BENEFIT PLANS

Substantially all of the employees of the Company and its subsidiaries are covered by government or Company-sponsored benefit plans. Total costs for Company-sponsored defined benefit, defined contribution and employee stock ownership plans amounted to $31.3 million, $26.2 million and $24.6 million in 2011, 2010 and 2009, respectively.

Defined Contribution Plans

The DENTSPLY Employee Stock Ownership Plan (“ESOP”) and 401(k) plans are designed to have contribution allocations of “Covered Compensation,” with a targeted 3% going into the ESOP in Company stock and a targeted 3% going into the 401(k) as a Non-Elective Contribution (“NEC”) in cash. The Company sponsors an employee 401(k) savings plan for its U.S. workforce to which enrolled participants may contribute up to IRS defined limits. The annual expense and cash contribution to the 401(k) is expected to be $4.9 million for 2011 (to be contributed in the first quarter of 2012), and was $4.6 million for 2010 (contributed in the first quarter of 2011), and $5.3 million for 2009 (contributed in the first quarter of 2010).

The ESOP is a non-contributory defined contribution plan that covers substantially all of the U.S. based non-union employees of the Company. Contributions to the ESOP, net of forfeitures, are expected to be $3.6 million for 2011 (to be contributed in the first quarter of 2012), and were $3.0 million for 2010 (contributed in the first quarter of 2011), and were $1.4 million for 2009 (contributed in the first quarter of 2010).

All future ESOP allocations will come from a combination of forfeited shares and shares acquired in the open market. The Company has targeted future ESOP allocations at 3% of “Covered Compensation.” The share allocation will be accounted at fair value at the point of allocation, which is normally year-end.

Defined Benefit Plans

The Company maintains a number of separate contributory and non-contributory qualified defined benefit pension plans and other postretirement medical plans for certain union and salaried employee groups in the U.S. Pension benefits for salaried plans are based on salary and years of service; hourly plans are based on negotiated benefits and years of service. Annual contributions to the pension plans are sufficient to satisfy minimum funding requirements. Pension plan assets are held in trust and consist mainly of common stock and fixed income investments. The U.S. plans are funded in excess of the funding required by the U.S. Department of Labor.

In addition to the U.S. plans, the Company maintains defined benefit pension plans for its employees in Austria, France, Germany, Italy, Japan, the Netherlands, Norway, Spain, Sweden, Switzerland and Taiwan. These plans provide benefits based upon age, years of service and remuneration. Substantially all of the German plans are unfunded book reserve plans. Other foreign plans are not significant individually or in the aggregate. Most employees and retirees outside the U.S. are covered by government health plans.

Defined Benefit Pension Plan Assets

The primary investment strategy is to ensure that the assets of the plans, along with anticipated future contributions, will be invested in order that the benefit entitlements of employees, pensioners and beneficiaries covered under the plan can be met when due with high probability. Pension plan assets consist mainly of common stock and fixed income investments. The target allocations for defined benefit plan assets are 30% to 65% equity securities, 30% to 65% fixed income securities, 0% to 15% real estate, and 0% to 25% in all other types of investments. Equity securities include investments in companies located both in and outside the U.S. Equity securities do not include common stock of the Company. Fixed income securities include corporate bonds of companies from diversified industries, government bonds, mortgage notes and pledge letters. Other types of investments include investments in mutual funds, common trusts, insurance contracts, hedge funds and real estate. These plan assets are not recorded on the Company’s consolidated balance sheet as they are held in trust or other off-balance sheet investment vehicles.

The defined benefit pension plan assets in the U.S. are held in trust and the investment policies of the plans are generally to invest the plans assets in equities and fixed income investments. The objective is to achieve a long-term rate of return in excess of 5% while at the same time mitigating the impact of investment risk associated with investment categories that are expected to yield greater than average returns. In accordance with the investment policies of the U.S. plans, the plans assets were invested in the following investment categories: interest-bearing cash, registered investment companies (e.g. mutual funds), common/collective trusts, master trust investment accounts and insurance company general accounts. The investment objective is for assets to be invested in a manner consistent with the fiduciary standards of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

The defined benefit pension plan assets maintained in Austria, Germany, Japan, Norway, the Netherlands, Switzerland and Taiwan all have separate investment policies but generally have an objective to achieve a long-term rate of return in excess 5% while at the same time mitigating the impact of investment risk associated with investment categories that are expected to yield greater than average returns. In accordance with the investment policies for the plans outside the U.S., the plans’ assets were invested in the following investment categories: interest-bearing cash, U.S. and foreign equities, foreign fixed income securities (primarily corporate and government bonds), insurance company contracts, real estate and hedge funds.

