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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

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 SIRONA Inc.
(Exact name of registrant as specified in its charter)
Delaware
39-1434669
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
13320 Ballantyne Corporate Place, Charlotte, North Carolina
28277-3607
(Address of principal executive offices)
(Zip Code)
(844) 848-0137
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, par value $.01 per shareXRAYThe Nasdaq Stock Market LLC

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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  x  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  x
Accelerated filer  

Non-accelerated filer  

Smaller reporting company  

Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   
Yes   No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At April 19, 2024, DENTSPLY SIRONA Inc. had 207,630,556 shares of common stock outstanding.



DENTSPLY SIRONA Inc.

TABLE OF CONTENTS
 
Page











2


General

Unless otherwise stated herein or the context otherwise indicates, reference throughout this Form 10-Q to “Dentsply Sirona,” or the “Company,” “we,” “us” or “our” refers to financial information and transactions of DENTSPLY SIRONA Inc., together with its subsidiaries on a consolidated basis.

Forward-Looking Statements and Associated Risks

All statements in this Form 10-Q that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control, including those described in Part I, Item 1A, “Risk Factors” of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Form 10-K"), and other factors which may be described in the Company’s other filings with the Securities and Exchange Commission (the “SEC”). No assurance can be given that any expectation, belief, goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.

Investors should understand it is not possible to predict or identify all such factors or risks. As such, you should not consider the risks identified in the Company’s SEC filings to be a complete discussion of all potential risks or uncertainties associated with an investment in the Company.

Disclosure Regarding Trademarks

This report includes trademarks, trade names and service marks that are our property or the property of other third parties. Solely for convenience, such trademarks and trade names sometimes appear without any “™” or “®” symbol. Failure to include such symbols is not intended to suggest, in any way, that we will not assert our rights or the rights of any applicable licensor, to these trademarks and trade names.


3


PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
(unaudited)
Three Months Ended March 31,
20242023
Net sales$953 $978 
Cost of products sold447 459 
Gross profit506 519 
Selling, general, and administrative expenses415 416 
Research and development expenses
42 46 
Intangible asset impairments6  
Restructuring and other costs1 59 
Operating income (loss)42 (2)
Other income and expenses:
Interest expense, net18 20 
Other (income) expense, net(7)6 
Income (loss) before income taxes31 (28)
Provision (benefit) for income taxes14 (5)
Net income (loss)17 (23)
Less: Net loss attributable to noncontrolling interest(1)(4)
Net income (loss) attributable to Dentsply Sirona$18 $(19)
Net income (loss) per common share attributable to Dentsply Sirona:
Basic$0.09 $(0.09)
Diluted$0.09 $(0.09)
Weighted average common shares outstanding:
Basic207.4 214.5 
Diluted208.5 214.5 

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.
4


DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in millions)
(unaudited)
Three Months Ended March 31,
20242023
Net income (loss)$17 $(23)
Other comprehensive (loss) income, net of tax:
 Foreign currency translation (loss) gain(62)15 
 Net gain (loss) on derivative financial instruments32 (1)
 Pension liability gain  
Total other comprehensive (loss) income, net of tax(30)14 
Total comprehensive loss(13)(9)
Less: Comprehensive loss attributable to noncontrolling interests(1)(4)
Total comprehensive loss attributable to Dentsply Sirona$(12)$(5)
See accompanying Notes to Unaudited Interim Consolidated Financial Statements.
5


DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share amounts)
(unaudited)
March 31, 2024December 31, 2023
Assets
Current Assets:
Cash and cash equivalents$291 $334 
Accounts and notes receivable-trade, net656 695 
Inventories, net613 624 
Prepaid expenses and other current assets342 320 
Total Current Assets1,902 1,973 
Property, plant, and equipment, net782 800 
Operating lease right-of-use assets, net171 178 
Identifiable intangible assets, net1,618 1,705 
Goodwill2,400 2,438 
Other noncurrent assets250 276 
Total Assets$7,123 $7,370 
Liabilities and Equity
Current Liabilities:
Accounts payable$279 $305 
Accrued liabilities681 749 
Income taxes payable27 49 
Notes payable and current portion of long-term debt343 322 
Total Current Liabilities1,330 1,425 
Long-term debt1,747 1,796 
Operating lease liabilities120 125 
Deferred income taxes214 228 
Other noncurrent liabilities454 502 
Total Liabilities3,865 4,076 
Commitments and contingencies (Note 14)
Equity:
Preferred stock, $1.00 par value; 0.25 million shares authorized; no shares issued
  
