<PAGE>
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 June 30, 1995
_______________________
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number 0-16211
DENTSPLY International Inc.
_________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 39-1434669
_________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
570 West College Avenue, P. O. Box 872, York, PA 17405-0872
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(717) 845-7511
______________________
(Registrant's telephone number, including area code)
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.
( X ) Yes ( ) No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: At August 10, 1995 the Company
had 27,062,669 shares of Common Stock outstanding, with a par value of $.01 per
share.
Page 1 of 21
----
Exhibit Index at Page 18
----
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DENTSPLY INTERNATIONAL INC.
FORM 10-Q
For Quarter Ended June 30, 1995
------------------------
INDEX
-----
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Condensed Balance Sheets............ 3
Consolidated Condensed Statements of Income...... 4
Consolidated Condensed Statements of Cash Flows.. 5
Consolidated Condensed Statement of
Stockholders' Equity........................... 7
Notes to Unaudited Consolidated Condensed
Financial Statements........................... 8
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.... 13
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings............................ 17
Item 4 - Submission of Matters to a Vote of
Security Holders........................... 17
Item 6 - Exhibits and Reports on Form 8-K............. 18
Signatures........................................... 19
2
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(audited) (unaudited)
December 31, June 30,
1994 1995
ASSETS ------------ ------------
Current assets: (in thousands)
Cash and cash equivalents $ 7,278 $ 6,921
Accounts and notes receivable-trade, net 78,771 94,126
Inventories 88,899 132,143
Prepaid expenses and other current assets 14,120 15,542
Net assets of discontinued operations 7,632 4,776
--------- ---------
Total Current Assets 196,700 253,508
Property, plant and equipment, net 91,140 142,099
Other noncurrent assets, net 10,214 13,904
Identifiable intangible assets, net 35,532 36,223
Cost in excess of fair value of net
assets acquired, net 140,976 149,846
--------- ---------
Total Assets $ 474,562 $ 595,580
LIABILITIES AND STOCKHOLDERS' EQUITY ========= =========
Current liabilities:
Accounts payable and accrued liabilities $ 60,135 $ 68,243
Income taxes payable 27,577 20,256
Notes payable and current portion
of long-term debt 9,150 24,074
--------- ---------
Total Current Liabilities 96,862 112,573
Long-term debt 12,789 93,942
Deferred income taxes 24,720 46,575
Other liabilities 40,854 45,785
--------- ---------
Total Liabilities 175,225 298,875
--------- ---------
Minority interests in consolidated subsidiary - 3,934
--------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; 250,000
shares authorized; no shares issued - -
Common stock, $.01 par value; 100,000,000
shares authorized; 27,845,288 and 26,919,669
shares issued at December 31, 1994 and
June 30, 1995, respectively 278 269
Capital in excess of par value 182,087 146,321
Retained earnings 133,531 155,722
Cumulative translation adjustment 198 3,708
Employee stock ownership plan reserve (14,055) (13,249)
Treasury stock, at cost, 87,500 shares
at December 31, 1994 (2,702) -
--------- ---------
Total Stockholders' Equity 299,337 292,771
--------- ---------
Total Liabilities and Stockholders' Equity $ 474,562 $ 595,580
========= =========
See accompanying notes to unaudited consolidated condensed financial
statements.
3
<PAGE>
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
1994 1995 1994 1995
-------- -------- -------- --------
(in thousands, except per share data)
Net sales $127,967 $139,878 $254,815 $272,983
Cost of products sold 63,885 69,715 129,612 136,385
-------- -------- -------- --------
Gross profit 64,082 70,163 125,203 136,598
Selling, general and
administrative expenses 39,477 43,251 78,725 86,775
-------- -------- -------- --------
Operating income from
continuing operations 24,605 26,912 46,478 49,823
Interest expense 1,984 2,395 4,065 4,001
Interest income (182) (328) (327) (583)
Other (income) expense,
net (722) 2,873 (926) 2,921
-------- -------- -------- --------
Income from continuing
operations before income
taxes 23,525 21,972 43,666 43,484
Provision for income taxes 9,959 8,735 18,513 17,275
-------- -------- -------- --------
Income from continuing
operations 13,566 13,237 25,153 26,209
Income from the operation
of discontinued Medical
business (less applicable
income taxes) 468 - 1,236 -
-------- -------- -------- --------
Net income $ 14,034 $ 13,237 $ 26,389 $ 26,209
======== ======== ======== ========
Earnings per common share:
From continuing operations $.49 $.49 $.91 $.97
From discontinued operations .02 -- .04 --
---- ---- ---- ----
$.51 $.49 $.95 $.97
==== ==== ==== ====
Weighted average common
shares outstanding 27,760 26,875 27,742 27,049
See accompanying notes to unaudited consolidated condensed financial statements.