Postretirement Healthcare

The plans for postretirement healthcare have no plan assets. The postretirement healthcare plans cover certain union and salaried employee groups in the U.S. and is contributory, with retiree contributions adjusted annually to limit the Company’s contribution for participants who retired after June 1, 1985. The Company also sponsors unfunded non-contributory postretirement medical plans for a limited number of union employees and their spouses and retirees of a discontinued operation.

Reconciliations of changes in the defined benefit and postretirement healthcare plans’ benefit obligations, fair value of assets and statement of funded status are as follows:



							Other Postretirement
	Pension Benefits						Benefits
	December 31,						December 31,
(in thousands)	2011			2010			2011			2010

Change in Benefit Obligation
Benefit obligation at beginning of year	$	211,504		$	191,976		$	11,607		$	11,666
Service cost	10,950			8,108			61			58
Interest cost	9,633			8,415			553			605
Participant contributions	3,562			2,886			583			616
Actuarial losses (gains)	2,991			7,976			537			(548		)
Amendments	(3,034		)	—			—			—
Acquisitions/Divestitures	52,282			291			—			—
Effect of exchange rate changes	(8,355		)	3,474			—			—
Benefits paid	(8,926		)	(11,622		)	(1,124		)	(790		)
Benefit obligation at end of year	$	270,607		$	211,504		$	12,217		$	11,607

Change in Plan Assets
Fair value of plan assets at beginning of year	$	99,546		$	88,866		$	—		$	—
Actual return on assets	(889		)	1,883			—			—
Acquisitions/Divestitures	7,006			—			—			—
Effect of exchange rate changes	(1,238		)	8,374			—			—
Employer contributions	9,647			9,159			541			174
Participant contributions	3,562			2,886			583			616
Benefits paid	(8,926		)	(11,622		)	(1,124		)	(790		)
Fair value of plan assets at end of year	$	108,708		$	99,546		$	—		$	—

Funded status at end of year	$	(161,899	)	$	(111,958	)	$	(12,217	)	$	(11,607	)

The amounts recognized in the accompanying consolidated balance sheets, net of tax effects, are as follows:



	Pension Benefits						Other Postretirement Benefits
	December 31,						December 31,
(in thousands)	2011			2010			2011			2010

Other noncurrent assets	$	355		$	—		$	—		$	—
Deferred tax asset	10,972			9,834			1,247			1,113
Total assets	$	11,327		$	9,834		$	1,247		$	1,113

Current liabilities	(4,411		)	(3,462		)	(978		)	(1,099		)
Long-term liabilities	(157,843		)	(108,496		)	(11,240		)	(10,508		)
Deferred tax liability	(269		)	(22		)	—			—
Total liabilities	$	(162,523	)	$	(111,980	)	$	(12,218	)	$	(11,607	)

Accumulated other comprehensive income	32,002			29,050			1,984			1,772
Net amount recognized	$	(119,194	)	$	(73,096	)	$	(8,987	)	$	(8,722	)

Amounts recognized in AOCI consist of:



						Other Postretirement
	Pension Benefits					Benefits
	December 31,					December 31,
(in thousands)	2011			2010		2011		2010

Net actuarial loss	$	45,462		$	38,694	$	3,232	$	2,884
Net prior service cost	(2,757		)	168		—		—
Pretax AOCI	$	42,705		$	38,862	$	3,232	$	2,884
Less deferred taxes	10,703			9,812		1,248		1,112
Post tax AOCI	$	32,002		$	29,050	$	1,984	$	1,772

Information for pension plans with an accumulated benefit obligation in excess of plan assets:



	December 31,
(in thousands)	2011		2010

Projected benefit obligation	$	268,391	$	211,504
Accumulated benefit obligation	246,515		200,574
Fair value of plan assets	106,137		99,546

Components of net periodic benefit cost:



	Pension Benefits									Other Postretirement Benefits
(in thousands)	2011			2010			2009			2011		2010		2009

Service cost	$	10,950		$	8,108		$	8,375		$	61	$	58	$	50
Interest cost	9,633			8,415			8,003			553		605		676
Expected return on assets	(5,184		)	(4,662		)	(3,991		)	—		—		—
Amortization of actuarial losses	—			124			240			—		—		—
Amortization of prior service	80			86			138			—		—		—
Amortization of net loss	1,584			1,002			1,652			189		265		281
Settlement gains	4			—			(1,148		)	—		—		—
Net periodic benefit cost	$	17,067		$	13,073		$	13,269		$	803	$	928	$	1,007

