UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report October 24, 2005
(Date of earliest event reported)
DENTSPLY INTERNATIONAL INC
(Exact name of Company as specified in charter)
Delaware 0-16211 39-1434669
(State of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
221 West Philadelphia Street, York, Pennsylvania 17405
(Address of principal executive offices) (Zip Code)
(717) 845-7511 (Company's telephone number
including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
thefollowing provisions:
_____ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
_____ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
_____ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
_____ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. - Results of Operations and Financial Condition
The following information is furnished pursuant to Item 2.02, "Results of
Operations and Financial Condition."
On October 24, 2005, the Company issued a press release disclosing its third
quarter 2005 sales and earnings. This earnings release references net sales
excluding precious metal content and earnings from continuing operations
excluding certain unusual items, both of which could be considered measures not
calculated in accordance with generally accepted accounting principles (
non-GAAP measures). 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, the Company 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. Earnings from continuing operations excluding
certain unusual items is presented to enhance the comparability between periods.
A copy of the Company's press release is attached hereto as Exhibit (99.1) and
is hereby incorporated by reference.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements - Not applicable.
(b) Exhibits:
99.1The Dentsply International Inc. Third quarter 2005 results and
announcement of asset impairment for the period release issued October
24, 2005 as referenced in Item 2.02.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
DENTSPLY INTERNATIONAL INC
(Company)
/s/William R. Jellison
William R. Jellison
Senior Vice President and
Chief Financial Officer
Date: October 24, 2005
NEWS
For Further
Information
Contact:
William R. Jellison FOR IMMEDIATE RELEASE
Senior Vice President and
Chief Financial Officer
(717) 849-4243
DENTSPLY International Inc.
Reports Third Quarter 2005 Results and Announces Asset Impairment
Charge for the Period
York, PA - October 24, 2005 -- DENTSPLY International Inc. (NASDAQ-XRAY) today
announced sales and earnings for the quarter ended September 30, 2005. Net sales
increased 6.7% to $416.0 million compared to $390.0 million reported for the
third quarter of 2004. Net sales, excluding precious metal content, increased
8.2% in the third quarter of 2005. Sales of all ceramic Cercon products, along
with implants, orthodontics, and restorative products were especially strong in
the period. Growth within Europe has continued to improve in the third quarter,
although still impacted by the softness in the German lab business.
In the third quarter of 2005, the Food and Drug Administration (FDA) conducted a
Pre-Approval Inspection of the Company's sterile filling plant under
construction in Chicago. As a result of the inspection and comments received
from the FDA, the Company has extended its estimate of the period required to
ready the plant for approval and production of products for the U.S. and Japan
until 2007. Modifications to the Company's plans for completion of the plant
encompassed specific steps and procedures to address comments received from the
FDA, and the extension of contract manufacturing agreements to provide continued
supply of injectable anesthetic products for those markets during this extension
period. In addition, the Company conducted an extensive review of all of its
assumptions associated with the injectable products. Based on this review, the
Company has concluded that the intangible asset associated with the injectable
anesthetic products has become impaired in the third quarter of 2005. As a
result, the Company recorded a pre-tax charge of $131.3 million ($111.6 million
after tax) or $1.41 per diluted share in the third quarter of 2005, and $1.37 on
a year-to-date diluted earnings per share basis.
Net loss from continuing operations for the third quarter of 2005 of $60.8
million, or $ 0.77 per diluted share was a decrease compared to net income from
continuing operations of $46.4 million, or $0.57 per diluted share in the third
quarter of 2004. The third quarter of 2005 included the pre-tax charge for
impairment of the intangible asset of $131.3 million ($1.41 per share). The
third quarter of 2004 included a reduction of income taxes of $2.8 million
($0.04 per diluted share) related to tax matters from prior periods and also
included a pretax charge of $2.1 million ($0.02 per diluted share) related to
restructuring activities. Earnings from continuing operations, excluding the
items noted above for the third quarter of 2005 and 2004, which constitutes a
non-GAAP measure, would have been $50.8 million or $0.63 per diluted share in
the third quarter of 2005 compared to $0.55 in the third quarter of 2004,
representing an increase of 14.5% in net income per dilutive share.
.