Common stock, $0.01 par value;
3 3 
400.0 million shares authorized, and 264.5 million shares issued at March 31, 2024 and December 31, 2023
207.6 million and 207.2 million shares outstanding at March 31, 2024 and December 31, 2023
Capital in excess of par value6,639 6,643 
Retained earnings190 205 
Accumulated other comprehensive loss(666)(636)
Treasury stock, at cost, 56.9 million and 57.3 million shares at March 31, 2024 and December 31, 2023, respectively
(2,908)(2,922)
Total Dentsply Sirona Equity3,258 3,293 
Noncontrolling interests 1 
Total Equity3,258 3,294 
Total Liabilities and Equity$7,123 $7,370 
See accompanying Notes to Unaudited Interim Consolidated Financial Statements.
6


DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions, except per share amounts)
(unaudited)
Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total Dentsply Sirona
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2023$3 $6,643 $205 $(636)$(2,922)$3,293 $1 $3,294 
Net income (loss)— — 18 — — 18 (1)17 
Other comprehensive loss
— — — (30)— (30)— (30)
Stock based compensation expense— 11 — — — 11 — 11 
Funding of employee stock purchase plan— — — — 3 3 — 3 
Restricted stock unit distributions— (15)— — 11 (4)— (4)
Cash dividends declared ($0.16 per share)
— — (33)— — (33)— (33)
Balance at March 31, 2024$3 $6,639 $190 $(666)$(2,908)$3,258 $ $3,258 


Common
Stock
Capital in
Excess of
Par Value
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Treasury
Stock
Total Dentsply Sirona
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2022$3 $6,629 $456 $(628)$(2,649)$3,811 $1 $3,812 
Net income (loss)— — (19)— — (19)(4)(23)
Other comprehensive income— — — 14 — 14 — 14 
Stock based compensation expense— 17 — — — 17 — 17 
Funding of employee stock purchase plan — — — — 3 3 — 3 
Accelerated share repurchase— (30)— — (121)(151)— (151)
Restricted stock unit distributions— (12)— — 8 (4)— (4)
Cash dividends declared ($0.14 per share)
— — (30)— — (30)— (30)
Balance at March 31, 2023$3 $6,604 $407 $(614)$(2,759)$3,641 $(3)$3,638 

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.
7



DENTSPLY SIRONA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended March 31,
20242023
Cash flows from operating activities:
Net income (loss)$17 $(23)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation32 31 
Amortization of intangible assets54 53 
Fixed asset impairment 4 
Indefinite-lived intangible asset impairment6  
Deferred income taxes(9)(21)
Stock based compensation expense11 17 
Restructuring and other costs 48 
Other non-cash expense19 9 
Changes in operating assets and liabilities, net of acquisitions:
Accounts and notes receivable-trade, net27 (15)
Inventories, net(5)(30)
Prepaid expenses and other current assets(28)(17)
Other noncurrent assets(6)(1)
Accounts payable(28)(14)
Accrued liabilities(50)(31)
Income taxes(2)(37)
Other noncurrent liabilities(13)6 
Net cash provided by (used in) operating activities25 (21)
Cash flows from investing activities:
Capital expenditures(34)(39)
Cash received on derivative contracts 2 
Cash paid on derivative contracts(9) 
Net cash used in investing activities(43)(37)
Cash flows from financing activities:
Cash paid for treasury stock (150)
Proceeds on short-term borrowings23 198 
Cash dividends paid(29)(27)
Repayments on long-term borrowings(3) 
Other financing activities, net(5)(4)
Net cash (used in) provided by financing activities(14)17 
Effect of exchange rate changes on cash and cash equivalents(11)(6)
Net decrease in cash and cash equivalents(43)(47)
Cash and cash equivalents at beginning of period334 365 
Cash and cash equivalents at end of period$291 $318 
See accompanying Notes to Unaudited Interim Consolidated Financial Statements.
8


DENTSPLY SIRONA Inc. and Subsidiaries

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BUSINESS AND BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year. These financial statements and related notes contain the accounts of DENTSPLY SIRONA Inc. and subsidiaries (“Dentsply Sirona” or the “Company”) on a consolidated basis and should be read in conjunction with the consolidated financial statements and notes included in the Company’s most recent Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024 (the “2023 Form 10-K”).

