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 November 1, 2006
(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 the
following 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 November 1, 2006, the Company issued a press release disclosing its third
quarter 2006 sales and earnings. This earnings release references net sales
excluding precious metal content and net income 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:
99.1 The Dentsply International Inc. Third Quarter 2006 earnings release
issued November 1, 2006 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: November 1, 2006
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 Record Third Quarter 2006 Sales and Earnings
York, PA - November 1, 2006 -- DENTSPLY International Inc. (NASDAQ-XRAY) today
announced record sales and earnings for the quarter ended September 30, 2006.
Net sales increased 4.8% to $435.7 million compared to $416.0 million reported
for the third quarter of 2005. Net sales, excluding precious metal content,
increased 5.8% in the third quarter of 2006. U.S. dealer-based purchases ahead
of price increases, along with continued strength in specialty products,
benefited performance for the quarter. This was partially offset by product
returns from approximately 200 distributors that were discontinued as part of
our previously announced Strategic Partnership Program during the period.
Net income for the third quarter of 2006 was $49.4 million, or $0.31 per diluted
share, compared to a net loss of $60.8 million, or $0.39 per diluted share in
the third quarter of 2005. Net income in the third quarter of 2006 includes the
net of tax impact of both expensing stock options of $3.6 million ($0.02 per
diluted share) and of restructuring and other related items of $0.6 million. The
third quarter of 2006 includes a net charge to income tax expense of $3.4
million ($0.02 per diluted share) from tax-related adjustments, while the third
quarter of 2005 included a net of tax impact of $111.6 million ($0.71 per
diluted share) for impairment of intangible assets associated with injectable
anesthetic products and a net reduction of income tax expense of $1.1 million
($0.01 per diluted share) related to tax related adjustments.
On an adjusted basis, earnings, excluding restructuring and other related items
and tax adjustments, but including the expensing of stock options in both
periods, which constitutes a non-GAAP measure, were $52.2 million or $0.33 per
diluted share in the third quarter of 2006, compared to $46.9 million or $0.30
per diluted share in the third quarter of 2005. This represents a 10.0% increase
in diluted earnings per share on an adjusted basis. For a reconciliation of this
non-GAAP measure to earnings per share calculated according to GAAP, see the
attached table.
Gary Kunkle, Chairman and Chief Executive Officer, commented that, "We are
pleased with the progress we are making on the important growth initiatives that
we have implemented as we position the Company for continued growth in the
future. During the quarter, we announced our Strategic Partnership Program in
the U.S. This action will significantly enhance our customer specific
intelligence and allow us to better focus selling and marketing activities on
the dental professional, our end-user customer. Also during the quarter, we
increased our focus on dental implant sales by combining the implant and
endodontic sales organizations in the U.S. This better positions DENTSPLY to
take further advantage of the continued rapid growth of the dental implant
market."
Mr. Kunkle also stated, "We believe these actions will strengthen our long-term
position within the dental industry and provide us with the ability to deliver
solid performance in 2007. We are maintaining our previous earnings guidance for
2006 of $1.38-1.42, including the expensing of stock options, but excluding tax
adjustments, and restructuring and other related items."
DENTSPLY has reviewed its prior accounting related to the classification of
certain short-term investments. Based on this review, the Company has determined
that the classification of these short-term investments should be revised from
their prior presentation as cash equivalents. The Company plans to reclassify
its short-term investments and restate the consolidated balance sheets and
consolidated statements of cash flows included in its Form 10-K for the year
ended December 31, 2005 and its Form 10Qs for the quarters ended March 31, 2006
and June 30, 2006 to reflect the required change. This restatement has no impact
on net sales, net income, earnings per share, current assets, total assets,
stockholders' equity, or cash flows from operating activities.
DENTSPLY will hold a conference call on Thursday, November 2, 2006 at 8:30 AM
Eastern Time. To access the call, dial 800-289-0529 (for domestic calls) and
913-981-5523 (for international calls). The Conference I.D. # is 7946401. 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 one week. To access
the replay, please dial 888-203-1112 (for domestic calls) and 719-457-0820 for
international calls). Conference I.D. # is 7946401.
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 continued strength of dental markets, the timing, success and market
reception for our new and existing products, uncertainty with respect to
governmental actions with respect to dental 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 Form 10-Qs
filed with the Securities and Exchange Commission.
Non-GAAP Financial Measures
DENTSPLY believes that the non-GAAP financial information provided in this
release may be useful to investors for comparison purposes because the Company
has historically provided similar information. The non-GAAP financial
information should not be considered in isolation from, or as a substitute for,
measures of financial performance prepared in accordance with GAAP.
