NEWS
For Further
Information
Contact:
William R. Jellison FOR IMMEDIATE RELEASE
Senior Vice President and
Chief Financial Officer
(717) 849-4243
DENTSPLY International Inc.
Reports Fourth Quarter and Full Year 2005
Sales and Earnings
York, PA - February 8, 2006 -- DENTSPLY International Inc. (NASDAQ-XRAY) today
announced sales and earnings for the year ended December 31, 2005. Sales in 2005
increased 1.2% to $1.72 billion compared to $1.69 billion reported for 2004.
Sales excluding precious metals, increased 4.2% in 2005. Internal growth, of
sales excluding precious metals, (excluding currency translation and
acquisitions) was 2.0% for the full year. The impact of the German dental reform
on internal growth is estimated to be a negative 4% for the year.
Net income from continuing operations for 2005 was $45.4 million or $0.56 per
diluted share. The 2005 earnings included the following items:
1) Pretax impairment and restructuring charges primarily associated
with the injectable anesthetic facility and indefinite-lived
intangible assets, of $232.8 million ($178.9 million after-tax) or
$2.21 per diluted share.
2) Net non-recurring benefits related to tax reorganization and
repatriation activities of $8.9 million or $0.11 per diluted share.
Net income from continuing operations for 2004 was $210.3 million or $2.56 per
diluted share. The 2004 period includes:
1) Pretax charges of $7.1 million or $0.06 per diluted share
relating to restructuring activities.
2) A net income tax benefit of $19.5 million or $0.24 per diluted
share primarily related to adjustments and settling audits of tax
returns.
Earnings from continuing operations for comparability analysis, excluding the
items noted above for the years ending 2005 and 2004, which constitutes a
non-GAAP measure, were $215.4 million or $2.66 per diluted share for 2005
compared to $2.38 in 2004, an increase of 11.8%.
Sales in the fourth quarter 2005 decreased 3.9% to $447.4 million compared to
$465.5 million reported in the fourth quarter of 2004. Sales excluding precious
metals, decreased 1.1% to $400.3 million in the fourth quarter of 2005. The
sales growth rate was negatively impacted in the quarter due to stronger
pre-reform purchasing levels by dental professionals within Germany in the
fourth quarter of last year. Sales were also negatively impacted in the fourth
quarter of 2005 due to the implementation of price increases earlier in the
year, and a negative impact from currency translation, as the U.S. dollar was
stronger in the quarter compared to the same period last year against most
foreign currencies.
Net loss from continuing operations for the fourth quarter of 2005 was $0.7
million or $0.01 per diluted share, a decrease compared to net income from
continuing operations of $69.0 million or $0.83 per diluted share in the fourth
quarter of 2004. The fourth quarter of 2005 included a pretax impairment and
restructuring charge of $101.4 million ($67.5 million after-tax) or $0.86 per
diluted share, primarily associated with the injectable anesthetic facility and
indefinite-lived intangible assets. This charge reflects the Company's decision
to permanently close its Chicago-based Pharmaceutical Manufacturing facility and
to seek strategic alternatives for the facility and for the dental injectable
product supply. The quarter also included a net income tax benefit from a global
tax project and the repatriation of foreign earnings of $5.7 million or $0.07
per diluted share. The fourth quarter of 2004 included pretax charges of $4.0
million or $0.03 per diluted share relating to restructuring activities for the
creation of the European Shared Service Center and Sales/Customer Service
consolidations in Europe and Japan. The quarter also included a reduction of
income taxes of $15.4 million or $0.19 per diluted share related to adjustments
in the Company's tax contingencies from settling audits of domestic and foreign
tax returns and adjustments associated with prior periods.
Earnings from continuing operations, excluding the items noted above for the
fourth quarter of 2005 and 2004, which constitutes a non-GAAP measure, would
have been $61.1 million or $0.76 per diluted share for 2005 compared to $56.0
million or $0.68 in 2004, an increase of 11.8% on a diluted per share basis.