4
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DENTSPLY INTERNATIONAL INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
June 30,
-------------------
1994 1995
-------- --------
(in thousands)
Cash flows from operating activities:
Net income $ 26,389 $ 26,209
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,092 10,110
Increase in inventories (9,810) (10,924)
Increase (decrease) in accounts payable 1,255 (3,452)
Increase (decrease) in income taxes payable 1,550 (7,559)
Other, net (1,593) (1,638)
-------- --------
Net cash provided by operating activities 27,883 12,746
-------- --------
Cash flows from investing activities:
Acquisition of businesses - (71,625)
Property, plant and equipment additions (5,946) (6,731)
Proceeds from disposal of Medical business - 3,260
Proceeds from sale of property, plant, and
equipment 80 2,239
Other, net (87) (367)
-------- --------
Net cash used in investing activities (5,953) (73,224)
-------- --------
Cash flows from financing activities:
Debt repayment (135,914) (18,757)
Proceeds from long-term debt 81,889 99,901
Cash paid for treasury stock - (38,400)
Increase in bank overdrafts and other
short-term debt 15,066 13,392
Other, net 2,845 2,004
-------- --------
Net cash provided by (used in) financing activities (36,114) 58,140
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (1,087) 1,981
-------- --------
Net decrease in cash and cash equivalents (15,271) (357)
Cash and cash equivalents at beginning of period 17,984 7,278
-------- --------
Cash and cash equivalents at end of period $ 2,713 $ 6,921
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 4,059 $ 2,354
Income taxes paid 8,151 22,174
See accompanying notes to unaudited consolidated condensed financial statements.
5
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DENTSPLY INTERNATIONAL INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Supplemental disclosures of noncash transactions (in thousands):
The Company purchased all of the capital stock of KV33 Corporation for $11.5
million. In conjunction with the acquisition, liabilities were assumed as
follows:
Fair value of assets acquired $ 14,329
Cash paid for capital stock (11,450)
--------
Liabilities assumed $ 2,879
========
The Company purchased approximately 96% of the capital stock of Maillefer
Instruments, S.A. for $65.8 million. In conjunction with the acquisition,
liabilities were assumed as follows:
Fair value of assets acquired $ 96,796
Cash paid for capital stock (65,783)
--------
Liabilities assumed $ 31,013
========
See accompanying notes to unaudited consolidated condensed financial statements.
6
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<TABLE>
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited)
<CAPTION>
Capital in Cumulative Total
Common Excess of Retained Translation Treasury Stockholders'
Stock Par Value Earnings Adjustment ESOP Reserve Stock Equity
(in thousands) ------ ----------- -------- ----------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ 278 $182,087 $133,531 $ 198 $(14,055) $ (2,702) $299,337
Exercise of stock options and
warrants --- (6,850) --- --- --- 9,034 2,184
Tax benefit related to stock
options and warrants exercised --- 3,143 --- --- --- --- 3,143
Repurchase of 1,125,000 shares
of common stock --- --- --- --- --- (38,400) (38,400)
Cash dividends declared, $.15
per share --- --- (4,018) --- --- --- (4,018)
Cancellation of 935,000 shares
of treasury stock (9) (32,059) --- --- --- 32,068 ---
Translation adjustment --- --- --- 3,510 --- --- 3,510
Net change in ESOP reserve --- --- --- --- 806 --- 806
Net income --- --- 26,209 --- --- --- 26,209
------ -------- -------- ------- -------- -------- --------
Balance at June 30, 1995 $ 269 $146,321 $155,722 $ 3,708 $(13,249) $ --- $292,771
====== ======== ======== ======= ======== ========= =========
<FN>
See accompanying notes to unaudited consolidated condensed financial statements.
