UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2019~~2020

Commission File Number 0-16211

DENTSPLY SIRONA 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.)

13320 Ballantyne Corporate Place, Charlotte, North Carolina						28277-3607
(Address of principal executive offices)						(Zip Code)

(844) ~~546-3722~~848-0137

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	XRAY	The Nasdaq Stock Market LLC

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. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x			Accelerated filer ☐
Non-accelerated filer ☐			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: At ~~July 26, 2019,~~August 3, 2020, DENTSPLY SIRONA Inc. had ~~224,183,464~~218,496,392 shares of ~~Common Stock~~common stock outstanding.

DENTSPLY SIRONA Inc.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

DENTSPLY SIRONA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share amounts)

(unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019

Net sales	Net sales	$	1,009.4	$	1,042.1	$	1,955.6	$	1,998.2	Net sales	$	490.6	$	1,009.4	$	1,364.9	$	1,955.6
Cost of products sold	Cost of products sold	468.6		489.3		915.1		931.3		Cost of products sold	314.5		468.6		721.0		915.1

Gross profit	Gross profit	540.8		552.8		1,040.5		1,066.9		Gross profit	176.1		540.8		643.9		1,040.5
Selling, general, and administrative expenses	Selling, general, and administrative expenses	430.9		432.2		862.8		867.4		Selling, general, and administrative expenses	279.1		430.9		672.6		862.8
Goodwill impairment	Goodwill impairment	—		1,085.8		—		1,085.8		Goodwill impairment	—		—		156.6		—
Restructuring and other costs	Restructuring and other costs	42.4		188.9		62.9		199.1		Restructuring and other costs	1.3		42.4		43.8		62.9

Operating income (loss)		67.5		(1,154.1)		114.8		(1,085.4)
Operating (loss) income										Operating (loss) income	(104.3)		67.5		(229.1)		114.8

Other income and expenses:	Other income and expenses:									Other income and expenses:
Interest expense	Interest expense	8.0		9.6		16.4		18.2		Interest expense	12.3		8.0		19.0		16.4
Interest income	Interest income	(0.2)		(0.4)		(1.3)		(1.0)		Interest income	(1.0)		(0.2)		(1.4)		(1.3)
Other expense (income), net	Other expense (income), net	12.1		(1.0)		(1.7)		(35.1)		Other expense (income), net	4.3		12.1		2.9		(1.7)

Income (loss) before income taxes		47.6		(1,162.3)		101.4		(1,067.5)
Provision (benefit) for income taxes		11.2		(41.3)		25.8		(27.6)
(Loss) income before income taxes										(Loss) income before income taxes	(119.9)		47.6		(249.6)		101.4
(Benefit) provision for income taxes										(Benefit) provision for income taxes	(24.0)		11.2		(13.8)		25.8

Net income (loss)		36.4		(1,121.0)		75.6		(1,039.9)
Net (loss) income										Net (loss) income	(95.9)		36.4		(235.8)		75.6

Less: Net income attributable to noncontrolling interest		—		1.0		—		0.9
Less: Net loss attributable to noncontrolling interest										Less: Net loss attributable to noncontrolling interest	(0.5)		—		(0.5)		—

Net income (loss) attributable to Dentsply Sirona		$	36.4	$	(1,122.0)	$	75.6	$	(1,040.8)
Net (loss) income attributable to Dentsply Sirona										Net (loss) income attributable to Dentsply Sirona	$	(95.4)	$	36.4	$	(235.3)	$	75.6

Net income (loss) per common share attributable to Dentsply Sirona:
Net (loss) income per common share attributable to Dentsply Sirona:										Net (loss) income per common share attributable to Dentsply Sirona:
Basic	Basic	$	0.16	$	(4.98)	$	0.34	$	(4.60)	Basic	$	(0.44)	$	0.16	$	(1.07)	$	0.34
Diluted	Diluted	$	0.16	$	(4.98)	$	0.34	$	(4.60)	Diluted	$	(0.44)	$	0.16	$	(1.07)	$	0.34

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	224.2		225.2		223.7		226.2		Basic	218.7		224.2		219.8		223.7
Diluted	Diluted	225.7		225.2		225.3		226.2		Diluted	218.7		225.7		219.8		225.3

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

DENTSPLY SIRONA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

(unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018			2020		2019		2020		2019

Net income (loss)		$	36.4	$	(1,121.0)	$	75.6	$	(1,039.9)
Net (loss) income										Net (loss) income	$	(95.9)	$	36.4	$	(235.8)	$	75.6

Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:									Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss)	Foreign currency translation gain (loss)	43.7		(192.6)		(17.3)		(126.9)		Foreign currency translation gain (loss)	73.6		43.7		(44.8)		(17.3)
Net (loss) gain on derivative financial instruments		(9.8)		29.6		(8.1)		17.6
Net realized holding gain on available for sale securities		—		—		—		(44.3)
Net loss on derivative financial instruments										Net loss on derivative financial instruments	(7.5)		(9.8)		(2.9)		(8.1)

Pension liability gain	Pension liability gain	0.9		3.0		1.8		4.2		Pension liability gain	1.5		0.9		3.1		1.8
Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	34.8		(160.0)		(23.6)		(149.4)		Total other comprehensive income (loss), net of tax	67.6		34.8		(44.6)		(23.6)

Total comprehensive income (loss)		71.2		(1,281.0)		52.0		(1,189.3)
Total comprehensive (loss) income										Total comprehensive (loss) income	(28.3)		71.2		(280.4)		52.0

Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests	—		0.8		0.3		1.3		Less: Comprehensive income attributable to noncontrolling interests	0.1		—		0.4		0.3

Total comprehensive income (loss) attributable to Dentsply Sirona		$	71.2	$	(1,281.8)	$	51.7	$	(1,190.6)
Total comprehensive (loss) income attributable to Dentsply Sirona										Total comprehensive (loss) income attributable to Dentsply Sirona	$	(28.4)	$	71.2	$	(280.8)	$	51.7

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

DENTSPLY SIRONA INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

(unaudited)


		June 30, 2019		December 31, 2018			June 30, 2020		December 31, 2019

Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	250.1	$	309.6	Cash and cash equivalents	$	1,109.1	$	404.9
Accounts and notes receivables-trade, net	Accounts and notes receivables-trade, net	700.1		701.9		Accounts and notes receivables-trade, net	500.2		782.0
Inventories, net	Inventories, net	608.3		598.9		Inventories, net	548.9		561.7
Prepaid expenses and other current assets, net	Prepaid expenses and other current assets, net	269.8		277.6		Prepaid expenses and other current assets, net	204.7		251.3
Total Current Assets	Total Current Assets	1,828.3		1,888.0		Total Current Assets	2,362.9		1,999.9

Property, plant, and equipment, net		819.6		870.6
Property, plant and equipment, net						Property, plant and equipment, net	771.7		802.4
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	155.8		—		Operating lease right-of-use assets, net	138.8		159.3
Identifiable intangible assets, net	Identifiable intangible assets, net	2,295.9		2,420.3		Identifiable intangible assets, net	2,039.6		2,176.3
Goodwill, net	Goodwill, net	3,412.7		3,431.3		Goodwill, net	3,227.2		3,396.5
Other noncurrent assets, net	Other noncurrent assets, net	63.0		76.8		Other noncurrent assets, net	64.0		68.5
Total Assets	Total Assets	$	8,575.3	$	8,687.0	Total Assets	$	8,604.2	$	8,602.9

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	248.1	$	283.9	Accounts payable	$	214.1	$	307.9
Accrued liabilities	Accrued liabilities	524.4		578.9		Accrued liabilities	486.9		629.2
Income taxes payable	Income taxes payable	52.0		58.1		Income taxes payable	61.7		56.1
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	56.3		92.4		Notes payable and current portion of long-term debt	0.3		2.3
Total Current Liabilities	Total Current Liabilities	880.8		1,013.3		Total Current Liabilities	763.0		995.5

Long-term debt	Long-term debt	1,441.3		1,564.9		Long-term debt	2,182.7		1,433.1
Operating lease liabilities	Operating lease liabilities	119.3		—		Operating lease liabilities	101.0		119.5
Deferred income taxes	Deferred income taxes	519.8		552.8		Deferred income taxes	439.2		479.6
Other noncurrent liabilities	Other noncurrent liabilities	431.2		423.0		Other noncurrent liabilities	472.9		480.3
Total Liabilities	Total Liabilities	3,392.4		3,554.0		Total Liabilities	3,958.8		3,508.0

Commitments and contingencies	Commitments and contingencies	—		—		Commitments and contingencies	—		—

Equity:	Equity:					Equity:
Preferred stock, $1.00 par value; 0.25 million shares authorized; no shares issued		—		—
Preferred stock, $1.00 par value; 0.25 million shares authorized; 0 shares issued						Preferred stock, $1.00 par value; 0.25 million shares authorized; 0 shares issued	—		—
Common stock, $0.01 par value;	Common stock, $0.01 par value;	2.6		2.6		Common stock, $0.01 par value;	2.6		2.6
400.0 million shares authorized and 264.5 million shares issued at June 30, 2019 and December 31, 2018, respectively
224.1 million and 223.0 million shares outstanding at June 30, 2019 and December 31, 2018, respectively
400.0 million shares authorized, and 264.5 million shares issued at June 30, 2020 and December 31, 2019						400.0 million shares authorized, and 264.5 million shares issued at June 30, 2020 and December 31, 2019
218.4 million and 221.3 million shares outstanding at June 30, 2020 and December 31, 2019, respectively						218.4 million and 221.3 million shares outstanding at June 30, 2020 and December 31, 2019, respectively
Capital in excess of par value	Capital in excess of par value	6,551.3		6,522.3		Capital in excess of par value	6,576.7		6,586.7
Retained earnings	Retained earnings	1,261.8		1,225.9		Retained earnings	1,124.7		1,404.2
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(502.6)		(478.7)		Accumulated other comprehensive loss	(644.7)		(599.7)
Treasury stock, at cost, 40.4 million and 41.5 million shares at June 30, 2019 and December 31, 2018, respectively		(2,132.0)		(2,151.0)
Treasury stock, at cost, 46.1 million and 43.2 million shares at June 30, 2020 and December 31, 2019, respectively						Treasury stock, at cost, 46.1 million and 43.2 million shares at June 30, 2020 and December 31, 2019, respectively	(2,416.2)		(2,301.3)
Total Dentsply Sirona Equity	Total Dentsply Sirona Equity	5,181.1		5,121.1		Total Dentsply Sirona Equity	4,643.1		5,092.5

Noncontrolling interests	Noncontrolling interests	1.8		11.9		Noncontrolling interests	2.3		2.4
Total Equity	Total Equity	5,182.9		5,133.0		Total Equity	4,645.4		5,094.9
Total Liabilities and Equity	Total Liabilities and Equity	$	8,575.3	$	8,687.0	Total Liabilities and Equity	$	8,604.2	$	8,602.9

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

DENTSPLY SIRONA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in millions, except per share amounts)

(unaudited)

Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total Dentsply Sirona
Equity Noncontrolling
Interests Total
Equity
Balance at December 31, 2018 $ 2.6 $ 6,522.3 $ 1,225.9 $ (478.7) $ (2,151.0) $ 5,121.1 $ 11.9 $ 5,133.0
Net income — — 39.2 — — 39.2 — 39.2
Other comprehensive loss — — — (58.7) — (58.7) 0.3 (58.4)
Divestiture of noncontrolling interest — — — — — — (10.4) (10.4)
Exercise of stock options — 1.5 — — 18.2 19.7 — 19.7
Stock based compensation expense — 9.1 — — — 9.1 — 9.1
Funding of Employee Stock Purchase Plan — 0.1 — — 1.9 2.0 — 2.0
Restricted Stock Unit "RSU" distributions — (12.8) — — 8.0 (4.8) — (4.8)
RSU dividends — 0.2 (0.2) — — — — —
Cash dividends ($0.0875 per share) — — (19.9) — — (19.9) — (19.9)
Balance at March 31, 2019 $ 2.6 $ 6,520.4 $ 1,245.0 $ (537.4) $ (2,122.9) $ 5,107.7 $ 1.8 $ 5,109.5
Net income — — 36.4 — — 36.4 — 36.4
Other comprehensive income — — — 34.8 — 34.8 — 34.8
Exercise of stock options — 6.3 — — 50.2 56.5 — 56.5
Stock based compensation expense — 25.2 — — — 25.2 — 25.2
Treasury shares purchased — — — — (60.0) (60.0) — (60.0)
RSU distributions — (0.8) — — 0.7 (0.1) — (0.1)
RSU dividends — 0.2 (0.2) — — — — —
Cash dividends ($0.0875 per share) — — (19.4) — — (19.4) — (19.4)
Balance at June 30, 2019 $ 2.6 $ 6,551.3 $ 1,261.8 $ (502.6) $ (2,132.0) $ 5,181.1 $ 1.8 $ 5,182.9