Gary Kunkle, Chairman and Chief Executive Officer, stated that, "The impairment
charge on our injectable anesthetic products resulted from a comprehensive
assessment of this business following comments received from the FDA in the
third quarter of this year. This delay in approval will postpone receipt of the
benefits of this facility for approximately one year moving it from our previous
estimate of 2007 to 2008. Our diluted earnings per share guidance for 2005 with
the impairment charge is projected at $1.24 - 1.28. Excluding the impact of the
impairment charge, we are raising our full year 2005 guidance to $2.61 - $2.65.
Additionally, the Company still anticipates taking advantage of repatriating
foreign earnings under Section 965 of the Internal Revenue Code, however, the
size and timing of any repatriation will not be finalized until late November or
early December. The tax impact of this potential repatriation is not included in
our current earnings guidance for the year."
Gary Kunkle also stated, "While this impairment charge is a setback for the
reporting period, we are very pleased with the performances of our other
businesses. The recently announced changes to our U.S. sales organization, our
above-market performance in many product categories, and the continued
improvement in the German market provide us with a high degree of confidence as
we go forward."
This press release includes some company data that does not directly conform to
generally acceptable accounting principles, or GAAP. Management believes that
the presentation of some non-GAAP data provides investors with additional
insight into the ongoing operations of the business. These measures should not
be viewed as an alternative to GAAP measures of performance. Furthermore, these
measures may not be consistent with similar measures provided by other
companies. The attached non-GAAP reconciliation schedules provide
reconciliations of these non-GAAP financial measures to the most closely
comparable measures determined in accordance with GAAP.
DENTSPLY will hold a conference call on Tuesday, October 25, 2005 at 8:30 AM
Eastern Time. To access the call, dial 877-885-5820 (for domestic calls) and
706-643-9578 (for international calls). Conference I.D.: 1514129. This
conference call will be broadcast live on the Internet at: www.dentsply.com. An
audio replay of the conference call will be available for two weeks. To access
the replay, please dial (800) 642-1687 (for domestic calls) and (706) 645-9291
(for international calls).
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.
This press release contains forward-looking information (within the meaning of
the Private Securities Litigation Reform Act of 1995) regarding future events or
the future financial performance of the company that involve substantial risks
and uncertainties. Actual events or results may differ materially from those in
the projections or other forward-looking information set forth herein as a
result of certain risk factors. These risk factors include without limitation;
the uncertainty associated with the FDA inspection and approval of the Company's
sterile filling plant in Chicago, and the timing of any such inspection and
approval, as well as the timing of any production of products at such plant, the
continued strength of dental markets, the timing, success and market reception
for our new and existing products, outcome of litigation, continued support of
our products by influential dental professionals and changes in the general
economic environment that could affect our business. Changes in such assumptions
or factors could produce significantly different results.
For an additional description of risk factors, please refer to the Company's
Annual Report on Form 10-K and its subsequent periodic reports on Forms 10-Q
filed with the Securities and Exchange Commission.
DENTSPLY INTERNATIONAL INC.
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net
income/(loss) from continuing operations in total and on a per share basis to
the non-GAAP financial measures.
Three Months Ended September 30, 2005:
Income Diluted
(Expense) Per Share
------------- -------------
Loss from Continuing Operations $ (60,805) $(0.77)
Charges for Unusual Items:
Impairment Charge 111,595 1.41
Dilutive Effect of Including Potential
Outstanding Shares on Earnings Per Share (a) - (0.01)
------------- -------------
Earnings From Continuing Operations Before Unusual Items $ 50,790 $ 0.63
============= =============
(a) For the three months ended September 30, 2005, the dilutive weighted
average number of common shares outstanding excluded potential common shares
from stock options of 1,324. These shares were excluded from the GAAP
calculation of earnings per share due to their antidilutive effect resulting
from the loss from continuting operations.