</FN>
</TABLE>
7
<PAGE>
DENTSPLY INTERNATIONAL INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
--------------------------------------------------------------
JUNE 30, 1995
-------------
The accompanying interim consolidated condensed financial statements
reflect all adjustments (consisting only of normal recurring adjustments) which
in the opinion of management are necessary for a fair presentation of financial
position, results of operations and cash flows for the interim periods. These
interim financial statements conform with the requirements for interim financial
statements and consequently do not include all the disclosures normally required
by generally accepted accounting principles. Disclosures are updated where
appropriate.
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
Principles of Consolidation
---------------------------
The consolidated condensed financial statements include the accounts of
DENTSPLY International Inc. (the "Company") and its subsidiaries. For the six
months ended June 30, 1994, the financial statements for Gendex Dental Systems
S.r.l. and Gendex Dental Systeme GmbH are included on a current basis as
compared to a two month lag in 1993. Accordingly, the consolidated condensed
statements of income and cash flows for the six months ended June 30, 1994
include eight months of operations for Gendex Dental Systems S.r.l. and Gendex
Dental Systeme GmbH. The effects of this change in reporting were insignificant
to the consolidated financial position and operations of the Company.
Inventories
-----------
Inventories are stated at the lower of cost or market. At December 31, 1994
and June 30, 1995, the cost of $10.2 million or 11% and $9.5 million or 7%,
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
or average cost method.
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 - 8 to 15 years. The cost of leasehold improvements is amortized over
the shorter of the estimated useful life or the term of the lease. For income
tax purposes, depreciation is computed using various methods.
8
<PAGE>
Earnings per Share
------------------
Earnings per share are based on the weighted average number of common
shares outstanding. Common stock equivalents (options and warrants) had no
material effect on the earnings per share computation. All shares held by the
DENTSPLY Employee Stock Ownership Plan are considered outstanding and are
included in the earnings per share computation.
NOTE 2 - BUSINESS ACQUISITION
-----------------------------
In June 1995, the Company purchased approximately 96% of the
outstanding Capital Stock of Maillefer Instruments S.A. (Maillefer) from
Maillefer stockholders for 11,000 SFR per share in a cash transaction valued at
approximately $65.8 million. Based in Switzerland, Maillefer Instruments is a
manufacturer and distributor of principally endodontic instruments.
The acquisition was accounted for under the purchase method of accounting
and the results of Maillefer's operations have been included in the accompanying
financial statements since the date of acquisition. The aggregate purchase price
of $65.8 million plus direct acquisition costs has been allocated on the basis
of preliminary estimates of the fair values of assets acquired and liabilities
assumed. Since the estimated fair value of net assets acquired exceeded the
purchase price by approximately $15.4 million, the values otherwise assignable
to noncurrent assets acquired have been reduced by a proportionate part of the
excess.
The following unaudited pro forma consolidated results of operations assume
that the acquisition of Maillefer occurred on January 1, 1994 (in thousands,
except per share amounts):
Six Months Ended June 30,
1994 1995
-------- --------
Net sales $271,007 $290,172
Income from continuing operations 26,001 28,234
Earnings per share from continuing
operations .94 1.04
The pro forma information does not purport to be indicative of the results
that actually would have been obtained had the operations been combined during
the periods presented.
9
<PAGE>
NOTE 3 - INVENTORIES
--------------------
Inventories consist of the following:
December 31, June 30,
1994 1995
------------ ------------
(in thousands)
Finished goods $ 46,765 $ 75,328
Work-in-process 19,238 32,285
Raw materials and supplies 22,896 24,530
-------- --------
$ 88,899 $132,143
======== ========
Pre-tax income was $.2 million and $.4 million lower in the six months
ended June 30, 1994 and 1995, respectively, as a result of using the LIFO method
compared to the first-in, first-out (FIFO) method. If the FIFO method had been
used to determine the cost of the LIFO inventories, the amounts at which net
inventory is stated would be lower than reported at December 31, 1994 and June
30, 1995 by $2.2 million and $1.8 million, respectively.