	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Dentsply Sirona Equity		Noncontrolling Interests		Total Equity

Balance at December 31, 2019	$	2.6	$	6,586.7	$	1,404.2	$	(599.7)	$	(2,301.3)	$	5,092.5	$	2.4	$	5,094.9
Net loss	—		—		(139.9)		—		—		(139.9)		—		(139.9)
Other comprehensive (loss) income	—		—		—		(112.5)		—		(112.5)		0.3		(112.2)

Exercise of stock options	—		(0.5)		—		—		4.3		3.8		—		3.8
Stock based compensation expense	—		9.4		—		—		—		9.4		—		9.4
Funding of employee stock purchase plan	—		0.8		—		—		1.3		2.1		—		2.1
Treasury shares purchased	—		(28.0)		—		—		(112.0)		(140.0)		—		(140.0)


Restricted stock unit distributions	—		(14.8)		—		—		8.7		(6.1)		—		(6.1)
Restricted stock unit dividends	—		0.3		(0.3)		—		—		—		—		—
Cash dividends ($0.1000 per share)	—		—		(21.8)		—		—		(21.8)		—		(21.8)
Balance at March 31, 2020	$	2.6	$	6,553.9	$	1,242.2	$	(712.2)	$	(2,399.0)	$	4,687.5	$	2.7	$	4,690.2
Net loss	—		—		(95.4)		—		—		(95.4)		(0.5)		(95.9)
Other comprehensive income	—		—		—		67.5		—		67.5		0.1		67.6

Exercise of stock options	—		0.3		—		—		1.3		1.6		—		1.6
Stock based compensation expense	—		10.3		—		—		—		10.3		—		10.3
Treasury shares purchased	—		28.0		—		—		(28.0)		—		—		—

Restricted stock unit distributions	—		(16.0)		—		—		9.5		(6.5)		—		(6.5)
Restricted stock unit dividends	—		0.2		(0.2)		—		—		—		—		—
Cash dividends ($0.1000 per share)	—		—		(21.9)		—		—		(21.9)		—		(21.9)
Balance at June 30, 2020	$	2.6	$	6,576.7	$	1,124.7	$	(644.7)	$	(2,416.2)	$	4,643.1	$	2.3	$	4,645.4

~~DENTSPLY SIRONA INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY~~

~~(in millions, except per share amounts)~~

~~(unaudited)~~

Common
Stock Capital in
Excess of
Par Value Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock Total Dentsply Sirona
Equity Noncontrolling
Interests Total
Equity
Balance at December 31, 2017 $ 2.6 $ 6,543.9 $ 2,316.2 $ (291.0) $ (1,955.4) $ 6,616.3 $ 11.6 $ 6,627.9
Net income — — 81.2 — — 81.2 (0.1) 81.1
Other comprehensive income — — — 10.0 — 10.0 0.6 10.6
Exercise of stock options — (1.8) — — 9.4 7.6 — 7.6
Cumulative effect on adoption of ASC 606 — — (6.0) — — (6.0) — (6.0)
Reclassification on adoption of ASU No. 2016-16 — — (2.7) — — (2.7) — (2.7)
Reclassification on adoption of ASU No. 2018-02 — — 7.6 — — 7.6 — 7.6
Stock based compensation expense — 9.3 — — — 9.3 — 9.3
RSU distributions — (19.9) — — 9.9 (10.0) — (10.0)
RSU dividends — 0.2 (0.2) — — — — —
Cash dividends ($0.0875 per share) — — (20.2) — — (20.2) — (20.2)
Balance at March 31, 2018 $ 2.6 $ 6,531.7 $ 2,375.9 $ (281.0) $ (1,936.1) $ 6,693.1 $ 12.1 $ 6,705.2
Net income — — (1,122.0) — — (1,122.0) 1.0 (1,121.0)
Other comprehensive (loss) income — — — (159.8) — (159.8) (0.2) (160.0)
Exercise of stock options — (4.6) — — 8.2 3.6 — 3.6
Reclassification on adoption of ASU No. 2018-02 — — 0.5 — — 0.5 — 0.5
Stock based compensation expense — 0.5 — — — 0.5 — 0.5
Treasury shares purchased — — — — (250.2) (250.2) — (250.2)
RSU distributions — (1.5) — — 1.1 (0.4) — (0.4)
RSU dividends — 0.1 (0.1) — — — — —
Cash dividends ($0.175 per share) — — (38.1) — — (38.1) — (38.1)
Balance at June 30, 2018 $ 2.6 $ 6,526.2 $ 1,216.2 $ (440.8) $ (2,177.0) $ 5,127.2 $ 12.9 $ 5,140.1


	Common Stock		Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Dentsply Sirona Equity		Noncontrolling Interests		Total Equity

Balance at December 31, 2018	$	2.6	$	6,522.3	$	1,225.9	$	(478.7)	$	(2,151.0)	$	5,121.1	$	11.9	$	5,133.0
Net income	—		—		39.2		—		—		39.2		—		39.2
Other comprehensive (loss) income	—		—		—		(58.7)		—		(58.7)		0.3		(58.4)
Divestiture of noncontrolling interest	—		—		—		—		—		—		(10.4)		(10.4)
Exercise of stock options	—		1.5		—		—		18.2		19.7		—		19.7
Stock based compensation expense	—		9.1		—		—		—		9.1		—		9.1
Funding of employee stock purchase plan	—		0.1		—		—		1.9		2.0		—		2.0
Restricted stock unit distributions	—		(12.8)						8.0		(4.8)		—		(4.8)
Restricted stock unit dividends	—		0.2		(0.2)		—		—		—		—		—
Cash dividends ($0.0875 per share)	—		—		(19.9)		—		—		(19.9)		—		(19.9)
Balance at March 31, 2019	$	2.6	$	6,520.4	$	1,245.0	$	(537.4)	$	(2,122.9)	$	5,107.7	$	1.8	$	5,109.5
Net income	—		—		36.4		—		—		36.4		—		36.4
Other comprehensive income	—		—		—		34.8		—		34.8		—		34.8

Exercise of stock options	—		6.3		—		—		50.2		56.5		—		56.5

Stock based compensation expense	—		25.2		—		—		—		25.2		—		25.2
Treasury shares purchased	—		—		—		—		(60.0)		(60.0)		—		(60.0)

Restricted stock unit distributions	—		(0.8)		—		—		0.7		(0.1)		—		(0.1)
Restricted stock unit dividends	—		0.2		(0.2)		—		—		—		—		—
Cash dividends ($0.0875 per share)	—		—		(19.4)		—		—		(19.4)		—		(19.4)
Balance at June 30, 2019	$	2.6	$	6,551.3	$	1,261.8	$	(502.6)	$	(2,132.0)	$	5,181.1	$	1.8	$	5,182.9

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

DENTSPLY SIRONA INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


		Six Months Ended June 30,							Six Months Ended June 30,
		2019		2018			2020		2019

Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)		$	75.6	$	(1,039.9)
Net (loss) income						Net (loss) income	$	(235.8)	$	75.6

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net (loss) income to net cash provided by operating activities:						Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation	Depreciation	70.4		68.8		Depreciation	64.5		70.4
Amortization of intangible assets	Amortization of intangible assets	95.5		100.1		Amortization of intangible assets	93.8		95.5
Amortization of deferred financing costs	Amortization of deferred financing costs	1.4		1.3		Amortization of deferred financing costs	1.8		1.4
Fixed asset impairment	Fixed asset impairment	33.2		—		Fixed asset impairment	—		33.2
Goodwill impairment	Goodwill impairment	—		1,085.8		Goodwill impairment	156.6		—
Indefinite-lived intangible asset impairment	Indefinite-lived intangible asset impairment	5.3		179.2		Indefinite-lived intangible asset impairment	38.7		5.3

Deferred income taxes	Deferred income taxes	(18.4)		(70.8)		Deferred income taxes	(32.4)		(18.4)
Stock based compensation expense	Stock based compensation expense	34.4		9.8		Stock based compensation expense	19.7		34.4
Restructuring and other costs - non-cash	Restructuring and other costs - non-cash	14.8		9.1		Restructuring and other costs - non-cash	4.5		14.8

Other non-cash income	Other non-cash income	(16.7)		(2.9)		Other non-cash income	(3.7)		(16.7)
Loss on disposal of property, plant and equipment	Loss on disposal of property, plant and equipment	0.6		0.6		Loss on disposal of property, plant and equipment	0.6		0.6
Gain on divestiture of noncontrolling interest	Gain on divestiture of noncontrolling interest	(8.7)		—		Gain on divestiture of noncontrolling interest	—		(8.7)
Loss on sale of non-strategic businesses and product lines	Loss on sale of non-strategic businesses and product lines	14.5		—		Loss on sale of non-strategic businesses and product lines	—		14.5
Gain on sale of equity security		—		(44.1)

Changes in operating assets and liabilities, net of acquisitions:	Changes in operating assets and liabilities, net of acquisitions:					Changes in operating assets and liabilities, net of acquisitions:
Accounts and notes receivable-trade, net	Accounts and notes receivable-trade, net	(1.5)		23.0		Accounts and notes receivable-trade, net	268.7		(1.5)
Inventories, net	Inventories, net	(18.3)		(69.3)		Inventories, net	(1.0)		(18.3)
Prepaid expenses and other current assets, net	Prepaid expenses and other current assets, net	7.9		(25.7)		Prepaid expenses and other current assets, net	33.0		7.9
Other noncurrent assets, net	Other noncurrent assets, net	6.9		(7.7)		Other noncurrent assets, net	5.9		6.9
Accounts payable	Accounts payable	(32.2)		(6.5)		Accounts payable	(88.7)		(32.2)
Accrued liabilities	Accrued liabilities	(81.1)		(4.6)		Accrued liabilities	(138.6)		(81.1)
Income taxes	Income taxes	(11.0)		(28.5)		Income taxes	(14.6)		(11.0)
Other noncurrent liabilities	Other noncurrent liabilities	1.8		(5.7)		Other noncurrent liabilities	(8.6)		1.8
Net cash provided by operating activities	Net cash provided by operating activities	174.4		172.0		Net cash provided by operating activities	164.4		174.4

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(63.5)		(81.2)		Capital expenditures	(38.8)		(63.5)

Cash paid for acquisitions of businesses and equity investments, net of cash acquired		—		(130.5)

Cash received on sale of non-strategic businesses or product lines	Cash received on sale of non-strategic businesses or product lines	11.6		—		Cash received on sale of non-strategic businesses or product lines	—		11.6
Cash received on derivatives contracts		27.0		1.9
Cash paid on derivatives contracts		—		(2.4)
Expenditures for identifiable intangible assets		—		(5.3)
Purchase of short-term investments		(0.3)		—
Cash received on derivative contracts						Cash received on derivative contracts	57.5		27.0

Purchase of short term investments						Purchase of short term investments	—		(0.3)

Proceeds from sale of equity security		—		54.1
Proceeds from sale of property, plant, and equipment, net		0.7		3.9
Net cash used in investing activities		(24.5)		(159.5)

Proceeds from sale of property, plant and equipment, net						Proceeds from sale of property, plant and equipment, net	0.7		0.7
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	19.4		(24.5)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Increase in short-term borrowings		(23.3)		187.3

Repayments on short-term borrowings						Repayments on short-term borrowings	(1.2)		(23.3)
Cash paid for treasury stock	Cash paid for treasury stock	(60.0)		(250.2)		Cash paid for treasury stock	(140.0)		(60.0)
Cash dividends paid	Cash dividends paid	(39.1)		(39.7)		Cash dividends paid	(44.0)		(39.1)

Proceeds from long-term borrowings, net of deferred financing costs		1.7		0.3
Repayments on long-term borrowings		(134.6)		(0.4)
Proceeds from long-term borrowings						Proceeds from long-term borrowings	1,448.4		1.7
Repayments of long-term borrowings						Repayments of long-term borrowings	(700.9)		(134.6)
Deferred financing costs						Deferred financing costs	(6.3)		—
Proceeds from exercised stock options	Proceeds from exercised stock options	76.4		13.9		Proceeds from exercised stock options	5.4		76.4
Cash paid for contingent consideration on prior acquisitions	Cash paid for contingent consideration on prior acquisitions	(30.6)		—		Cash paid for contingent consideration on prior acquisitions	(2.7)		(30.6)

Net cash used in financing activities		(209.5)		(88.8)
Cash paid on derivative contracts						Cash paid on derivative contracts	(30.5)		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	528.2		(209.5)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	0.1		(5.0)		Effect of exchange rate changes on cash and cash equivalents	(7.8)		0.1
Net decrease in cash and cash equivalents		(59.5)		(81.3)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	704.2		(59.5)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	309.6		320.6		Cash and cash equivalents at beginning of period	404.9		309.6
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	250.1	$	239.3	Cash and cash equivalents at end of period	$	1,109.1	$	250.1

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

DENTSPLY SIRONA Inc. and Subsidiaries

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the U.S. Securities and Exchange Commission (“SEC”). The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included. Results for interim periods should not be considered indicative of results for a full year. These financial statements and related notes contain the accounts of DENTSPLY SIRONA Inc. and ~~Subsidiaries~~subsidiaries (“Dentsply Sirona” or the “Company”) on a consolidated basis and should be read in conjunction with the consolidated financial statements and notes included in the Company’s most recent Form 10-K for the year ended December 31, ~~2018.~~2019.