Use of Estimates

The preparation of financial statements in conformity with US GAAP 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 Net sales and expense during the reporting period. Actual results could differ materially from those estimates.

Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” which requires public entities to disclose information about significant expenses in their reportable segment results on both an interim and annual basis. Public entities are required to disclose significant expense categories and amounts for each reportable segment. Significant expense categories are derived from expenses that are regularly reported to an entity’s chief operating decision-maker (“CODM”) and included in a segment’s reported measures of profit or loss. Public entities are also required to disclose the title and position of the CODM and explain how the CODM uses the reported measures of profit or loss to assess segment performance. This standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and early adoption is permitted and should be applied retrospectively for all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires public entities to disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid on an annual basis. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024, and early adoption is permitted and should be applied prospectively. The Company is currently evaluating the impact on its consolidated financial statements and related disclosures.

Seasonality

Our business is subject to quarterly fluctuations in demand due to price changes, marketing and promotional programs, management of inventory levels by distributors and other customers, and implementation of strategic initiatives which may impact sales levels in any given period. Demand can also fluctuate based on the timing of dental tradeshows, new product introductions, and variability in dental patient traffic, which can be exacerbated by seasonal or severe weather patterns, demographic disruptions, macroeconomic conditions, or other factors. Some dental practices in certain countries may also delay purchasing equipment and restocking consumables until year-end due to tax or other financial planning reasons which can impact the timing of our consolidated net sales, net income and cash flows. Sales for the industry and the Company are generally strongest in the second and fourth quarters and weaker in the first and third quarters, due to the effects of the items noted above and due to the impact of holidays and vacations, particularly throughout Europe. Because of the seasonal nature of our business, the results of operations for any fiscal quarter will not necessarily be indicative of results to be expected for other quarters or a full fiscal year.
9


NOTE 2 - REVENUE

Revenues are derived primarily from the sale of dental equipment and dental and healthcare consumable products. Revenues are measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

Net sales disaggregated by product category for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
(in millions)20242023
Equipment & Instruments$125 $152 
CAD/CAM122 113 
Connected Technology Solutions247 265 
Essential Dental Solutions364 386 
Orthodontics98 86 
Implants & Prosthetics173 173 
Orthodontic and Implant Solutions271 259 
Wellspect Healthcare71 68 
Total net sales$953 $978 

Net sales disaggregated by geographic region for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
(in millions)20242023
United States$356 $351 
Europe376 396 
Rest of World221 231 
Total net sales$953 $978 

Contract Assets and Liabilities

The Company does not typically have contract assets in the normal course of its business. Contract liabilities, which represent billings in excess of revenue recognized, are primarily related to advanced billings for customer orthodontic aligner treatments where the performance obligation has not yet been fulfilled. The Company recorded deferred revenue of $102 million and $59 million in Accrued liabilities and Other noncurrent liabilities, respectively, in the Consolidated Balance Sheets at March 31, 2024. The Company recorded deferred revenue of $91 million and $57 million in Accrued liabilities and Other noncurrent liabilities, respectively, in the Consolidated Balance Sheets at December 31, 2023. The Company recognized approximately $41 million of net sales during the three months ended March 31, 2024 which was previously deferred as of December 31, 2023. The Company expects to recognize a majority of the remaining deferred revenue in net sales within the next twelve months.

10


Allowance for Doubtful Accounts

Accounts and notes receivable-trade, net are stated net of allowances for doubtful accounts and trade discounts, which were $17 million at March 31, 2024 and $17 million at December 31, 2023. For the three months ended March 31, 2024 and 2023, changes to the provision for doubtful accounts, including write-offs of accounts receivable that were previously reserved, were insignificant. Changes to this provision are included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

11


NOTE 3 – STOCK COMPENSATION

The amounts of stock compensation expense recorded in the Company's Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
(in millions)20242023
Cost of products sold
$1 $1 
Selling, general, and administrative expense10 13 
Research and development expense 1 
Restructuring and other costs 2 
Total stock based compensation expense$11 $17 
Related deferred income tax benefit$2 $2 

12


NOTE 4 – COMPREHENSIVE INCOME (LOSS)

