flows from investing activities:

Acquisitions of businesses, net of cash acquired (15,038) (49,805) (812,523)
Expenditures for identifiable intangible assets (2,410) (2,629) (2,414)
Proceeds from bulk sale of precious metals inventory -- 6,754 41,814
Insurance proceeds received for fire-destroyed equipment -- 2,535 8,980
Redemption of PracticeWorks preferred stock -- 15,000 --
Proceeds from sale of PracticeWorks securities 23,506 -- --
Proceeds from sale of property, plant and equipment 2,959 1,777 645
Capital expenditures (76,583) (55,476) (47,529)
Cash flows used in discontinued operations' investing activities (1,811) (2,658) (3,659)

Net cash used in investing activities (69,377) (84,502) (814,686)

Cash flows from financing activities:

Proceeds from long-term borrowings, net of deferred financing costs 634 100,244 1,435,175
Payments on long-term borrowings (70,738) (190,589) (819,186)
(Decrease) increase in short-term borrowings (3,277) (3,666) 7,511
Proceeds from exercise of stock options and warrants 16,871 9,053 8,017
Cash paid for treasury stock -- -- (875)
Cash dividends paid (14,999) (14,358) (14,228)
Realization of cross currency swap value 10,736 -- --
Proceeds from the termination of a pension plan -- -- 8,486
Fractional share payout -- (53) --

Net cash (used in) provided by financing activities (60,773) (99,369) 624,900

Effect of exchange rate changes on cash and cash equivalents 10,261 2,830 (3,005)

Net increase (decrease) in cash and cash equivalents 138,103 (8,058) 18,277

Cash and cash equivalents at beginning of period 25,652 33,710 15,433

Cash and cash equivalents at end of period $ 163,755 $ 25,652 $ 33,710


The accompanying notes are an integral part of these financial statements.







DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


Year Ended December 31,
2003 2002 2001
(in thousands)

Supplemental disclosures of cash flow information:
Interest paid $25,796 $25,545 $15,967
Income taxes paid 57,733 55,913 47,215
Supplemental disclosures of non-cash transactions:
Receipt of PracticeWorks convertible preferred stock
in connection with the sale of Infosoft business -- -- 32,000
Receipt of PracticeWorks common stock and stock warrants
in exchange for convertible preferred stock -- 18,582 --


The company assumed liabilities in conjunction
with the following acquisitions:


Fair Value Cash Paid for
of Assets Assets or Liabilities
Date Acquired Acquired Capital Stock Assumed
(in thousands)


Austenal, Inc. January 2002 $ 31,929 $ 17,770 $ 14,159
Degussa Dental Group October 2001 654,878 528,487 126,391
CeraMed Dental (remaining 49%) July 2001 20,000 20,000 --
Tulsa Dental Products (earn-out payment) May 2001 84,627 84,627 --
Dental injectible anesthetic assets of
AstraZeneca March 2001 130,469 119,347 11,122
Friadent GmbH January 2001 128,356 97,749 30,607



The accompanying notes are an integral part of these financial statements.







DENTSPLY INTERNATIONAL INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Description of Business

DENTSPLY designs, develops, manufactures and markets a broad
range of products for the dental market. The Company believes
that it is the world's leading manufacturer and distributor of
dental prosthetics, precious metal dental alloys, dental
ceramics, endodontic instruments and materials, prophylaxis
paste, dental sealants, ultrasonic scalers and crown and bridge
materials; the leading United States manufacturer and distributor
of dental handpieces, dental x-ray film holders, film mounts and
bone substitute/grafting materials; and a leading worldwide
manufacturer or distributor of dental injectable anesthetics,
impression materials, orthodontic appliances, dental cutting
instruments and dental implants. The Company distributes its
dental products in over 120 countries under some of the most well
established brand names in the industry.

DENTSPLY is committed to the development of innovative,
high-quality, cost effective new products for the dental market.

Principles of Consolidation

The consolidated financial statements include the accounts of
the Company and all majority-owned subsidiaries. Intercompany
accounts and transactions are eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenue and
expense during the reporting period. Actual results could differ
from those estimates, if different assumptions are made or if
different conditions exist.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents.

Accounts and Notes Receivable-Trade

The Company sells its products through a worldwide network of
distributors or direct to the end user. For customers on credit
terms, the Company performs ongoing credit evaluation of those
customers' financial condition and generally does not require
collateral from them. The Company establishes allowances for
doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. Accounts
and notes receivable-trade are stated net of these allowances
which were $15.1 million and $18.5 million at December 31, 2003
and 2002, respectively. Certain of the Company's customers are
offered cash rebates based on targeted sales increases. In
accounting for these rebate programs, the Company records an
accrual as a reduction of net sales for the estimated rebate as
sales take place throughout the year in accordance with EITF
01-09, " Accounting for Consideration Given by a Vendor to a
Customer (Including a Reseller of the Vendor's Products)".

Inventories

Inventories are stated at the lower of cost or market. At
December 31, 2003 and 2002, the cost of $11.4 million, or 6%, and
$13.0 million, or 6%, respectively, of inventories was
determined by the last-in, first-out ("LIFO") method. The cost
of other inventories was determined by the first-in, first-out
("FIFO") or average cost methods. The Company establishes reserves
for inventory estimated to be obsolete or unmarketable equal to
the difference between the cost of inventory and estimated market
value based upon assumptions about future demand and market
conditions.






If the FIFO method had been used to determine the cost of LIFO
inventories, the amounts at which net inventories are stated
would be higher than reported at December 31, 2003 and December
31, 2002 by $1.0 million and $0.8 million, respectively.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, net of
accumulated depreciation. Except for leasehold improvements,
depreciation for financial reporting purposes is computed by the
straight-line method over the following estimated useful lives:
buildings - generally 40 years and machinery and equipment - 4 to
15 years. The cost of leasehold improvements is amortized over
the shorter of the estimated useful life or the term of the
lease. Maintenance and repairs are charged to operations;
replacements and major improvements are capitalized. These assets
are reviewed for impairment whenever events or circumstances
provide evidence that suggest that the carrying amount of the
asset may not be recoverable. Impairment is based upon an
evaluation of the identifiable undiscounted cash flows. If
impaired, the resulting charge reflects the excess of the asset's
carrying cost over its fair value.


Identifiable Finite-lived Intangible Assets

Identifiable finite-lived intangible assets, which primarily
consist of patents, trademarks and licensing agreements, are
amortized on a straight-line basis over their estimated useful
lives, ranging from 5 to 40 years. These assets are reviewed for
impairment whenever events or circumstances provide evidence that
suggest that the carrying amount of the asset may not be
recoverable. The Company performs ongoing impairment analysis on
intangible assets related to new technology. Impairment is based
upon an evaluation of the identifiable undiscounted cash flows.
If impaired, the resulting charge reflects the excess of the
asset's carrying cost over its fair value.

Goodwill and Indefinite-Lived Intangible Assets

Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill
and Other Intangible Assets". This statement requires that the
amortization of goodwill and indefinite-lived intangible assets
be discontinued and instead an annual impairment approach be
applied. The Company performed the the annual impairment tests
during 2002 and 2003, as required, and no impairment was
identified. These impairment tests are based upon a fair value
approach rather than an evaluation of the undiscounted cash
flows. If impairment is identified under SFAS 142, the resulting
charge is determined by recalculating goodwill through a
hypothetical purchase price allocation of the fair value and
reducing the current carrying value to the extent it exceeds the
recalculated value. If impairment is identified on
indefinite-lived intangibles, the resulting charge reflects the
excess of the asset's carrying cost over its fair value.


Derivative Financial Instruments

The Company adopted Statement of Financial Accounting Standards
No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities", on January 1, 2001. This standard, as
amended by SFAS 138 and 149, requires that all derivative
instruments be recorded on the balance sheet at their fair value
and that changes in fair value be recorded each period in current
earnings or comprehensive income.

The Company employs derivative financial instruments to hedge
certain anticipated transactions, firm commitments, or assets and
liabilities denominated in foreign currencies. Additionally, the
Company utilizes interest rate swaps to convert floating rate
debt to fixed rate, fixed rate debt to floating rate, cross
currency basis swaps to convert debt denominated in one currency
to another currency, and commodity swaps to fix its variable raw
materials costs.







Litigation

The Company and its subsidiaries are from time to time parties
to lawsuits arising out of their respective operations. The
Company records liabilities when a loss is probable and can be
reasonably estimated. These estimates are made by management
based on an analysis made by internal and external legal counsel
which considers information known at the time.

Foreign Currency Translation

The functional currency for foreign operations, except for
those in highly inflationary economies, has been determined to be
the local currency.

Assets and liabilities of foreign subsidiaries are translated
at exchange rates on the balance sheet date; revenue and expenses
are translated at the average year-to-date rates of exchange.
The effects of these translation adjustments are reported in
stockholders' equity within "Accumulated other comprehensive
income". During the years ended December 31, 2003 and 2002 the
Company had translation gains of $153.0 million and $121.4
million, respectively, offset by losses of $57.0 million and
$32.7 million, respectively, on its loans designated as hedges of
net investments. During the year ended December 31, 2001 the
Company had translation losses of $32.1 million offset by gains
of $5.5 million on its loans designated as hedges of net
investments.

Exchange gains and losses arising from transactions denominated
in a currency other than the functional currency of the entity
involved and translation adjustments in countries with highly
inflationary economies are included in income. Exchange gains of
$0.3 million in 2003 and $1.2 million in 2001 and exchange losses
of $3.5 million in 2002 are included in "Other expense (income),
net".

Revenue Recognition

Revenue, net of related discounts and allowances, is recognized
at the time of shipment in accordance with shipping terms and as
title and risk of loss pass to customers. Net sales include
shipping and handling costs collected from customers in
connection with the sale.

A significant portion of the Company's net sales is comprised
of sales of precious metals generated through its precious metal
alloy product offerings. The precious metals content of sales was
$205.0 million, $187.1 million and $50.7 million for 2003, 2002
and 2001, respectively.

Warranties

The Company provides warranties on certain equipment products.
Estimated warranty costs are accrued when sales are made to
customers. Estimates for warranty costs are based primarily on
historical warranty claim experience.


Research and Development Costs

Research and development ("R&D") costs relate primarily to
internal costs for salaries and direct overhead costs. In
addition, the Company contracts with outside vendors to conduct
R&D activities. All such R&D costs are charged to expense when
incurred. The Company capitalizes the costs of equipment that has
general R&D uses and expenses such equipment that is solely for
specific R&D projects. The depreciation related to this
capitalized equipment is included in the Company's R&D costs. R&D
costs are included in "Selling, general and administrative
expenses" and amounted to approximately $43.3 million, $39.9
million and $27.3 million for 2003, 2002 and 2001, respectively.






Income Taxes

Income taxes are determined in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), which
requires recognition of deferred income tax liabilities and
assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
Under this method, deferred income tax liabilities and assets are
determined based on the difference between financial statements
and tax bases of liabilities and assets using enacted tax rates
in effect for the year in which the differences are expected to
reverse. SFAS 109 also provides for the recognition of deferred
tax assets if it is more likely than not that the assets will be
realized in future years. A valuation allowance has been
established for deferred tax assets for which realization is not
likely.

The Company accounts for income tax contingencies in accordance
with the Statement of Financial Standards No. 5, "Accounting for
Contingencies".

Earnings Per Share

Basic earnings per share is calculated by dividing net earnings
by the weighted average number of shares outstanding for the
period. Diluted earnings per share is calculated by dividing net
earnings by the weighted average number of shares outstanding for
the period, adjusted for the effect of an assumed exercise of all
dilutive options outstanding at the end of the period.

Stock Compensation

The Company has stock-based employee compensation plans which
are described more fully in Note 13. The Company applies the
intrinsic value method in accordance with Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees",
and related interpretations in accounting for stock compensation
plans. Under this method, no compensation expense is recognized
for fixed stock option plans, provided that the exercise price is
greater than or equal to the price of the stock at the date of
grant. The following table illustrates the effect on net income
and earnings per share if the Company had applied the fair value
recognition provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation", to
stock-based employee compensation.



Year Ended December 31,
2003 2002 2001
(in thousands, except per share amounts)


Net income as reported $ 174,183 $ 147,952 $ 121,496
Deduct: Stock-based employee compensation
expense determined under fair value
method, net of related tax (11,062) (9,576) (6,137)
Pro forma net income $ 163,121 $ 138,376 $ 115,359

Basic earnings per common share
As reported $ 2.21 $ 1.89 $ 1.56
Pro forma under fair value based method $ 2.07 $ 1.77 $ 1.49

Diluted earnings per common share
As reported $ 2.16 $ 1.85 $ 1.54
Pro forma under fair value based method $ 2.02 $ 1.73 $ 1.46









Other Comprehensive Income (Loss)

Other comprehensive income (loss) includes foreign currency
translation adjustments related to the Company's foreign
subsidiaries, net of the related changes in certain financial
instruments hedging these foreign currency investments. In
addition, changes in the fair value of the Company's
available-for-sale investment securities and certain derivative
financial instruments and changes in its minimum pension
liability are recorded in other comprehensive income (loss).
These adjustments are recorded in other comprehensive income
(loss) net of any related tax effects. For the years ended 2003
and 2002, these adjustments were net of tax benefits of $29.1
million and $32.9 million, respectively. For the year ended 2001,
these adjustments were net of tax liabilities of $5.6 million.