NOTE 4 - PROPERTY, PLANT AND EQUIPMENT
--------------------------------------
Property, plant and equipment consist of the following:
December 31, June 30,
1994 1995
------------ ------------
Assets, at cost: (in thousands)
Land $ 16,130 $ 18,106
Buildings and improvements 41,420 69,152
Machinery and equipment 61,103 87,475
Construction in progress 5,244 4,997
-------- --------
123,897 179,730
Less: Accumulated depreciation 32,757 37,631
-------- --------
$ 91,140 $142,099
======== ========
NOTE 5 - SPECIAL CHARGES
------------------------
During the quarter ended June 30, 1995, the Company recorded special
charges which materially impacted the comparison with prior periods. These
special charges, on a pre-tax basis, included the following (in thousands):
Costs associated with consolidation of
all executive functions in York,
Pennsylvania $2,460
Loss on sale of corporate aircraft 626
------
$3,086
======
10
<PAGE>
The impact of these expenses on earnings per share was $.07 per share in
the quarter ended June 30, 1995.
NOTE 6 - DISCONTINUED OPERATIONS
--------------------------------
On October 13, 1994, the Company announced its strategic decision to
discontinue the operations comprising its medical business. The medical
operations include Eureka X-Ray Tube Corp. (Eureka), GENDEX Medical and CMW
business units which manufacture medical x-ray tubes, medical x-ray systems and
orthopedic bone cement, respectively. The net assets of CMW and substantially
all of the net assets of Eureka were sold in the fourth quarter of 1994.
Sales from these operations were $13.1 million and $4.8 million for the
three months ended June 30, 1994 and 1995, respectively. Income before
applicable income taxes for the three months ended June 30, 1994 and 1995 was
$.7 million and $-0-, respectively. Sales for the six months ended June 30, 1994
and 1995 were $26.7 million and $10.0 million, respectively. Income before
applicable income taxes for the six months ended June 30, 1994 and 1995 was $1.8
million and $-0-, respectively. The sale of the remaining operations comprising
the medical business is expected to be completed in 1995.
The components of net assets of discontinued operations included in the
Consolidated Condensed Balance Sheets are as follows:
December 31, June 30,
1994 1995
------------ ------------
(in thousands)
Accounts and notes receivable-trade, net $ 4,650 $ 2,591
Inventories 6,312 7,077
Deferred income taxes 4,130 4,130
Prepaid expenses and other current assets 1,848 281
Property, plant and equipment, net 3,899 2,898
Other noncurrent assets, net 1,298 2,563
Cost in excess of fair value of net assets
acquired, net 3,448 3,398
Accounts payable and accrued liabilities (11,272) (11,514)
Other liabilities (6,681) (6,648)
-------- --------
$ 7,632 $ 4,776
======== ========
NOTE 7 - NOTES PAYABLE AND LONG-TERM DEBT
-----------------------------------------
The increases from December 31, 1994 in Notes payable and current portion
of long-term debt ($14.9 million) and Long-term debt ($81.2 million) were
primarily due to utilization of the Company's credit facilities for the
following transactions:
- During the first quarter of 1995, the Company repurchased 1.1 million
shares of its common stock for $38.4 million, in accordance with the share
repurchase program authorized by the Board of Directors in December 1994.
The repurchased shares included .8 million shares from
11
<PAGE>
the McDonough family interests pursuant to an agreement entered into on
February 8, 1995, in connection with John J. McDonough's resignation as
Chief Executive Officer of the Company.
- In March, 1995, the Company paid $11.5 million to acquire the outstanding
capital stock of KV33 Corporation.
- In June, 1995, the Company paid $65.8 million to acquire approximately 96%
of the outstanding capital stock of Maillefer Instruments, S.A.
12
<PAGE>
DENTSPLY INTERNATIONAL INC.