Changes in Accumulated other comprehensive income (loss) (“AOCI”), net of tax, by component for the three months ended March 31, 2024 and 2023 were as follows:
(in millions)Foreign Currency Translation Gain (Loss)Gain (Loss) on Cash Flow HedgesGain (Loss) on Net Investment and Fair Value HedgesPension
Liability Gain (Loss)
Total
Balance, net of tax, at December 31, 2023$(473)$(13)$(107)$(43)$(636)
Other comprehensive income (loss) before reclassifications and tax impact(34)42  8 
Tax expense
(28)(10) (38)
Other comprehensive income (loss), net of tax, before reclassifications(62) 32  (30)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax     
Net increase (decrease) in other comprehensive income(62) 32  (30)
Balance, net of tax, at March 31, 2024$(535)$(13)$(75)$(43)$(666)
(in millions)Foreign Currency Translation Gain (Loss)Gain (Loss) on Cash Flow HedgesGain (Loss) on Net Investment and Fair Value HedgesPension
Liability Gain (Loss)
Total
Balance, net of tax, at December 31, 2022$(522)$(17)$(73)$(16)$(628)
Other comprehensive (loss) income before reclassifications and tax impact6 (1)  5 
Tax benefit
9    9 
Other comprehensive (loss) income, net of tax, before reclassifications15 (1)  14 
Amounts reclassified from accumulated other comprehensive income (loss), net of tax     
Net (decrease) increase in other comprehensive income15 (1)  14 
Balance, net of tax, at March 31, 2023$(507)$(18)$(73)$(16)$(614)
At March 31, 2024 and December 31, 2023, the cumulative tax adjustments were $128 million and $166 million, respectively, primarily related to foreign currency translation adjustments.

The cumulative foreign currency translation adjustments included translation losses of $452 million and $360 million at March 31, 2024 and December 31, 2023, respectively, and cumulative losses on loans designated as hedges of net investments of $83 million and $113 million, respectively.

Reclassifications out of AOCI to the Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 were not significant.

13


NOTE 5 – EARNINGS (LOSS) PER COMMON SHARE

The computation of basic and diluted earnings (loss) per common share for the three months ended March 31, 2024 and 2023 was as follows:
Basic Earnings (Loss) Per Common Share Three Months Ended
(in millions, except per share amounts)20242023
Net income (loss) attributable to Dentsply Sirona$18 $(19)
Weighted average common shares outstanding207.4 214.5 
Earnings (loss) per common share - basic$0.09 $(0.09)
Diluted Earnings (Loss) Per Common ShareThree Months Ended
(in millions, except per share amounts)20242023
Net income (loss) attributable to Dentsply Sirona$18 $(19)
Weighted average common shares outstanding207.4 214.5 
Incremental weighted average shares from assumed exercise of dilutive options from stock-based compensation awards1.1  
Total weighted average diluted shares outstanding208.5 214.5 
Earnings (loss) per common share - diluted$0.09 $(0.09)
Weighted average shares excluded from diluted common shares outstanding due to reported net loss for the period
 1.4 
Weighted average shares excluded from diluted common shares outstanding due to antidilutive nature3.3 3.8 

On November 7, 2023, the Board of Directors approved an increase to the authorized share repurchase program of $1.0 billion. Share repurchases may be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions or other transactions in such amounts and at such times as the Company considers appropriate based upon prevailing market and business conditions and other factors. At March 31, 2024, the Company had authorization to repurchase $1.44 billion in shares of common stock remaining under the share repurchase program.





14


NOTE 6 – SEGMENT INFORMATION

The Company has four operating segments that are organized primarily by product. They generally have overlapping geographical presence, customer bases, distribution channels, and regulatory oversight with the exception of Wellspect Healthcare, which has a more discrete market and regulatory environment specific to the medical device industry. These operating segments, which also form the Company’s reportable segments, are identified in accordance with how the Company’s CODM regularly reviews financial results and uses this information to evaluate the Company’s performance and allocate resources.

The Company evaluates performance of the segments based on net sales and adjusted operating income. Segment adjusted operating income is defined as operating income before income taxes and before certain corporate headquarters unallocated costs, goodwill and intangible asset impairments, restructuring and other costs, interest expense, net, other expense (income), net, amortization of intangible assets, and depreciation resulting from the fair value step-up of property, plant, and equipment from business combinations. Asset and other balance sheet information are not reported to the CODM.