The balances included in accumulated other comprehensive income
(loss) in the consolidated balance sheets are as follows:



December 31,
2003 2002
(in thousands)

Foreign currency translation adjustments $ 109,532 $ 13,548
Net loss on derivative financial
instruments (3,553) (5,983)
Unrealized gain (loss) on available-for-sale securities 151 (4,854)
Minimum pension liability (1,210) (1,087)
$ 104,920 $ 1,624



The cumulative foreign currency translation adjustments included
translation gains of $193.0 million and $39.9 million as of
December 31, 2003 and 2002, respectively, offset by losses of
$83.5 million and $26.4 million, respectively, on loans
designated as hedges of net investments.

Reclassifications

Certain reclassifications have been made to prior years' data
in order to conform to the current year presentation.

New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board
("FASB") issued Interpretation No. 46 ("FIN 46"), "Consolidation
of Variable Interest Entities, an interpretation of ARB 51". The
primary objectives of this interpretation are to provide guidance
on the identification of entities for which control is achieved
through means other than through voting rights ("variable
interest entities") and how to determine when and which business
enterprise should consolidate the variable interest entity (the
"primary beneficiary"). This new model for consolidation applies
to an entity which either (1) the equity investors (if any) do
not have a controlling financial interest or (2) the equity
investment at risk is insufficient to finance that entity's
activities without receiving additional subordinated financial
support from other parties. In addition, FIN 46 requires that
both the primary beneficiary and all other enterprises with a
significant variable interest in a variable interest entity make
additional disclosures. Certain disclosure requirements of FIN 46
are effective for financial statements issued after January 31,
2003. The remaining provisions of FIN 46 are effective
immediately for all variable interests in entities created after
January 31, 2003. Adoption of this provision did not have an
effect on the Company. In December 2003, the FASB released a
revised version of FIN 46, FIN 46R, to clarify certain aspects of
FIN 46 and to provide certain entities with exemptions from the
requirements of FIN 46. FIN 46R requires the application of
either FIN 46 or FIN 46R to all Special Purpose Entitied
("SPE's") created prior to February 1, 2003 at the end of the
first interim or annual reporting period ending after December
15, 2003. Adoption of this provision did not have an effect on
the Company. FIN 46R will be applicable to all non-SPE entities
created prior to February 1, 2003 at the end of the first interim
or annual reporting period ending after March 15, 2004. The
Company does not expect the application of this portion of FIN
46R to have a material impact on the Company's financial
statements.






In April 2003, the FASB issued Statement of Financial
Accounting Standards No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". The statement
amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities under SFAS
133, "Accounting for Derivative Instruments and Hedging
Activities". Specifically, the statement clarifies under what
circumstances a contract with an initial net investment meets the
characteristic of a derivative. In addition, it clarifies when a
derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS 149 is effective
for contracts entered into or modified after June 30, 2003. The
Application of this standard has not had a material impact on the
Company's financial statements.

In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150 ("SFAS 150"), " Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity". This Statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that
an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. Adoption
of the provisions of SFAS No. 150 in the third quarter of 2003
related to mandatorily redeemable financial instruments had no
effect on the Company's financial statements. In November 2003,
the FASB issued FSP No. 150-3, "Effective Date, Disclosures and
Transition for Mandatorily Redeemable Financial Instruments of
Certain Nonpublic Entities and Certain Mandatorily Redeemable
Noncontrolling Interests under FASB Statement No. 150, Accounting
for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity". For public companies, FSP 150-3 deferred
the provisions of SFAS 150 related to classification and
measurement of certain mandatorily redeemable noncontrolling
interests issued prior to November 5, 2003. For mandatorily
redeemable noncontrolling interests issued after November 5,
2003, SFAS 150 applies without any deferral. The Company
continues to analyze the provisions of SFAS 150 related to
mandatorily redeemable noncontrolling interests, but does not
believe that application of these provisions will have a material
impact on the Company's financial statements.

In January 2004, the FASB released FASB Staff Position ("FSP")
No. 106-1, "Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of
2003." SFAS 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" requires a company to consider
current changes in applicable laws when measuring its
postretirement benefit costs and accumulated postretirement
benefit obligation. However, because of uncertainties of the
effect of the provisions of the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the "Act") on plan
sponsors and certain accounting issues raised by the Act, FSP
106-1 allows plan sponsors to elect a one-time deferral of the
accounting for the Act. The Company is electing the deferral
provided by FSP 106-1 to analyze the impact of the Act on
prescription drug coverage provided to a limited number of
retirees from one of its business units. The Company does not
expect the Act to have a material impact on the Company's
postretiremenent benefits liabilities or the Company's financial
statements.








NOTE 2 - EARNINGS PER COMMON SHARE

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



Earnings per common share
--------------------------------------
Income From Income From
Continuing Discontinued Net Continuing Discontinued
Operations Operations Income Shares Operations Operations Total
(in thousands, except per share amounts)

Year Ended December 31, 2003
Basic $169,853 $ 4,330 $174,183 78,823 $ 2.16 $ 0.05 $ 2.21
Incremental shares from
assumed exercise of
dilutive options -- -- -- 1,824

Diluted $169,853 $ 4,330 $174,183 80,647 $ 2.11 $ 0.05 $ 2.16


Year Ended December 31, 2002
Basic $143,641 $ 4,311 $147,952 78,180 $ 1.84 $ 0.05 $ 1.89
Incremental shares from
assumed exercise of
dilutive options -- -- -- 1,814

Diluted $143,641 $ 4,311 $147,952 79,994 $ 1.80 $ 0.05 $ 1.85


Year Ended December 31, 2001
Basic $117,714 $ 3,782 $121,496 77,671 $ 1.51 $ 0.05 $ 1.56
Incremental shares from
assumed exercise of
dilutive options -- -- -- 1,304

Diluted $117,714 $ 3,782 $121,496 78,975 $ 1.49 $ 0.05 $ 1.54




Options to purchase 1.4 million and 0.1 million shares of
common stock that were outstanding during the years ended 2003
and 2002, respectively, were not included in the computation of
diluted earnings per share since the options' exercise prices
were greater than the average market price of the common shares
and, therefore, the effect would be antidilutive.


NOTE 3 - BUSINESS ACQUISITIONS AND DIVESTITURES

Acquisitions
All acquisitions completed in 2002 and 2001 were accounted for
under the purchase method of accounting; accordingly, the results
of the operations acquired are included in the accompanying
financial statements for the periods subsequent to the respective
dates of the acquisitions. The purchase prices were allocated on
the basis of estimates of the fair values of assets acquired and
liabilities assumed.

In January 2002, the Company acquired the partial denture
business of Austenal Inc. ("Austenal") in a cash transaction
valued at approximately $17.8 million. Previously headquartered
in Chicago, Illinois, Austenal manufactured dental laboratory
products and was the world leader in the manufacture and sale of
systems used by dental laboratories to fabricate partial
dentures.

In October 2001, the Company completed the acquisition of the
Degussa Dental Group ("Degussa Dental"). The Company paid 548
million Euros or $503 million at the closing date and paid 12.1
million Euros, or $11.4 million, as a closing balance sheet
adjustment in June 2002. The final closing balance payment to
Degussa of $9.3 million was made in December 2003, as a result of
an arbitration ruling.






Prior to the acquisition, Degussa Dental had carried large
amounts of precious metals, for its production of precious metal
alloy products, in inventory which resulted in exposure to the
risk of price changes in the precious metals. After the
acquisition, Dentsply management changed Degussa Dental's
practice of holding a long position in the metal to holding metal
on a consignment basis from various financial institutions. In
connection with this change in practice, the Company sold certain
precious metals to various financial institutions in the fourth
quarter of 2001 for a value of $41.8 million and in the first
quarter of 2002 for a value of $6.8 million. These transactions
effectively transferred the price risk on the precious metals to
the financial institutions and allows the Company to acquire the
precious metal at approximately the same time and for the same
price as alloys are sold to the Company's customers. As the
precious metal inventory was recorded at fair value as of the
acquisition date, which was based on the value realized in the
transactions with the financial institutions, the Company did not
recognize a gain or loss on these transactions.

In March 2001, the Company acquired the dental injectible
anesthetic assets of AstraZeneca ("AZ Assets"). The total
purchase price of this transaction was composed of the following:
an initial $96.5 million payment which was made at closing in
March 2001; a $20 million contingency payment (including related
accrued interest) associated with the first year sales of
injectible dental anesthetic which was paid during the first
quarter of 2002.

In a separate agreement, as amended, the Company acquired
the know-how, patent and trademark rights to the non-injectible
periodontal anesthetic product known as Oraqix with a purchase
price composed of the following: a $2.0 million payment upon
submission of a New Drug Application ("NDA") in the U.S. and a
Marketing Authorization Application ("MAA") in Europe for the
Oraqix product under development; payments of $6.0 million and
$2.0 million upon the approval of the NDA and MAA, respectively,
for licensing rights; and a $10.0 million prepaid royalty payment
upon approval of both applications. The $2.0 million payment
related to the application filings was accrued as restructuirng
and other costs during the fourth quarter of 2001 and was paid
during the first quarter of 2002. The MAA was approved in Sweden,
the European Union member reference state, and the Company made
the required $2.0 million payment to AstraZeneca in the second
quarter of 2003. The NDA application was approved in December
2003 and as a result the remaining payments of $16.0 million
became due and were accrued in 2003 and the payments were made in
January 2004. These payments were capitalized and will be
amortized over the term of the licensing agreement.

In January 2001, the Company acquired the outstanding shares of
Friadent GmbH ("Friadent") for 220 million German marks or $106
million ($105 million, net of cash acquired). During the first
quarter of 2002, the Company received cash of 16.5 million German
marks or approximately $7.3 million, representing a final balance
sheet adjustment. As a result of this closing balance sheet
adjustment, goodwill was reduced by approximately $7.3 million.
Previously headquartered in Mannheim, Germany, Friadent was a
major global dental implant manufacturer and marketer with
subsidiaries in Germany, France, Denmark, Sweden, the United
States, Switzerland, Brazil, and Belgium.






The respective purchase prices plus direct acquisition costs
for Austenal, Degussa Dental, Friadent and the AZ Assets have
been allocated on the basis of estimated fair values at the dates
of acquisition. The purchase price allocations for these
acquisitions are as follows:



Austenal Degussa Dental AZ Assets Friadent
(in thousands)


Current assets $ 5,991 $ 166,216 $ -- $ 16,244
Property, plant and equipment 2,413 71,641 878 4,184
Identifiable intangible assets and goodwill 20,227 402,678 129,591 98,282
Other long-term assets 3,298 14,343 -- 4,882
Current liabilities (8,357) (62,550) (11,122) (18,855)
Other long-term liabilities (5,802) (63,841) -- (6,988)
$ 17,770 $ 528,487 $ 119,347 $ 97,749



A summary of the identifiable intangible assets and goodwill
acquired in these acquisitions is as follows:



Austenal Degussa Dental AZ Assets Friadent
---------------------- ----------------------- ----------------------- -----------------------

Weighted Weighted Weighted Weighted
Average Average Average Average
Amorti- Amorti- Amorti- Amorti-
Value zation Value zation Value zation Value zation
Assigned Period Assigned Period Assigned Period Assigned Period


Finite-lived intangible assets:
Patents $ 548 9.0 $ 8,300 12.3 $ - $ 2,302 7.3
Trademarks - 6,800 40.0 - 603 10.0
Licensing agreements - 4,143 18.0 - 1,909 3.3
Other - 1,479 3.0 - 875 2.8
548 9.0 20,722 21.9 - 5,689 5.6
Indefinite-lived intangible assets:
Licensing agreements - N/A - N/A 129,591 N/A - N/A

Goodwill 19,679 N/A 381,956 N/A - N/A 92,593 N/A

$20,227 $402,678 $ 129,591 $98,282



The factors that contributed to the purchase price for
Austenal, and the resulting goodwill, included its partial
denture products which helped to expand the Company's product
offerings. None of the goodwill recognized as a result of the
Austenal transaction is expected to be deductible for tax
purposes.

The factors that contributed to the purchase price for Degussa
Dental, and the resulting goodwill, included its product breadth
and worldwide position in precious metal alloys used in
dentistry, its ceramics technology for crown and bridge
applications and its strong position in Europe and Japan. The
Company expects that approximately 50% of the goodwill recognized
as a result of the transaction will be deductible for tax
purposes.

The factors that contributed to the purchase price for
Friadent, and the resulting goodwill, included its strong
position in dental implants, one of the highest growth areas in
dentistry. The Company expects that approximately 25% of the
goodwill recognized as a result of the transaction will be
deductible for tax purposes.






In August 1996, the Company purchased a 51% interest in CeraMed
Dental ("CeraMed") for $5 million with the right to acquire the
remaining 49% interest. In March 2001, the Company entered into
an agreement for an early buy-out of the remaining 49% interest
in CeraMed at a cost of $20 million, which was made in July 2001,
with a potential contingent consideration ("earn-out") provision
capped at $5 million. The earn-out was based on future sales of
CeraMed products during the August 1, 2001 to July 31, 2002 time
frame, with any additional pay out due on September 30, 2002. The
Company was not required to make a payment under this earn-out
provision.

Certain assets of Tulsa Dental Products LLC were purchased in
January 1996 for $75.1 million, plus $5.0 million paid in May
1999 related to earn-out provisions in the purchase agreement
based on performance of the acquired business. The purchase
agreement provided for an additional earn-out payment based upon
the operating performance of the Tulsa Dental business for one of
the three two-year periods ending December 31, 2000, December 31,
2001 or December 31, 2002, as selected by the seller. The seller
chose the two-year period ended December 31, 2000 and the final
earn-out payment of $84.6 million was made in May 2001 resulting
in an increase in goodwill.


