SEGMENT AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements [Abstract]

SEGMENT INFORMATION

SEGMENT INFORMATION

The Company has numerous operating businesses covering a wide range of dental and certain healthcare products and geographic regions, primarily serving the professional dental market. Professional dental products represented approximately 88% and 89% of sales for the three months ended June 30, 2013 and 2012, respectively, and 89% of sales for both the six months ended June 30, 2013 and 2012.

The operating businesses are combined into operating groups, which have overlapping product offerings, geographical presence, customer bases, distribution channels, and regulatory oversight. These operating groups are considered the Company’s reportable segments as the Company’s chief operating decision-maker regularly reviews financial results at the operating group level and uses this information to manage the Company’s operations. The accounting policies of the segments are consistent with those described in the Company’s most recently filed Form 10-K in the summary of significant accounting policies.  The Company measures segment income for reporting purposes as net operating income before restructuring and other costs, interest expense, interest income, other expense (income), net and provision for income taxes. Additionally, the operating segments are measured on net third party sales, excluding precious metal content. A description of the services provided within each of the Company’s four reportable segments is provided below.

During the first six months of 2013, the Company realigned certain implant and implant related businesses as a result of changes to the business structure. The segment information below reflects the revised structure for all periods shown.

Dental Consumable and Laboratory Businesses

This segment includes responsibility for the design, manufacturing, sales and distribution of certain small equipment and chairside consumable products in the United States, Germany and certain other European regions.  It also has responsibility for the sales and distribution of certain Endodontic products in Germany. This segment also includes the responsibility for the design, manufacture, sales and distribution of most dental laboratory products, excluding certain countries. This segment is also responsible for most of the Company’s non-dental business excluding medical products.

Orthodontics/Canada/Mexico/Japan

  This segment is responsible for the worldwide manufacturing, sales and distribution of the Company’s Orthodontic products. It also has responsibility for the sales and distribution of most of the Company’s dental products sold in Japan, Canada and Mexico.

Select Distribution Businesses

This segment includes responsibility for the sales and distribution for most of the Company’s dental products sold in France, United Kingdom, Italy, Austria and certain other European countries, Middle Eastern countries, India and Africa. Operating margins of the segment are reflective of the intercompany transfer price of products manufactured by other operating segments.

Implants/Endodontics/Healthcare/Pacific Rim

This segment includes the responsibility for the design, manufacture, sales and distribution of most of the Company’s dental implant and related products. This segment also includes the responsibility for the design and manufacturing of Endodontic products and is responsible for the sales and distribution of the Company’s Endodontic products in the United States, Switzerland, and locations not covered by other selling divisions.  In addition, this segment is also responsible for sales and distribution of certain Endodontic products in Germany, Asia and other parts of the world. Additionally, this segment is responsible for the design and manufacture of certain dental consumables and dental laboratory products and the sales and distribution of most dental products sold in Brazil, Latin America (excluding Mexico), Australia and most of Asia (excluding India and Japan). This segment is also responsible for the worldwide design, manufacturing, sales and distribution of the Company’s healthcare products (non-dental) throughout most of the world.

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

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

The following tables set forth information about the Company’s segments for the three and six months ended June 30, 2013 and 2012:

Third Party Net Sales

	Three Months Ended						Six Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	255,223		$	266,244		$	519,852		$	521,379
Orthodontics/Canada/Mexico/Japan	82,079			83,195			153,414			153,549
Select Distribution Businesses	66,115			63,753			126,929			122,846
Implants/Endodontics/Healthcare/Pacific Rim	358,453			352,657			695,097			685,802
All Other (a)	(860		)	(2,855		)	(2,198		)	(4,169		)
Total	$	761,010		$	762,994		$	1,493,094		$	1,479,407

(a) Includes amounts recorded at Corporate headquarters.

Third Party Net Sales, Excluding Precious Metal Content

	Three Months Ended						Six Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	218,794		$	211,604		$	430,824		$	423,713
Orthodontics/Canada/Mexico/Japan	73,900			73,915			138,871			137,208
Select Distribution Businesses	65,981			63,592			126,698			122,524
Implants/Endodontics/Healthcare/Pacific Rim	358,140			352,224			694,410			684,830
All Other (b)	(860		)	(2,855		)	(2,198		)	(4,169		)
Total excluding precious metal content	715,955			698,480			1,388,605			1,364,106
Precious metal content	45,055			64,514			104,489			115,301
Total including precious metal content	$	761,010		$	762,994		$	1,493,094		$	1,479,407

(b) Includes amounts recorded at Corporate headquarters.

Inter-segment Net Sales

	Three Months Ended						Six Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	54,907		$	56,852		$	106,739		$	109,321
Orthodontics/Canada/Mexico/Japan	937			1,054			1,766			2,233
Select Distribution Businesses	213			401			1,504			795
Implants/Endodontics/Healthcare/Pacific Rim	32,387			38,186			66,411			72,225
All Other (c)	60,238			56,328			117,665			110,309
Eliminations	(148,682		)	(152,821		)	(294,085		)	(294,883		)
Total	$	—		$	—		$	—		$	—

(c) Includes amounts recorded at Corporate headquarters and one distribution warehouse not managed by named segments.

Segment Operating Income (Loss)

	Three Months Ended						Six Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	65,589		$	65,251		$	127,339		$	128,596
Orthodontics/Canada/Mexico/Japan	5,028			3,228			6,891			2,961
Select Distribution Businesses	(671		)	(1,020		)	(2,296		)	(2,461		)
Implants/Endodontics/Healthcare/Pacific Rim	78,503			77,095			142,354			142,478
All Other (d)	(23,414		)	(33,119		)	(54,730		)	(71,743		)
Segment operating income	125,035			111,435			219,558			199,831
Reconciling Items:
Restructuring and other costs	2,169			2,528			2,834			3,765
Interest expense	11,507			14,323			26,728			30,105
Interest income	(2,243		)	(1,984		)	(4,418		)	(3,862		)
Other expense (income), net	4,223			982			7,141			1,045
Income before income taxes	$	109,379		$	95,586		$	187,273		$	168,778

(d) Includes the results of Corporate headquarters, inter-segment eliminations and one distribution warehouse not managed by named segments.

Assets
(in thousands)	June 30, 2013		December 31, 2012
Dental Consumable and Laboratory Businesses	$	973,168	$	1,007,307
Orthodontics/Canada/Mexico/Japan	299,275		294,348
Select Distribution Businesses	170,824		192,684
Implants/Endodontics/Healthcare/Pacific Rim	3,157,931		3,195,382
All Other (e)	273,485		282,576
Total	$	4,874,683	$	4,972,297

(e) Includes the assets of Corporate headquarters, inter-segment eliminations and one distribution warehouse not managed by named segments.