The accounting policies of the Company, as applied in the interim consolidated financial statements presented herein are substantially the same as presented in the Company’s Form 10-K for the year ended December 31, ~~2018,~~2019, except as may be indicated below.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.

For the six months ended June 30, 2020, the Company made certain estimates and assumptions related to the financial statements. Some of these estimates and assumptions were based on the impacts of the COVID-19 pandemic as they were known as of the date of the filing of this Form 10-Q and there may be changes to those estimates in future periods. Actual results may differ from these estimates. As of the date of issuance of these consolidated financial statements, the full extent to which the COVID-19 pandemic will directly or indirectly have a negative material impact on the Company's financial condition, liquidity, or results of operations, is highly uncertain and difficult to predict. More specifically, the demand for the Company's products has been, and continues to be, affected by social distancing guidelines, newly implemented dental practice safety protocols which reduce patient traffic, and patient reluctance to seek dental care. At this time, it is uncertain how long these impacts will continue. The impact of the stay-at-home orders and limits to essential-only dental procedures affected demand for the Company's products in March and April, and began to see improvements in May and June as some of these orders were lifted. Furthermore, economies and, to a lesser extent, capital markets worldwide have also been negatively impacted by the continuing COVID-19 pandemic, and it is possible that it could prolong or deepen the United States and/or global economic recession. Such economic disruption has had, and could continue to have, a significant negative effect on the Company's business. Governmental authorities around the world have responded with fiscal policy actions to support economies as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

During the first six months of 2020, the Company's business was impacted by COVID-19. The impact began in mid-March where it was most pronounced in Europe and certain countries in Asia where the Company experienced partial or country-wide lockdowns of operations in various markets; including China, France, and Italy. The United States was most impacted in April and May. Certain other countries in South America continue to be impacted by many COVID-19 cases. Additionally, most countries throughout the world continue to experience localized surges of COVID-19 cases which are being responded to by governmental authorities with partial lockdowns. While the duration and severity of this continuing pandemic is uncertain, the Company currently expects that its results of operations will have a negative material impact for the remainder of 2020 and potentially beyond. As a result of the economic uncertainties caused by the COVID-19 pandemic, the Company has implemented several measures to improve liquidity and operating results, including reduction of hours and salaries, furloughs, suspended hiring, travel bans, delaying some of its planned capital expenditures, and deferring other discretionary spending for 2020. The Company will continue to reassess the reduction in work hours and furloughs as demand for products increases. The Company believes it will be able to generate sufficient liquidity to satisfy its obligations and remain in compliance with the Company's existing debt covenants for the next twelve months.

Specifically, at June 30, 2020, the Company had $1,109.1 million of cash and has availability to a $700.0 million revolving credit facility as well as other credit facilities of approximately $400.0 million entered into during the three months ended June 30, 2020. For further details on these credit facilities see Note 11, Financing Arrangements. At June 30, 2020, the Company is in compliance with all of the debt covenants. The Company expects to remain in compliance with all covenants, which includes an operating income excluding depreciation and amortization to interest expense of not less than 3.0 times on a trailing twelve months basis. If recovery from the pandemic takes longer than currently estimated by the Company, the Company may need to seek covenant waivers in the future. The Company's failure to obtain debt covenant waivers could trigger a violation of these covenants and lead to default and acceleration of all of its outstanding debt, which could have a material adverse effect on liquidity.

Revenue Recognition

At June 30, ~~2019,~~2020, the Company had ~~$29.2~~$25.7 million of deferred revenue recorded in Accrued liabilities in the Consolidated Balance Sheets. The Company expects to recognize significantly all of the deferred revenue within the next ~~twelve~~12 months.

Accounts and Notes Receivable

The Company records a provision for doubtful accounts, which is included in Selling, general, and administrative expenses in the Consolidated Statements of Operations.

Accounts and notes receivables – trade, net are stated net of allowances for doubtful accounts and trade discounts, which were ~~$28.5~~$37.4 million at June 30, ~~2019~~2020 and ~~$24.5~~$29.4 million at December 31, ~~2018.~~2019. During the three months ended June 30, 2020, the Company has experienced delays in customer payments as a result of disruptions in operations of dental practices due to the COVID-19 pandemic.

Recently Adopted Accounting Pronouncements

In ~~February~~June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13 "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." This newly issued accounting standard changes the recognition and measurement of credit losses, including trade accounts receivable. Under current accounting standards, a loss is recognized when such loss becomes probable of occurring. The new standard broadens the information that an entity must consider when developing expected credit loss estimates. The Company adopted this accounting standard on January 1, 2020. The adoption of this standard did not materially impact the Company's financial position, results of operations, cash flows, disclosures or internal controls.

In December 2019, the FASB issued ASU No. ~~2016-02, Leases~~2019-12 "Income Taxes (Topic ~~842) with subsequent~~740): Simplifying the Accounting for Income Taxes." This newly issued accounting standard simplifies key provisions for accounting for income taxes, as part of the FASB's initiative to reduce complexity in accounting standards. The amendments ~~(collectively, “Topic 842”).~~eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendments also clarify and simplify other aspects of the accounting for income taxes. The amendments in this update are effective for interim and fiscal periods beginning after December 31, 2020. The Company adopted ~~the new leasing standards~~this accounting standard on January 1, 2019 using the modified retrospective approach transition method. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior periods are not adjusted and continue to be reported in accordance with historic accounting under ASC 840.2020. The ~~Company elected the package~~adoption of ~~practical expedients permitted under the transition guidance within the~~this standard ~~which eliminates the reassessment of past leases, their classification and initial direct costs for existing leases. The Company~~ did not ~~elect to adopt~~materially impact the hindsight practical expedient. The Company recognized material right-of-use assets and liabilities in the Consolidated Balance Sheets for its operating lease commitments with terms greater than twelve months. See Note 8, Leases for additional information. The impactCompany's financial position, results of ~~adopting this standard, by financial statement line item, on January 1, 2019 was as follows:~~operations, cash flows, disclosures or internal controls.

~~(in millions)~~

~~January 1, 2019~~

~~Assets~~

~~Operating lease right-of-use assets, net~~

~~167.1~~

~~Property, plant, and equipment, net~~

~~1.8~~

~~Liabilities~~

~~Accrued liabilities~~

~~39.4~~

~~Notes payable and current portion of long-term debt~~

~~0.2~~

~~Long-term debt~~

~~1.5~~

~~Operating lease liabilities~~

~~126.5~~

In August 2017, the FASB issued ASU No. 2017-12, “Derivatives and Hedging.” This newly issued accounting standard improves the financial reporting and disclosure of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in this update make improvements to simplify the application of the hedge accounting guidance in current US GAAP based on the feedback received from preparers, auditors, users and other stakeholders. More specifically, this update expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instruments and the hedged items in the financial statements. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, an entity should apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this update. The amended presentation and disclosure guidance is required only prospectively. The Company adopted this accounting standard during the three months ended March 31, 2019. The adoption of this standard did not materially impact the statements of operations, financial position, cash flows, and disclosures.

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~

In August 2018, the FASB issued ASU No. 2018-14 "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans." This newly issued accounting standard changes disclosure requirements for defined benefit plans, including removal and modification of existing disclosures. The amendments in this standard are required for fiscal years ending after December 15, 2020. ~~Early adoption is permitted.~~ The amendments should be applied on a retrospective basis for all periods presented. The Company adopted this accounting standard on January 1, 2020. The adoption of this standard did not materially impact the Company's disclosures.

Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 828): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This newly issued accounting standard provides guidance on whether the change in reference rate is a modification versus an extinguishment of a contract. Specifically, there is risk of cessation of the London Interbank Offer Rate ("LIBOR"). The Company has certain variable interest rate debt that use LIBOR as a reference rate. The guidance provided by this accounting standard may be used for contracts entered into on or before December 31, 2022 on a prospective basis. The Company is currently assessing the impact that this standard will have on its financial position, results of operations, cash flows and disclosures.

NOTE 2 – STOCK COMPENSATION

~~The following represents total~~Total stock based compensation expense for non-qualified stock options, ~~RSUs~~restricted stock units ("RSU") and the tax related benefit for the three and six months ended June 30, 2020 and 2019 were as follows:


	Three Months Ended						Six Months Ended
(in millions)	2020		2019		2020		2019

Stock option expense	$	1.9	$	2.8	$	3.5	$	5.0
RSU expense	8.0		22.1		15.6		28.8
Total stock based compensation expense	$	9.9	$	24.9	$	19.1	$	33.8

Related deferred income tax benefit	$	1.1	$	3.6	$	2.1	$	5.0

For the three and ~~2018:~~

Three Months Ended Six Months Ended
(in millions) 2019 2018 2019 2018
Stock option expense $ 2.8 $ 2.7 $ 5.0 $ 3.4
RSU expense 22.1 (2.6) 28.8 5.9
Total stock based compensation expense $ 24.9 $ 0.1 $ 33.8 $ 9.3
Related deferred income tax benefit $ 3.6 $ — $ 5.0 $ 1.6
six months ended June 30, 2020, stock compensation expense was $9.9 million and $19.1 million, respectively, of which $9.6 million and $18.5 million, respectively, was recorded in Selling, general, and administrative expense, and $0.3 million and $0.6 million, respectively, was recorded in Cost of products sold in the Consolidated Statements of Operations.

For the three and six months ended June 30, 2019, stock compensation expense was $24.9 million and $33.8 million, respectively, of which $24.2 million and $32.8 million, respectively, was recorded in Selling, general, and administrative expense, and $0.7 million and $1.0 million, respectively, was recorded in Cost of products sold in the Consolidated Statements of Operations.

For the three and six months ended June 30, 2018, stock compensation expense was $0.1 million and $9.3 million, respectively, of which $1.2 million and $8.3 million, respectively, was recorded in Selling, general, and administrative expense, and $0.1 million and $0.4 million, respectively, was recorded in Cost of products sold in the Consolidated Statements of Operations. For the three and six months ended June 30, 2018, the Company recorded income of $1.2 million and expense of $0.5 million, respectively, in Restructuring and other costs in the Consolidated Statements of Operations.

