-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TOWeWShmZKS9tI1Vp0u+lsAGWNAc99nGX6g93KOiFcK8v4XBocnhajexoswDUMqR XDd1JhsO3yMFmpUeRlUgdg== 0000818479-95-000004.txt : 19950530 0000818479-95-000004.hdr.sgml : 19950530 ACCESSION NUMBER: 0000818479-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DENTSPLY INTERNATIONAL INC /DE/ CENTRAL INDEX KEY: 0000818479 STANDARD INDUSTRIAL CLASSIFICATION: 3844 IRS NUMBER: 391434669 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16211 FILM NUMBER: 95538063 BUSINESS ADDRESS: STREET 1: 570 W COLLEGE AVE CITY: YORK STATE: PA ZIP: 17405-0872 BUSINESS PHONE: 7178457511 MAIL ADDRESS: STREET 1: 570 W COLLEGE AVE CITY: YORK STATE: PA ZIP: 17405 FORMER COMPANY: FORMER CONFORMED NAME: GENDEX CORP DATE OF NAME CHANGE: 19920703 10-Q 1 10-Q FIRST QUARTER 1995 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, 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 May 9, 1995 the Company had 26,847,373 shares of Common Stock outstanding, with a par value of $.01 per share. Page 1 of 16 ---- Exhibit Index at Page 13 ---- DENTSPLY INTERNATIONAL INC. FORM 10-Q For Quarter Ended March 31, 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........................... 6 Notes to Unaudited Consolidated Condensed Financial Statements........................... 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.... 11 PART II - OTHER INFORMATION Item 1 - Legal Proceedings............................ 13 Item 6 - Exhibits and Reports on Form 8-K............. 13 Signatures........................................... 14 2 PART I FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS DENTSPLY INTERNATIONAL INC. CONSOLIDATED CONDENSED BALANCE SHEETS (audited) (unaudited) December 31, March 31, 1994 1995 ASSETS ------------ ------------ Current assets: (in thousands) Cash and cash equivalents $ 7,278 $ 3,430 Accounts and notes receivable-trade, net 78,771 84,112 Inventories 88,899 97,098 Deferred income taxes 5,710 5,710 Prepaid expenses and other current assets 8,410 8,968 Net assets of discontinued operations 7,632 6,629 --------- --------- Total Current Assets 196,700 205,947 Property, plant and equipment, net 91,140 95,386 Other noncurrent assets, net 10,214 21,350 Identifiable intangible assets, net 35,532 32,840 Cost in excess of fair value of net assets acquired, net 140,976 140,781 --------- --------- Total Assets $ 474,562 $ 496,304 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 60,135 $ 63,408 Income taxes payable 27,577 22,840 Notes payable and current portion of long-term debt 9,150 30,389 --------- --------- Total Current Liabilities 96,862 116,637 Long-term debt 12,789 31,141 Other liabilities 65,574 69,756 --------- --------- Total Liabilities 175,225 217,534 --------- --------- 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 shares issued at December 31, 1994 and March 31, 1995 278 278 Capital in excess of par value 182,087 180,046 Retained earnings 133,531 144,503 Cumulative translation adjustment 198 4,028 Employee stock ownership plan reserve (14,055) (13,593) Treasury stock, at cost, 87,500 shares at December 31, 1994 and 1,067,200 shares at March 31, 1995 (2,702) (36,492) --------- --------- Total Stockholders' Equity 299,337 278,770 --------- --------- Total Liabilities and Stockholders' Equity $ 474,562 $ 496,304 ========= ========= See accompanying notes to unaudited consolidated condensed financial statements. 3 DENTSPLY INTERNATIONAL INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (unaudited) Three Months Ended March 31, ------------------------- 1994 1995 -------- -------- (in thousands, except per share data) Net sales $126,848 $133,105 Cost of products sold 65,728 66,670 -------- -------- Gross profit 61,120 66,435 Selling, general and administrative expenses 39,247 43,524 -------- -------- Operating income from continuing operations 21,873 22,911 Interest expense 2,081 1,606 Interest income (146) (255) Other (income)expense, net (203) 48 -------- -------- Income from continuing operations before income taxes 20,141 21,512 Provision for income taxes 8,553 8,540 -------- -------- Income from continuing operations 11,588 12,972 Income from the operation of discontinued Medical business (less applicable income taxes) 767 - -------- -------- Net income $ 12,355 $ 12,972 ======== ======== Earnings per common share: From continuing operations $.42 $.48 From discontinued operations .03 - ---- ---- Total $.45 $.48 ==== ==== Weighted average common shares outstanding 27,723 27,225 See accompanying notes to unaudited consolidated condensed financial statements. 4 DENTSPLY INTERNATIONAL INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) Three Months Ended March 31, ------------------- 1994 1995 -------- -------- (in thousands) Cash flows from operating activities: Net income $ 12,355 $ 12,972 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,236 4,768 Other, net (9,421) (10,251) -------- -------- Net cash provided by operating activities 8,170 7,489 -------- -------- Cash flows from investing activities: Acquisition of business - (10,950) Property, plant and equipment additions (2,329) (2,716) Other, net (33) 797 -------- -------- Net cash used in investing activities (2,362) (12,869) -------- -------- Cash flows from financing activities: Debt repayment (121,713) (11,589) Proceeds from long-term debt 81,903 30,019 Cash paid for treasury stock - (38,400) Increase in bank overdrafts and other short-term debt 18,145 20,888 Other, net 1,446 485 -------- -------- Net cash provided by (used in) financing activities (20,219) 1,403 -------- -------- Effect of exchange rate changes on cash and cash equivalents (994) 129 -------- -------- Net decrease in cash and cash equivalents (15,405) (3,848) Cash and cash equivalents at beginning of period 17,984 7,278 -------- -------- Cash and cash equivalents at end of period $ 2,579 $ 3,430 ======== ======== Supplemental disclosures of cash flow information: Interest paid $ 2,617 $ 1,006 Income taxes paid 6,587 12,509 See accompanying notes to unaudited consolidated condensed financial statements. 5 DENTSPLY INTERNATIONAL INC. CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited)