Gary K. Kunkle, Chairman and Chief Executive Officer, commented that, "DENTSPLY
was faced with two significant challenges in 2005, the soft German market
(impacted by the reimbursement changes implemented by their government) and the
increased costs associated with our pharmaceutical facility. We are pleased
however, with the underlying profit improvements in our business and our strong
year-end cash flow. We look forward to 2006 with the promise of moving both
these issues behind us and the expectation of solid improvements, and new
product introductions in many of our businesses."
Earnings Guidance for 2006
The Company expects earnings in 2006 to be $2.80 to $2.85 per diluted share,
excluding any restructuring costs. This includes approximately $.15 per diluted
share of costs associated with the expensing of stock options due to the
adoption of stock-based compensation following the mandatory adoption of
Statement of Financial Accounting Standard ("SFAS") 123(R) Share-Based Payment,
effective January 1, 2006. On a non-GAAP basis excluding the after-tax impact of
expensing of stock-based compensation and restructuring costs, diluted earnings
per share are expected to be $2.95 to $3.00.
A conference call has been scheduled for Thursday, February 9 at 8:30 AM Eastern
Time. A live broadcast is available through Thomson Financial Services by
accessing DENTSPLY's website at www.dentsply.com. The Conference ID # is
4378954. In order to participate in the call, dial (877) 885-5820 (for domestic
calls) and (706) 643-9578 (for international calls). At that time, you will be
able to discuss the Fourth Quarter Earnings with DENTSPLY's Chairman and Chief
Executive Officer, Mr. Gary Kunkle; President and Chief Operating Officer, Mr.
Bret Wise; and Senior Vice President and Chief Financial Officer, Mr. William
Jellison.
An on-line rebroadcast, as well as a transcript of the conference call, will be
available to the public following the conference call at the DENTSPLY website:
www.dentsply.com. A replay will be available for one week following the
conference call at (800) 642-1687 (for domestic calls) and (706) 645-9291 (for
international calls).
DENTSPLY designs, develops, manufactures and markets a broad range of products
for the dental market. The Company believes that it is the world's leading
manufacturer and distributor of dental prosthetics, precious metal dental
alloys, dental ceramics, endodontic instruments and materials, prophylaxis
paste, dental sealants, ultrasonic scalers, and crown and bridge materials; the
leading United States manufacturer and distributor of dental handpieces, dental
x-ray film holders, film mounts and bone substitute/grafting materials; and a
leading worldwide manufacturer or distributor of dental injectable anesthetics,
impression materials, orthodontic appliances, dental cutting instruments and
dental implants. The Company distributes its dental products in over 120
countries under some of the most well-established brand names in the industry.
DENTSPLY is committed to the development of innovative, high quality,
cost-effective new products for the dental market.
This press release contains forward-looking information (within the meaning of
the Private Securities Litigation Reform Act of 1995) regarding future events or
the future financial performance of the Company that involve substantial risks
and uncertainties. Actual events or results may differ materially from those in
the projections or other forward-looking information set forth herein as a
result of certain risk factors. These risk factors include, without limitation;
the continued strength of dental markets, the timing, success and market
reception for our new and existing products, uncertainty with respect to
governmental actions with respect to dental products, outcome of litigation,
continued support of our products by influential dental professionals, and
changes in the general economic environment that could affect our business.
Changes in such assumptions or factors could produce significantly different
results.
For an additional description of risk factors, please refer to the Company's
Annual Report on Form 10-K and its subsequent periodic reports on Forms 10-Q
filed with the Securities and Exchange Commission.
Non-GAAP Financial Measures
This press release includes some company data that does not directly conform to
generally acceptable accounting principles, or GAAP. Management believes that
the presentation of some non-GAAP data provides investors with additional
insight into the ongoing operations of the business. These measures should not
be viewed as an alternative to GAAP measures of performance. Furthermore, these
measures may not be consistent with similar measures provided by other
companies. The attached non-GAAP reconciliation schedules provide
reconciliations of these non-GAAP financial measures to the most closely
comparable measures determined in accordance with GAAP.