During the six months ended June 30, 2019, the Company granted certain performance-based RSUs issued under the 2016 Omnibus Incentive Plan to provide performance targets for the Company's three year transformation program. The adjusted operating income margin performance target approximates the adjusted operating income margin targets previously disclosed by the Company as part of its effort to support revenue growth and margin expansion. For vesting to occur an adjusted operating income margin target must be achieved over a period of four consecutive quarters, and an adjusted operating income margin above that target threshold must then be maintained for the subsequent quarter, all calculated on a trailing four quarter basis. ~~The performance period began on January 1, 2019 and concludes on December 31, 2022.~~

NOTE 3 – COMPREHENSIVE INCOME (LOSS)

~~The following summarizes the components~~Components of Other comprehensive income (loss), net of tax, for the three and six months ended June 30, 2020 and 2019 ~~and 2018:~~were as follows:


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in millions)	(in millions)	2019		2018		2019		2018		(in millions)	2020		2019		2020		2019

Foreign currency translation gains (losses)	Foreign currency translation gains (losses)	$	54.9	$	(223.4)	$	(17.0)	$	(139.4)	Foreign currency translation gains (losses)	$	83.5	$	54.9	$	(39.5)	$	(17.0)
Foreign currency translation (loss) gain on hedges of net investments		(11.2)		31.0		(0.6)		12.1
Foreign currency translation loss on hedges of net investments										Foreign currency translation loss on hedges of net investments	(10.0)		(11.2)		(5.7)		(0.6)

These amounts are recorded in Accumulated other comprehensive ~~loss~~income (loss) ("AOCI"), net of any related tax adjustments. At June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the cumulative tax adjustments were ~~$152.6~~$172.0 million and ~~$157.4~~$173.0 million, respectively, primarily related to foreign currency translation gains and losses.

The cumulative foreign currency translation adjustments included translation losses of ~~$189.9~~$299.7 million and ~~$172.9~~$260.2 million at June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, and cumulative losses on loans designated as hedges of net investments of ~~$112.4~~$113.8 million and ~~$111.8~~$108.1 million, respectively. These foreign currency translation losses were partially offset by movements on derivative financial instruments.

Changes in AOCI, net of tax, by component for the six months ended June 30, ~~2019~~2020 and ~~2018~~2019 were as follows:


(in millions)	(in millions)	Foreign Currency Translation Gain (Loss)		Gain (Loss) on Cash Flow Hedges		Gain (Loss) on Net Investment Hedges		Pension Liability Gain (Loss)		Total		(in millions)	Foreign Currency Translation Gain (Loss)		Gain (Loss) on Cash Flow Hedges		Gain (Loss) on Net Investment Hedges		Pension Liability Gain (Loss)		Total

Balance, net of tax, at December 31, 2018		$	(284.7)	$	0.6	$	(111.4)	$	(83.2)	$	(478.7)
Balance, net of tax, at December 31, 2019												Balance, net of tax, at December 31, 2019	$	(368.3)	$	(10.6)	$	(100.7)	$	(120.1)	$	(599.7)
Other comprehensive (loss) income before reclassifications and tax impact	Other comprehensive (loss) income before reclassifications and tax impact	(13.4)		(15.4)		6.7		—		(22.1)		Other comprehensive (loss) income before reclassifications and tax impact	(41.1)		(15.9)		9.8		—		(47.2)
Tax (expense) benefit	Tax (expense) benefit	(4.2)		4.0		(4.6)		—		(4.8)		Tax (expense) benefit	(4.1)		3.8		(0.7)		—		(1.0)
Other comprehensive (loss) income, net of tax, before reclassifications	Other comprehensive (loss) income, net of tax, before reclassifications	(17.6)		(11.4)		2.1		—		(26.9)		Other comprehensive (loss) income, net of tax, before reclassifications	(45.2)		(12.1)		9.1		—		(48.2)
Amounts reclassified from accumulated other comprehensive income, net of tax	Amounts reclassified from accumulated other comprehensive income, net of tax	—		1.2		—		1.8		3.0		Amounts reclassified from accumulated other comprehensive income, net of tax	—		0.1		—		3.1		3.2
Net (decrease) increase in other comprehensive loss	Net (decrease) increase in other comprehensive loss	(17.6)		(10.2)		2.1		1.8		(23.9)		Net (decrease) increase in other comprehensive loss	(45.2)		(12.0)		9.1		3.1		(45.0)

Balance, net of tax, at June 30, 2019		$	(302.3)	$	(9.6)	$	(109.3)	$	(81.4)	$	(502.6)
Balance, net of tax, at June 30, 2020												Balance, net of tax, at June 30, 2020	$	(413.5)	$	(22.6)	$	(91.6)	$	(117.0)	$	(644.7)


(in millions)	(in millions)	Foreign Currency Translation Gain (Loss)		Gain (Loss) on Cash Flow Hedges		Gain (Loss) on Net Investment Hedges		Net Unrealized Holding Gain on Available-for-sale Securities		Pension Liability Gain (Loss)		Total		(in millions)	Foreign Currency Translation Gain (Loss)		Gain (Loss) on Cash Flow Hedges		Gain (Loss) on Net Investment Hedges		Pension Liability Gain (Loss)		Total

Balance, net of tax, at December 31, 2017		$	(104.5)	$	(12.6)	$	(127.6)	$	44.3	$	(90.6)	$	(291.0)
Balance, net of tax, at December 31, 2018														Balance, net of tax, at December 31, 2018	$	(284.7)	$	0.6	$	(111.4)	$	(83.2)	$	(478.7)
Other comprehensive (loss) income before reclassifications and tax impact	Other comprehensive (loss) income before reclassifications and tax impact	(106.6)		(4.2)		29.4		—		2.4		(79.0)		Other comprehensive (loss) income before reclassifications and tax impact	(13.4)		(15.4)		6.7		—		(22.1)
Tax (expense) benefit	Tax (expense) benefit	(20.7)		0.5		(14.5)		—		(0.6)		(35.3)		Tax (expense) benefit	(4.2)		4.0		(4.6)		—		(4.8)
Other comprehensive (loss) income, net of tax, before reclassifications	Other comprehensive (loss) income, net of tax, before reclassifications	(127.3)		(3.7)		14.9		—		1.8		(114.3)		Other comprehensive (loss) income, net of tax, before reclassifications	(17.6)		(11.4)		2.1		—		(26.9)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax		—		6.4		—		(44.3)		2.4		(35.5)
Amounts reclassified from accumulated other comprehensive income, net of tax														Amounts reclassified from accumulated other comprehensive income, net of tax	—		1.2		—		1.8		3.0
Net (decrease) increase in other comprehensive loss	Net (decrease) increase in other comprehensive loss	(127.3)		2.7		14.9		(44.3)		4.2		(149.8)		Net (decrease) increase in other comprehensive loss	(17.6)		(10.2)		2.1		1.8		(23.9)

Balance, net of tax, at June 30, 2018		$	(231.8)	$	(9.9)	$	(112.7)	$	—	$	(86.4)	$	(440.8)
Balance, net of tax, at June 30, 2019														Balance, net of tax, at June 30, 2019	$	(302.3)	$	(9.6)	$	(109.3)	$	(81.4)	$	(502.6)

Reclassifications out of AOCI to the Consolidated Statements of Operations for the three and six months ended June 30, 2020 and 2019 ~~and 2018~~ were ~~as follows:~~

Details about AOCI Components Amounts Reclassified from AOCI Affected Line Item in the Consolidated Statements of Operations
Three Months Ended
(in millions) 2019 2018
Loss on derivative financial instruments:
Interest rate swaps $ (0.5) $ (0.5) Interest expense
Foreign exchange forward contracts (0.5) (4.3) Cost of products sold
Net loss before tax (1.0) (4.8)
Tax impact — 0.7 Provision (benefit) for income taxes
Net loss after tax $ (1.0) $ (4.1)
Amortization of defined benefit pension and other postemployment benefit items:
Amortization of prior service benefits $ 0.1 $ — (a)
Amortization of net actuarial losses (1.3) (1.7) (a)
Net loss before tax (1.2) (1.7)
Tax impact 0.3 0.5 Provision (benefit) for income taxes
Net loss after tax $ (0.9) $ (1.2)
Total reclassifications for the period $ (1.9) $ (5.3)

~~(a) These AOCI components are included in the computation of net periodic benefit cost for the three months ended June 30, 2019 and 2018.~~insignificant.

1312

Details about AOCI Components Amounts Reclassified from AOCI Affected Line Item in the Consolidated Statements of Operations
Six Months Ended
(in millions) 2019 2018
Loss on derivative financial instruments:
Interest rate swaps $ (1.1) $ (1.1) Interest expense
Foreign exchange forward contracts (0.1) (6.1) Cost of products sold
Net loss before tax (1.2) (7.2)
Tax impact — 0.8 Provision (benefit) for income taxes
Net loss after tax $ (1.2) $ (6.4)
Net unrealized holding gain on available-for-sale securities:
Available-for-sale securities $ — $ 45.0 Other expense (income), net
Tax impact — (0.7) Provision (benefit) for income taxes
Net gain after tax $ — $ 44.3
Amortization of defined benefit pension and other postemployment benefit items:
Amortization of prior service benefits $ 0.2 $ — (a)
Amortization of net actuarial losses (2.7) (3.4) (a)
Net loss before tax (2.5) (3.4)
Tax impact 0.7 1.0 Provision (benefit) for income taxes
Net loss after tax $ (1.8) $ (2.4)
Total reclassifications for the period $ (3.0) $ 35.5

~~(a) These AOCI components are included in the computation of net periodic benefit cost for the three months ended June 30, 2019 and 2018.~~

NOTE 4 – EARNINGS PER COMMON SHARE

The ~~calculation~~computation of basic and diluted earnings per common share for the three and six months ended June 30, 2020 and 2019 were as follows:


Basic Earnings Per Common Share Computation	Basic Earnings Per Common Share Computation	Three Months Ended						Six Months Ended						Basic Earnings Per Common Share Computation	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	(in millions, except per share amounts)	2019		2018		2019		2018		(in millions, except per share amounts)	2020		2019		2020		2019

Net income (loss) attributable to Dentsply Sirona		$	36.4	$	(1,122.0)	$	75.6	$	(1,040.8)
Net (loss) income attributable to Dentsply Sirona										Net (loss) income attributable to Dentsply Sirona	$	(95.4)	$	36.4	$	(235.3)	$	75.6

Weighted average common shares outstanding	Weighted average common shares outstanding	224.2		225.2		223.7		226.2		Weighted average common shares outstanding	218.7		224.2		219.8		223.7

Earnings (loss) per common share - basic		$	0.16	$	(4.98)	$	0.34	$	(4.60)
(Loss) earnings per common share - basic										(Loss) earnings per common share - basic	$	(0.44)	$	0.16	$	(1.07)	$	0.34

Diluted Earnings Per Common Share Computation	Diluted Earnings Per Common Share Computation	Three Months Ended						Six Months Ended						Diluted Earnings Per Common Share Computation	Three Months Ended				Six Months Ended
(in millions, except per share amounts)	(in millions, except per share amounts)	2019		2018		2019		2018		(in millions, except per share amounts)	2020		2019		2020		2019

Net income (loss) attributable to Dentsply Sirona		$	36.4	$	(1,122.0)	$	75.6	$	(1,040.8)
Net (loss) income attributable to Dentsply Sirona										Net (loss) income attributable to Dentsply Sirona	$	(95.4)	$	36.4	$	(235.3)	$	75.6

Weighted average common shares outstanding	Weighted average common shares outstanding	224.2		225.2		223.7		226.2		Weighted average common shares outstanding	218.7		224.2		219.8		223.7
Incremental weighted average shares from assumed exercise of dilutive options from stock-based compensation awards	Incremental weighted average shares from assumed exercise of dilutive options from stock-based compensation awards	1.5		—		1.6		—		Incremental weighted average shares from assumed exercise of dilutive options from stock-based compensation awards	—		1.5		—		1.6
Total weighted average diluted shares outstanding	Total weighted average diluted shares outstanding	225.7		225.2		225.3		226.2		Total weighted average diluted shares outstanding	218.7		225.7		219.8		225.3

Earnings (loss) per common share - diluted		$	0.16	$	(4.98)	$	0.34	$	(4.60)
(Loss) earnings per common share - diluted										(Loss) earnings per common share - diluted	$	(0.44)	$	0.16	$	(1.07)	$	0.34

The calculation of weighted average diluted common shares outstanding ~~excludes stock~~excluded 0.7 million and 1.0 million of potentially diluted common shares because the Company reported a net loss for the three and six months ended June 30, 2020, respectively. Stock options and RSUs of ~~3.1~~4.2 million and ~~3.6~~3.1 million equivalent shares of common stock that were outstanding during the three and six months ended June 30, ~~2019, respectively,~~2020 were excluded because their effect would be antidilutive. There were ~~5.5~~3.1 million and ~~4.7~~3.6 million antidilutive equivalent shares of common stock outstanding during the three and six months ended June 30, ~~2018, respectively.~~2019.