Three Months Ended September 30, 2004:
Income Diluted
(Expense) Per Share
--------------- -------------
Income from Continuing Operations $ 46,343 $ 0.57
Charges (Income) for Unusual Items:
Reduction of Income Taxes for Prior Period Items (2,848) (0.04)
Restructuring Charges 1,317 0.02
------------- -------------
Earnings From Continuing Operations Before Unusual Items $ 44,812 $ 0.55
============= =============
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ----------------------
2005 2004 2005 2004
------------- ---------- ----------- ----------
NET SALES $ 415,964 $ 389,965 $ 1,267,773 $ 1,228,732
NET SALES - Ex Precious Metals 373,479 345,213 1,143,574 1,076,983
COST OF PRODUCTS SOLD 206,962 191,449 622,547 614,268
GROSS PROFIT 209,002 198,515 645,226 614,463
% OF NET SALES 50.2% 50.9% 50.9% 50.0%
% OF NET SALES - Ex Precious Metals 56.0% 57.5% 56.4% 57.1%
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 134,324 128,296 419,248 395,516
RESTRUCTURING AND IMPAIRMENT COSTS 131,311 2,108 131,351 3,165
------------ ---------- ----------- ----------
(LOSS)INCOME FROM OPERATIONS (56,633) 68,111 94,627 215,782
% OF NET SALES -13.6% 17.5% 7.5% 17.6%
% OF NET SALES - Ex Precious Metals -15.2% 19.7% 8.3% 20.0%
NET INTEREST AND OTHER EXPENSE 2,863 5,543 3,320 16,253
------------ ---------- ----------- ----------
PRE-TAX (LOSS)INCOME (59,496) 62,568 91,307 199,529
INCOME TAXES 1,309 16,225 45,170 58,196
------------ ---------- ----------- ----------
(LOSS) INCOME FROM CONTINUING OPERATIONS (60,805) 46,343 46,137 141,333
% OF NET SALES -14.6% 11.9% 3.6% 11.5%
% OF NET SALES - Ex Precious Metals -16.3% 13.4% 4.0% 13.1%
(LOSS) INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX (INCLUDING GAIN ON SALE IN 2004 OF $43,031) - 340 - 43,225
----------- ----------- ----------- ----------
NET (LOSS) INCOME $ (60,805) $ 46,683 $ 46,137 $ 184,558
=========== =========== =========== ==========
EARNINGS PER SHARE - BASIC:
CONTINUING OPERATIONS $ (0.77) $ 0.58 $ 0.58 $ 1.76
DISCONTINUED OPERATIONS - - - 0.54
-----------------------------------------------
TOTAL EARNINGS PER SHARE $ (0.77) $ 0.58 $ 0.58 $ 2.30
=========== =========== =========== ==========
EARNINGS PER SHARE - DILUTIVE:
CONTINUING OPERATIONS $ (0.77) $ 0.57 $ 0.57 $ 1.72
DISCONTINUED OPERATIONS - - - 0.53
----------- ----------- ----------- ----------
TOTAL EARNINGS PER SHARE $ (0.77) $ 0.57 $ 0.57 $ 2.25
=========== =========== =========== ==========
DIVIDENDS PER SHARE $ 0.0600 $ 0.0525 $ 0.1800 $ 0.1575
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
-BASIC 78,895 80,495 79,905 80,304
-DILUTIVE (a) 78,895 82,110 81,357 81,910
(a) - For the three months ended September 30, 2005, the dilutive weighted
average number of common shares outstanding excluded potential common shares
from stock options of 1,324. These shares are excluded due to their antidilutive
effect resulting from the loss from continuing operations. For the nine months
ended September 30, 2005, fully diluted shares were used to calculate EPS.
DENTSPLY INTERNATIONAL INC.
CONDENSED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2005 2004
-------------- ---------------
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 398,581 $ 506,369
ACCOUNTS AND NOTES RECEIVABLE-TRADE, NET 259,920 238,873
INVENTORIES, NET 228,960 213,709
OTHER CURRENT ASSETS 99,533 97,458
TOTAL CURRENT ASSETS 986,994 1,056,409
PROPERTY,PLANT AND EQUIPMENT, NET 376,340 407,527
GOODWILL, NET 949,138 996,262
IDENTIFIABLE INTANGIBLES ASSETS, NET 104,701 258,084
OTHER NONCURRENT ASSETS, NET 48,645 79,863
TOTAL ASSETS $ 2,465,818 $ 2,798,145
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES $ 363,888 $ 404,607
LONG-TERM DEBT 684,601 779,940
OTHER LIABILITIES 105,126 110,829
DEFERRED INCOME TAXES 55,794 58,196
-------------- ---------------
TOTAL LIABILITIES 1,209,409 1,353,572
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 610 600
STOCKHOLDERS' EQUITY 1,255,799 1,443,973
TOTAL LIABILITIES AND STOCKHOLDERS' EQ$I2,465,818 $ 2,798,145