Capital in Cumulative Total Common Excess of Retained Translation Treasury Stockholders' Stock Par Value Earnings Adjustment ESOP Reserve Stock Equity (in thousands) ------ ----------- -------- ----------- ------------ --------- ------------ Balance at December 31, 1994 $ 278 $182,087 $133,531 $ 198 $(14,055) $ (2,702) $299,337 Exercise of stock options and warrants --- (3,728) --- --- --- 4,610 882 Tax benefit related to stock options and warrants exercised --- 1,687 --- --- --- --- 1,687 Purchase of 1,125,000 shares of common stock --- --- --- --- --- (38,400) (38,400) Cash dividends declared, $.075 per share --- --- (2,000) --- --- --- (2,000) Translation adjustment --- --- --- 3,830 --- --- 3,830 Net change in ESOP reserve --- --- --- --- 462 --- 462 Net income --- --- 12,972 --- --- --- 12,972 ------ -------- -------- ------- -------- -------- -------- Balance at March 31, 1995 $ 278 $180,046 $144,503 $ 4,028 $(13,593) $(36,492) $278,770 ====== ======== ======== ======= ======== ========= ========= See accompanying notes to unaudited consolidated condensed financial statements.
6 DENTSPLY INTERNATIONAL INC. NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -------------------------------------------------------------- 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 quarter ended March 31, 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 three months ended March 31, 1994 include five 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 March 31, 1995, the cost of $10.2 million or 11% and $9.7 million or 10%, 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. 7 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 - PENDING BUSINESS ACQUISITION - - - - - - ------------------------------------- On March 13, 1995, the Company announced that the Board of Directors approved the purchase of approximately 95% of the outstanding Capital Stock of Maillefer Instruments S.A. from Maillefer stockholders for 11,000 SFR per share in a cash transaction valued at approximately $67 million. Based in Switzerland, Maillefer Instruments is a manufacturer and distributor of principally endodontic instruments. The transaction is subject to due diligence, the execution of a definitive agreement, regulatory approvals and the satisfaction of customary closing conditions. The acquisition is expected to close in the second quarter of 1995 and will be accounted for under the purchase method of accounting. NOTE 3 - INVENTORIES - - - - - - -------------------- Inventories consist of the following: December 31, March 31, 1994 1995 ------------ ------------ (in thousands) Finished goods $ 46,765 $ 52,101 Work-in-process 19,238 19,562 Raw materials and supplies 22,896 25,435 -------- -------- $ 88,899 $ 97,098 ======== ======== Pre-tax income was $.4 million and $.3 million lower in the three months ended March 31, 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 March 31, 1995 by $2.2 million and $1.9 million, respectively. 8 NOTE 4 - PROPERTY, PLANT AND EQUIPMENT - - - - - - -------------------------------------- Property, plant and equipment consist of the following: December 31, March 31, 1994 1995 ------------ ------------ Assets, at cost: (in thousands) Land $ 16,130 $ 17,622 Buildings and improvements 41,420 44,088 Machinery and equipment 61,103 63,848 Construction in progress 5,244 5,359 -------- -------- 123,897 130,917 Less: Accumulated depreciation 32,757 35,531 -------- -------- $ 91,140 $ 95,386 ======== ======== NOTE 5 - 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 $13.5 million and $5.2 million for the three months ended March 31, 1994 and 1995, respectively. Income before applicable income taxes for the three months ended March 31, 1994 and 1995 was $1.2 million and $-0-, respectively. The components of net assets of discontinued operations included in the Consolidated Condensed Balance Sheets are as follows: December 31, March 31, 1994 1995 ------------ ------------ (in thousands) Accounts and notes receivable-trade, net $ 4,650 $ 2,521 Inventories 6,312 6,452 Deferred income taxes 4,130 4,130 Prepaid expenses and other current assets 1,848 306 Property, plant and equipment 3,899 2,976 Other noncurrent assets, net 1,298 2,627 Cost in excess of fair value of net assets acquired 3,448 3,423 Accounts payable and accrued liabilities (11,272) (9,138) Other liabilities (6,681) (6,668) -------- -------- $ 7,632 $ 6,629 ======== ======== The sale of the remaining operations comprising the medical business is expected to be completed in 1995. 