On March 9, 2020, the Company entered into an accelerated share repurchase agreement with a financial institution pursuant to an Accelerated Share Repurchase Transaction (“ASR Agreement") to purchase $140.0 million of shares of the Company's common stock. Pursuant to the terms of the ASR Agreement, the Company delivered $140.0 million cash to a financial institution and received an initial delivery of 2.7 million shares of the Company’s common stock on March 9, 2020 based on a closing market price of $42.12 per share and the applicable contractual discount. The Company received the remaining 1.0 million shares on May 12, 2020. The average price per share for the total shares purchased under the ASR Agreement was $38.88 per share.

~~NOTE 5 – BUSINESS COMBINATIONS~~

On May 1, 2018, the Company acquired all of the outstanding shares of privately held OraMetrix, Inc. for $120.0 million, with an additional payment totaling $30.0 million, subject to meeting certain earn-out provisions. During the three months ended March 31, 2019, the Company paid the earn-out provision. OraMetrix specializes in orthodontic treatment planning software, wire bending, and clear aligner manufacturing and is headquartered in Richardson, Texas.

NOTE 65 – SEGMENT INFORMATION

The Company has numerous operating businesses covering a wide range of dental consumable products, dental technology, and dental equipment products primarily serving the professional dental market, and certain healthcare products. Professional dental products represented approximately ~~91%~~88%, respectively, of net sales for the three and six months ended June 30, ~~2019~~2020 and ~~92%~~91% for the three and six months ended June 30, ~~2018.~~2019.

The operating businesses are combined into ~~two~~2 operating groups, which generally have overlapping 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 adjusted operating income. Net third party sales excluding precious metal content is considered a measure not calculated in accordance with US GAAP, and is therefore considered a non-US GAAP measure. Management believes that the presentation of net sales, excluding precious metal content, provides useful information to investors because a portion of Dentsply Sirona’s net sales is comprised of sales of precious metals generated through sales of the Company’s precious metal dental alloy products, which are used by third parties to construct crown and bridge materials. Due to the fluctuations of precious metal prices and because the cost of the precious metal content of the Company’s sales is largely passed through to customers and has minimal effect on earnings, Dentsply Sirona reports net sales both with and without precious metal content to show the Company’s performance independent of precious metal price volatility and to enhance comparability of performance between periods. The Company uses its cost of precious metal purchased as a proxy for the precious metal content of sales, as the precious metal content of sales is not separately tracked and invoiced to customers. The Company believes that it is reasonable to use the cost of precious metal content purchased in this manner since precious metal dental alloy sale prices are typically adjusted when the prices of underlying precious metals change. 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 also evaluates segment performance based on each segment’s adjusted operating income before provision for income taxes and interest. Segment adjusted operating income is defined as operating income before income taxes and before certain corporate ~~headquarter~~headquarters unallocated costs, restructuring and other costs, interest expense, interest income, other expense (income), net, amortization of intangible assets, and depreciation resulting from the fair value step-up of property, plant and equipment from acquisitions. The Company’s segment adjusted operating income is considered a ~~non-US GAAP~~Non-GAAP measure. A description of the products and services provided within each of the Company’s ~~two~~2 operating segments is provided below.

During the three and six months ended June 30, 2019, certain reclassifications have been made to prior year’s data in order to conform to current year presentation. Specifically, during the three months ended March 31, 2019; the Company's laboratory dental business moved into the Consumables segment as the products sold from this business are typically made on a recurring basis and have similar sales and operating characteristics as the other businesses in this segment. The Company moved the orthodontics business into the Technologies & Equipment segment to take advantage of the synergies related to digital planning and treatment within this segment. The Company also moved the instruments business into the Technologies & Equipment segment in order to take advantage of the synergies that stem from pairing equipment with instruments, which are often sold in conjunction with each other. The segment information reflects the revised structure for all periods shown.

Technologies & Equipment

This segment is responsible for the worldwide design, manufacture, sales and distribution of the Company’s Dental Technology and Equipment Products and Healthcare Consumable Products. These products include dental implants, CAD/CAM systems, orthodontic ~~dental products,~~clear aligners, imaging systems, treatment centers, instruments, as well as consumable medical device products.

Consumables

This segment is responsible for the worldwide design, manufacture, sale and distribution of the Company’s Dental Consumable Products which include preventive, restorative, endodontic, and laboratory dental products.

The Company’s segment information for the three and six months ended June 30, ~~were~~2020 and 2019 was as follows:

~~Third Party~~ Net Sales


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in millions)	(in millions)	2019		2018		2019		2018		(in millions)	2020		2019		2020		2019

Technologies & Equipment	Technologies & Equipment	$	558.4	$	553.2	$	1,079.2	$	1,063.3	Technologies & Equipment	$	303.9	$	558.4	$	824.2	$	1,079.2
Consumables	Consumables	451.0		488.9		876.4		934.9		Consumables	186.7		451.0		540.7		876.4
Total net sales	Total net sales	$	1,009.4	$	1,042.1	$	1,955.6	$	1,998.2	Total net sales	$	490.6	$	1,009.4	$	1,364.9	$	1,955.6

~~Third Party Net Sales, Excluding Precious Metal Content~~

Three Months Ended Six Months Ended
(in millions) 2019 2018 2019 2018
Technologies & Equipment $ 558.4 $ 553.2 $ 1,079.2 $ 1,063.3
Consumables 442.1 479.5 856.3 915.2
Total net sales, excluding precious metal content 1,000.5 1,032.7 1,935.5 1,978.5
Precious metal content of sales 8.9 9.4 20.1 19.7
Total net sales, including precious metal content $ 1,009.4 $ 1,042.1 $ 1,955.6 $ 1,998.2

Segment Adjusted Operating (Loss) Income


		Three Months Ended						Six Months Ended							Three Months Ended				Six Months Ended
(in millions)	(in millions)	2019		2018		2019		2018		(in millions)	2020		2019		2020		2019

Technologies & Equipment	Technologies & Equipment	$	96.0	$	68.8	$	167.8	$	137.3	Technologies & Equipment	$	(3.8)	$	96.0	$	107.3	$	167.8
Consumables	Consumables	121.8		143.4		227.5		258.1		Consumables	(17.6)		121.8		44.0		227.5
Segment adjusted operating income before income taxes and interest		217.8		212.2		395.3		395.4
Segment adjusted operating (loss) income										Segment adjusted operating (loss) income	(21.4)		217.8		151.3		395.3

Reconciling items expense (income):	Reconciling items expense (income):									Reconciling items expense (income):
All Other (a)		58.9		39.6		118.6		92.2
All other (a)										All other (a)	33.5		58.9		83.2		118.6
Goodwill impairment	Goodwill impairment	—		1,085.8		—		1,085.8		Goodwill impairment	—		—		156.6		—
Restructuring and other costs	Restructuring and other costs	42.4		188.9		62.9		199.1		Restructuring and other costs	1.3		42.4		43.8		62.9
Interest expense	Interest expense	8.0		9.6		16.4		18.2		Interest expense	12.3		8.0		19.0		16.4
Interest income	Interest income	(0.2)		(0.4)		(1.3)		(1.0)		Interest income	(1.0)		(0.2)		(1.4)		(1.3)
Other expense (income), net	Other expense (income), net	12.1		(1.0)		(1.7)		(35.1)		Other expense (income), net	4.3		12.1		2.9		(1.7)
Amortization of intangible assets	Amortization of intangible assets	47.3		50.2		95.5		100.1		Amortization of intangible assets	46.6		47.3		93.8		95.5
Depreciation resulting from the fair value step-up of property, plant, and equipment, net from business combinations		1.7		1.8		3.5		3.6
Income (loss) before income taxes		$	47.6	$	(1,162.3)	$	101.4	$	(1,067.5)
Depreciation resulting from the fair value step-up of property, plant, and equipment from business combinations										Depreciation resulting from the fair value step-up of property, plant, and equipment from business combinations	1.5		1.7		3.0		3.5
(Loss) income before income taxes										(Loss) income before income taxes	$	(119.9)	$	47.6	$	(249.6)	$	101.4

(a) Includes the results of unassigned Corporate ~~headquarter~~headquarters costs and inter-segment eliminations.

NOTE 76 – INVENTORIES

Inventories are stated at the lower of cost and net realizable value. The cost of inventories determined by the last-in, first-out (“LIFO”) method at June 30, ~~2019~~2020 and December 31, ~~2018~~2019 were ~~$8.7~~$7.9 million and ~~$9.0~~$5.0 million, respectively. The cost of remaining inventories was determined by the first-in, first-out (“FIFO”) or average cost methods. If the FIFO method had been used to determine the cost of LIFO inventories, the amounts at which net inventories are stated would be higher than reported at June 30, ~~2019~~2020 and December 31, ~~2018~~2019 by ~~$11.6~~$15.9 million and ~~$10.2~~$14.3 million, respectively.

Inventories, net of inventory valuation reserves, ~~consist of the following:~~were as follows:


(in millions)	(in millions)	June 30, 2019		December 31, 2018		(in millions)	June 30, 2020		December 31, 2019

Finished goods	Finished goods	$	390.6	$	380.0	Finished goods	$	322.3	$	356.4
Work-in-process	Work-in-process	87.3		89.2		Work-in-process	78.8		82.5
Raw materials and supplies	Raw materials and supplies	130.4		129.7		Raw materials and supplies	147.8		122.8
Inventories, net	Inventories, net	$	608.3	$	598.9	Inventories, net	$	548.9	$	561.7

The inventory valuation ~~allowance~~reserve was ~~$106.7~~$102.0 million and ~~$92.5~~$85.0 million at June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

The increase in the inventory valuation reserve is primarily related to charges for slow moving inventory as a result of lower customer demand, some of which is due to the COVID-19 pandemic.

1916

~~NOTE 8 – LEASES~~

The Company leases real estate, automobiles and equipment under various operating and finance leases. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the implicit rate is not readily determinable in most of the Company’s lease agreements, the Company uses its estimated secured incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Beginning January 1, 2019, any new real estate and equipment operating lease agreements with lease and nonlease components, will be accounted for as a single lease component; auto leases will be accounted for as separate lease components.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of approximately 1 year to 11 years. Many of the Company's real estate and equipment leases have one or more options to renew, with terms that can extend primarily from 1 year to 3 years, which are not included in the initial lease term. The Company does not have lease agreements with residual value guarantees, sale-and-leaseback terms, or material restrictive covenants. The Company does not have any material sublease arrangements.