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ----------- -----------
NET SALES $435,725 $415,964 $1,339,165 $1,267,773
NET SALES - Ex Precious Metals 394,845 373,119 1,201,784 1,142,660
COST OF PRODUCTS SOLD 209,814 206,962 650,964 622,547
GROSS PROFIT 225,911 209,002 688,201 645,226
% OF NET SALES 51.8% 50.2% 51.4% 50.9%
% OF NET SALES - Ex Precious Metals 57.2% 56.0% 57.3% 56.5%
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 148,521 134,324 446,878 419,248
RESTRUCTURING AND OTHER OPERATING (INCOME) COSTS (1,149) 131,311 6,184 131,351
---------- ---------- ----------- -----------
INCOME FROM OPERATIONS 78,539 (56,633) 235,139 94,627
% OF NET SALES 18.0% -13.6% 17.6% 7.5%
% OF NET SALES - Ex Precious Metals 19.9% -15.2% 19.6% 8.3%
NET INTEREST AND OTHER NON OPERATING (INCOME) EXPENSE 54 2,863 (621) 3,320
---------- ---------- ----------- -----------
PRE-TAX INCOME 78,485 (59,496) 235,760 91,307
INCOME TAXES 29,036 1,309 76,991 45,170
---------- ---------- ----------- -----------
NET INCOME 49,449 (60,805) 158,769 46,137
% OF NET SALES 11.3% -14.6% 11.9% 3.6%
% OF NET SALES - Ex Precious Metals 12.5% -16.3% 13.2% 4.0%
EARNINGS PER SHARE
-BASIC $ 0.32 $ (0.39) $ 1.02 $ 0.29
-DILUTIVE $ 0.31 $ (0.39) $ 1.00 $ 0.28
DIVIDENDS PER SHARE $0.0350 $ 0.0300 $ 0.1050 $ 0.0900
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
-BASIC 153,968 157,789 156,246 159,810
-DILUTIVE 157,153 157,789 159,344 162,713
DENTSPLY INTERNATIONAL INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
2006 2005
(Restated)
---------------- ---------------
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 331,825 $ 433,984
SHORT TERM INVESTMENTS 128,304 541
ACCOUNTS AND NOTES RECEIVABLE-TRADE, NET 296,066 254,822
INVENTORIES, NET 236,279 208,179
OTHER CURRENT ASSETS 144,533 132,517
-------- -------
TOTAL CURRENT ASSETS 1,137,007 1,030,043
PROPERTY,PLANT AND EQUIPMENT, NET 320,779 316,218
GOODWILL, NET 969,778 933,227
IDENTIFIABLE INTANGIBLE ASSETS, NET 67,826 68,600
OTHER NONCURRENT ASSETS, NET 71,545 59,241
------- ------
TOTAL ASSETS $ 2,566,935 $ 2,407,329
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES $ 763,362 $ 741,234
LONG-TERM DEBT 329,202 270,104
OTHER LIABILITIES 144,542 111,311
DEFERRED INCOME TAXES 43,972 42,912
------------ -----------
TOTAL LIABILITIES 1,281,078 1,165,561
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 212 188
STOCKHOLDERS' EQUITY 1,285,645 1,241,580
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,566,935 $ 2,407,329
============ ===========
DENTSPLY INTERNATIONAL INC.
(IN THOUSANDS EXCEPT PER SHARE DATA)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net income in
total and on a per share basis to the non-GAAP financial measures.
Three Months Ended September 30, 2006:
Income Diluted
(Expense) Per Share
------------- -------------
Net Income $ 49,449 $ 0.31
Restructuring (Income)Costs (632) (0.00)
Income Tax Related Adjustments 3,362 0.02
------------- -------------
Adjusted Non-GAAP Earnings $ 52,179 $ 0.33
============= =============
Three Months Ended September 30, 2005:
Income Diluted
(Expense) Per Share
--------------- -------------
Net Income $(60,805) $ (0.39)
Stock-Based Compensation Expense as Disclosed in Footnotes (2,817) (0.02)
Income Tax Related Adjustments (1,091) (0.01)
Restructuring Costs 111,618 0.71
Rounding 0.01
------------- -------------
Adjusted Non-GAAP Earnings $ 46,905 $ 0.30
============= =============
DENTSPLY INTERNATIONAL INC.
(IN THOUSANDS EXCEPT PER SHARE DATA)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net income in
total and on a per share basis to the non-GAAP financial measures.
Nine Months Ended September 30, 2006:
Income Diluted
(Expense) Per Share
------------- -------------
Net Income $ 158,769 $ 1.00
Restructuring Costs 4,060 0.03
Income Tax Related Adjustments 4,011 0.03
Rounding (0.01)
------------- -------------
Adjusted Non-GAAP Earnings $ 166,840 $ 1.05
============= =============
Nine Months Ended September 30, 2005:
Income Diluted
(Expense) Per Share
--------------- -------------
Net Income $ 46,137 $ 0.28
Stock-Based Compensation Expense as Disclosed in Footnotes (8,365) (0.05)
Income Tax Related Adjustments (3,199) (0.02)
Restructuring Costs 111,597 0.69
------------- -------------
Adjusted Non-GAAP Earnings $ 146,170 $ 0.90
============= =============