Divestitures
In March 2001, the Company sold InfoSoft, LLC to PracticeWorks
Inc. ("PracticeWorks"). InfoSoft, LLC was the wholly owned
subsidiary of the Company, that developed and sold software and
related products for dental practice management. In the
transaction, the Company received 6.5% convertible preferred
stock in PracticeWorks, with a fair value of $32 million. The
sale resulted in a $23.1 million pretax gain which was included
in "Other expense (income), net" in 2001. The Company recorded
the preferred stock investment and subsequent accrued dividends
to "Other noncurrent assets".

In June 2002, the Company completed a transaction with
PracticeWorks to exchange the accumulated balance of this
preferred stock investment for a combination of $15.0 million of
cash, 1.0 million shares of PracticeWorks' common stock valued at
$15.0 million and 450,000 seven-year term stock warrants issued
by PracticeWorks, valued at $3.6 million, based on the
Black-Scholes option pricing model. The transaction resulted in a
loss to the Company of $1.1 million, which is included in "Other
expense (income), net" in 2002.

In October 2003, PracticeWorks was acquired by Eastman Kodak in
a cash transaction and as a result the Company received $23.5
million for its common stock and warrant holdings. This buyout
resulted in a Company recognizing a $5.8 million pre-tax gain,
which is included in "Other expense (income), net" in 2003.


NOTE 4 - SEGMENT AND GEOGRAPHIC INFORMATION


Segment Information

The Company follows Statement of Financial Accounting Standards
No. 131 ("SFAS 131"), "Disclosures about Segments of an
Enterprise and Related Information". SFAS 131 establishes
standards for disclosing information about reportable segments in
financial statements. The Company has numerous operating
businesses covering a wide range of products and geographic
regions, primarily serving the professional dental market.
Professional dental products represented approximately 98%, 98%
and 97% of sales in 2003, 2002 and 2001, respectively.

Operating businesses are combined into five operating groups
which have overlapping product offerings, geographical presence,
customer bases, distribution channels, and regulatory oversight.
In determining reportable segments, the Company considers its
operating and management structure and the types of information
subject to regular review by its chief operating decision-maker.
The accounting policies of the segments are consistent with those
described for the consolidated financial statements in the
summary of significant accounting policies (see Note 1). The
Company measures segment income for reporting purposes as net
operating profit before restructuring, interest and taxes. A
description of the services provided within each of the Company's
five reportable segments follows:






Dental Consumables - U.S. and Europe/Japan/Non-Dental

This business group includes responsibility for the design,
manufacturing, sales, and distribution for certain small
equipment and chairside consumable products in the U.S., Germany,
Scandinavia, Iberia and Eastern Europe; the design and
manufacture of certain chairside consumable and laboratory
products in Japan, the sales and distribution of all Company
products in Japan; and the design and the Company's non-dental
business.

Endodontics/Professional Division Dental Consumables/Asia

This business group includes the responsibility for the design
and manufacturing for endodontic products in the U.S.,
Switzerland and Germany; certain small equipment and chairside
consumable products in the U.S.; and laboratory products in
China. The business is responsible for sales and distribution of
all Company products throughout Asia - except Japan; all Company
endodontic products in the U.S., Canada, Swtizerland, Benelux,
Scandinavia, and Eastern Europe, and certain endodontic products
in Germany; and certain small equipment and chairside consumable
products in the U.S.

Dental Consumables - United Kingdom, France, Italy, CIS, Middle
East, Africa/European Dental Laboratory Business

This business group includes responsibility for the design and
manufacture of dental laboratory products in Germany and the
Netherlands and the sales and distribution of these products in
Europe, Eastern Europe, Middle East, Africa and the CIS. The
group also has responsibility for sales and distribution of the
Company's other products in France, United Kingdom, Italy, Middle
East, Africa and the CIS.

Australia/Canada/Latin America/U.S. Pharmaceutical

This business group includes responsibility for the design,
manufacture, sales and distribution of dental anesthetics in the
U.S. and Brazil; chairside consumable and laboratory products in
Brazil. It also has responsibility for the sales and
distribution of all Company products sold in Australia, Canada,
Latin America and Mexico.

U.S. Dental Laboratory Business/Implants/Orthodontics

This business group includes the responsibility for the design,
manufacture, sales and distribution for laboratory products in
the U.S. and the sales and distribution of U.S. manufactured
laboratory products in certain international markets; the design,
manufacture, world-wide sales and distribution of the Company's
dental implant and bone generation products; and the world-wide
sales and distribution of the Company's orthodontic products.

Significant interdependencies exist among the Company's
operations in certain geographic areas. Inter-group sales are at
prices intended to provide a reasonable profit to the
manufacturing unit after recovery of all manufacturing costs and
to provide a reasonable profit for purchasing locations after
coverage of marketing and general and administrative costs.

Generally, the Company evaluates performance of segments based
on the segments operating income and net third party sales
excluding precious metal content.






The following table sets forth information about the Company's
operating groups for 2003, 2002 and 2001.


Third Party Net Sales

2003 2002 2001

Dental Consumables - U.S. and Europe/Japan/Non-dental $ 277,304 $ 254,503 $ 193,788
Endodontics/Professional Division Dental Consumables/Asia 384,706 358,227 316,257
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 455,431 376,441 178,382
Australia/Canada/Latin America/U.S. Pharmaceutical 114,447 109,661 122,052
U.S. Dental Laboratory Business/Implants/Orthodontics 318,292 298,287 217,839
All Other (a) 20,745 20,481 16,957
Total $1,570,925 $1,417,600 $1,045,275





Third Party Net Sales, excluding precious metal content

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 264,648 $ 242,117 $ 190,708
Endodontics/Professional Division Dental Consumables/Asia 381,509 357,643 316,257
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 307,017 241,135 139,530
Australia/Canada/Latin America/U.S. Pharmaceutical 113,262 108,454 121,983
U.S. Dental Laboratory Business/Implants/Orthodontics 278,709 260,682 209,195
All Other 20,745 20,481 16,957
Total excluding precious metal content 1,365,890 1,230,512 994,630
Precious Metal Content 205,035 187,088 50,645
Total including Precious Metal Content $1,570,925 $1,417,600 $1,045,275







Intersegment Net Sales

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 207,284 $ 190,520 $ 173,875
Endodontics/Professional Division Dental Consumables/Asia 158,501 151,125 144,110
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 76,648 63,636 15,511
Australia/Canada/Latin America/U.S. Pharmaceutical 33,276 37,923 21,714
U.S. Dental Laboratory Business/Implants/Orthodontics 31,737 29,036 29,005
All Other 158,377 153,842 109,680
Eliminations (665,823) (626,082) (493,895)
Total $ - $ - $ -






Depreciation and amortization

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 6,719 $ 6,869 $ 6,127
Endodontics/Professional Division Dental Consumables/Asia 11,042 10,574 16,166
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 9,189 7,140 1,768
Australia/Canada/Latin America/U.S. Pharmaceutical 1,715 1,259 2,791
U.S. Dental Laboratory Business/Implants/Orthodontics 7,652 7,259 7,800
All Other 9,344 8,251 16,860
Total $ 45,661 $ 41,352 $ 51,512







Segment Operating Income

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 82,378 $ 70,941 $ 59,789
Endodontics/Professional Division Dental Consumables/Asia 154,025 141,585 110,111
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 30,545 11,356 (72)
Australia/Canada/Latin America/U.S. Pharmaceutical 12,031 14,758 20,167
U.S. Dental Laboratory Business/Implants/Orthodontics 41,428 50,191 42,034
All Other (48,724) (42,111) (56,747)
Segment Operating Income 271,683 246,720 175,282

Reconciling Items:
Restructuring and other costs (income) 3,700 (2,732) 5,073
Interest Expense 26,079 29,242 19,358
Interest Income (1,874) (1,853) (1,102)
Other (income) expense, net (7,418) 7,973 (27,569)
Income before income taxes $ 251,196 $ 214,090 $ 179,522






Assets

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 187,248 $ 181,747 $ 149,664
Endodontics/Professional Division Dental Consumables/Asia 1,215,723 1,189,961 1,160,798
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 590,208 517,067 499,812
Australia/Canada/Latin America/U.S. Pharmaceutical 256,299 169,989 124,926
U.S. Dental Laboratory Business/Implants/Orthodontics 311,782 310,258 253,870
All Other (115,673) (281,989) (390,919)
Total $2,445,587 $2,087,033 $1,798,151







Capital Expenditures

2003 2002 2001

Dental consumables - U.S. and Europe/Japan/Non-dental $ 8,569 $ 8,394 $ 8,444
Endodontics/Professional Division Dental Consumables/Asia 8,517 12,550 18,458
Dental Consumables - UK, France, Italy, CIS, Middle East,
Africa/European Dental Laboratory Business 5,075 9,624 2,525
Australia/Canada/Latin America/U.S. Pharmaceutical 39,547 3,434 2,752
U.S. Dental Laboratory Business/Implants/Orthodontics 5,265 8,870 10,356
All Other 9,610 12,604 4,994
Total $ 76,583 $ 55,476 $ 47,529


(a) Includes: two operating divisions not managed by named
segments, operating expenses of two distribution warehouses not
managed by named segments, Corporate and inter-segment
eliminations.

Geographic Information

The following table sets forth information about the Company's
operations in different geographic areas for 2003, 2002 and
2001. Net sales reported below represent revenues for shipments
made by operating businesses located in the country or territory
identified, including export sales. Assets reported represent
those held by the operating businesses located in the respective
geographic areas.





United Other
States Germany Foreign Consolidated
(in thousands)


2003
Net sales $ 705,541 $ 397,357 $ 468,027 $ 1,570,925
Long-lived assets 213,607 121,481 129,059 464,147

2002
Net sales $ 684,809 $ 325,301 $ 407,490 $ 1,417,600
Long-lived assets 178,978 100,707 114,099 393,784

2001
Net sales $ 578,755 $ 152,010 $ 314,510 $ 1,045,275
Long-lived assets 130,362 66,756 91,288 288,406








Product and Customer Information


The following table presents sales information by product category:

Year Ended December 31,

2003 2002 2001
(in thousands)

Dental consumables $ 555,738 $ 523,060 $ 457,344
Dental laboratory products 521,131 473,485 225,788
Specialty dental products 460,506 388,066 327,150
Non-dental 33,550 32,989 34,993
$1,570,925 $1,417,600 $1,045,275



Dental consumable products consist of dental sundries and small
equipment products used in dental offices in the treatment of
patients. DENTSPLY's products in this category include dental
injectable anesthetics, prophylaxis paste, dental sealants,
impression materials, restorative materials, tooth whiteners, and
topical fluoride. The Company manufactures thousands of
different consumable 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.
DENTSPLY's small equipment products include high and low speed
handpieces, intraoral curing light systems and ultrasonic scalers
and polishers.

Dental laboratory products are used in dental laboratories in
the preparation of dental appliances. DENTSPLY's products in
this category include dental prosthetics, including artificial
teeth, precious metal dental alloys, dental ceramics, and crown
and bridge materials and small equipment products used in
laboratories consisting of computer aided machining (CAM)
ceramics systems and porcelain furnaces.

Specialty dental products are used for specific purposes within
the dental office and laboratory settings. DENTSPLY's products
in this category include endodontic (root canal) instruments and
materials, dental implants, and orthodontic appliances and
accessories.

Non-dental products are comprised primarily of investment
casting materials that are used in the production of jewelry,
golf club heads and other casted products.

Third party export sales from the United States are less than
ten percent of consolidated net sales. No customers accounted
for more than ten percent of consolidated net sales in 2003 and
2002. In 2001, one customer, a distributor, accounted for 11% of
consolidated net sales.







NOTE 5 - OTHER (INCOME) EXPENSE


Other (income) expense, net consists of the following:

Year Ended December 31,
-----------------------------

2003 2002 2001
(in thousands)
Foreign exchange transaction (gains) losses $ (263) $ 3,481 $ (1,177)
Gain on sale of InfoSoft, LLC -- -- (23,121)
(Gain) loss on PracticeWorks securities (7,395) 2,598 (1,710)
Minority interests (312) 364 (1,265)
Other 552 1,530 (296)

$ (7,418) $ 7,973 $(27,569)


NOTE 6 - DISCONTINUED OPERATIONS


During the fourth quarter of the year ended December 31, 2003,
the Company's management and board of directors made the decision
to divest of its Gendex equipment business. The sale of Gendex
narrows the Company's product lines to focus primarily on dental
consumables. Gendex is a manufacturer of dental x-ray equipment
and accessories and intraoral cameras. On December 11, 2003, the
Company entered into a definitive agreement to sell the assets
and related liabilities of the Gendex business to Danaher
Corporation for $102.5 million cash, plus the assumption of
certain pension liabilities. The agreement also contains a
provision for a post-closing adjustment to the purchase price
bosed on changes in certain balance sheet accounts. The
transaction closed on February 27, 2004.

Also during the fourth quarter of the year ended December 31,
2003, the Company's management and board of directors made a
decision to discontinue the operations of the Company's dental
needle business.