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
On October 13, 1994, the Company announced its strategic decision to discontinue
the operations comprising its medical business. Accordingly, the Company's
financial statements have been restated to reflect the accounting treatment for
discontinued operations. Management's discussion of the results of operations
covers continuing operations and discontinued operations, separately.
RESULTS OF OPERATIONS
Quarter Ended June 30, 1995 Compared to Quarter Ended June 30, 1994
In the quarter ended June 30, 1995, net sales increased $11.9 million, or 9.3%,
to $139.9 million from $128.0 million in the same period in 1994. Sales
increases in Europe, excluding the impact of the weaker U.S. dollar, were very
strong, especially for consumable products. Sales in the United States and other
international markets increased at a lower rate.
Gross profit increased $6.1 million, or 9.5%, to $70.2 million from $64.1
million in the second quarter of 1994 as a result of higher net sales. As a
percentage of net sales, gross profit increased slightly from 50.1% in the
quarter ended June 30, 1994 to 50.2% in the same period of 1995.
Selling, general and administrative expenses for the second quarter of 1995
increased $3.8 million, or 9.6%. As a percentage of net sales, expenses
increased from 30.8% in the quarter ended June 30, 1994 to 30.9% for the same
period in 1995. Marketing and selling expenses related to the promotion of new
products, implementation costs for management information systems in Europe, and
increased spending for product development were the main reasons for the expense
increase.
The Company incurred other expense of $2.9 million in the second quarter of 1995
compared to other income of $.7 million in the second quarter of 1994. The
Company took a one-time charge of $3.1 million in the second quarter of 1995 to
cover the costs of closing down its Executive Offices in Illinois and
consolidating its executive operations in York, Pennsylvania. This charge on an
after tax basis was $1.8 million or $.07 per share.
Income from continuing operations before income taxes of $22.0 million for the
three months ended June 30, 1995 decreased $1.5 million, or 6.6%, from $23.5
million in 1994. Without the one-time charge for closing down the Executive
Offices in Illinois and consolidating executive operations in York,
Pennsylvania, income from continuing operations before income taxes for the
second quarter of 1995 was $25.1 million, an increase of $1.5 million, or 6.5%,
over the same period in 1994. This increase was mainly the result of higher net
sales.
The Company's effective tax rate on income from continuing operations before
income taxes decreased from 42.3% in the three months ended June 30, 1994 to
39.8% for the three months ended June 30, 1995 due mainly to lower foreign
losses without tax benefit in 1995.
13
<PAGE>
Earnings per share from continuing operations of $.49 for the three months ended
June 30, 1995 equaled the year earlier period. Without the one-time charge to
cover the costs of closing down the Executive Offices in Illinois and
consolidating executive operations in York, Pennsylvania, earnings per share
were $.56, an increase of $.07, or 14.3%, over the year earlier period.
Net sales from the discontinued medical business for the quarter ended June 30,
1995 were $4.8 million, a decrease of $8.3 million from the same period of 1994,
as a result of the divestiture during the fourth quarter of 1994 of two of the
three business units identified as discontinued operations.
Six Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1994
During the first six months of 1995, net sales increased by $18.2 million or
7.1%, to $273.0 million from $254.8 million in the same period of 1994. Sales
increased in Europe at a higher rate than in the United States and other
international markets. The amount of the increase in net sales for the first six
months of 1995 attributable to a weaker U.S. dollar was significantly offset by
the additional two months of sales reported in the first quarter of 1994 due to
the elimination of a reporting lag at two foreign locations.
Gross profit increased $11.4 million or 9.1%, to $136.6 million from $125.2
million in the first six months of 1994 as a result of higher net sales. As a
percentage of net sales, gross profit increased from 49.1% in the six months
ended June 30, 1994 to 50.0% in the same period of 1995. The increase in the
gross profit percentage was mainly due to an improvement in product mix and
manufacturing cost efficiencies in the United States and Europe.
Selling, general and administrative expenses for the first six months of 1995
increased $8.1 million, or 10.2%. As a percentage of net sales, expenses
increased from 30.9% in the six months ended June 30, 1994 to 31.8% for the same
period of 1995, primarily due to higher than normal marketing and sales expenses
relating to several new product launches, the on-going promotion of these new
products, and a major bi-annual trade show held in Europe, as well as
expenditures for the implementation of management information systems in Europe
and increased spending for product development.