~~The net present value of finance and operating lease assets and liabilities consist of the following:~~

~~(in millions, except percentages)~~

~~Location in the Consolidated Balance Sheets~~

~~June 30, 2019~~

~~Assets~~

~~Current assets~~

~~Finance leases~~

~~Property, plant, and equipment, net~~

~~1.6~~

~~Operating leases~~

~~Operating lease right-of-use assets, net~~

~~155.8~~

~~Total right-of-use assets~~

~~157.4~~

~~Liabilities~~

~~Current liabilities~~

~~Finance leases~~

~~Notes payable and current portion of long-term debt~~

~~0.2~~

~~Operating leases~~

~~Accrued liabilities~~

~~39.7~~

~~Noncurrent liabilities~~

~~Finance leases~~

~~Long-term debt~~

~~1.4~~

~~Operating leases~~

~~Operating lease liability~~

~~119.3~~

~~Total lease liabilities~~

~~160.6~~

~~Supplemental information:~~

~~Weighted-average discount rate~~

~~Finance leases~~

~~3.5~~

~~Operating leases~~

~~3.0~~

~~Weighted-average remaining lease term in years~~

~~Finance leases~~

~~7.2~~

~~Operating leases~~

~~5.7~~

~~The lease cost recognized in the Consolidated Statements of Operations for the three and six months ended June 30, 2019 were as follows:~~

(in millions) Three Months Ended Six Months Ended
Finance lease cost
Amortization of right-of-use assets $ 0.1 $ 0.2
Operating lease cost 12.5 25.7
Short-term lease cost 0.3 0.4
Variable lease cost 2.0 3.9
Total lease cost $ 14.9 $ 30.2

~~The contractual maturity dates of the remaining lease liabilities at June 30, 2019 consist of the following:~~

(in millions) Finance Leases Operating Leases Total
2019, excluding the six months ended June 30, 2019 $ 0.1 $ 23.0 $ 23.1
2020 0.3 38.8 39.1
2021 0.3 29.7 30.0
2022 0.3 22.4 22.7
2023 0.2 17.4 17.6
2024 and beyond 0.7 43.8 44.5
Total lease payments $ 1.9 $ 175.1 $ 177.0
Less imputed interest 0.3 16.1 16.4
Present value of lease liabilities $ 1.6 $ 159.0 $ 160.6

~~The contractual maturity dates presented under prior lease accounting guidance of the remaining rental commitments at December 31, 2018 were as follows:~~

(in millions) Finance Leases Operating Leases Total
2019 $ 4.2 $ 36.6 $ 40.8
2020 4.2 28.5 32.7
2021 2.5 22.1 24.6
2022 1.8 16.4 18.2
2023 1.3 12.7 14.0
2024 and beyond 1.1 16.9 18.0
Total lease payments $ 15.1 $ 133.2 $ 148.3

~~The supplemental cash flow information for the three and six months ended June 30, 2019 were as follows:~~

(in millions) Three Months Ended Six Months Ended
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 12.6 $ 25.2
Financing cash flows from finance leases 0.1 0.2
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases $ 1.5 $ 5.8

NOTE 97 – RESTRUCTURING AND OTHER COSTS

During the three and six months ended June 30, 2020 the Company recorded restructuring and other costs of $1.3 million and $43.8 million, respectively. During the three and six months ended June 30, 2019, the Company recorded restructuring and other costs of $42.4 million and $62.9 million, respectively.

Restructuring Costs

During the three and six months ended June 30, ~~2019,~~2020 the Company recorded net restructuring costs ~~and other costs~~ of ~~$42.4~~$2.2 million and ~~$62.9 million, respectively, which includes net restructuring costs of $10.7 million and $24.9~~$4.5 million, respectively. During the three and six months ended June 30, ~~2018,~~2019, the Company recorded net restructuring costs ~~and other cost~~ of ~~$188.9~~$10.7 million and ~~$199.1 million, respectively, which includes net restructuring costs of $3.4 million and $10.8~~$24.9 million, respectively. These costs are recorded in Restructuring and other costs in the Consolidated Statements of Operations and the associated liabilities are recorded in Accrued liabilities and Other noncurrent liabilities in the Consolidated Balance Sheets.

The Company’s restructuring accruals at June 30, 2020 were as follows:


		Severance															Severance
(in millions)	(in millions)	2017 and Prior Plans		2018 Plans		2019 Plans		Total		(in millions)	2018 and Prior Plans		2019 Plans		2020 Plans		Total

Balance at December 31, 2018		$	26.8	$	16.4	$	—	$	43.2
Balance at December 31, 2019										Balance at December 31, 2019	$	7.2	$	19.8	$	—	$	27.0
Provisions	Provisions	2.5		2.0		16.0		20.5		Provisions	1.0		0.9		4.1		6.0
Amounts applied	Amounts applied	(16.2)		(8.9)		(3.4)		(28.5)		Amounts applied	(2.2)		(5.6)		(0.3)		(8.1)
Change in estimates	Change in estimates	(0.6)		(0.5)		1.6		0.5		Change in estimates	(0.4)		(1.5)		—		(1.9)
Balance at June 30, 2019		$	12.5	$	9.0	$	14.2	$	35.7
Balance at June 30, 2020										Balance at June 30, 2020	$	5.6	$	13.6	$	3.8	$	23.0


		Lease/Contract Terminations									Lease/Contract Terminations
(in millions)	(in millions)	2017 and Prior Plans		2018 Plans		Total		(in millions)	2018 and Prior Plans		2020 Plans		Total

Balance at December 31, 2018		$	0.5	$	0.1	$	0.6
Balance at December 31, 2019								Balance at December 31, 2019	$	0.5	$	—	$	0.5
Provisions	Provisions	0.4		—		0.4		Provisions	0.3		0.1		0.4
Amounts applied	Amounts applied	(0.4)		(0.1)		(0.5)		Amounts applied	(0.3)		(0.1)		(0.4)

Balance at June 30, 2019		$	0.5	$	—	$	0.5
Balance at June 30, 2020								Balance at June 30, 2020	$	0.5	$	—	$	0.5


		Other Restructuring Costs															Other Restructuring Costs
(in millions)	(in millions)	2017 and Prior Plans		2018 Plans		2019 Plans		Total		(in millions)	2018 and Prior Plans		2019 Plans		2020 Plans		Total

Balance at December 31, 2018		$	2.0	$	0.4	$	—	$	2.4
Balance at December 31, 2019										Balance at December 31, 2019	$	2.2	$	0.3	$	—	$	2.5
Provisions	Provisions	0.6		0.6		2.7		3.9		Provisions	—		0.3		(0.2)		0.1
Amounts applied	Amounts applied	(0.6)		(1.0)		(2.3)		(3.9)		Amounts applied	—		(0.5)		0.2		(0.3)
Change in estimate	Change in estimate	0.2		(0.9)		0.3		(0.4)		Change in estimate	—		(0.1)		—		(0.1)
Balance at June 30, 2019		$	2.2	$	(0.9)	$	0.7	$	2.0
Balance at June 30, 2020										Balance at June 30, 2020	$	2.2	$	—	$	—	$	2.2

The cumulative amounts for the provisions and adjustments and amounts applied for all the plans by segment were as follows:


(in millions)	December 31, 2019		Provisions		Amounts Applied		Change in Estimates		June 30, 2020

Technologies & Equipment	$	19.1	$	3.1	$	(5.6)	$	(1.9)	$	14.7
Consumables	11.4		1.3		(2.7)		(0.1)		9.9
All Other	(0.5)		2.1		(0.5)		—		1.1
Total	$	30.0	$	6.5	$	(8.8)	$	(2.0)	$	25.7

~~The following provides the year-to-date changes in the restructuring accruals by segment:~~

(in millions)
December 31, 2018 (a)
Provisions Amounts
Applied Change in Estimates June 30, 2019
Technologies & Equipment $ 32.9 $ 8.2 $ (23.6) $ 1.6 $ 19.1
Consumables 13.6 15.7 (8.6) (1.3) 19.4
All Other (0.3) 0.9 (0.7) (0.2) (0.3)
Total $ 46.2 $ 24.8 $ (32.9) $ 0.1 $ 38.2

~~(a) Reclassifications have been made to prior year balances to confirm to the new segments, see Note 6, Segment Information.~~

2317

Other Costs

Other costs for the three months ended June 30, 2020, were a net benefit of $0.9 million. Other costs for the six months ended June 30, 2020 were $39.3 million, which includes an impairment charge of $38.7 million related to indefinite-lived intangible assets. The impaired indefinite-lived intangible assets are tradenames and trademarks related to a reporting unit within the Technologies & Equipment segment. For further details, see Note 12, Goodwill and Intangible Assets.

Other costs for the three and six months ended June 30, 2019 were $31.7 million and $38.0 million, respectively including fixed asset impairments of $32.8 million recorded during the three months ended June 30, 2019. ~~During~~

These other costs are recorded in Restructuring and other costs in the ~~six months ended June 30, 2019 the~~Consolidated Statements of Operations.

The Company ~~recorded an impairment~~announced on August 6, 2020 that it will close its traditional orthodontics business as well as close and restructure certain portions of ~~$5.3 million related to indefinite-lived tradenames and trademarks within~~its laboratory business. The traditional orthodontics business is part of the Technologies & Equipment segment and the laboratory business is part of the Consumables segment. The Company intends to close several of its facilities and reduce its workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of $80 million to $90 million for inventory write-downs, severance costs, fixed asset write-offs and other facility closure costs. It is expected that the majority of these charges will be taken during the remainder of 2020. The Company estimates that $45 million to $55 million of the restructuring charges will be non-cash charges related to inventory write-downs and fixed asset write-offs The Company does not expect a significant impact to net sales in the third and fourth quarter of 2020.

Other costs for the three and six months ended June 30, 2018 were $185.5 million and $188.3 million, respectively. During the three months ended June 30, 2018 the Company recorded an impairment of $179.2 million related to indefinite-lived tradenames and trademarks within the Technologies & Equipment segment.

NOTE 108 – FINANCIAL INSTRUMENTS AND DERIVATIVES

Derivative Instruments and Hedging Activities

The Company’s activities expose it to a variety of market risks, which primarily include the risks related to the effects of changes in foreign currency exchange rates and interest rates. These financial exposures are monitored and managed by the Company as part of its overall risk management program. The objective of this risk management program is to reduce the volatility that these market risks may have on the Company’s operating results and equity. The Company employs derivative financial instruments to hedge certain anticipated transactions, firm commitments, or assets and liabilities denominated in foreign currencies. Additionally, the Company ~~utilizes~~has utilized interest rate swaps to convert variable rate debt to fixed rate debt.

Derivative Instruments Designated as Hedging

Cash Flow Hedges

The following summarizes the notional amounts of cash flow hedges by derivative instrument type at June 30, ~~2019~~2020 and the notional amounts expected to mature during the next 12 months, with a discussion of the various cash flow hedges by derivative instrument type following the table:


(in millions)	(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months		(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months

Foreign exchange forward contracts	Foreign exchange forward contracts	$	360.7	$	271.4	Foreign exchange forward contracts	$	312.9	$	226.1
Interest rate swaps		266.4		116.4

Total derivative instruments designated as cash flow hedges	Total derivative instruments designated as cash flow hedges	$	627.1	$	387.8	Total derivative instruments designated as cash flow hedges	$	312.9	$	226.1

Foreign Exchange Risk Management

The Company uses a program to hedge select anticipated foreign currency cash flows to reduce volatility in both cash flows and reported earnings of the consolidated Company. The Company accounts for the designated foreign exchange forward contracts as cash flow hedges. As a result, the Company records the fair value of the contracts primarily through AOCI based on the assessed effectiveness of the foreign exchange forward contracts. The Company measures the effectiveness of cash flow hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value will be deferred in AOCI and released and recorded in the Consolidated Statements of Operations in the same period that the hedged transaction is recorded. The ~~time value~~time-value component of the fair value of the derivative is reported on a ~~straight line~~straight-line basis in Cost of products sold in the Consolidated Statements of Operations in the period which it is applicable. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows. The Company hedges various currencies, ~~with the most significant activity occurring~~primarily in euros, Swedish kronor, Canadian dollars, British pounds, Swiss francs and Australian dollars.

These foreign exchange forward contracts generally have maturities up to 18 months and the counterparties to the transactions are typically large international financial institutions.

Interest Rate Risk Management

The Company uses interest rate swaps to convert a portion of its variable interest rate debt to fixed interest rate debt. At June 30, 2019, the Company has one significant exposure hedged with interest rate contracts. The exposure is hedged with derivative contracts having notional amounts totaling 12.6 billion Japanese yen, which effectively converts the underlying variable interest rate debt facility to a fixed interest rate of 0.9% for an initial term of ~~five~~ years ending September 2019. On March 11, 2019, the Company entered into a Treasury Rate Lock ("T-Lock") transaction to hedge the base interest rate variability exposure on a planned $150 million ten year debt issuance in 2021. The T-Lock is designated as a cash flow hedge of interest rate risk. The T-Lock will be cash settled when the debt is issued, with the fair value of the T-Lock recognized as an asset or liability with an offsetting position in AOCI. As interest is accrued on this debt in the future, a pro-rata amount from AOCI will be released and recorded in Other expense (income) in the Consolidated Statements of Operations.

The Company enters into interest rate swap contracts infrequently as they are only used to manage interest rate risk on long-term debt instruments and not for speculative purposes. Any cash flows associated with these instruments are included in operating activities in the Consolidated Statements of Cash Flows.