The Gendex business and the dental needle business are
distinguishable as separate components of the Company in
accordance with Statement of Financial Accounting Standards No.
144 ("SFAS 144"), "Accounting for the Impairment or Disposal of
Long-Lived Assets". The Gendex business and the needle business
are classified as held for sale at December 31, 2003 in
accordance with SFAS 144. Direct costs to transact the sales are
comprised of, but not limited to, broker commissions, legal and
title transfer fees and closing costs. The statements of
operations and related financial statement disclosures for all
prior years have been restated to present the Gendex business and
needle business as discontinued operations separate from
continuing operations.

Discontinued operations net revenue and income before income
taxes for the periods presented were as follows:

Year Ended December 31,
-----------------------------

2003 2002 2001
(in thousands)
Net sales $106,313 $ 96,142 $ 87,693
Income before income taxes 7,329 6,893 5,605







The following assets and liabilities are reclassified as held
for sale for the periods presented as follows:

December 31,
2003
(in thousands)
Accounts and notes receivable-trade, net $10,626
Inventories, net 16,848
Prepaid expenses and other current assets 788
Current assets of discontinued operations held for sale $28,262

Property, plant and equipment, net $ 7,656
Identifiable intangible assets, net 4,022
Goodwill, net 5,771
Noncurrent assets of discontinued operations held for sale $17,449

Accounts payable $10,021
Accrued liabilities 10,185
Current liabilities of discontinued operations $20,206

Other noncurrent liabilities $ 1,269
Noncurrent liabilities of discontinued operations $ 1,269



NOTE 7 - INVENTORIES

Inventories consist of the following:

December 31,
2003 2002
(in thousands)
Finished goods $123,290 $134,989
Work-in-process 41,997 39,065
Raw materials and supplies 40,300 40,438

$205,587 $214,492








NOTE 8- PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:



December 31,
2003 2002
(in thousands)

Assets, at cost:
Land $ 40,553 $ 34,746
Buildings and improvements 190,222 160,566
Machinery and equipment 295,354 274,915
Construction in progress 60,036 28,368
586,165 498,595
Less: Accumulated depreciation 209,954 185,417

$376,211 $313,178




NOTE 9 - GOODWILL AND INTANGIBLE ASSETS

Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill
and Other Intangible Assets". This statement requires that the
amortization of goodwill and indefinite-lived intangible assets
be discontinued and instead an annual impairment test approach be
applied. The impairment tests are required to be performed
annually (or more often if adverse events occur) and are based
upon a fair value approach rather than an evaluation of
undiscounted cash flows. If goodwill impairment is identified,
the resulting charge is determined by recalculating goodwill
through a hypothetical purchase price allocation of the fair
value and reducing the current carrying value to the extent it
exceeds the recalculated goodwill. If impairment is identified on
indefinite-lived intangibles, the resulting charge reflects the
excess of the asset's carrying cost over its fair value. Other
intangible assets with finite lives will continue to be amortized
over their useful lives.

The Company performed the required annual impairment tests in
the second quarter of 2003 and no impairment was identified. This
impairment assessment was based upon a review of twenty reporting
units.

In accordance with SFAS 142, prior period amounts have not been
restated. The following table presents prior year reported
amounts adjusted to eliminate the amortization of goodwill and
indefinite-lived intangible assets.



Year Ended December 31,

2003 2002 2001
(in thousands, except per share amounts)


Reported net income $ 174,183 $ 147,952 $ 121,496
Add: amortization adjustment, net of related tax - - 13,963
Adjusted net income $ 174,183 $ 147,952 $ 135,459

Reported basic earnings per share $ 2.21 $ 1.89 $ 1.56
Add: amortization adjustment - - 0.18
Adjusted basic earnings per share $ 2.21 $ 1.89 $ 1.74

Reported diluted earnings per share $ 2.16 $ 1.85 $ 1.54
Add: amortization adjustment - - 0.18
Adjusted diluted earnings per share $ 2.16 $ 1.85 $ 1.72







The table below presents the net carrying values of goodwill
and identifiable intangible assets.

December 31,
2003 2002
(in thousands)

Goodwill $ 963,264 $ 898,497

Indefinite-lived identifiable intangible assets:
Trademarks $ 4,080 $ 4,080
Licensing agreements 165,621 149,254
Finite-lived identifiable intangible assets 76,774 82,675
Total identifiable intangible assets $ 246,475 $ 236,009

A reconciliation of changes in the Company's goodwill is as
follows:

December 31,
2003 2002
(in thousands)

Balance, beginning of the year $ 898,497 $ 763,270
Acquisition activity 15,153 28,176
Changes to purchase price allocation (28,381) 40,025
Reclassification to assets held
for sale(Note 6) (5,771) --
Impairment charges (Note 16) (360) --
Effects of exchange rate changes 84,126 67,026
Balance, end of the year $ 963,264 $ 898,497


The change in the net carrying value of goodwill in 2003 was
primarily due to the final payment related to the Degussa Dental
acquisition, several small acquisitions including the purchase of
one of the Company's suppliers and additional investments in
partially owned subsidiaries, foreign currency translation
adjustments, reclassification to assets held for sale and changes
to the purchase price allocations of Austenal, Degussa Dental and
Friadent. These purchase price allocation changes were primarily
related to the reversal of preacquisition tax contingencies due
to expiring statutes.

The increase in indefinite-lived licensing agreements was due
to foreign currency translation adjustments. These intangible
assets relate exclusively to the royalty-free licensing rights to
AstraZeneca's dental products and tradenames, which are
primarily denominated in Swiss francs. The change in finite-lived
identifiable intangible assets was due primarily to amortization
for the period, reclassification to assets held for sale,
additions related to the Oraqix agreement and foreign currency
translation adjustments.

Finite-lived identifiable intangible assets consist of the
following:



December 31, 2003 December 31, 2002
---------------------------------- -----------------------------------



Gross Net Gross Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
(in thousands)


Patents $ 55,142 $ (33,425) $ 21,717 $ 53,902 $ (30,015) $ 23,887
Trademarks 34,936 (7,142) 27,794 37,145 (6,608) 30,537
Licensing agreements 30,858 (8,105) 22,753 23,730 (6,411) 17,319
Other 12,573 (8,063) 4,510 26,151 (15,219) 10,932
$ 133,509 $ (56,735) $ 76,774 $ 140,928 $ (58,253) $ 82,675








Amortization expense for finite-lived identifiable intangible
assets for 2003, 2002 and 2001 was $8.8 million, $9.0 million and
$10.4 million, respectively. The annual estimated amortization
expense related to these intangible assets for each of the five
succeeding fiscal years is $8.1 million, $7.2 million, $6.4
million, $5.7 million and $5.2 million for 2004, 2005, 2006, 2007
and 2008, respectively.


NOTE 10 - ACCRUED LIABILITIES

Accrued liabilities consist of the following:

December 31,
2003 2002
(in thousands)
Payroll, commissions, bonuses and
other cash compensation $ 42,200 $ 44,490
Employee benefits 14,692 13,181
General insurance 15,852 14,965
Sales and marketing programs 15,944 15,424
Restructuring and other costs (Note 16) 7,781 15,190
Accrued Oraqix payments 16,000 --
Warranty liabilities 3,629 7,429
Other 56,586 80,104
$172,684 $190,783


A reconciliation of changes in the Company's warranty liability
for 2003 is as follows:

Warranty Liability

December 31,
2003
(in thousands)
Balance, beginning of the year $ 7,429
Accruals for warranties issued during the year 5,064
Accruals related to pre-existing warranties (1,328)
Warranty settlements made during the year (4,663)
Reclassification to liabilities of discontinued operations (3,378)
Effects of exchange rate changes 505
Balance, end of the year $ 3,629



NOTE 11 - FINANCING ARRANGEMENTS

Short-Term Borrowings

Short-term bank borrowings amounted to $0.8 million and $3.2
million at December 31, 2003 and 2002, respectively. The weighted
average interest rates of these borrowings were 4.8% and 2.5% at
December 31, 2003 and 2002, respectively. Unused lines of credit
for short-term financing at December 31, 2003 and 2002 were $84.9
million and $80.0 million, respectively. Substantially all
short-term borrowings were classified as long-term as of December
31, 2003 and 2002, reflecting the Company's intent and ability to
refinance these obligations beyond one year and are included in
the table below. The unused lines of credit have no major
restrictions and are provided under demand notes between the
Company and the lending institution. Interest is charged on
borrowings under these lines of credit at various rates,
generally below prime or equivalent money rates.






Long-Term Borrowings



December 31,
2003 2002
(in thousands)


$250 million multi-currency revolving credit agreement expiring May 2006,
Japanese yen 12.6 billion at 0.56% $ 116,659 $ 152,803

$250 million multi-currency revolving credit agreement expiring May 2004 - -

Prudential Private Placement Notes, Swiss franc denominated, 84.4 million at 4.56%
and 82.5 million at 4.42% maturing March 2007, 80.4 million at 4.96% maturing October 2006 198,722 178,881

ABN Private Placement Note, Japanese yen 6.2 billion at 1.39% maturing December 2005 38,646 52,562

Euro 350.0 million Eurobonds at 5.75% maturing December 2006 452,712 378,144

$250 million commercial paper facility rated A/2-P/2 U.S. dollar borrowings - -

Other borrowings, various currencies and rates 4,599 8,836
811,338 771,226
Less: Current portion (included in notes payable and current portion of long-term debt) 21,136 1,403
$ 790,202 $ 769,823



The table below reflects the contractual maturity dates of
the various borrowings at December 31, 2003 (in thousands). The
individual borrowings under the revolving credit agreement are
structured to mature on a quarterly basis but because the Company
has the intent and ability to extend them until the expiration
date of the agreement, these borrowings are considered
contractually due in May 2006.

2004 $ 22,780
2005 64,738
2006 679,093
2007 44,727
$811,338

The Company utilizes interest rate swaps to convert the
variable rate Japanese yen-denominated debt under the revolving
facility to fixed rate debt. In addition, swaps are used to
convert the fixed rate Eurobond to variable rate financing. The
Company's use of interest rate swaps is further described in "
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK" and in
Note 17.

The Company has a $500 million revolving credit agreement with
participation from thirteen banks. The revolving credit
agreements contain certain affirmative and negative covenants as
to the operations and financial condition of the Company, the
most restrictive of which pertain to asset dispositions,
maintenance of certain levels of net worth, and prescribed ratios
of indebtedness to total capital and operating income plus
depreciation and amortization to interest expense. The Company
pays a facility fee of 0.125 % annually on the amount of the
commitment under the $250 million five year facility ("facility
B") and 0.125% annually under the $250 million 364-day facility
("facility A"). Interest rates on amounts borrowed under the
facility will depend on the maturity of the borrowing, the
currency borrowed, the interest rate option selected, and the
Company's long-term credit rating from Moody's and Standard and
Poors.

The $250 million facility A may be extended, subject to certain
conditions, for additional periods of 364 days, which the Company
intends to extend annually. The entire $500 million revolving
credit agreement has a usage fee of 0.125 % annually if
utilization exceeds 50% of the total available facility.






The Company has complementary U.S. dollar and Euro
multicurrency commercial paper facilities totaling $250 million
which have utilization, dealer, and annual appraisal fees which
on average cost 0.11% annually. The $250 million facility A acts
as back-up credit to this commercial paper facility. The total
available credit under the commercial paper facilities and the
facility A is $250 million There were no outstanding commercial
paper obligations at December 31, 2003.

In March 2001, the Company issued Series A and B private
placement notes to Prudential Capital Group totaling Swiss francs
166.9 million at an average rate of 4.49% with six year final
maturities. The notes were issued to finance the acquisition of
the AZ Assets. In October 2001, the Company issued a Series C
private placement note to Prudential Capital Group for Swiss
francs 80.4 million at a rate of 4.96% with a five year final
maturity. The series A and B notes were also amended in October
2001 to increase the interest rate by 30 basis points, reflecting
the Company's higher leverage. In December 2001, the Company
issued a private placement note through ABN AMRO for Japanese yen
6.2 billion at a rate of 1.39% with a four year final maturity.
The Series C note and the ABN note were issued to partially
finance the Degussa Dental acquisition.

In December 2001, the Company issued 350 million Eurobonds with
a coupon of 5.75%, maturing December 2006 at an effective yield
of 5.89%. These bonds were issued to partially finance the
Degussa Dental acquisition.

At December 31, 2003, the Company had total unused lines of
credit, including lines available under its short-term
arrangements, of $472 million.

NOTE 12 - OTHER NONCURRENT LIABILITIES

Other noncurrent liabilities consist of the following:

December 31,
2003 2002
(in thousands)

Pension benefits (Note 15) $ 67,854 $ 55,063
Noncurrent income taxes payable (Note 18) 45,750 67,880
Other postretirement benefits (Note 15) 10,711 10,676
Derivative instruments (Note 17) 5,843 7,890
Other 12,546 13,610
$142,704 $155,119







NOTE 13 - STOCKHOLDERS' EQUITY


The Board of Directors authorized the repurchase of up to 1.5
million shares of common stock for the year ended December 31,
2001 on the open market or in negotiated transactions, with the
authorization expiring on December 31 of that year. The Company
repurchased 37,500 shares for $0.9 million in 2001. No share
repurchases were made during 2003 and 2002. In December 2003, the
Board of Directors authorized the repurchase of up to 1.0 million
shares of common stock for the year ended December 31, 2004 on
the open market.

The Company has stock options outstanding under three stock
option plans (1993 Plan, 1998 Plan and 2002 Plan). Further
grants can only be made under the 2002 Plan. Under the 1993 and
1998 Plans, a committee appointed by the Board of Directors
granted to key employees and directors of the Company options to
purchase shares of common stock at an exercise price determined
by such committee, but not less than the fair market value of the
common stock on the date of grant. Options generally expire ten
years after the date of grant under these plans and grants become
exercisable over a period of three years after the date of grant
at the rate of one-third per year, except that they become
immediately exercisable upon death, disability or retirement.