DENTSPLY believes that the non-GAAP financial information provided in this
release may be useful to investors for comparison purposes because the Company
has historically provided similar information. The non-GAAP financial
information should not be considered in isolation from, or as a substitute for,
measures of financial performance prepared in accordance with GAAP.
DENTSPLY INTERNATIONAL INC.
(IN THOUSANDS EXCEPT PER SHARE DATA)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net
income/(loss) from continuing operations in total and on a per share basis to
the non-GAAP financial measures.
Twelve Months Ended December 31, 2005:
Income Diluted
(Expense) Per Share
------------- -------------
Income from Continuing Operations $ 45,413 $ 0.56
Income Tax Related Adjustments (8,899) (0.11)
Restructuring and Impairment Costs 178,915 2.21
------------- -------------
Adjusted Non-GAAP Earnings From Continuing Operations $215,429 $ 2.66
============= =============
Twelve Months Ended December 31, 2004:
Income Diluted
(Expense) Per Share
--------------- -------------
Income from Continuing Operations $210,286 $ 2.56
Income Tax Related Adjustments (19,496) (0.24)
Restructuring Costs 4,960 0.06
------------- -------------
Adjusted Non-GAAP Earnings From Continuing Operations $195,750 $ 2.38
============= =============
DENTSPLY INTERNATIONAL INC.
(IN THOUSANDS EXCEPT PER SHARE DATA)
Earnings Summary:
The following tables present the reconciliation of reported GAAP net
income/(loss) from continuing operations in total and on a per share basis to
the non-GAAP financial measures.
Three Months Ended December 31, 2005:
Income Diluted
(Expense) Per Share
------------- -------------
Loss from Continuing Operations $ (725) $(0.01)
Income Tax Related Adjustments (5,700) (0.07)
Restructuring and Impairment Costs 67,503 0.86
Dilutive Effect of Including Potential
Outstanding Shares on Earnings Per Share (a) - (0.02)
------------- -------------
Adjusted Non-GAAP Earnings From Continuing Operations $ 61,078 $ 0.76
============= =============
<FN>
<F1>(a) For the three months ended December 31, 2005, the dilutive weighted
average number of common shares outstanding excluded potential common shares
from stock options of 1,299. These shares were excluded from the GAAP
calculation of earnings per share due to their antidilutive effect resulting
from the loss from continuing operations.
</FN>
Three Months Ended December 31, 2004:
Income Diluted
(Expense) Per Share
--------------- -------------
Income from Continuing Operations $ 68,607 $ 0.83
Income Tax Related Adjustments (15,410) (0.19)
Restructuring Costs 2,806 0.03
Rounding - 0.01
------------- -------------
Adjusted Non-GAAP Earnings From Continuing Operations $ 56,003 $ 0.68
============= =============
DENTSPLY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE DATA)
TWELVE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------ ----------------------
2005 2004 2005 2004
------------- ---------- ----------- ----------
NET SALES $ 447,362 $ 465,500 $ 1,715,135 $ 1,694,232
NET SALES - Ex Precious Metals 400,342 404,889 1,543,916 1,481,872
COST OF PRODUCTS SOLD 223,571 233,446 846,117 847,714
GROSS PROFIT 223,791 232,054 869,018 846,518
% OF NET SALES 50.0% 49.9% 50.7% 50.0%