The Company’s segment information for the three months ended March 31, 2024 and 2023 was as follows:

Net Sales
Three Months Ended
(in millions)20242023
Connected Technology Solutions$247 $265 
Essential Dental Solutions364 386 
Orthodontic and Implant Solutions271 259 
Wellspect Healthcare71 68 
Total net sales$953 $978 
Segment Adjusted Operating Income
Three Months Ended
(in millions)20242023
Connected Technology Solutions$2 $6 
Essential Dental Solutions115 125 
Orthodontic and Implant Solutions42 49 
Wellspect Healthcare23 18 
Segment adjusted operating income182 198 
Reconciling items expense (income):
All other (a)
79 88 
Intangible asset impairments6  
Restructuring and other costs1 59 
Interest expense, net18 20 
Other (income) expense, net(7)6 
Amortization of intangible assets54 53 
Income (loss) before income taxes$31 $(28)
(a) Includes unassigned corporate headquarters costs.
15


NOTE 7 – INVENTORIES

Inventories, net were as follows:
(in millions)March 31, 2024December 31, 2023
Raw materials and supplies$174 $185 
Work-in-process75 77 
Finished goods364 362 
Inventories, net$613 $624 

The Company's inventory reserve was $107 million at both March 31, 2024 and December 31, 2023. Inventories are stated at the lower of cost and net realizable value.

16


NOTE 8 – RESTRUCTURING AND OTHER COSTS

Restructuring and other costs for the three months ended March 31, 2024 and 2023 were recorded in the Consolidated Statements of Operations as follows:
Affected Line ItemThree Months Ended
(in millions)20242023
Cost of products sold$ $4 
Selling, general, and administrative expenses3  
Restructuring and other costs1 59 
Total restructuring and other costs$4 $63 
        
Restructuring and other costs of $1 million recorded in the first three months of 2024 consisted primarily of employee severance benefits and other restructuring costs related to the plan approved by the Board of Directors of the Company on February 14, 2023. This plan seeks to restructure the Company’s business to improve operational performance and drive shareholder value creation through a new operating model with four operating segments, optimization of central functions and overall management infrastructure, and other efforts aimed at cost savings. The restructuring plan anticipates a reduction in the Company’s global workforce of approximately 8% to 10%, subject to co-determination processes with employee representative groups in countries where required, which processes are now substantially complete. The Company expects to incur between $115 million and $135 million in one-time charges, comprising $80 million to $100 million in restructuring expenditures and charges, primarily related to employee transition, severance payments, employee benefits and facility closure costs, and $35 million in other non-recurring costs which mostly consist of consulting, legal and other professional service fees. The plan is expected to be substantially completed in 2024. The estimates of these charges and their timing are subject to several assumptions, including local law requirements in various jurisdictions and co-determination aspects in countries where required. Actual amounts may differ materially from estimates. In addition, the Company may incur other charges or cash expenditures in connection with this plan which are not currently contemplated.

The liabilities associated with the Company's restructuring plans are recorded in Accrued liabilities and Other noncurrent liabilities in the Consolidated Balance Sheets. Activity in the Company’s restructuring accruals at March 31, 2024 was as follows:
Severance
(in millions)2022 and Prior Plans2023 PlanTotal
Balance at December 31, 2023$2 $37 $39 
Provisions1 2 3 
Amounts applied (11)(11)
Change in estimates (2)(2)
Balance at March 31, 2024$3 $26 $29 
Other Restructuring Costs
(in millions)2022 and Prior Plans2023 PlanTotal
Balance at December 31, 2023$1 $ $1 
Provisions 1 1 
Amounts applied (1)(1)
Balance at March 31, 2024$1 $ $1 
17


The cumulative amounts for the provisions and adjustments and amounts applied for all the plans by segment were as follows:
(in millions)December 31, 2023ProvisionsAmounts
Applied
Change in EstimatesMarch 31, 2024
Connected Technology Solutions$13 $1 $(7)$(2)$5 
Essential Dental Solutions17 1 (2) 16 
Orthodontic and Implant Solutions9  (2) 7 
Wellspect Healthcare1    1 
All Other 2 (1) 1 
Total$40 $4 $(12)$(2)$30 

18


NOTE 9 – FINANCIAL INSTRUMENTS AND DERIVATIVES

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 and interest rates. 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 volatility that these market risks may have on the Company’s operating results and cash flows. 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 fixed rate debt into variable rate debt or vice versa. The Company does not hold derivative instruments for trading or speculative purposes.