The 2002 Plan authorized grants of 7.0 million shares of common
stock, (plus any unexercised portion of canceled or terminated
stock options granted under the DENTSPLY International Inc. 1993
and 1998 Stock Option Plans), subject to adjustment as follows:
each January, if 7% of the outstanding common shares of the
Company exceed 7.0 million, the excess becomes available for
grant under the Plan. The 2002 Plan enables the Company to grant
"incentive stock options" ("ISOs") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, to key
employees of the Company, and "non-qualified stock options"
("NSOs") which do not constitute ISOs to key employees and
non-employee directors of the Company. Grants of options to key
employees are solely discretionary with the Board of Directors of
the Company. ISOs and NSOs generally expire ten years from date
of grant and become exercisable over a period of three years
after the date of grant at the rate of one-third per year, except
that they become immediately exercisable upon death, disability
or retirement. Such options are granted at exercise prices not
less than the fair market value of the common stock on the grant
date.

Future option grants may only be made under the 2002 Plan,
which will include the unexercised portion of canceled or
terminated options granted under the 1993 or 1998 Plans. Each
non-employee director receives an automatic grant of NSOs to
purchase 9,000 shares of common stock on the date he or she
becomes a non-employee director and an additional 9,000 options
on the third anniversary of the date of the non-employee director
was last granted an option.







The following is a summary of the status of the Plans as of
December 31, 2003, 2002 and 2001 and changes during the years
ending on those dates:




Outstanding Exercisable
--------------------- ----------------------

Weighted Weighted Available
Average Average for
Exercise Exercise Grant
Shares Price Shares Price Shares


December 31, 2000 5,792,243 17.85 2,989,478 $ 15.64 3,226,467
Authorized (Lapsed) - (83,444)
Granted 1,605,900 30.43 (1,605,900)
Exercised (497,813) 16.01 -
Expired/Canceled (167,087) 18.47 167,087

December 31, 2001 6,733,243 20.97 3,732,179 16.76 1,704,210
Authorized (Lapsed) - 7,023,106
Granted 1,574,550 36.91 (1,574,550)
Exercised (515,565) 17.33 -
Expired/Canceled (100,639) 19.08 100,639

December 31, 2002 7,691,589 24.50 4,649,889 18.99 7,253,405
Authorized (Lapsed) - 177,882
Granted 1,434,300 43.84 (1,434,300)
Exercised (829,155) 19.30 -
Expired/Canceled (119,277) 29.38 119,277

December 31, 2003 8,177,457 $ 28.35 5,225,300 $ 22.22 6,116,264


The following table summarizes information about stock options
outstanding under the Plans at December 31, 2003:



Options Outstanding Options Exercisable
--------------------------------- ------------------------

Weighted
Number Average Number
Outstanding Remaining Weighted Exercisable Weighted
at Contractual Average at Average
December 31 Life Exercise December 31 Exercise
Exercise Price Range 2003 (in years) Price 2003 Price


$10.01 - $15.00 528,751 1.4 $ 13.12 528,751 $ 13.12
15.01 - 20.00 2,211,089 5.0 16.44 2,211,089 16.44
20.01 - 25.00 1,166,026 6.8 24.62 1,132,926 24.66
25.01 - 30.00 69,650 7.5 27.94 41,000 27.98
30.01 - 35.00 1,272,412 7.9 31.23 822,662 31.20
35.01 - 40.00 1,570,929 8.9 36.93 488,872 36.97
40.01 - 45.00 1,346,400 9.9 44.26 - -
45.01 - 50.00 12,200 9.7 45.53 - -

8,177,457 7.1 $ 28.35 5,225,300 $ 22.22








The Company uses the Black-Scholes option pricing model to
value option awards. The per share weighted average fair value of
stock options and the weighted average assumptions used to
determine these values are as follows:

Year Ended December 31,
2003 2002 2001
Per share fair value $ 14.85 $ 12.69 $ 11.47
Expected dividend yield 0.48% 0.50% 0.61%
Risk-free interest rate 3.36% 3.35% 5.01%
Expected volatility 31% 34% 33%
Expected life (years) 5.50 5.50 5.50

The Black-Scholes option pricing model was developed for
tradable options with short exercise periods and is therefore not
necessarily an accurate measure of the fair value of compensatory
stock options.

The rollforward of the common shares and the treasury shares
outstanding is as follows:

Common Treasury Outstanding
Shares Shares Shares
(in thousands)
Balance at December 31, 2000 81,389 (3,971) 77,418
Exercise of stock options -- 500 500
Repurchase of common stock, at cost -- (38) (38)

Balance at December 31, 2001 81,389 (3,509) 77,880
Exercise of stock options -- 519 519
Fractional share payouts (1) -- (1)

Balance at December 31, 2002 81,388 (2,990) 78,398
Exercise of stock options -- 853 853

Balance at December 31, 2003 81,388 (2,137) 79,251







NOTE 14 - INCOME TAXES

The components of income before income taxes from continuing
operations are as follows:

Year Ended December 31,

2003 2002 2001
(in thousands)
United States ("U.S.") $113,994 $116,160 $131,010
Foreign 137,202 97,930 48,512
$251,196 $214,090 $179,522


The components of the provision for income taxes from continuing
operations are as follows:

Year Ended December 31,

2003 2002 2001
(in thousands)
Current:
U.S. federal $ 28,693 $ 47,627 $ 42,159
U.S. state 1,941 2,520 1,331
Foreign 18,298 28,737 11,297
Total 48,932 78,884 54,787

Deferred:
U.S. federal 12,077 (7,586) 12,854
U.S. state 2,466 (908) 2,359
Foreign 17,868 59 (8,192)
Total 32,411 (8,435) 7,021

$ 81,343 $ 70,449 $ 61,808




The reconcilation of the U.S. federal statutory tax rate to the
effective rate is as follows:



Year Ended December 31,

2003 2002 2001


Statutory federal income tax rate 35.0 % 35.0 % 35.0 %
Effect of:
State income taxes, net of federal benefit 1.1 0.5 1.3
Nondeductible amortization of goodwill - - 1.1
Foreign earnings at lower rates than US federal (4.5) (2.3) (2.2)
Foreign tax credit - - (0.8)
Extraterritorial income (0.9) (1.1) (1.0)
Taxes on unremitted earnings of certain
foreign subsidiaries 2.5 - 0.1
Other (0.8) 0.8 0.9

Effective income tax rate on continuing operations 32.4 % 32.9 % 34.4 %




The tax effect of temporary differences giving rise to deferred
tax assets and liabilities are as follows:



December 31, 2003 December 31, 2002

Current Noncurrent Current Noncurrent
Asset Asset Asset Asset
(Liability) (Liability) (Liability) (Liability)
(in thousands)

Employee benefit accruals $ 2,225 $ 9,053 $ 1,496 $ 9,961
Product warranty accruals 1,155 -- 1,012 --
Insurance premium accruals 4,035 -- 3,919 --
Commission and bonus accrual 1,526 -- 3,156 --
Sales and marketing accrual 1,474 -- 2,612 --
Restructuring and other cost accruals 2,947 2,824 7,595 4,352
Differences in financial reporting and tax basis for:
Inventory 8,467 -- 7,838 --
Property, plant and equipment -- (34,793) -- (29,272)
Identifiable intangible assets -- (59,578) -- (35,086)
Unrealized losses (gains) included in other
comprehensive income -- 45,305 -- 18,324
Miscellaneous Accruals 12,561 -- 10,403 --
Other 3,884 8,455 855 5,515
Discontinued Operations 1,883 4,293 2,633 4,315
Tax loss carryforwards in foreign jurisdictions -- 9,649 -- 9,521
Valuation allowance for tax loss carryforwards -- (9,649) -- (5,342)
$ 40,157 $(24,441) $ 41,519 $(17,712)



Current and noncurrent deferred tax assets and liabilities are included
in the following balance sheet captions:

December 31,
2003 2002
(in thousands)
Prepaid expenses and other current assets $ 41,427 $ 42,096
Income taxes payable (1,270) (577)
Other noncurrent assets 26,800 9,327
Deferred income taxes (51,241) (27,039)






Certain foreign subsidiaries of the Company have tax loss
carryforwards of $30.6 million at December 31, 2003, of which
$4.9 million expire through 2011 and $25.7 million may be carried
forward indefinitely. The tax benefit of these tax loss
carryforwards has been fully offset by a valuation allowance as
of December 31, 2003. The valuation allowance of $9.6 million
and $5.3 million at December 31, 2003 and 2002, respectively,
relates to foreign tax loss carryforwards for which realizability
is uncertain. The change in the valuation allowances for 2003
and 2002 results primarily from the generation of additional
foreign tax loss carryforwards in excess of loss carryforwards
utilized in certain foreign jurisdictions.

The Company has provided for the potential repatriation of
certain undistributed earnings of its foreign subsidiaries and
considers earnings above the amounts on which tax has been
provided to be permanently reinvested. Income taxes have not
been provided on $343 million of undistributed earnings of
foreign subsidiaries, which will continue to be permanently
reinvested. If remitted as dividends, these earnings could
become subject to additional tax, however such repatriation is
not anticipated.

The pretax income from discontinued operations for the years
ended December 31, 2003, 2002 and 2001 was $7.3 million, $6.9
million and $5.6 million, respectively. The income tax expense
related to discontinued operations for the years ended December
31, 2003, 2002 and 2001 was $3.0 million, $2.6 million and $1.8
million, respectively.

NOTE 15 - BENEFIT PLANS

Substantially all of the employees of the Company and its
subsidiaries are covered by government or Company-sponsored
benefit plans. Total costs for Company-sponsored defined
benefit, defined contribution and employee stock ownership plans
amounted to $13.5 million in 2003, $11.5 million in 2002 and $7.9
million in 2001.

Defined Contribution Plans
The DENTSPLY Employee Stock Ownership Plan ("ESOP") is a
non-contributory defined contribution plan that covers
substantially all of the United States based non-union employees
of the Company. Contributions to the ESOP were $2.2 million for
2003, $2.2 million for 2002 and $2.1 million for 2001. The
Company makes annual contributions to the ESOP of not less than
the amounts required to service ESOP debt. In connection with the
refinancing of ESOP debt in March 1994, the Company agreed to
make additional cash contributions totaling at least $0.6 million
through 2003. Dividends received by the ESOP on allocated shares
are either reinvested in participants' accounts or passed through
to Plan participants, at the participant's election. Most ESOP
shares were initially pledged as collateral for its debt. As the
debt is repaid, shares are released from collateral and allocated
to active employees based on the proportion of debt service paid
in the year. At December 31, 2003, the ESOP held 7.0 million
shares, of which 6.9 million were allocated to plan participants
and 0.1 million shares were unallocated and pledged as collateral
for the ESOP debt. Unallocated shares were acquired prior to
December 31, 1992 and are accounted for in accordance with
Statement of Position 76-3. Accordingly, all shares held by the
ESOP are considered outstanding and are included in the earnings
per common share computations.

The Company sponsors an employee 401(k) savings plan for its
United States workforce to which enrolled participants may
contribute up to IRS defined limits.

Defined Benefit Plans
The Company maintains a number of separate contributory and
non-contributory qualified defined benefit pension plans and
other postretirement medical plans for certain union and salaried
employee groups in the United States. Pension benefits for
salaried plans are based on salary and years of service; hourly
plans are based on negotiated benefits and years of service.
Annual contributions to the pension plans are sufficient to
satisfy legal funding requirements. Pension plan assets are held
in trust and consist mainly of common stock and fixed income
investments.

The Company maintains defined benefit pension plans for its
employees in Germany, Japan, The Netherlands, and Switzerland.
These plans provide benefits based upon age, years of service and
remuneration. The German plans are unfunded book reserve plans.
Other foreign plans are not significant individually or in the
aggregate. Most employees and retirees outside the United States
are covered by government health plans.






Postretirement Healthcare
The plans for postretirement healthcare have no plan assets.
The postretirement healthcare plan covers certain union and
salaried employee groups in the United States and is
contributory, with retiree contributions adjusted annually to
limit the Company's contribution for participants who retired
after June 1, 1985. The Company also sponsors unfunded
non-contributory postretirement medical plans for a limited
number of union employees and their spouses and retirees of a
discontinued operation.