% OF NET SALES - Ex Precious Metals 55.9% 57.3% 56.3% 57.1%
SELLING, GENERAL &
ADMINISTRATIVE EXPENSES 144,093 148,747 563,341 544,264
RESTRUCTURING AND IMPAIRMENT COSTS 101,404 3,959 232,755 7,124
------------ ---------- ----------- ----------
(LOSS)INCOME FROM OPERATIONS (21,706) 79,348 72,922 295,130
% OF NET SALES -4.9% 17.0% 4.3% 17.4%
% OF NET SALES - Ex Precious Metals -5.4% 19.6% 4.7% 19.9%
NET INTEREST AND OTHER (INCOME) EXPENSE (1,436) 4,722 1,884 20,975
------------ ---------- ----------- ----------
PRE-TAX (LOSS)INCOME (20,270) 74,626 71,038 274,155
INCOME TAX (BENEFIT) EXPENSE (19,545) 5,673 25,625 63,869
------------ ---------- ----------- ----------
(LOSS) INCOME FROM CONTINUING OPERATIONS (725) 68,953 45,413 210,286
% OF NET SALES -0.2% 14.8% 2.6% 12.4%
% OF NET SALES - Ex Precious Metals -0.2% 17.0% 2.9% 14.2%
(LOSS) INCOME FROM DISCONTINUED OPERATIONS,
NET OF TAX (INCLUDING GAIN ON SALE IN 2004 OF $43,031) - (346) - 42,879
----------- ----------- ----------- ----------
NET (LOSS) INCOME $ (725) $ 68,607 $ 45,413 $ 253,165
=========== =========== =========== ==========
(LOSS) INCOME PER SHARE - BASIC:
CONTINUING OPERATIONS $ (0.01) $ 0.85 $ 0.57 $ 2.61
DISCONTINUED OPERATIONS - - - 0.54
-----------------------------------------------
TOTAL (LOSS) INCOME PER SHARE $ (0.01) $ 0.85 $ 0.57 $ 3.15
=========== =========== =========== ==========
(LOSS) INCOME PER SHARE - DILUTIVE:
CONTINUING OPERATIONS $ (0.01) $ 0.83 $ 0.56 $ 2.56
DISCONTINUED OPERATIONS - - - 0.53
----------- ----------- ----------- ----------
TOTAL (LOSS) INCOME PER SHARE $ (0.01) $ 0.83 $ 0.56 $ 3.09
=========== =========== =========== ==========
DIVIDENDS PER SHARE $ 0.0700 $ 0.0600 $ 0.2500 $ 0.2175
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
-BASIC 78,677 80,636 79,595 80,387
-DILUTIVE (a) 78,677 82,306 81,008 82,014
<FN>
<F1>(a) - For the three months ended December 31, 2005, the dilutive weighted
average number of common shares outstanding excluded potential common shares
from stock options of 1,299. These shares were excluded from the GAAP
calculation of earnings per share due to their antidilutive effect resulting
from the loss from continuing operations.
</FN>
DENTSPLY INTERNATIONAL INC.
CONDENSED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
DECEMBER 31, DECEMBER 31,
2005 2004
------------ ------------
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 434,525 $ 506,369
ACCOUNTS AND NOTES RECEIVABLE-TRADE, NET 254,822 238,873
INVENTORIES, NET 208,179 213,709
OTHER CURRENT ASSETS 95,551 97,458
---------- ----------
TOTAL CURRENT ASSETS 993,077 1,056,409
PROPERTY,PLANT AND EQUIPMENT, NET 316,218 399,880
GOODWILL, NET 933,227 996,262
IDENTIFIABLE INTANGIBLES ASSETS, NET 68,600 265,731
OTHER NONCURRENT ASSETS, NET 87,576 79,863
----------- ----------
TOTAL ASSETS $ 2,398,698 $2,798,145
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES $ 737,512 $ 404,607
LONG-TERM DEBT 270,104 779,940
OTHER LIABILITIES 111,311 110,829
DEFERRED INCOME TAXES 38,003 58,196
---------- ----------
TOTAL LIABILITIES 1,156,930 1,353,572
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 188 600
STOCKHOLDERS' EQUITY 1,241,580 1,443,973
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,398,698 $2,798,145
---------- ----------