The following summarizes the notional amounts of cash flow hedges, hedges of net investments, fair value hedges, and derivative instruments not designated as hedges for accounting purposes by derivative instrument type at March 31, 2024 and the notional amounts expected to mature during the next 12 months.
(in millions)Aggregate Notional AmountAggregate Notional Amount Maturing within 12 Months
Cash Flow Hedges
Foreign exchange forward contracts$10 $10 
Total derivative instruments designated as cash flow hedges$10 $10 
Hedges of Net Investments
Foreign exchange forward contracts
$839 $86 
Cross currency basis swaps288  
Total derivative instruments designated as hedges of net investments$1,127 $86 
Fair Value Hedges
Interest rate swaps$150 $ 
Foreign exchange forward contracts 28 28 
Total derivative instruments designated as fair value hedges$178 $28 
Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts$803 $803 
Total derivative instruments not designated as hedges$803 $803 

Cash Flow Hedges

Foreign Exchange Risk Management

The Company hedges select anticipated foreign currency cash flows to reduce volatility in both cash flows and reported earnings. The Company designates certain foreign exchange forward contracts as cash flow hedges. As a result, the Company records the fair value of the contracts through AOCI based on the assessed effectiveness of the foreign exchange forward contracts. The Company measures the effectiveness of cash flow hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value is deferred in AOCI and released and recorded in the Consolidated Statements of Operations in the same period that the hedged transaction is recorded. The time-value component of the fair value of the derivative is reported on a straight-line basis in Cost of products sold in the Consolidated Statements of Operations in the period which it is applicable. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.

These foreign exchange forward contracts generally have maturities up to 18 months, which is the period over which the Company is hedging exposures to variability of cash flows, and the counterparties to the transactions are large international financial institutions.
19



Interest Rate Risk Management

The Company enters into interest rate swap contracts to manage interest rate risk on long-term debt instruments and not for speculative purposes. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.

On May 26, 2020, the Company paid $31 million to settle the $150 million notional Treasury rate lock contract, which partially hedged the interest rate risk of the $750 million Senior Notes due June 2030. This loss is amortized over the ten-year life of the notes. As of both March 31, 2024 and December 31, 2023, $19 million of this loss is remaining to be amortized from AOCI in future periods.

AOCI Release

Overall, the derivatives designated as cash flow hedges are considered to be highly effective for accounting purposes. At March 31, 2024, the Company expects to reclassify $3 million of deferred net losses on cash flow hedges recorded in AOCI in the Consolidated Statements of Operations during the next 12 months. For the rollforward of derivative instruments designated as cash flow hedges in AOCI, see Note 4, Comprehensive Income (Loss).

Hedges of Net Investments in Foreign Operations     

The Company has significant investments in foreign subsidiaries. The net assets of these subsidiaries are exposed to volatility in foreign currency exchange rates. The Company employs both derivative and non-derivative financial instruments to hedge a portion of these exposures. The derivative instruments consist of foreign exchange forward contracts and cross-currency basis swaps. The non-derivative instruments consist of foreign currency denominated debt held at the parent company level. Translation gains and losses related to the net assets of the foreign subsidiaries are offset by gains and losses in the aforementioned instruments, which are designated as hedges of net investments and the intrinsic value changes in these instruments are recorded on AOCI, net of tax effects. The time-value component of the fair value of the derivative instrument is amortized on a straight-line basis in Other (income) expense, net in the Consolidated Statements of Operations in the applicable period. Any cash flows associated with these instruments are included in investing activities in the Consolidated Statements of Cash Flows except for derivative instruments that include an other-than-insignificant financing element, for which all cash flows are classified as financing activities in the Consolidated Statements of Cash Flows.
The fair value of the foreign currency exchange forward contracts and cross-currency basis swaps is the estimated amount the Company would receive or pay at the reporting date, taking into account the effective interest rates and foreign exchange rates. The effective portion of the change in the value of these derivatives is recorded in AOCI, net of tax effects.

Fair Value Hedges

Foreign Exchange Risk Management

The Company has intercompany loans denominated in Swedish kronor that are exposed to volatility in foreign currency exchange rates. The Company employs derivative financial instruments to hedge these exposures. The Company accounts for these designated foreign exchange forward contracts as fair value hedges. The Company measures the effectiveness of fair value hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value will be recorded in Other (income) expense, net in the Consolidated Statements of Operations. The time-value component of the fair value of the derivative is reported on a straight-line basis in Other (income) expense, net in the Consolidated Statements of Operations in the applicable period. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.