The Company uses a December 31 measurement date for the
majority of it plans. Reconciliations of changes in the above
plans' benefit obligations, fair value of assets, and statement
of funded status are as follows:



Other Postretirement
Pension Benefits Benefits
----------------------- ---------------------
December 31, December 31,
2003 2002 2003 2002
(in thousands)

Reconciliation of Benefit Obligation
Benefit obligation at beginning of year $ 103,711 $ 81,134 $ 10,735 $ 7,877
Service cost 4,137 3,428 235 419
Interest cost 5,358 4,464 726 833
Participant contributions 1,185 972 570 442
Actuarial (gains) losses (3,561) 2,877 1,165 2,537
Amendments 343 -- -- --
Acquisitions -- -- -- --
Effects of exchange rate changes 15,248 14,955 -- --
Benefits paid (3,854) (4,119) (1,231) (1,373)

Benefit obligation at end of year $ 122,567 $ 103,711 $ 12,200 $ 10,735

Reconciliation of Plan Assets
Fair value of plan assets at beginning of year $ 51,238 $ 43,348 $ -- $ --
Actual return on assets 520 (10) -- --
Acquisitions -- -- -- --
Effects of exchange rate changes 5,584 7,716 -- --
Employer contributions 5,435 3,331 661 931
Participant contributions 1,185 972 570 442
Benefits paid (3,854) (4,119) (1,231) (1,373)

Fair value of plan assets at end of year $ 60,108 $ 51,238 $ -- $ --


Reconciliation of Funded Status
Actuarial present value of projected
benefit obligations $ 122,567 $ 103,711 $ 12,200 $ 10,735
Plan assets at fair value 60,108 51,238 -- --

Funded status (62,459) (52,473) (12,200) (10,735)
Unrecognized transition obligation 1,495 1,581 -- --
Unrecognized prior service cost 795 590 3,743 2,998
Unrecognized net actuarial loss (gain) 6,043 7,499 (2,254) (2,940)


Net amount recognized $ (54,126) $ (42,803) $ (10,711) $ (10,677)








The amounts recognized in the accompanying Consolidated Balance
Sheets are as follows:

Other Postretirement
Pension Benefits Benefits
----------------- ------------------
December 31, December 31,
2003 2002 2003 2002
(in thousands)
Other noncurrent liabilities $ (67,854) $ (55,063) $ (10,711) $ (10,676)
Other noncurrent assets 11,905 10,498 - -
Accumulated other
comprehensive loss 1,823 1,762 - -

Net amount recognized $ (54,126) $ (42,803) $ (10,711) $ (10,676)



Information for pension plans with an accumulated benefit obligation
in excess of plan assets

December 31,
2003 2002
(in thousands)
Projected benefit obligation $ 122,569 $ 104,528
Accumulated benefit obligation 116,865 97,304
Fair value of plan assets 60,109 50,973


Components of the net periodic benefit cost for the plans are as follows:



Other Postretirement
Pension Benefits Benefits
--------------------------------- --------------------------------
2003 2002 2001 2003 2002 2001
(in thousands)

Service cost $ 4,137 $ 3,428 $ 1,877 $ 235 $ 419 $ 205
Interest cost 5,358 4,464 3,548 726 833 539
Expected return on plan assets (3,018) (2,706) (2,525) -- -- --
Net amortization and deferral 576 445 287 (265) 27 (63)

Net periodic benefit cost $ 7,053 $ 5,631 $ 3,187 $ 696 $ 1,279 $ 681




The weighted average assumptions used to determine benefit obligations
for the Company's plans, principally in foreign locations, are as follows:



Other Postretirement
Pension Benefits Benefits
--------------------------------- ---------------------------------
2003 2002 2001 2003 2002 2001

Discount rate 5.0% 5.1% 5.4% 6.0% 6.8% 7.3%
Expected return on plan assets 5.5% 5.5% 5.0% n/a n/a n/a
Rate of compensation increase 3.0% 3.0% 2.5% n/a n/a n/a
Initial health care cost trend n/a n/a n/a 9.5% 10.0% 7.0%
Ultimate health care cost trend n/a n/a n/a 5.0% 5.0% 7.0%
Years until ultimate trend is reached n/a n/a n/a 9.0 10.0 n/a





The weighted average assumptions used to determine net periodic benefit
cost for the Company's plans, principally in foreign locations, are as follows:



Other Postretirement
Pension Benefits Benefits
--------------------------------- ---------------------------------
2003 2002 2001 2003 2002 2001

Discount rate 5.1% 5.4% 5.7% 6.8% 7.3% 7.0%
Expected return on plan assets 5.5% 5.0% 5.7% n/a n/a n/a
Rate of compensation increase 3.0% 2.5% 3.5% n/a n/a n/a
Initial health care cost trend n/a n/a n/a 10.0% 7.0% 7.0%
Ultimate health care cost trend n/a n/a n/a 5.0% 7.0% 7.0%
Years until ultimate trend is reached n/a n/a n/a 10.0 n/a n/a



Assumed health care cost trend rates have an impact on the amounts reported
for postretirement benefits. A one percentage point change in assumed healthcare
cost trend rates would have the following effects for the year ended December
31, 2003:

Other Postretirement
Benefits
---------------------
1% Increase 1% Decrease
(in thousands)
Effect on total of service and interest cost components $ 131 $ (105)
Effect on postretirement benefit obligation 1,416 (1,162)


Plan Assets:
The weighted average asset allocations of the U.S. plans at
December 31, 2003 and 2002 by asset category are as follows:


Target December 31,
Allocation 2003 2002
Equity 40%-65% 51% 44%
Debt 35%-60% 47% 53%
Real estate 0%-15% 0% 0%
Other 0%-15% 2% 3%
--------- ---------
Total 100% 100%
--------- ---------

Equity securities do not include Company stock of Dentsply International
Inc. The expected return on plan assets is the weighted average long-term
expected return based upon asset allocations and historic average returns for
the markets where the assets are invested, principally in foreign locations.


Cash Flows:
The Company expects to contribute $0.7 million to its U.S. defined benefit
pension plans and $0.7 million to its other postretirement benefit plan in 2004.


NOTE 16 - RESTRUCTURING AND OTHER COSTS (INCOME)

Restructuring and other costs (income) consists of the
following:



Year Ended December 31,
2003 2002 2001
(in thousands)

Restructuring and other costs $ 4,497 $ 1,669 $ 17,774
Reversal of restructuring charges due to
changes in estimates (797) (3,687) (802)
Gain on pension plan termination -- -- (8,486)
Gain on insurance settlement associated with fire -- (714) (5,758)
Costs related to the Oraqix agreement -- -- 2,345
Total restructuring and other costs (income) $ 3,700 $ (2,732) $ 5,073








During the fourth quarter of 2003, the Company recorded
restructuring and other costs of $4.5 million. These costs were
primarily related to impairment charges recorded to certain
investments in emerging technologies. The products related to
these technologies were abandoned and therefore these assets were
no longer viewed as being recoverable. In addition, certain costs
were associated with the consolidation of the Company's U.S.
laboratory businesses. Included in this charge were severance
costs of $0.9 million, lease/contract termination costs of $0.6
million and intangible and other asset impairment charges of $3.0
million. This restructuring plan will result in the elimination
of approximately 65 administrative and manufacturing positions
primarily in the United States, most of which remain to be
eliminated as of December 31, 2003. Certain of these positions
will need to be replaced at the consolidated site and therefore
the net reduction in positions is expected to be approximately
25. This plan is expected to be complete by December 31, 2004.
The major components of these charges and the remaining
outstanding balances at December 31, 2003 are as follows:




Amounts Balance
2003 Applied December 31,
Provisions 2003 2003

Severance $ 908 $ (49) $ 859
Lease/contract terminations 562 (410) 152
Other restructuring costs 27 (27) --
Intangible and other asset impairment charges 3,000 (3,000) --
$ 4,497 $(3,486) $ 1,011



On January 25, 2001, the Company suffered a fire at its
Maillefer facility in Switzerland. The fire caused severe damage
to a building and to most of the equipment it contained. During
the third quarter of 2002, the Company received insurance
proceeds for settlement of the damages caused to the building.
These proceeds resulted in the Company recognizing a net gain on
the damaged building of approximately $0.7 million. The Company
also received insurance proceeds on the destroyed equipment
during the fourth quarter of 2001 and recorded the related
disposal gains of $5.8 million during that period.

During the second quarter of 2002, the Company recorded a
charge of $1.7 million for restructuring and other costs. The
charge primarily related to the elimination of duplicative
functions created as a result of combining the Company's Ceramed
and U.S. Friadent divisions. Included in this charge were
severance costs of $0.6 million, lease/contract termination costs
of $0.9 million and $0.2 million of impairment charges on fixed
assets that will be disposed of as a result of the restructuring
plan. This restructuring plan resulted in the elimination of
approximately 35 administrative and manufacturing positions in
the United States and was substantially complete as of December
31, 2002.

As part of combining Austenal with the Company in 2002, $4.4
million of liabilities were established through purchase price
accounting for the restructuring of the acquired company's
operations, primarily in the United States and Germany. Included
in this liability were severance costs of $2.9 million,
lease/contract termination costs of $1.4 million and other
restructuring costs of $0.1 million. During 2003 the Company
reversed a total of $1.1 million, which was recorded to goodwill,
as a change in estimate as it determined the costs to complete
the plan were lower than originally estimated. This restructuring
plan included the elimination of approximately 75 administrative
and manufacturing positions in the United States and Germany, 20
of which remain to be eliminated as of December 31, 2003. The
Company anticipates that most aspects of this plan will be
completed by the first quarter of 2004.

The major components of the 2002 restructuring charges and the
amounts recorded through purchase price accounting and the
remaining outstanding balances at December 31, 2003 are as
follows:



Change
in Estimate
Amounts Recorded
Recorded Through
Through Amounts Change Amounts Purchase Balance
2002 Purchase Applied in Estimate Applied Accounting December 31,
Provisions Accounting 2002 2002 2003 2003 2003

Severance $ 541 $ 2,927 $ (530) $ (164) $ (988) $ (878) $ 908
Lease/contract terminations 895 1,437 (500) 120 (665) (245) 1,042
Other restructuring costs 38 60 (60) (36) -- -- 2
Fixed asset impairment charges 195 -- (195) -- -- -- --
$ 1,669 $ 4,424 $(1,285) $ (80) $(1,653) $(1,123) $ 1,952









The Company's subsidiary in the United Kingdom restructured its
pension plans in the fourth quarter of 2001, simplifying its
structure by consolidating its two separate defined contribution
plans into one plan and terminating the other plan. An
unallocated surplus of approximately $8.5 million existed in the
terminated plan. As a result, these unallocated funds reverted
back to the Company.

As discussed in Note 3, the Company agreed in 2001 to a payment
of $2.0 million to AstraZeneca related to the submission of the
Oraqix product New Drug Application in the U.S. and a Marketing
Authorization Application in Europe. Under the terms of the
agreement, this payment and related estimated application costs
were accrued during the fourth quarter of 2001.

In the fourth quarter of 2001, the Company recorded a charge of
$12.3 million for restructuring and other costs. The charge
included costs of $6.0 million to restructure the Company's
existing operations, primarily in Germany, Japan and Brazil, as a
result of the integration with Degussa Dental. Included in this
charge were severance costs of $2.1 million, lease/contract
termination costs of $1.1 million and other restructuring costs
of $0.2 million. In addition, the Company recorded $2.6 million
of impairment charges on fixed assets that will be disposed of as
a result of the restructuring plan. The remaining charge of $6.3
million involves impairment charges on intangible assets. During
2002 and 2003 the Company reversed a net total of $1.0 million
and $0.8 million, respectively, as a change in estimate as it
determined the costs to complete the plan were lower than
originally estimated. This restructuring plan resulted in the
elimination of approximately 160 administrative and manufacturing
positions in Germany, Japan and Brazil. As part of these
reorganization activities, some of these positions were replaced
with lower-cost outsourced services. This plan was substantially
complete at December 31, 2003. The impairment charge of $6.3
million includes the impairment of intangible assets related to
two acquisitions made in prior periods. One of these acquisitions
involved the exclusive patent rights for technology related to
cutting teeth in preparation for restoration, which was acquired
in September 1996. The other acquisition involved technology
related to a line of lotions and creams used to protect the hands
from irritants, which was acquired in September 2000. Based on a
slowing trend in sales related to the product lines associated
with these technologies in 2001, the Company performed impairment
evaluations, and as a result, recorded impairment charges of $2.0
million and $4.3 million for the teeth preparation product
intangibles and lotion product intangibles, respectively.

In the first quarter of 2001, the Company recorded a charge of
$5.5 million related to reorganizing certain functions within
Europe, Brazil and North America. The primary objectives of this
reorganization were to consolidate duplicative functions and to
improve efficiencies within these regions. Included in this
charge were severance costs of $3.1 million, lease/contract
termination costs of $0.6 million and other restructuring costs
of $0.8 million. In addition, the Company recorded $1.0 million
of impairment charges on fixed assets that will be disposed of as
a result of the restructuring plan. This restructuring plan
resulted in the elimination of approximately 310 administrative
and manufacturing positions in Brazil and Germany. As part of
these reorganization activities, some of these positions were
replaced with lower-cost outsourced services. During the first
quarter of 2002, this plan was substantially completed and the
remaining accrual balances of $1.9 million were reversed as a
change in estimate.

As part of combining Friadent and Degussa Dental with the
Company in 2001, $14.1 million of liabilities were established
through purchase price accounting for the restructuring of the
acquired companies' operations in Germany, Brazil, the United
States and Japan. Included in this liability were severance costs
of $11.9 million, lease/contract termination costs of $1.1
million and other restructuring costs of $1.1 million. During
2003 the Company reversed a total of $3.4 million, which was
recorded to goodwill, as a change in estimate as it determined
the costs to complete the plan were lower than originally
estimated. This restructuring plan resulted in the elimination of
approximately 190 administrative and manufacturing positions in
Germany, Brazil and the United States. This plan was
substantially complete at December 31, 2003.






