SEGMENT AND GEOGRAPHIC INFORMATION

9 Months Ended

Sep. 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% of sales for both the three months ended September 30, 2013 and 2012, and 88% and 89% of sales for the nine months ended September 30, 2013 and 2012, respectively.

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 nine 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 nine months ended September 30, 2013 and 2012:

Third Party Net Sales

	Three Months Ended						Nine Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	242,281		$	244,215		$	761,691		$	765,186
Orthodontics/Canada/Mexico/Japan	71,298			78,761			224,712			232,310
Select Distribution Businesses	66,012			59,498			192,941			182,344
Implants/Endodontics/Healthcare/Pacific Rim	325,542			313,729			1,021,082			999,939
All Other (a)	(1,115		)	(469		)	(3,314		)	(4,638		)
Total	$	704,018		$	695,734		$	2,197,112		$	2,175,141

(a) Includes amounts recorded at Corporate headquarters.

Third Party Net Sales, Excluding Precious Metal Content

	Three Months Ended						Nine Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	214,634		$	204,230		$	645,015		$	627,536
Orthodontics/Canada/Mexico/Japan	64,758			70,675			203,629			207,883
Select Distribution Businesses	65,914			59,387			192,612			181,911
Implants/Endodontics/Healthcare/Pacific Rim	325,233			313,295			1,020,086			998,532
All Other (b)	(1,115		)	(467		)	(3,313		)	(4,637		)
Total excluding precious metal content	669,424			647,120			2,058,029			2,011,225
Precious metal content	34,594			48,614			139,083			163,916
Total including precious metal content	$	704,018		$	695,734		$	2,197,112		$	2,175,141

(b) Includes amounts recorded at Corporate headquarters.

Inter-segment Net Sales

	Three Months Ended						Nine Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	21,413		$	23,049		$	128,153		$	132,370
Orthodontics/Canada/Mexico/Japan	1,022			989			2,788			3,221
Select Distribution Businesses	311			345			1,816			1,139
Implants/Endodontics/Healthcare/Pacific Rim	36,328			34,059			102,739			106,283
All Other (c)	121,453			109,138			178,880			163,118
Eliminations	(180,527		)	(167,580		)	(414,376		)	(406,131		)
Total	$	—		$	—		$	—		$	—

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

Segment Operating Income (Loss)

	Three Months Ended						Nine Months Ended
(in thousands)	2013			2012			2013			2012
Dental Consumable and Laboratory Businesses	$	62,575		$	58,975		$	183,508		$	181,261
Orthodontics/Canada/Mexico/Japan	1,901			4,678			8,792			7,639
Select Distribution Businesses	833			(790		)	(1,463		)	(3,250		)
Implants/Endodontics/Healthcare/Pacific Rim	65,211			65,546			213,972			214,333
All Other (d)	(23,268		)	(24,646		)	(77,999		)	(96,389		)
Segment operating income	107,252			103,763			326,810			303,594
Reconciling Items:
Restructuring and other costs	2,231			15,097			5,065			18,862
Interest expense	11,442			13,948			38,170			44,053
Interest income	(2,138		)	(2,342		)	(6,556		)	(6,204		)
Other expense (income), net	1,581			1,279			8,723			2,324
Income before income taxes	$	94,136		$	75,781		$	281,408		$	244,559

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

Assets
(in thousands)	September 30, 2013		December 31, 2012
Dental Consumable and Laboratory Businesses	$	879,460	$	1,007,307
Orthodontics/Canada/Mexico/Japan	306,699		294,348
Select Distribution Businesses	183,987		192,684
Implants/Endodontics/Healthcare/Pacific Rim	3,424,913		3,195,382
All Other (e)	214,920		282,576
Total	$	5,009,979	$	4,972,297

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