SEGMENT AND GEOGRAPHIC INFORMATION

The 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 for the consolidated financial statements in the summary of significant accounting policies (see Note 1, Significant Accounting Policies). The Company measures segment income for reporting purposes as net operating income before restructuring, impairments, and other costs, interest and taxes. Additionally, the operating groups are measured on net third party sales, excluding precious metal content. A description of the products and services provided within each of the Company’s four reportable segments is provided below.

During the year ended December 31, 2013, the Company realigned certain implant and implant related businesses as result of changes to the business structure. These changes also helped the Company gain operating efficiencies and effectiveness. 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 world-wide 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 business group 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 world-wide design, manufacturing, sales and distribution of the Company’s medical 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 table sets forth information about the Company’s segments for the years ended December 31, 2013, 2012 and 2011.



Third Party Net Sales
(in thousands)	2013			2012			2011

Dental Consumable and Laboratory Businesses	$	991,694		$	993,624		$	992,406
Orthodontics/Canada/Mexico/Japan	307,160			320,614			309,143
Select Distribution Businesses	267,949			252,632			253,421
Implants/Endodontics/Healthcare/Pacific Rim	1,388,152			1,365,231			987,778
All Other (a)	(4,185		)	(3,672		)	(5,030		)
Total net sales	$	2,950,770		$	2,928,429		$	2,537,718


(a)	Includes amounts recorded at Corporate headquarters.



Third Party Net Sales, Excluding Precious Metal Content
(in thousands)	2013			2012			2011

Dental Consumable and Laboratory Businesses	$	842,736		$	816,281		$	824,341
Orthodontics/Canada/Mexico/Japan	278,994			286,680			276,228
Select Distribution Businesses	267,300			252,064			252,539
Implants/Endodontics/Healthcare/Pacific Rim	1,386,883			1,363,344			984,509
All Other (b)	(4,185		)	(3,671		)	(5,030		)
Total net sales, excluding precious metal content	$	2,771,728		$	2,714,698		$	2,332,587
Precious metal content of sales	179,042			213,731			205,131
Total net sales, including precious metal content	$	2,950,770		$	2,928,429		$	2,537,718


(b)	Includes amounts recorded at Corporate headquarters.



Intersegment Net Sales
(in thousands)	2013			2012			2011

Dental Consumable and Laboratory Businesses	$	172,827		$	173,194		$	167,621
Orthodontics/Canada/Mexico/Japan	3,913			4,000			4,065
Select Distribution Businesses	2,129			1,534			1,549
Implants/Endodontics/Healthcare/Pacific Rim	143,455			139,460			158,724
All Other (c)	243,127			221,867			211,658
Eliminations	(565,451		)	(540,055		)	(543,617		)
Total	$	—		$	—		$	—


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



Depreciation and Amortization
(in thousands)	2013		2012		2011

Dental Consumable and Laboratory Businesses	$	31,137	$	33,855	$	34,575
Orthodontics/Canada/Mexico/Japan	3,716		4,959		4,432
Select Distribution Businesses	931		964		875
Implants/Endodontics/Healthcare/Pacific Rim	90,175		86,900		42,546
All Other (d)	1,944		2,521		2,607
Total	$	127,903	$	129,199	$	85,035


(d)	Includes amounts recorded at Corporate headquarters.



Segment Operating Income (Loss)
(in thousands)	2013			2012			2011

Dental Consumable and Laboratory Businesses	$	229,566		$	223,702		$	209,353
Orthodontics/Canada/Mexico/Japan	13,946			14,104			12,998
Select Distribution Businesses	(1,005		)	(4,191		)	(1,358		)
Implants/Endodontics/Healthcare/Pacific Rim	295,419			292,991			218,396
All Other (e)	(105,404		)	(118,950		)	(102,796		)
Segment Operating Income	$	432,522		$	407,656		$	336,593

Reconciling Items:
Restructuring and other costs	13,356			25,717			35,865
Interest expense	49,625			56,851			43,814
Interest income	(8,123		)	(8,760		)	(8,237		)
Other expense (income), net	8,329			3,169			9,040
Income before income taxes	$	369,335		$	330,679		$	256,111


(e)	Includes results of Corporate headquarters, inter-segment eliminations and one distribution warehouse not managed by named segments. Amount recorded in 2011 includes $31.9 million of Astra Tech acquisition costs.