The major components of the 2001 restructuring charges and the
amounts recorded through purchase price accounting and the
remaining outstanding balances at December 31, 2003 are as
follows:



Change Change
in Estimate in Estimate
Amounts Recorded Recorded
Recorded Through Through
Through Amounts Amounts Change Purchase Amounts Change Purchase Balance
2001 Purchase Applied Applied in Estimate Accounting Applied in Estimate Accounting December
Provisions Accounting 2001 2002 2002 2002 2003 2003 2003 31, 2003

Severance $ 5,270 $ 11,929 $ (1,850) $ (6,257) $ (655) $ (174) $ (985) $ (816) $ (2,971) $ 3,491
Lease/contract
terminations 1,682 1,071 (563) (579) (721) 203 (291) - (50) 752
Other restructuring
costs 897 1,062 - (552) (759) 458 (175) 19 (375) 575
Fixed asset
impairment charges 3,634 - (3,634) 223 (747) 524 - - - -
Intangible asset
impairment charges 6,291 - (6,291) - - - - - - -
$ 17,774 $ 14,062 $ (12,338) $ (7,165) $(2,882) $1,011 $(1,451) $ (797) $ (3,396) $ 4,818



During the fourth quarter 2003, the Company made the decision
to discontinue the operations of its dental needle business. The
business consists of one manufacturing location which will cease
operations by March 31, 2004. As a result of this decision, the
Company has recorded a charge of $1.6 million included in income
from discontinued operations. Included in this charge were
severance costs of $0.4 million, fixed asset impairment charges
of $0.5 million, $0.4 million of impairment charges related to
goodwill and other restructuring costs of $0.3 million. This plan
will result in the elimination of approximately 55 administrative
and manufacturing positions in the United States, most of which
remain to be eliminated at December 31, 2003. This plan is
expected to be substantially completed by March 31, 2004. The
major components of these charges and the remaining outstanding
balances at December 31, 2003 are as follows:


Amounts Balance
2003 Applied December 31,
Provisions 2003 2003
Severance $ 405 $ -- $ 405
Other restructuring costs 300 (300) --
Fixed asset impairment charges 520 (520) --
Goodwill impairment charges 360 (360) --
$ 1,585 $(1,180) $ 405





NOTE 17 - FINANCIAL INSTRUMENTS AND DERIVATIVES

Fair Value of Financial Instruments

The fair value of financial instruments is determined by
reference to various market data and other valuation techniques
as appropriate. The Company believes the carrying amounts of cash
and cash equivalents, accounts receivable (net of allowance for
doubtful accounts), prepaid expenses and other current assets,
accounts payable, accrued liabilities, income taxes payable and
notes payable approximate fair value due to the short-term nature
of these instruments. The Company estimates the fair value of
its total long-term debt was $815.8 million versus its carrying
value of $811.3 million as of December 31, 2003. The fair value
approximated the carrying value since much of the Company's debt
is variable rate and reflects current market rates. The fixed
rate Eurobonds are effectively converted to variable rate as a
result of an interest rate swap and the interest rates on
revolving debt and commercial paper are variable and therefore
the fair value of these instruments approximates their carrying
values. The Company has fixed rate Swiss franc and Japanese yen
denominated notes with estimated fair values that differ from
their carrying values. At December 31, 2003, the fair value of
these instruments was $241.8 million versus their carrying values
of $237.4 million. The fair values differ from the carrying
values due to lower market interest rates at December 31, 2003
versus the rates at issuance of the notes.

Derivative Instruments and Hedging Activities

The Company's activities expose it to a variety of market risks
which primarily include the risks related to the effects of
changes in foreign currency exchange rates, interest rates and
commodity prices. These financial exposures are monitored and
managed by the Company as part of its overall risk-management
program. The objective of this risk management program is to
reduce the potentially adverse effects that these market risks
may have on the Company's operating results.

A portion of the Company's borrowings and certain inventory
purchases are denominated in foreign currencies which exposes the
Company to market risk associated with exchange rate movements.
The Company's policy generally is to hedge major foreign currency
transaction exposures through foreign exchange forward
contracts. These contracts are entered into with major financial
institutions thereby minimizing the risk of credit loss. In
addition, the Company's investments in foreign subsidiaries are
denominated in foreign currencies, which creates exposures to
changes in exchange rates. The Company uses debt denominated in
the applicable foreign currency as a means of hedging a portion
of this risk.

With the Company's significant level of long-term debt, changes
in the interest rate environment can have a major impact on the
Company's earnings, depending upon its interest rate exposure. As
a result, the Company manages its interest rate exposure with the
use of interest rate swaps, when appropriate, based upon market
conditions.

The manufacturing of some of the Company's products requires
the use of commodities which are subject to market fluctuations.
In order to limit the unanticipated earnings fluctuations from
such market fluctuations, the Company selectively enters into
commodity price swaps, primarily for silver, used in the
production of dental amalgam. Additionally, the Company uses
non-derivative methods, such as the precious metal consignment
agreement to effectively hedge commodity risks.






Cash Flow Hedges

The Company uses interest rate swaps to convert a portion of
its variable rate debt to fixed rate debt. As of December 31,
2003, the Company has two groups of significant variable rate to
fixed rate interest rate swaps. One of the groups of swaps was
entered into in January 2000 and February 2001, has a notional
amount totaling 180 million Swiss francs, and effectively
converts the underlying variable interest rates on the debt to a
fixed rate of 3.3% for a period of approximately four years. The
other significant group of swaps entered into in February 2002,
has notional amounts totaling 12.6 billion Japanese yen, and
effectively converts the underlying variable interest rates to an
average fixed rate of 1.6% for a term of ten years. As part of
entering into the Japanese yen swaps in February 2002, the
Company entered into reverse swap agreements with the same terms
to offset 115 million of the 180 million of Swiss franc swaps.
Additionally, in the third quarter of 2003, the Company exchanged
the remaining portion of the Swiss franc swaps, 65 million Swiss
francs, for a forward-starting variable to fixed interest rate
swap. Completion of this exchange allowed the Company to pay
down debt and the forward-starting interest rate swap locks in
the rate of borrowing for future Swiss franc variable rate debt,
that will arise upon the maturity of the Company's fixed rate
Swiss franc notes in 2005, at 4.2% for a term of seven years.

The Company selectively enters into commodity price swaps to
effectively fix certain variable raw material costs. In November
2002, the Company entered into a commodity price swap agreement
with notional amounts totaling 300,000 troy ounces of silver
bullion to hedge forecasted purchases throughout calendar year
2003. The average fixed rate of this agreement is $4.65 per troy
ounce. The Company generally hedges between 33% and 67% of its
projected annual silver needs.

The Company enters into forward exchange contracts to hedge the
foreign currency exposure of its anticipated purchases of certain
inventory from Japan. The forward contracts that are used in this
program mature in twelve months or less. The Company generally
hedges between 33% and 67% of its anticipated purchases from
Japan.

During 2002 and 2001, the Company recognized net losses of $0.1
million and $0.4 million, respectively, in "Other expense
(income), net", which represented the total ineffectiveness of
all cash flow hedges. During 2003, the Company recognized gains
of $0.1 million offset by losses of $0.1 million due to
ineffectiveness of its cash flow hedges.

As of December 31, 2003, $0.3 million of deferred net gains on
derivative instruments recorded in "Accumulated other
comprehensive gain (loss)" are expected to be reclassified to
current earnings during the next twelve months. Transactions and
events that are expected to occur over the next twelve months
that will necessitate such a reclassification include the sale of
inventory that includes previously hedged purchases made in
Japanese yen. The maximum term over which the Company is hedging
exposures to variability of cash flows (for all forecasted
transactions, excluding interest payments on variable-rate debt)
is eighteen months.

Fair Value Hedges

The Company uses interest rate swaps to convert a portion of
its fixed rate debt to variable rate debt. In December 2001, the
Company issued 350 million in Eurobonds at a fixed rate of 5.75%
maturing in December 2006 to partially finance the Degussa Dental
acquisition. Coincident with the issuance of the Eurobonds, the
Company entered into two integrated transactions: (a) an
interest rate swap agreement with notional amounts totaling Euro
350 million which converted the 5.75% fixed rate Euro-denominated
financing to a variable rate (based on the London Interbank
Borrowing Rate) Euro-denominated financing; and (b) a
cross-currency basis swap which converted this variable rate
Euro-denominated financing to variable rate U.S.
dollar-denominated financing.

The Euro 350 million interest rate swap agreement was
designated as a fair value hedge of the Euro 350 million in fixed
rate debt pursuant to SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). In
accordance with SFAS No. 133, the interest rate swap and
underlying Eurobond have been marked-to-market via the income
statement. As of December 31, 2003 and 2002, the accumulated
fair value of the interest rate swap was $14.1million and $10.9
million, respectively, and was recorded in Other Noncurrent
Assets. The notional amount of the underlying Eurobond was
increased by a corresponding amount at December 31, 2003 and
2002.






From inception through the first quarter of 2003, the
cross-currency element of the integrated transaction was not
designated as a hedge and changes in the fair value of the
cross-currency element of the integrated transaction were
marked-to-market in the income statement, offsetting the impact
of the change in exchange rates on the Eurobonds that were also
recorded in the income statement. As of December 31, 2003 and
2002, the accumulated fair value of the cross-currency element of
the integrated transaction was $56.6 million and $52.3 million,
respectively, and was recorded in Other Noncurrent Assets. The
notional amount of the underlying Eurobond was increased by a
corresponding amount at December 31, 2003 and 2002.See Hedges of
Net Investments in Foreign Operations below for further
information related to the cross-currency element of the
integrated transaction.

Hedges of Net Investments in Foreign Operations

The Company has numerous investments in foreign subsidiaries.
The net assets of these subsidiaries are exposed to volatility in
currency exchange rates. Currently, the Company uses both
non-derivative financial instruments, including foreign currency
denominated debt held at the parent company level and long-term
intercompany loans, for which settlement is not planned or
anticipated in the foreseeable future and derivative financial
instruments to hedge some of this exposure. Translation gains
and losses related to the net assets of the foreign subsidiaries
are offset by gains and losses in the non-derivative and
derivative financial instruments designated as hedges of net
investments.

At December 31, 2003 and 2002, the Company had Swiss
franc-denominated and Japanese yen-denominated debt (at the
parent company level) to hedge the currency exposure related to a
designated portion of the net assets of its Swiss and Japanese
subsidiaries. At December 31, 2003, the Company also had
Euro-denominated debt designated as a hedge of a designated
portion of the net assets of its European subsidiaries, due to
the change in the cross-currency element of the integrated
transaction discussed below. At December 31, 2003 and 2002, the
accumulated translation losses related to foreign
currency denominated-debt included in Accumulated Other
Comprehensive income (loss) were $83.5 million and $26.4 million,
respectively.

In the first quarter of 2003, the Company amended the
cross-currency element of the integrated transaction to realize
the $ 51.8 million of accumulated value of the cross-currency
swap. The amendment eliminated the final payment (at a fixed
rate of $.90) of $315 million by the Company in exchange for the
final payment of Euro 350 million by the counterparty in return
for the counterparty paying the Company LIBOR plus 4.29% for the
remaining term of the agreement or approximately $14.0 million on
an annual basis. Other cash flows associated with the
cross-currency element of the integrated transaction, including
the Company's obligation to pay on $315 million LIBOR plus
approximately 1.34% and the counterparty's obligation to pay on
Euro 350 million LIBOR plus approximately 1.47%, remained
unchanged by the amendment. Additionally, the cross-currency
element of the integrated transaction continue to be
marked-to-market.

No gain or loss was recognized upon the amendment of the cross
currency element of the integrated transaction, as the interest
rate of LIBOR plus 4.29% was established to ensure that the fair
value of the cash flow streams before and after amendment were
equivalent.

Since, as a result of the amendment, the Company became
economically exposed to the impact of exchange rates on the final
principal payment on the Euro 350 million Eurobonds, the Company
designated the Euro 350 million Eurobonds as a hedge of net
investment, on the date of the amendment. Since March 2003, the
effect of currency on the Euro 350 million Eurobonds of $ 35.2
million has been recorded as part of Accumulated Other
Comprehensive income (loss).

Other

As of December 31, 2003, the Company had recorded assets
representing the fair value of derivative instruments of $8.4
million in "Prepaid expenses and other current assets" and $62.5
million in "Other noncurrent assets" on the balance sheet and
liabilities representing the fair value of derivative instruments
of $1.8 million in "Accrued liabilities" and $5.8 million in
"Other noncurrent liabilities".






In accordance with SFAS 52, "Foreign Currency Translation", the
Company utilizes long-term intercompany loans to eliminate
foreign currency transaction exposures of certain foreign
subsidiaries. Net gains or losses related to these long-term
intercompany loans, those for which settlement is not planned or
anticipated in the foreseeable future, are included "Accumulated
other comprehensive income (loss)".


NOTE 18 - COMMITMENTS AND CONTINGENCIES

Leases
The Company leases automobiles and machinery and equipment and
certain office, warehouse, and manufacturing facilities under
non-cancelable operating leases. These leases generally require
the Company to pay insurance, taxes and other expenses related to
the leased property. Total rental expense for all operating
leases was $20.7 million for 2003, $17.4 million for 2002, and
$12.0 million for 2001.

Rental commitments, principally for real estate (exclusive of
taxes, insurance and maintenance), automobiles and office
equipment are as follows (in thousands):

2004 $ 18,115
2005 11,778
2006 7,855
2007 4,420
2008 2,965
2009 and thereafter 6,830
$ 51,963

Litigation

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. The trial in the government's case was held in April
and May 2002. On August 14, 2003, the Judge entered a decision
that the Company's tooth distribution practices do not violate
the antitrust laws. On October 14, 2003, the Department of
Justice appealed this decision to the U.S. Third Circuit Court of
Appeals. The parties are proceeding under the briefing schedule
issued by the Third Circuit.