2519

Cash Flow Hedge Activity

Gains and losses recorded in AOCI in the Consolidated Balance Sheets, ~~and~~ Cost of products sold and Interest expense in the Company's Consolidated Statements of Operations related to all cash flow hedges for the three months ended June 30, 2020 and 2019 were insignificant.

Gains and losses recorded in AOCI in the Consolidated Balance Sheets, Cost of products sold and Interest expense in the Company's Consolidated Statements of Operations related to all cash flow hedges for the six months ended June 30, 2020 were as follows:


	Six Months Ended June 30, 2020
	Gain (Loss) in AOCI		Consolidated Statements of Operations Location	Effective Portion Reclassified from AOCI into Income (Expense)		Ineffective Portion Recognized in Income (Expense)

(in millions)

Effective Portion:
Foreign exchange forward contracts	$	3.8	Cost of products sold	$	1.3	$	—
Interest rate swaps	(19.7)		Interest expense	(1.4)		—

Ineffective Portion:
Foreign exchange forward contracts	—		Cost of products sold	—		1.5
Total in cash flow hedging	$	(15.9)		$	(0.1)	$	1.5

Gains and losses recorded in AOCI in the Consolidated Balance Sheets, Cost of products sold and Interest expense in the Company’s Consolidated Statements of Operations related to all cash flow hedges for the ~~three and~~ six months ended June 30, 2019 ~~and 2018~~ were insignificant.

For the rollforward of derivative instruments designated as cash flow hedges in AOCI see Note 3, Comprehensive Income (Loss).

Hedges of Net Investments in Foreign Operations

The Company has significant investments in foreign subsidiaries, the most significant of which are denominated in euros, Swiss francs, Japanese yen and Swedish kronor. The net assets of these subsidiaries are exposed to volatility in currency exchange rates. The Company employs both derivative and non-derivative financial instruments to hedge a portion of this exposure. The derivative instruments consist of foreign exchange forward contracts and cross currency basis swaps. The non-derivative instruments consist of foreign currency denominated debt held at the parent company level. Translation gains and losses related to the net assets of the foreign subsidiaries are offset by gains and losses in derivative and non-derivative financial instruments; which are designated as hedges of net investments and are included in AOCI. The ~~time value~~time-value component of the fair value of the derivative is reported on a ~~straight line~~straight-line basis in Other expense (income), net in the Consolidated Statements of Operations in the ~~period which it is~~ applicable period. Any cash flows associated with these instruments are included in investing activities in the Consolidated Statements of Cash Flows except for derivative instruments that include an other-than-insignificant financing element, for which all cash flows are classified as financing activities in the Consolidated Statements of Cash Flows.

~~During the six months ended June 30, 2019,~~On April 7, 2020, the Company ~~early~~ terminated its ~~existing 245.6 million euro cross currency basis swap and entered into a new 263.4 million euro cross currency basis swap maturing in August 2021. The cross currency basis swap is designated as a~~entire net investment hedge ~~of net investments. This contract effectively converts the $295.7 million bond coupon from 4.1% to 1.2%,~~portfolio early which ~~will result in a net reduction of interest expense through maturity in 2021. The early termination~~ resulted in a $48.1 million cash ~~receipt of $17.4 million.~~receipt. The Company elected to enter into this transaction to convert the favorable gain position into additional liquidity.

The ~~following summarizes the~~ notional amount of hedges of net investments by derivative instrument type at June 30, ~~2019~~2020 and the notional amounts expected to mature during the next 12 ~~months:~~months were as follows:

(in millions) Aggregate
Notional
Amount Aggregate Notional Amount Maturing within 12 Months
Foreign exchange forward contracts $ 778.4 $ 259.5
Cross currency basis swaps 299.5 —
Total for instruments not designated as hedges $ 1,077.9 $ 259.5


(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months





Cross currency basis swaps	$	295.7	$	—
Total for instruments designated as hedges of net investment	$	295.7	$	—

The ~~following summarizes~~fair value of the foreign exchange forward contracts and cross currency basis swaps is the estimated amount the Company would receive or pay at the reporting date, taking into account the effective interest rates, cross currency swap basis rates and foreign exchange rates. The effective portion of ~~gains~~the change in the value of these derivatives is recorded in AOCI, net of tax effects.

Gains and losses recorded in AOCI in the Consolidated Balance Sheets, Interest expense and Other expense (income), net in the ~~Company's~~Company’s Consolidated Statements of Operations related to the hedges of net investments for the three months ended June 30, 2020 and 2019 ~~and 2018:~~were as follows:

June 30, 2019
Gain (Loss) in AOCI Consolidated Statements of Operations Location Recognized in Income (Expense)
(in millions)
Effective Portion:
Cross currency basis swaps $ (2.5) Interest Expense $ 2.1
Foreign exchange forward contracts (9.4) Other expense (income), net 6.1
Total for net investment hedging $ (11.9) $ 8.2


	Three Months Ended June 30, 2020
	Gain (Loss) in AOCI		Consolidated Statements of Operations Location	Recognized in Income (Expense)

(in millions)

Effective Portion:
Cross currency basis swaps	$	(5.4)	Interest expense	$	2.1

Foreign exchange forward contracts	(9.5)		Other expense (income), net	0.4

Total for net investment hedging	$	(14.9)		$	2.5

	Three Months Ended June 30, 2019
(in millions)	Gain (Loss) in AOCI		Consolidated Statements of Operations Locations	Recognized in Income (Expense)

Effective Portion:
Cross currency basis swaps	$	(2.5)	Interest expense	$	2.1

Foreign exchange forward contracts	(9.4)		Other expense (income), net	6.1

Total for net investment hedging	$	(11.9)		$	8.2

2621

June 30, 2018
Gain (Loss) in AOCI Consolidated Statements of Operations Location Recognized in Income (Expense)
(in millions)
Effective Portion:
Cross currency basis swaps $ 16.0 Interest Expense $ 1.9
Foreign exchange forward contracts 31.3 Other expense (income), net 3.9
Total for net investment hedging $ 47.3 $ 5.8

~~The following summarizes the amount of gains~~Gains and losses recorded in AOCI in the Consolidated Balance Sheets, Interest expense and Other expense (income), net in the Company's Consolidated Statements of Operations related to the hedges of net investments for the six months ended June 30, 2020 and 2019 ~~and 2018:~~

June 30, 2019
Gain (Loss) in AOCI Consolidated Statements of Operations Location Recognized in Income (Expense)
(in millions)
Effective Portion:
Cross currency basis swaps $ 0.6 Interest expense $ 4.1
Foreign exchange forward contracts 6.1 Other expense (income), net 9.6
Total for net investment hedging $ 6.7 $ 13.7
were as follows:

June 30, 2018

Six Months Ended June 30, 2020

Gain (Loss) in AOCI

Consolidated Statements of Operations Location

Recognized in Income (Expense)

Gain (Loss) in AOCI

Consolidated Statements of Operations Location

Recognized in Income (Expense)

Gain (Loss) in AOCI

Consolidated Statements of Operations Location

Recognized in Income (Expense)

(in millions)

Effective Portion:

Cross currency basis swaps

9.6

Interest expense

3.6

Cross currency basis swaps

3.4

Interest expense

4.4

Other expense (income), net

(6.6)

Foreign exchange forward contracts

19.8

Other expense (income), net

5.4

Foreign exchange forward contracts

6.4

Other expense (income), net

6.2

Total for net investment hedging

29.4

2.4

Total for net investment hedging

9.8

10.6

Six Months Ended June 30, 2019

(in millions)

Gain (Loss) in AOCI

Consolidated Statements of Operations Location

Recognized in Income (Expense)

Effective Portion:

Cross currency basis swaps

0.6

Interest expense

4.1

Foreign exchange forward contracts

6.1

Other expense (income), net

9.6

Total for net investment hedging

6.7

13.7

Fair Value Hedges

Foreign Exchange Risk Management

The Company has an intercompany loan denominated in Swedish ~~Kronor~~kronor that is exposed to volatility in currency exchange rates. The Company employs derivative financial instruments to hedge this exposure. The Company accounts for these designated foreign exchange forward contracts as fair value hedges. The Company measures the effectiveness of fair value hedges of anticipated transactions on a spot-to-spot basis rather than on a forward-to-forward basis. Accordingly, the spot-to-spot change in the derivative fair value will be recorded in the Consolidated Statements of Operations. Any cash flows associated with these instruments are included in investing activities in the Consolidated Statements of Cash Flows.

The ~~following summarizes the~~ notional amounts of fair value hedges by derivative instrument type at June 30, ~~2019~~2020 and the notional amounts expected to mature during the next 12 ~~months:~~months were as follows:


(in millions)	(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months		(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months

Foreign exchange forward contracts	Foreign exchange forward contracts	$	120.7	$	38.8	Foreign exchange forward contracts	$	94.5	$	57.9
Total derivative instruments as cash flow hedges		$	120.7	$	38.8
Total derivative instruments as fair value hedges						Total derivative instruments as fair value hedges	$	94.5	$	57.9

~~The following summarizes the amount of gains~~Gains and losses recorded in AOCI in the Consolidated Balance Sheets and Other expense (income), net in the Company's Consolidated Statements of Operations related to the fair value hedges for the three and six months ended June 30, ~~2019:~~2020 and 2019 were insignificant.

June 30, 2019
Gain (Loss) in AOCI Consolidated Statements of Operations Location Recognized in Income (Expense)
(in millions)
Effective Portion:
Foreign exchange forward contracts $ 5.0 Other expense (income), net $ 3.0
Total for cash flow hedging $ 5.0 $ 3.0

Derivative Instruments Not Designated as Hedges

The Company enters into derivative instruments with the intent to partially mitigate the foreign exchange revaluation risk associated with recorded assets and liabilities that are denominated in a non-functional currency. The gains and losses on these derivative transactions offset the gains and losses generated by the revaluation of the underlying non-functional currency balances and are recorded in Other expense (income), net in the Consolidated Statements of Operations. The Company primarily uses foreign exchange forward contracts to hedge these risks. Any cash flows associated with the foreign exchange forward contracts and interest rate swaps not designated as hedges are included in cash from operating activities in the Consolidated Statements of Cash Flows.

The ~~following summarizes the~~ aggregate notional amounts of the Company’s economic hedges not designated as hedges by derivative instrument types at June 30, ~~2019~~2020 and the notional amounts expected to mature during the next 12 ~~months:~~months were as follows:

(in millions) Aggregate
Notional
Amount Aggregate Notional Amount Maturing within 12 Months
Foreign exchange forward contracts $ 282.9 $ 282.9
Total for instruments not designated as hedges $ 282.9 $ 282.9


(in millions)	Aggregate Notional Amount		Aggregate Notional Amount Maturing within 12 Months

Foreign exchange forward contracts	$	334.0	$	334.0



Total for instruments not designated as hedges	$	334.0	$	334.0

Gains and losses recorded in the Company’s Consolidated Statements of Operations related to the economic hedges not designated as ~~hedging~~hedges for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 were insignificant.

Consolidated Balance Sheets Location of Derivative Fair Values

The fair value and the location of the Company's derivatives in the Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019 were as follows:


	June 30, 2020
(in millions)	Prepaid Expenses and Other Current Assets, Net		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities

Designated as Hedges:
Foreign exchange forward contracts	$	6.5	$	3.3	$	0.2	$	0.7

Cross currency basis swaps	—		10.3		—		—
Total	$	6.5	$	13.6	$	0.2	$	0.7

Not Designated as Hedges:
Foreign exchange forward contracts	$	2.4	$	—	$	1.0	$	—
Total	$	2.4	$	—	$	1.0	$	—

	December 31, 2019
(in millions)	Prepaid Expenses and Other Current Assets, Net		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities

Designated as Hedges:
Foreign exchange forward contracts	$	26.9	$	11.3	$	1.3	$	1.8
Interest rate swaps	—		—		—		10.8
Cross currency basis swaps	—		6.9		—		—
Total	$	26.9	$	18.2	$	1.3	$	12.6

Not Designated as Hedges:
Foreign exchange forward contracts	$	2.0	$	—	$	1.5	$	—
Total	$	2.0	$	—	$	1.5	$	—

Balance Sheet Offsetting

Substantially all of the Company’s derivative contracts are subject to netting ~~arrangements,~~arrangements; whereby the right to offset occurs in the event of default or termination in accordance with the terms of the arrangements with the counterparty. While these contracts contain the enforceable right to offset through netting arrangements with the same counterparty, the Company elects to present them on a gross basis in the Consolidated Balance Sheets.