The Company incurred other expense of $2.9 million for the first six months of
1995, compared to other income of $.9 million in the same period of 1994. The
Company took a one-time charge of $3.1 million in the second quarter of 1995 to
cover the costs of closing down its Executive Offices in Illinois and
consolidating its executive operations in York, Pennsylvania. This charge on an
after tax basis was $1.8 million or $.07 per share.
Income from continuing operations before income taxes of $43.5 million for the
six months ended June 30, 1995 decreased $.2 million, or .4%, from $43.7 million
in 1994. Without the one-time charge for closing down the Executive Offices in
Illinois and consolidating executive operations in York, Pennsylvania, income
from continuing operations before income taxes for the first six months of 1995
was $46.6 million, an increase of $2.9 million, or 6.7%, over the same period of
1994.
14
<PAGE>
The Company's effective tax rate on income from continuing operations before
income taxes decreased from 42.4% in the six months ended June 30, 1994 to 39.7%
for the six months ended June 30, 1995 due mainly to lower foreign losses
without tax benefit in 1995.
Earnings per share from continuing operations of $.97 for the six months ended
June 30, 1995 increased $.06, or 6.6%, from $.91 in the same period of 1994.
Without the one-time charge to cover the costs of closing down the Executive
Offices in Illinois and consolidating executive operations in York,
Pennsylvania, earnings per share were $1.04, an increase of $.13, or 14.3%, over
the year earlier period.
Net sales from the discontinued medical business for the six months ended June
30, 1995 were $10.0 million, a decrease of $16.7 million from the same period in
1994 as a result of the divestiture during the fourth quarter of 1994 of two of
the three business units identified as discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
In March 1995, the Company paid $11.5 million to acquire the outstanding capital
stock of KV33 Corporation (KV33), based in Tucson, Arizona. KV33 designs,
develops, manufactures, and markets disposable articulators for the dental
laboratory market, and is the leading manufacturer and distributor of disposable
articulators in the United States. Articulators are used by dental laboratory
technicians to replicate human jaw movement when performing restorative
procedures such as crown and bridge restorations. KV33 plastic articulators are
a cost-effective, disposable alternative to conventional multi-use metal
articulators which require routine disinfecting.
In June 1995, the Company acquired approximately 96% of the outstanding Capital
Stock of Maillefer Instruments S.A. (Maillefer) in a cash transaction for $65.8
million. Maillefer is the world's leading manufacturer and distributor of
endodontic instruments. Based in Ballaigues, Switzerland, Maillefer's product
offerings include endodontic broaches, files, burs, pins and post systems,
surgical twist drills, and a variety of other instruments and accessory
products. Maillefer products have achieved a world class reputation for high
quality through continuous new, innovative research and development and
state-of-the-art manufacturing processes.
The Company obtained the funds for the aforementioned acquisitions from a new
$60.0 million term loan (which has the same maturity date, interest rate
structure, and covenants as the Company's existing $175.0 million Bank Revolving
Loan Facility), short-term bank borrowings, and cash on hand.
Investing activities for the six months ended June 30, 1995 include capital
expenditures of $6.7 million.
During 1995 the Company repurchased 1.1 million shares of its common stock for
$38.4 million, in accordance with the share repurchase program authorized by the
Board of Directors in December 1994. The repurchased shares included .8 million
shares from the McDonough family interests pursuant to an agreement entered into
on February 8, 1995 in connection with John J. McDonough's resignation as Chief
Executive Officer of the Company.
15
<PAGE>
Excluding the net assets of discontinued operations, at June 30, 1995, the
Company's current ratio was 2.2 with working capital of $136.2 million. This
compares with a current ratio of 2.0 and working capital of $92.2 million at
December 31, 1994. The increase was primarily due to the acquisition of
Maillefer.
The Company expects to be able to finance cash requirements, including capital
expenditures, stock repurchases, and debt service from funds generated from
operations and amounts available under the existing Revolving Credit Agreement.