Other changes in plan assets and benefit obligations recognized in AOCI:



	Pension Benefits									Other Postretirement Benefits
(in thousands)	2011			2010			2009			2011			2010			2009

Net actuarial (gain) loss	$	8,352		$	12,640		$	(7,994	)	$	537		$	(548	)	$	1,020
Net prior service (credit)	(2,845		)	(8		)	(37		)	—			—			—
Net transition obligation	—			(1		)	1			—			—			—
Amortization	(1,664		)	(1,212		)	(2,030		)	(189		)	(265		)	(281		)
Total recognized in AOCI	$	3,843		$	11,419		$	(10,060	)	$	348		$	(813	)	$	739
Total recognized in net periodic benefit cost and AOCI	$	20,910		$	24,492		$	3,209		$	1,151		$	115		$	1,746

The estimated net loss, prior service cost and transition obligation for the defined benefit plans that will be amortized from AOCI into net periodic benefit cost over the next fiscal year are $1.8 million. The estimated net loss and prior service credit for the other postretirement plans that will be amortized from AOCI into net periodic benefit cost over the next fiscal year is $0.2 million.

The amounts in AOCI that are expected to be amortized as net expense (income) during fiscal year 2012 are as follows:



(in thousands)	Pension Benefits			Other Postretirement Benefits

Amount of net prior service cost	$	(124	)	$	—
Amount of net loss	1,962			230

The weighted average assumptions used to determine benefit obligations for the Company's plans, principally in foreign locations, at December 31, 2011, 2010 and 2009 are as follows:



	Pension Benefits						Other Postretirement Benefits
	2011		2010		2009		2011		2010		2009
Discount rate	4.0	%	4.1	%	4.7	%	4.0	%	5.0	%	5.5	%
Rate of compensation increase	2.8	%	2.6	%	2.7	%	n/a		n/a		n/a
Health care cost trend	n/a		n/a		n/a		7.5	%	8.0	%	8.5	%
Ultimate health care cost trend	n/a		n/a		n/a		5.0	%	5.0	%	5.0	%
Years until ultimate trend is reached	n/a		n/a		n/a		6.0		7.0		8.0

The weighted average assumptions used to determine net periodic benefit cost for the Company's plans, principally in foreign locations, for the years ended December 31, 2011, 2010 and 2009 are as follows:



	Pension Benefits						Other Postretirement Benefits
	2011		2010		2009		2011		2010		2009
Discount rate	4.1	%	4.7	%	4.5	%	5.0	%	5.5	%	6.3	%
Expected return on plan assets	4.8	%	5.2	%	5.2	%	n/a		n/a		n/a
Rate of compensation increase	2.6	%	2.7	%	2.7	%	n/a		n/a		n/a
Health care cost trend	n/a		n/a		n/a		7.5	%	8.0	%	8.5	%
Ultimate health care cost trend	n/a		n/a		n/a		5.0	%	5.0	%	5.0	%
Years until ultimate trend is reached	n/a		n/a		n/a		6.0		7.0		8.0

Measurement Date	12/31/2011		12/31/2010		12/31/2009		12/31/2011		12/31/2010		12/31/2009

To develop the assumptions for the expected long-term rate of return on assets, the Company considered the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the assets are invested and the expectations for future returns of each asset class. The expected return for each asset class was then weighted based on the target asset allocations to develop the assumptions for the expected long-term rate of return on assets.

Assumed health care cost trend rates have an impact on the amounts reported for postretirement benefits. A one percentage point change in assumed healthcare cost trend rates would have the following effects for the year ended December 31, 2011:



	Other Postretirement Benefits
(in thousands)	1% Increase		1% Decrease
Effect on total of service and interest cost components	$	62	$	(52	)
Effect on postretirement benefit obligation	1,289		(1,078		)

Fair Value Measurements of Plan Assets

The fair value of the Company's pension plan assets at December 31, 2011 is presented in the table below by asset category. Over 80% of the total plan assets are categorized as Level 1, and therefore, the values assigned to these pension assets are based on quoted prices available in active markets. For the other category levels, a description of the valuation is provided in Note 1, Significant Accounting Policies, under the “Fair Value Measurement” heading.