Capital Expenditures
(in thousands)	2013		2012		2011

Dental Consumable and Laboratory Businesses	$	21,122	$	18,957	$	20,693
Orthodontics/Canada/Mexico/Japan	14,423		9,071		7,494
Select Distribution Businesses	1,377		657		1,123
Implants/Endodontics/Healthcare/Pacific Rim	58,104		58,372		32,958
All Other (f)	5,319		5,015		8,918
Total	$	100,345	$	92,072	$	71,186


(f)	Includes capital expenditures of Corporate headquarters.



Assets
(in thousands)	2013		2012

Dental Consumable and Laboratory Businesses	$	961,989	$	1,007,307
Orthodontics/Canada/Mexico/Japan	308,393		294,348
Select Distribution Businesses	166,679		192,684
Implants/Endodontics/Healthcare/Pacific Rim	3,450,670		3,195,382
All Other (g)	190,316		282,576
Total	$	5,078,047	$	4,972,297


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

Geographic Information

The following table sets forth information about the Company’s operations in different geographic areas for the years ended December 31, 2013, 2012 and 2011. Net sales reported below represent revenues for shipments made by operating businesses located in the country or territory identified, including export sales. Property, plant and equipment, net, represents those long-lived assets held by the operating businesses located in the respective geographic areas.



(in thousands)	United States		Germany		Sweden		Other Foreign		Consolidated

2013
Net sales	$	1,011,646	$	559,109	$	57,504	$	1,322,511	$	2,950,770
Property, plant and equipment, net	158,673		129,685		134,083		214,731		637,172

2012
Net sales	$	993,980	$	546,092	$	54,507	$	1,333,850	$	2,928,429
Property, plant and equipment, net	148,950		122,310		133,502		209,943		614,705

2011
Net sales	$	875,471	$	515,819	$	20,383	$	1,126,045	$	2,537,718
Property, plant and equipment, net	137,871		118,229		150,167		185,178		591,445

Product and Customer Information

The following table presents net sales information by product category:



	December 31,
(in thousands)	2013		2012		2011

Dental consumables products	$	777,935	$	768,098	$	766,385
Dental laboratory products	472,080		511,850		515,491
Dental specialty products	1,347,417		1,313,035		1,087,551
Consumable medical device products	353,338		335,446		168,291
Total net sales	$	2,950,770	$	2,928,429	$	2,537,718

Dental consumable products consist of value added dental supplies and small equipment products used in dental offices for the treatment of patients. DENTSPLY’s products in this category include dental anesthetics, infection control products, prophylaxis paste, dental sealants, impression materials, restorative materials, bone grafting materials, tooth whiteners and topical fluoride. The Company manufactures thousands of different consumable products marketed under more than a hundred brand names. Small equipment products consist of various durable goods used in dental offices for treatment of patients. DENTSPLY’s small equipment products include dental handpieces, intraoral curing light systems and ultrasonic scalers and polishers.

Dental laboratory products are used in dental laboratories in the preparation of dental appliances. DENTSPLY’s products in this category include dental prosthetics, including artificial teeth, precious metal dental alloys, dental ceramics, crown and bridge materials, and equipment products used in laboratories consisting of computer aided design and machining (CAD/CAM) ceramic systems and porcelain furnaces.

Dental specialty products are specialized treatment products used within the dental office and laboratory settings. DENTSPLY’s products in this category include endodontic (root canal) instruments and materials, implants and related products, bone grafting material, 3D digital scanning and treatment planning software, dental lasers and orthodontic appliances and accessories.

Consumable medical device products consist mainly of urology catheters, certain surgical products, medical drills and other non-medical products.

Both in 2013 and 2012, the Company did not have any single customer that represented ten percent or more of DENTSPLY’s consolidated net sales. In 2011, one customer, Henry Schein Incorporated, accounted for 11% of DENTSPLY’s consolidated net sales. Third party export sales from the U.S. are less than ten percent of consolidated net sales.