For the six months ended June 30, 1995, cash flows from operating activities
were $12.7 million compared to $27.9 million for the six months ended June 30,
1994. The decrease is due mainly to higher income tax payments. In 1995, income
tax payments included taxes on the gain from the disposal of the medical
business. Income tax payments for 1994 were reduced by the deduction of the
prepayment penalty on the repayment of the senior debt in January 1994.
IMPACT OF INFLATION
The Company has generally offset the impact of inflation on wages and the cost
of purchased materials by reducing operating costs and increasing selling prices
to the extent permitted by market conditions.
16
<PAGE>
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
In June 1995, the United States Department of Justice issued to the Company
a Civil Investigative Demand to determine if there has been a violation of the
federal antitrust laws as a result of policies and conduct undertaken by the
Company's Trubyte Division with respect to the distribution of artificial teeth
and related products. This matter is currently pending with the Department of
Justice. It is the Company's position that the conduct and activities of the
Trubyte Division do not violate federal antitrust laws.
The Company and its subsidiaries are from time to time parties to lawsuits
arising out of their respective operations. The Company believes that pending
litigation to which it is a party will not have a material adverse effect upon
its consolidated financial position or results of operations.
Item 4 - Submission of Matters to a Vote of Security Holders
(a) On May 24, 1995, the Company held its 1995 Annual Meeting of
Stockholders.
(b) Not applicable, pursuant to Instruction 3 of Item 4 of this Form
10-Q.
(c) The following matters were voted upon at the Annual Meeting, with the
results indicated:
1. Election of Class III Directors:
Votes Authority Broker
For Withheld Non-Votes
---------- --------- ---------
Michael J. Coleman 22,871,329 186,770 -0-
Arthur A. Dugoni,
D.D.S., M.S.D. 22,905,587 152,512 -0-
John C. Miles II 22,799,699 258,400 -0-
W. Keith Smith 22,881,939 176,160 -0-
2. Proposal to ratify the appointment of KPMG Peat Marwick LLP,
independent certified accountants, to audit the books and accounts of
the Company for the year ending December 31, 1995:
Votes For: 22,901,217 Votes Against: 54,145
Abstentions: 102,737 Broker Non-Votes: -0-
17
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits. The following exhibits are filed herewith:
---------
Number Description Sequential Page No.
------ ----------- -------------------
11 Statement regarding computation
of earnings per share. 20
27 Financial Data Schedule (pursuant to Item 601(c)(iv) of
Regulation S-K, this exhibit shall not be deemed filed for
purposes of Section 18 of the Securities
Exchange Act of 1934, as amended) 21
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by the Company during the quarter
ended June 30, 1995. On July 17, 1995 the Company filed Form 8-K
reporting the acquisition of Maillefer Instruments, S.A.
18
<PAGE>
Signatures
__________
Pursuant to the requirements 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.
August 14, 1995 /s/ Burton C. Borgelt
____________________ ___________________________________
Date Burton C. Borgelt
Chairman and
Chief Executive Officer
August 14, 1995 /s/ Edward D. Yates
____________________ ___________________________________
Date Edward D. Yates
Senior Vice President and
Chief Financial Officer
19
<PAGE>
DENTSPLY INTERNATIONAL INC.
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
Earnings per common share:
--------------------------
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
1994 1995 1994 1995
-------- -------- -------- --------
(in thousands, except per share data)
Weighted average common
shares outstanding 27,760 26,875 27,742 27,049
Income from continuing
operations $ 13,566 $ 13,237 $ 25,153 $ 26,209
Income from discontinued
medical segment 468 - 1,236 -
-------- -------- -------- --------
Net income $ 14,034 $ 13,237 $ 26,389 $ 26,209
======== ======== ======== ========
Earnings per common share:
From continuing operations $.49 $.49 $.91 $.97
From discontinued operations .02 -- .04 --
---- ---- ---- ----
Net income $.51 $.49 $.95 $.97
==== ==== ==== ====
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF DENTSPLY
INTERNATIONAL, INC. AT JUNE 30, 1995 AND FOR THE FISCAL QUARTER THEN
ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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