	December 31, 2011
(in thousands)	Total		Level 1		Level 2		Level 3
Assets Category
Cash and cash equivalents	$	5,165	$	5,001	$	164	$	—
Equity securities:
U. S.	2,036		2,036		—		—
International	27,982		27,982		—		—
Fixed income securities:
Fixed rate bonds (a)	44,499		44,499		—		—
Other types of investments:
Mutual funds (b)	8,065		—		8,065		—
Common trusts (c)	2,083		—		—		2,083
Insurance contracts	9,323		—		3,503		5,820
Hedge funds	891		—		—		891
Real estate	8,664		8,307		—		357
Total	$	108,708	$	87,825	$	11,732	$	9,151



	December 31, 2010
(in thousands)	Total		Level 1		Level 2		Level 3
Assets Category
Cash and cash equivalents	$	3,028	$	2,775	$	253	$	—
Equity securities:
U. S.	1,103		1,103		—		—
International	29,944		29,944		—		—
Fixed income securities:
Fixed rate bonds (a)	41,215		41,215		—		—
Other types of investments:
Mutual funds (b)	8,857		417		8,440		—
Common trusts (c)	1,648		—		—		1,648
Insurance contracts	4,858		—		3,034		1,824
Hedge funds	1,334		—		—		1,334
Real estate	7,559		7,199		—		360
Total	$	99,546	$	82,653	$	11,727	$	5,166


(a)	This category includes fixed income securities invested primarily in Swiss bonds, foreign bonds in Swiss currency, foreign currency bonds, mortgage notes and pledged letters.


(b)	This category includes mutual funds balanced between moderate-income generation and moderate capital appreciation with investment allocations of approximately 50% equities and 50% fixed income investments.


(c)	This category includes common/collective funds with investments in approximately 65% equities and 35% in fixed income investments.

The following table provides a reconciliation from December 31, 2010 to December 31, 2011 for the plans assets categorized as Level 3.



	Changes within Level 3 Category for
	Year Ended December 31, 2011
(in thousands)	Common Trust		Insurance Contracts			Hedge Funds			Real Estate			Total
Balance at December 31, 2010	$	1,648	$	1,824		$	1,334		$	360		$	5,166
Actual return on plan assets:
Relating to assets still held at the reporting date	5		(1,355		)	(80		)	—			(1,430		)
Relating to assets sold during the period	5		—			—			—			5
Acquisitions/Divestitures	—		6,738			—			—			6,738
Purchases, sales and settlements, net	7		(1,144		)	(384		)	—			(1,521		)
Transfers in and/or out	418		—			—			—			418
Effect of exchange rate changes	—		(243		)	20			(2		)	(225		)
Balance at December 31, 2011	$	2,083	$	5,820		$	890		$	358		$	9,151

The following tables provide a reconciliation from December 31, 2009 to December 31, 2010 for the plans assets categorized as Level 3. No assets were transferred in or out of the Level 3 category during the year ended December 31, 2010.



	Changes within Level 3 Category for
	Year Ended December 31, 2010
(in thousands)	Common Trust			Insurance Contracts			Hedge Funds			Real Estate		Total
Balance at December 31, 2009	$	1,842		$	1,742		$	1,672		$	325	$	5,581
Actual return on plan assets:
Relating to assets still held at the reporting date	116			29			37			—		182
Relating to assets sold during the period	46			—			—			—		46
Purchases, sales and settlements, net	(356		)	109			(541		)	—		(788		)
Effect of exchange rate changes	—			(56		)	166			35		145
Balance at December 31, 2010	$	1,648		$	1,824		$	1,334		$	360	$	5,166

Fair values for Level 3 assets are determined as follows:

Common Trusts and Hedge Funds: The investments are valued using the net asset value provided by the administrator of the trust or fund, which is based on the fair value of the underlying securities.

Real Estate: Investment is stated by its appraised value.

Insurance Contracts: The value of the asset represents the mathematical reserve of the insurance policies and is calculated by the insurance firms using their own assumptions.

Cash Flows

In 2012, the Company expects to make contributions and direct benefit payments of $11.6 million to its defined benefit pension plans and $1.0 million to its postretirement medical plans.

Estimated Future Benefit Payments



(in thousands)	Pension Benefits		Other Postretirement Benefits
2012	$	8,863	$	978
2013	10,134		967
2014	10,799		948
2015	10,620		904
2016	11,341		902
2017-2019	67,976		3,888