9 NOTE 6 - NOTES PAYABLE AND LONG-TERM DEBT - - - - - - ----------------------------------------- The increases from December 31, 1994 in Notes payable and current portion of long-term debt ($21.2 million) and Long-term debt ($18.4 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 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 $11.0 million to acquire a product for the crown and bridge product line. 10 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 March 31, 1995 Compared to Quarter Ended March 31, 1994 In the quarter ended March 31, 1995, net sales increased $6.3 million, or 4.9%, to $133.1 million from $126.8 million in the same period in 1994. Sales increased in Europe at a higher rate than in the United States and other international markets. The amount of the increase in the first quarter 1995 net sales attributed to a weaker U.S. dollar was more than offset by the additional two months sales reported in the first quarter 1994 due to the elimination of a reporting lag at two foreign locations. Gross profit increased $5.3 million, or 8.7%, to $66.4 million from $61.1 million in the first quarter of 1994 as a result of higher net sales. As a percentage of net sales, gross profit increased from 48.2% in the quarter ended March 31, 1994 to 49.9% 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 increased $4.3 million, or 10.9%. As a percentage of net sales, expenses increased from 30.9% in the quarter ended March 31, 1994 to 32.7% for the same period in 1995 primarily due to higher than normal marketing and sales expenses relating to several new product launches 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. Income from continuing operations before income taxes of $21.5 million for the three months ended March 31, 1995 increased $1.4 million, or 6.8%, from $20.1 million in 1994 as a result of higher sales coupled with the increased gross profit percentage. The Company's effective tax rate on income from continuing operations before income taxes decreased from 42.5% in the three months ended March 31, 1994 to 39.7% for the three months ended March 31, 1995 due mainly to lower foreign losses without tax benefit in 1995. Earnings per share from continuing operations of $.48 for the three months ended March 31, 1995 increased $.06, or 14.3%, from $.42 in the same period in 1994. Net sales from the discontinued medical business for the quarter ended March 31, 1995 were $5.2 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. 11 LIQUIDITY AND CAPITAL RESOURCES In March 1995, the Company paid $11.0 million to acquire a product for the crown and bridge product line. Investing activities for the three months ended March 31, 1995 include capital expenditures of $2.7 million. 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 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. Excluding the net assets of discontinued operations, at March 31, 1995, the Company's current ratio was 1.7 with working capital of $82.7 million. This compares with a current ratio of 2.0 and working capital of $92.2 million at December 31, 1994. The Company expects to be able to finance cash requirements, including capital expenditures, stock repurchases, debt service and the anticipated acquisition of Maillefer Instruments S.A., from funds generated from operations and amounts available under the existing Revolving Credit Agreement and a new $60.0 million term loan. The new term loan, which is expected to become effective during the second quarter of 1995, has the same maturity date, interest rate structure, and covenants as the Revolving Credit Agreement, but permits borrowing in pounds sterling and Swiss francs in addition to U.S. dollars. For the three months ended March 31, 1995, cash flows from operating activities were $7.5 million compared to $8.2 million for the three months ended March 31, 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. 12 PART II OTHER INFORMATION Item 1 - Legal Proceedings DENTSPLY International Inc. (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 6 - Exhibits and Reports on Form 8-K (a) Exhibits. The following exhibits are filed herewith: --------- Sequential Number Description Page No. ------ ----------- ---------- 11 Statement regarding computation 15 of earnings per share. 27 Financial Data Schedule 16 (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) (b) Reports on Form 8-K ------------------- No reports on Form 8-K were filed by the Company during the quarter ended March 31, 1995. 13 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. May 12, 1995 /s/ Burton C. Borgelt - - - - - - -------------------- ----------------------------------- Date Burton C. Borgelt Chairman and Chief Executive Officer May 12, 1995 /s/ Edward D. Yates - - - - - - -------------------- ----------------------------------- Date Edward D. Yates Senior Vice President and Chief Financial Officer 14 DENTSPLY INTERNATIONAL INC. EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE Earnings per common share: - - - - - - -------------------------- Three Months Ended March 31, ---------------------- 1994 1995 -------- -------- (in thousands, except per share data) Weighted average common shares outstanding 27,723 27,225 Income from continuing operations $11,588 $12,972 Income from discontinued medical segment 767 ------- ------- Net income $12,355 $12,972 ======= ======= Earnings per common share: From continuing operations $.42 $.48 From discontinued operations .03 - ---- ---- Net income $.45 $.48 ==== ==== 15 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF DENTSPLY INTERNATIONAL, INC. AT MARCH 31, 1995 AND FOR THE FISCAL QUARTER THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 3-MOS DEC-31-1995 MAR-31-1995 3430 0 84112 0 97098 205947 130917 35531 496304 116637 31141 278 0 0 278492 496304 133105 133105 66670 66670 43524 0 1606 21512 8540 12972 0 0 0 12972 .48 0
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