Subsequent to the filing of the Department of Justice Complaint
in 1999, several private party class actions were filed based on
allegations similar to those in the Department of Justice case,
on behalf of laboratories, and denture patients in seventeen
states who purchased Trubyte teeth or products containing Trubyte
teeth. These cases were transferred to the U.S. District Court in
Wilmington, Delaware. 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. The Plaintiffs in the
laboratory case have filed a petition with the Third Circuit to
hear an interlocutory appeal of this decision. Also, private
party class actions on behalf of indirect purchasers were filed
in California and Florida state courts. The California and
Florida cases have been dismissed by the Plaintiffs following the
decision by the Federal District Court Judge issued in August
2003.






On March 27, 2002, a Complaint was filed in Alameda County,
California (which was transferred to Los Angeles County) by Bruce
Glover, D.D.S. alleging, inter alia, breach of express and
implied warranties, fraud, unfair trade practices and negligent
misrepresentation in the Company's manufacture and sale of
Advance(R) cement. The Complaint seeks damages in an unspecified
amount for costs incurred in repairing dental work in which the
Advance(R) product allegedly failed. In September 2003, the
Plaintiff filed a Motion for class certification, which the
Company opposed. Oral arguments were held in December 2003, and
in January, 2004, the Judge entered an Order granting class
certification only on the claims of breach of warranty and
fraud. In general, the Class is defined as California dentists
who purchased and used Advance(R) cement and were required, because
of failures of Advance(R), to repair or reperform dental
procedures. The Company has filed a Writ of Mandate in the
appellate court seeking reversal of the class certification. The
Advance(R) cement product was sold from 1994 through 2000 and total
sales in the United States during that period were approximately
$5.2 million.

Other
The Company has no material non-cancelable purchase commitments.

The Company has employment agreements with its executive
officers. These agreements generally provide for salary
continuation for a specified number of months under certain
circumstances. If all of the employees under contract were to be
terminated by the Company without cause (as defined in the
agreements), the Company's liability would be approximately $11.4
million at December 31, 2003.

Noncurrent Income Taxes Payable, included as part of Other
Noncurrent Liabilities (Note 12), represent accruals for tax
contingencies, the majority of which are attributable to acquired
companies. These reserves were established at the time of
purchase to provide for the adverse outcome of tax proceedings
related to pre-acquisition periods. The Company is subject to
ongoing tax examinations and assessments in various
jurisdictions. Accordingly, the Company may record incremental
tax expense or reductions of excess purchase price based on the
outcome of such matters. The change from 2002 to 2003 of $22.1
million is primarily related the reversal of preacquisition tax
contingencies as discussed in Note 9.


NOTE 19 - ACCOUNTING CHARGES AND RESERVE REVERSALS


In the first and second quarters of 2003, the Company recorded
pretax charges of $4.1 million and $5.5 million, respectively,
related primarily to adjustments to inventory, accounts
receivable, and prepaid expense accounts at one division in the
United States and two international subsidiaries. All of these
operating units had been involved in integrating one or more of
the acquisitions completed in 2001. Of the $9.6 million in total
pretax charges recorded in the first and second quarters of 2003,
$2.4 million were determined to be properly recorded as changes
in estimate, $0.4 million were determined to be errors between
the first and second quarters of 2003, and the remaining $6.8
million ($4.6 million after tax) were determined to be errors
relating in prior periods ("Charge Errors"). The Charge Errors
included $3.0 million related to inaccurate reconciliations and
valuation of inventory, $2.0 million related to inaccurate
reconciliations and valuation of accounts receivable, $1.3
million related to unrecoverable prepaid expenses and $0.5
million related to other accounts. Had the Charge Errors been
recorded in the proper period, net income as reported would have
been decreased by $0.6 million ($0.01 per diluted share) in 2001
and $4.0 million ($0.05 per diluted share) in 2002. Recording
the effect of the Charge Errors in 2003 reduced net income by
$4.6 million ($0.06 per diluted share).

In addition to the aforementioned, in the first and second
quarters of 2003, the Company determined that $4.8 million in
reserves reversed in 2003 and $4.1 million of reserves reversed
in 2001 and 2002 should have been reversed in earlier years or
had been erroneously established ("Reserve Errors). The Reserve
Errors occurred in 2000 through 2002 and related primarily to
asset valuation accounts and accrued liabilities, including (on a
pre-tax basis) $5.1 million related to product return provisions,
$1.1 million related to bonus accruals, $0.8 million related to
product warranties, $0.7 million related to inventory valuation
and $1.2 million related to other accounts. Had the Reserve
Errors been recorded in the proper period, they would have
increased net income as reported by $0.8 million ($0.01 per
diluted share) in 2000, $1.8 million ($0.02 per diluted share) in
2001 and $0.7 million ($0.01 per diluted share) in 2002.
Recording the effect of the Reserve Errors in 2003 increased net
income by $3.3 million ($0.04 per diluted share).






The above described charges (including the $2.4 million changes
in estimates) and Reserve Errors amounted to $19.9 million
(pre-tax) on an absolute basis and occurred from 2000 through the
second quarter of 2003. Included in this total, are $2.0 million
of Reserve Errors and $0.4 million of Charge Errors that
originated and reversed in different quarters of same year. In
the aggregate, had the Charge Errors and Reserve Errors described
above been recorded in the proper period, reported net income
would have increased by $0.8 million ($0.01 per diluted share) in
2000, $1.2 million ($0.02 per diluted share) in 2001 and
decreased by $3.4 million ($0.04 per diluted share) in 2002. The
effect of recording the Reserve Errors and Charge Errors in 2003
reduced net income by $1.3 million ($0.02 per diluted share).

The Company performed an analysis of the Charge Errors and
Reserve Errors on both a qualitative and quantitative basis and
concluded that the errors were not material to the results of
operations and financial position of the Company for the years
ended December 31, 2000, 2001, 2002 and 2003. Accordingly, prior
period financial statements have not been restated.





NOTE 20 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)



First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
(in thousands, except per share amounts)

2003

Net sales $371,236 $394,478 $375,503 $429,708 $1,570,925
Gross profit 182,762 198,075 183,801 208,563 773,201
Operating income 60,524 69,840 63,781 73,838 267,983
Income from continuing operations 37,439 43,450 40,287 48,677 169,853
Income from discontinued operations 828 768 1,027 1,707 4,330
Net income $ 38,267 $ 44,218 $ 41,314 $ 50,384 $ 174,183

Earnings per common share - basic
Continuing operations $ 0.48 $ 0.55 $ 0.51 $ 0.62 $ 2.16
Discontinued operations 0.01 0.01 0.01 0.02 0.05
Total earnings per common share - basic $ 0.49 $ 0.56 $ 0.52 $ 0.64 $ 2.21

Earnings per common share - diluted
Continuing operations $ 0.47 $ 0.54 $ 0.50 $ 0.60 $ 2.11
Discontinued operations 0.01 0.01 0.01 0.02 0.05
Total earnings per common share - diluted $ 0.48 $ 0.55 $ 0.51 $ 0.62 $ 2.16

Cash dividends declared per common share $ 0.046 $ 0.046 $0.0525 $0.0525 $ 0.197

2002

Net sales $331,650 $361,601 $340,301 $384,048 $1,417,600
Gross profit 163,169 178,654 171,239 191,349 704,411
Operating income 55,715 62,945 59,539 71,253 249,452
Income from continuing operations 32,148 35,810 34,900 40,783 143,641
Income from discontinued operations 948 1,010 866 1,487 4,311
Net income $ 33,096 $ 36,820 $ 35,766 $ 42,270 $ 147,952

Earnings per common share - basic
Continuing operations $ 0.41 $ 0.46 $ 0.45 $ 0.52 $ 1.84
Discontinued operations 0.01 0.01 0.01 0.02 0.05
Total earnings per common share - basic $ 0.42 $ 0.47 $ 0.46 $ 0.54 $ 1.89

Earnings per common share - diluted
Continuing operations $ 0.40 $ 0.45 $ 0.44 $ 0.51 $ 1.80
Discontinued operations 0.01 0.01 0.01 0.02 0.05
Total earnings per common share - diluted $ 0.41 $ 0.46 $ 0.45 $ 0.53 $ 1.85

Cash dividends declared per common share $ 0.046 $ 0.046 $ 0.046 $ 0.046 $ 0.184




As described in Note 19, the Company recorded pre-tax charges
of $4.1 million and $5.5 million in the first and second quarters
of 2003, respectively.; Of these amounts, $3.3 million and $3.5
million, respectively, were determined to be errors related
primarily to prior years and $0.8 million and $1.6 million,
respectively, were determined to be changes in estimates. In
addition $0.4 of charges recognized in the second quarter of
2003, should have been recognized in the first quarter of 2003
Also in the first and second quarters of 2003, the Company
reversed $2.4 million and $4.4 million, respectively, of certain
reserves that should have been reversed in earlier periods or had
been erroneously established, including $2.0 million of reserves
reversed in the second quarter of 2003 that should have been
reversed in the first quarter of 2003. If the above described
errors had been recorded in the proper periods, net income would
have been higher by $1.7 million ($0.02 per diluted share) in the
first quarter of 2003 and lower by $0.4 million (less than $0.01
per diluted share) in the second quarter of 2003.






Of the above described charge errors, $6.0 million should have
been recorded as an expense in 2002. Of this amount, $2.1 million
(pre-tax) is related to physical inventory-related issues at one
of the Company's operations in the United States. While the
Company has concluded that the inventory issues arose in 2002,
due to the nature of the issues, the Company is unable to
allocate the $2.1 million to any interim period within 2002. If
the remaining $3.9 million of pre-tax charge errors ($2.6 million
after-tax) had been recorded in the appropriate interim periods,
net income would have decreased by $0.4 million (less than $0.01
per diluted share) in the first quarter of 2002, $1.1 million
($0.01 per diluted share) in the second quarter of 2002, $0.3
million (less than $0.01 per diluted share) in the third quarter
of 2002 and $0.8 million ($0.01 per diluted share) in the fourth
quarter of 2002.

Of the above described reserve errors, $1.0 million pre-tax,
should have been recorded as a reduction of expense in 2002, net
of the impact of reserves that reversed in error in 2002. If
these reserves and reversals had been recorded in the
appropriate interim periods net income would have decreased by
$0.3 million (less than $0.01 per diluted share) in the first
quarter of 2002, increased by $0.6 million ($0.01 per diluted
share) in the second quarter of 2002, decreased by $0.6 million
($0.01 per diluted share) in the third quarter of 2002, and
increased by $1.0 million ($0.01 per diluted share) in the fourth
quarter of 2002.


Supplemental Stock Information

The common stock of the Company is traded on the NASDAQ
National Market under the symbol "XRAY". The following table
sets forth high, low and closing sale prices of the Company's
common stock for the periods indicated as reported on the NASDAQ
National Market:





Market Range of Common Stock Period-end Cash
Closing Dividend
High Low Price Declared

2003
First Quarter $ 37.95 $ 32.10 $ 34.79 $0.04600
Second Quarter 41.10 32.35 40.96 0.04600
Third Quarter 47.05 40.41 44.84 0.05250
Fourth Quarter 47.40 41.85 45.17 0.05250

2002
First Quarter $ 37.93 $ 31.60 $ 37.06 $0.04600
Second Quarter 40.95 35.25 36.91 0.04600
Third Quarter 43.50 31.25 40.17 0.04600
Fourth Quarter 43.10 31.89 37.20 0.04600

2001
First Quarter $ 26.67 $ 21.67 $ 24.33 $0.04583
Second Quarter 31.07 23.33 29.57 0.04583
Third Quarter 31.63 26.01 30.63 0.04583
Fourth Quarter 34.69 28.62 33.47 0.04584



All amounts reflect the 3-for-2 stock split effective January 31, 2002.



The Company estimates, based on information supplied by its transfer agent,
that there are approximately 26,700 holders of common stock, including 493
holders of record.







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/ Gerald K. Kunkle, Jr.

-----------------------------
Gerald K. Kunkle, Jr.
Vice 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 15, 2004
- ------------------------- --------------------
John C. Miles II Date

Chairman of the Board and a Director


/s/ Gerald K. Kunkle, Jr. March 15, 2004
- ---------------------------- --------------------
Gerald K. Kunkle, Jr. Date
Vice Chairman of the Board and
Chief Executive Officer and a Director
(Principal Executive Officer)

/s/ Bret W. Wise March 15, 2004
- ------------------------- --------------------
Bret W. Wise Date
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)


/s/ Dr. Michael C. Alfano March 15, 2004
- ------------------------- --------------------
Dr. Michael C. Alfano Date
Director



/s/ Paula H. Cholmondeley March 15, 2004
- ------------------------- --------------------
Paula H. Cholmondeley Date
Director







/s/ Michael J. Coleman March 15, 2004
- ------------------------- --------------------
Michael J. Coleman Date
Director


/s/ William F. Hecht March 15, 2004
- ------------------------- --------------------
William F. Hecht Date
Director


/s/ Leslie A. Jones March 15, 2004
- ------------------------- --------------------
Leslie A. Jones Date
Director


/s/ Betty Jane Scheihing March 15, 2004
- ------------------------- --------------------
Betty Jane Scheihing Date
Director


/s/Edgar H. Schollmaier March 15, 2004
- ------------------------- --------------------
Edgar H. Schollmaier Date
Director


/s/ W. Keith Smith March 15, 2004
- ------------------------- --------------------
W. Keith Smith Date
Director