Interest Rate Risk Management

On February 13, 2024, the Company paid $9 million to settle the variable interest rate swap with a notional amount of $100 million which was originally set to mature on June 1, 2026. This closure of the interest rate swap will result in a loss of $8 million being amortized over the remaining life of the Senior Notes due June 2030.

20


Derivative Instruments Not Designated as Hedges

The Company enters into derivative instruments with the intent to partially mitigate the foreign exchange revaluation risk associated with recorded assets and liabilities that are denominated in a non-functional currency. The Company primarily uses foreign exchange forward contracts to hedge these risks. The gains and losses on these derivative transactions offset the gains and losses generated by the revaluation of the underlying non-functional currency balances and are recorded in Other (income) expense, net in the Consolidated Statements of Operations. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.

Gains and (losses) recorded in the Company’s Consolidated Statements of Operations related to the economic hedges not designated as hedges for the three months ended March 31, 2024 and 2023 were not significant.

Derivative Instrument Activity

The effect of derivative hedging instruments on the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023 were as follows:
Three Months Ended
20242023
(in millions)Cost of products soldInterest expense, netOther (income) expense, netCost of products soldInterest expense, netOther (income) expense, net
Total amounts of line items presented in the Statement of Operations in which the effects of cash flow, net investment or fair value hedges are recorded$447 $18 $(7)$459 $20 $6 
(Gain) loss on Cash Flow Hedges reclassified from AOCI into income
Foreign exchange forward contracts$ $ $ $(1)$ $ 
Interest rate swaps    1  
(Gain) loss on Hedges of Net Investment
Cross currency basis swaps$ $ $(1)$ $ $1 
Foreign exchange forward contracts  (6)  1 
(Gain) loss on Fair Value Hedges:
Interest rate swaps$ $2 $ $ $2 $ 
Foreign exchange forward contracts  (1)   
(Gain) loss on Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts$ $ $(1)$ $ $2 
21


Amount of Gain or (Loss) Recognized in AOCIAmount of Gain or (Loss) Reclassified from AOCI into Income
Three Months Ended
Consolidated Statements of Operations LocationThree Months Ended
(in millions)2024202320242023
Cash Flow Hedges
Foreign exchange forward contracts$ $(1)Cost of products sold$ $1 
Interest rate swaps  Interest expense, net (1)
Hedges of Net Investments
Cross currency basis swaps$4 $1 Other expense (income), net$ $ 
Foreign exchange forward contracts38 (2)Other expense (income), net  
Fair Value Hedges
Foreign exchange forward contracts 1 Other expense (income), net  
22


Consolidated Balance Sheets Location of Derivative Fair Values

The fair value and the financial statement presentation of the Company's derivatives in the Consolidated Balance Sheets were as follows:
March 31, 2024
(in millions)Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsAccrued LiabilitiesOther Noncurrent Liabilities
Designated as Hedges:
Foreign exchange forward contracts$1 $1 $2 $5 
Interest rate swaps  7 16 
Cross currency basis swaps3 8   
Total$4 $9 $9 $21 
Not Designated as Hedges:
Foreign exchange forward contracts$7 $ $7 $ 
Total$7 $ $7 $ 
December 31, 2023
(in millions)Prepaid Expenses and Other Current AssetsOther Noncurrent AssetsAccrued LiabilitiesOther Noncurrent Liabilities
Designated as Hedges:
Foreign exchange forward contracts$3 $ $4 $47 
Interest rate swaps  9 19 
Cross currency basis swaps4 4   
Total$7 $4 $13 $66 
Not Designated as Hedges:
Foreign exchange forward contracts$5 $ $5 $ 
Total$5 $ $5 $ 

Balance Sheet Offsetting

Substantially all of the Company’s derivative contracts are subject to netting arrangements, whereby the right to offset occurs in the event of default or termination in accordance with the terms of the arrangements with the counterparty. While these contracts contain the enforceable right to offset through netting arrangements with the same counterparty, the Company elects to present them on a gross basis in the Consolidated Balance Sheets.

23


Offsetting of financial assets and liabilities under netting arrangements at March 31, 2024 were as follows:
Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)Gross Amounts RecognizedGross Amount Offset in the Consolidated Balance SheetsNet Amounts Presented in the Consolidated Balance SheetsFinancial InstrumentsCash Collateral Received/PledgedNet Amount
Assets
Foreign exchange forward contracts$10 $ $10 $(8)$ $2 
Cross currency basis swaps11  11 (5) 6 
Total assets$21 $ $21 $(13)$ $8