SEGMENT AND GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2014

Segment Reporting [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 in each of the three months ended June 30, 2014 and 2013, respectively, and 88% and 89% of sales for the six months ended June 30, 2014 and 2013, respectively.

The operating businesses are combined into operating groups, which generally 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 evaluates performance of the segments based on the groups’ net third party sales, excluding precious metal content, and segment income. The Company defines net third party sales excluding precious metal content as the Company’s net sales excluding the precious metal cost within the products sold, and this is considered a non-US GAAP measure. The Company’s exclusion of precious metal content in the measurement of net third party sales enhances comparability of performance between periods as it excludes the fluctuating market prices of the precious metal content. The Company defines segment income as net operating income before restructuring and other costs, interest expense, interest income, other expense (income), net and provision for income taxes. A description of the products and services provided within each of the Company’s three reportable segments is provided below.

Significant interdependencies exist among the Company’s operations in certain geographic areas. Inter-segment 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.

During the first quarter of 2014, the Company realigned reporting responsibilities for multiple locations as a result of changes to the management structure. The segment information below reflects the revised structure for all periods shown.

Dental Consumables and Certain International Businesses

This segment includes responsibility for the design and manufacture of the Company’s chairside consumable products. It also has responsibilities for sales and distribution of certain small equipment and chairside consumable products in the United States, Germany and certain other European regions as well as responsibility for the sales and distribution of certain endodontic products in Germany and certain other European regions. In addition, this segment has responsibilities for sales and distribution of chairside consumable, endodontic and dental laboratory products in Australia.

Dental Specialty and Laboratory and Certain Global Distribution Businesses

This segment includes responsibility for the design, manufacture, sales and distribution of most of the Company’s dental specialty products, including endodontic, orthodontic and implant products, in most regions of the world. In addition, this segment is responsible for the design, manufacture, sales and distribution of most of the Company’s dental laboratory products. This segment is also responsible for the sales and distribution of most of the Company’s other dental products, including most dental consumables, within certain European regions as well as Japan, Canada and Mexico, and the design, manufacture, worldwide distribution and sales of certain non-dental products, excluding urological and surgery-related products.

Healthcare and Emerging Markets Businesses

This segment is responsible for the worldwide design, manufacture, sales and distribution of the Company’s healthcare products, primarily urological and surgery-related products, throughout most of the world. This segment also includes the responsibility for the sales and distribution of most of the Company’s dental products, including most dental consumables, sold in Eastern Europe, Middle East, South America, Latin America, Asia (excluding Japan) and Africa.

The following tables set forth information about the Company’s segments for the three and six months ended June 30, 2014 and 2013:

Third Party Net Sales

	Three Months Ended						Six Months Ended
(in thousands)	2014			2013			2014			2013
Dental Consumable and Certain International Businesses	$	183,741		$	170,688		$	357,716		$	334,395
Dental Specialty and Laboratory and Certain Global Distribution Businesses	442,655			458,128			875,062			906,105
Healthcare and Emerging Markets Businesses	139,848			133,054			264,794			254,793
All Other (a)	(1,019		)	(860		)	(2,233		)	(2,199		)
Total net sales	$	765,225		$	761,010		$	1,495,339		$	1,493,094

(a) Includes amounts recorded at Corporate headquarters.

Third Party Net Sales, Excluding Precious Metal Content

	Three Months Ended						Six Months Ended
(in thousands)	2014			2013			2014			2013
Dental Consumable and Certain International Businesses	$	183,638		$	170,596		$	357,552		$	334,205
Dental Specialty and Laboratory and Certain Global Distribution Businesses	408,631			413,386			800,312			802,302
Healthcare and Emerging Markets Businesses	139,648			132,833			264,450			254,296
All Other (b)	(1,019		)	(860		)	(2,233		)	(2,199		)
Total net sales, excluding precious metal content	730,898			715,955			1,420,081			1,388,604
Precious metal content of sales	34,327			45,055			75,258			104,490
Total net sales, including precious metal content	$	765,225		$	761,010		$	1,495,339		$	1,493,094

(b) Includes amounts recorded at Corporate headquarters.

Inter-segment Net Sales

	Three Months Ended						Six Months Ended
(in thousands)	2014			2013			2014			2013
Dental Consumable and Certain International Businesses	$	32,209		$	31,372		$	60,810		$	61,602
Dental Specialty and Laboratory and Certain Global Distribution Businesses	50,487			49,472			100,718			92,437
Healthcare and Emerging Markets Businesses	2,639			3,464			5,945			6,577
All Other (c)	62,484			60,238			123,268			117,665
Eliminations	(147,819		)	(144,546		)	(290,741		)	(278,281		)
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)	2014			2013			2014			2013
Dental Consumable and Certain International Businesses	$	66,147		$	59,863		$	124,656		$	114,178
Dental Specialty and Laboratory and Certain Global Distribution Businesses	79,616			79,758			153,529			149,436
Healthcare and Emerging Markets Businesses	9,959			8,623			14,683			10,089
All Other (d)	(27,374		)	(23,209		)	(58,157		)	(54,145		)
Segment operating income	128,348			125,035			234,711			219,558
Reconciling Items:
Restructuring and other costs	1,242			2,169			2,035			2,834
Interest expense	11,798			11,507			22,753			26,728
Interest income	(1,744		)	(2,243		)	(3,179		)	(4,418		)
Other expense (income), net	575			4,223			963			7,141
Income before income taxes	$	116,477		$	109,379		$	212,139		$	187,273

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

Assets

(in thousands)	June 30, 2014		December 31, 2013
Dental Consumable and Certain International Businesses	$	706,509	$	683,965
Dental Specialty and Laboratory and Certain Global Distribution Businesses	3,346,528		3,364,190
Healthcare and Emerging Markets Businesses	932,438		925,742
All Other (e)	86,898		104,150
Total	$	5,072,373	$	5,078,047

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