2824

Offsetting of financial assets and liabilities under netting arrangements at June 30, ~~2019~~2020 were ~~insignificant.~~ as follows:


							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received/Pledged		Net Amount

Assets
Foreign exchange forward contracts	$	12.2	$	—	$	12.2	$	(0.8)	$	—	$	11.4


Cross currency basis swaps	10.3		—		10.3		(0.8)		—		9.5

Total assets	$	22.5	$	—	$	22.5	$	(1.6)	$	—	$	20.9

Liabilities
Foreign exchange forward contracts	$	1.9	$	—	$	1.9	$	(1.6)	$	—	$	0.3




Total liabilities	$	1.9	$	—	$	1.9	$	(1.6)	$	—	$	0.3

Offsetting of financial assets ~~under netting arrangements at June 30, 2019 were as follows:~~

Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions) Gross Amounts Recognized Gross Amount Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received/Pledged Net Amount
Assets
Foreign exchange forward contracts $ 38.3 $ — $ 38.3 $ (10.7) $ — $ 27.6
Total Assets $ 38.3 $ — $ 38.3 $ (10.7) $ — $ 27.6

~~Offsetting of financial~~and liabilities under netting arrangements at December 31, ~~2018 were insignificant. Offsetting of financial assets under netting arrangements at December 31, 2018~~2019 were as follows:

Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions) Gross Amounts Recognized Gross Amount Offset in the Consolidated Balance Sheets Net Amounts Presented in the Consolidated Balance Sheets Financial Instruments Cash Collateral Received/Pledged Net Amount
Assets
Foreign exchange forward contracts $ 33.7 $ — $ 33.7 $ (1.8) $ — $ 31.9
Cross currency basis swaps 11.6 — 11.6 (1.6) — 10.0
Total Assets $ 45.3 $ — $ 45.3 $ (3.4) $ — $ 41.9



							Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)	Gross Amounts Recognized		Gross Amount Offset in the Consolidated Balance Sheets		Net Amounts Presented in the Consolidated Balance Sheets		Financial Instruments		Cash Collateral Received/Pledged		Net Amount

Assets
Foreign exchange forward contracts	$	38.8	$	—	$	38.8	$	(7.8)	$	—	$	31.0


Cross currency basis swaps	6.9		—		6.9		(0.9)		—		6.0
Total assets	$	45.7	$	—	$	45.7	$	(8.7)	$	—	$	37.0

Liabilities
Foreign exchange forward contracts	$	3.2	$	—	$	3.2	$	(3.0)	$	—	$	0.2

Interest rate swaps	10.8		—		10.8		(5.7)		—		5.1


Total liabilities	$	14.0	$	—	$	14.0	$	(8.7)	$	—	$	5.3

NOTE 119 – FAIR VALUE MEASUREMENT

~~The Company records financial instruments~~Assets and Liabilities Measured at fair value with unrealized gains and losses related to certain financial instruments reflected in AOCI in the Consolidated Balance Sheets. In addition, the Company recognizes certain liabilities at fair value. The Company applies the market approach for recurring fair value measurements. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities that are recorded at fair value as of the balance sheet date are classified in their entirety basedFair Value on ~~the lowest level of input that is significant to the fair value measurement.~~a Recurring Basis

The Company estimates the fair value of financial instruments is determined by reference to various market data and other valuation techniques as appropriate. The Company believes the carrying amounts of cash and cash equivalents, accounts receivable (net of allowance for doubtful accounts), prepaid expenses and othertotal long term debt, including current ~~assets, accounts payable, accrued liabilities, income taxes payable and notes payable approximate fair value due to the short-term nature of these instruments. The Company estimated the fair value~~portion, using Level 1 ~~inputs and carrying value of total long-term debt, including the current portion, were $1,503.7 million and $1,497.6 million, respectively at~~inputs. At June 30, ~~2019. At December 31, 2018,~~2020, the Company estimated the fair value and carrying value of ~~total long-term~~this debt ~~including the current portion,~~ were ~~$1,577.1~~$2,238.4 million and ~~$1,575.5~~$2,183.0 million, respectively. ~~The variable interest rate on~~At December 31, 2019, the ~~Japanese yen term loan is consistent with current market conditions, therefore~~Company estimated the fair value ~~approximates the loan’s~~and carrying ~~value.~~value of this debt were $1,440.8 million and $1,433.3 million, respectively.

The ~~following~~Company’s financial assets and liabilities set forth by level within the fair value hierarchy ~~the Company’s financial assets and liabilities~~ that were accounted for at fair value on a recurring basis ~~at June 30, 2019 and both assets and liabilities at December 31, 2018:~~were as follows:


		June 30, 2019															June 30, 2020
(in millions)	(in millions)	Total		Level 1		Level 2		Level 3		(in millions)	Total		Level 1		Level 2		Level 3

Assets	Assets									Assets

Cross currency basis swaps										Cross currency basis swaps	$	10.3	$	—	$	10.3	$	—
Foreign exchange forward contracts										Foreign exchange forward contracts	12.2		—		12.2		—

Foreign exchange forward contracts		$	38.3	—		$	38.3	$	—
Total assets	Total assets	$	38.3	$	—	$	38.3	$	—	Total assets	$	22.5	$	—	$	22.5	$	—

Liabilities	Liabilities									Liabilities
Interest rate swaps		$	8.6	$	—	$	8.6	$	—

Cross currency basis swaps		1.5		—		1.5		—

Foreign exchange forward contracts	Foreign exchange forward contracts	5.6		—		5.6		—		Foreign exchange forward contracts	$	1.9	$	—	$	1.9	$	—

Contingent considerations on acquisitions	Contingent considerations on acquisitions	9.5		—		—		9.5		Contingent considerations on acquisitions	5.9		—		—		5.9
Total liabilities	Total liabilities	$	25.2	$	—	$	15.7	$	9.5	Total liabilities	$	7.8	$	—	$	1.9	$	5.9


		December 31, 2018															December 31, 2019
(in millions)	(in millions)	Total		Level 1		Level 2		Level 3		(in millions)	Total		Level 1		Level 2		Level 3

Assets	Assets									Assets

Cross currency basis swaps	Cross currency basis swaps	$	11.6	$	—	$	11.6	$	—	Cross currency basis swaps	$	6.9	$	—	$	6.9	$	—
Foreign exchange forward contracts	Foreign exchange forward contracts	33.7		—		33.7		—		Foreign exchange forward contracts	40.2		—		40.2		—

Total assets	Total assets	$	45.3	$	—	$	45.3	$	—	Total assets	$	47.1	$	—	$	47.1	$	—

Liabilities	Liabilities									Liabilities
Interest rate swaps	Interest rate swaps	$	0.2	$	—	$	0.2	$	—	Interest rate swaps	$	10.8	$	—	$	10.8	$	—

Foreign exchange forward contracts	Foreign exchange forward contracts	3.2		—		3.2		—		Foreign exchange forward contracts	4.6		—		4.6		—

Contingent considerations on acquisitions	Contingent considerations on acquisitions	9.1		—		—		9.1		Contingent considerations on acquisitions	8.7		—		—		8.7

Total liabilities	Total liabilities	$	12.5	$	—	$	3.4	$	9.1	Total liabilities	$	24.1	$	—	$	15.4	$	8.7

There have been no transfers between levels during the six months ended June 30, ~~2019.~~2020.

Derivative valuations are based on observable inputs to the valuation model including interest rates, foreign currency exchange rates and credit risks. The Company utilizes interest ~~rate~~rates swaps and foreign exchange forward contracts that are considered cash flow hedges. In addition, the Company may at times ~~employs~~employ certain cross currency interest rate swaps and forward exchange contracts that are considered hedges of net investment in foreign operations. ~~Designated~~Both types of designated derivative instruments are further discussed in Note ~~10,~~8, Financial Instruments and Derivatives.

NOTE 1210 – INCOME TAXES

Uncertainties in Income Taxes

The Company recognizes the impact of a tax position in the interim consolidated financial statements ~~the impact of a tax position,~~ if that position is more likely than not of being sustained on audit based on the technical merits of the position.

It is reasonably possible that certain amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date of the Company’s quarterly consolidated financial statements. Final settlement and resolution of outstanding tax matters in various jurisdictions during the next ~~twelve~~12 months are not expected to be significant.

Other Tax Matters

During the three months ended June 30, ~~2019,~~2020, the Company recorded ~~$1.8~~$0.9 million of ~~excess~~ tax ~~benefit related to employee share-based compensation. The Company also recorded a $10.1 million~~expense for discrete tax ~~benefit as a discrete item related to the fixed asset impairment charge.~~matters.

During the three months ended June 30, ~~2018,~~2019, the Company recorded the following discrete tax items, $0.5 million of excess tax benefit related to employee share-based compensation, tax benefits of $0.7 million related to valuation allowances, $2.5 million related to enacted statutory rate changes and $0.6$1.8 million of tax ~~benefit~~expense for ~~other~~ discrete tax matters. The Company also recorded a ~~$50.4~~$10.1 million tax benefit ~~as a discrete item~~ related to ~~the indefinite-lived intangible asset impairment charge, $1.1 million for the~~a fixed asset impairment charge, and $3.3 million related to goodwill that was tax-deductible for the three months ended June 30, 2018. In addition, the Company also recorded a $0.6 million tax benefit as a discrete item related to the gain on sale of marketable securities.

charge.

3227

NOTE 1311 – FINANCING ARRANGEMENTS

At June 30, 2019 and December 31, 2018, there were no outstanding borrowings under the current $700.0 million multi- currency revolving credit facility. The Company had $43.3 million outstanding borrowings under the commercial paper facility at June 30, 2019 and $67.8 million outstanding under the commercial paper facility at December 31, 2018. The multi-currency revolving credit facility serves as a back-stop facility for the Company’s $500.0 million commercial paper program.

~~At June 30, 2019,~~2020, the Company had ~~$676.8~~$1,156.1 million of borrowing available under lines of credit, including lines available under its short-term arrangements and revolving credit ~~agreement.~~facility. Through the date of the filing of this Form 10-Q, the Company has no outstanding borrowings under any of these credit agreements.

In response to the COVID-19 pandemic the Company took the following actions during the six months ended June 30, 2020 to strengthen its liquidity and financial flexibility:

•On April 9, 2020, the Company entered into a $310.0 million 364-day revolving credit facility with a maturity date of April 8, 2021. The 364-day revolving credit facility mirrors the original five-year facility in all major respects, is unsecured and contains certain affirmative and negative covenants relating to the operations and financial condition of the Company.

•On April 17, 2020, the Company provided a notice to the administrative agent to draw down the full available amount under the 2018 revolving credit facility, which is equal to $700.0 million. The Company had previously not drawn down any sums under this facility. The borrowings incurred interest at the rate of adjusted LIBOR plus 1.25%. The Company subsequently repaid the $700.0 million revolver borrowing on May 26, 2020.

•On May 26, 2020, the Company issued $750.0 million of senior unsecured notes with a final maturity date of June 1, 2030 at a semi-annual coupon rate of 3.25%. The net proceeds were $748.4 million, net of discount of $1.6 million. Issuance fees totaled $6.4 million. The Company paid $30.5 million to settle the $150.0 million notional T-Lock contract which partially hedged the interest rate risk of the note issuance. This cost will be amortized over the ten-year life of the notes. The proceeds were used to repay the $700.0 million revolver borrowing and the remaining proceeds will be used for working capital and other general corporate purposes.

•Various other credit facilities:

◦On May 5, 2020, the Company entered into a 40.0 million euro 364-day revolving credit facility with a maturity date of April 30, 2021.

◦On May 12, 2020 the Company entered into a 30.0 million euro 364-day revolving credit facility with a maturity date of May 6, 2021.

◦On June 11, 2020, the Company entered into a 3.3 billion Japanese yen 364-day revolving credit facility with a maturity date of June 11, 2021.

These agreements are unsecured and contain certain affirmative and negative covenants relating to the operations and financial condition of the Company.

The Company has a $500.0 million commercial paper program. The $700.0 million multi-currency revolving credit facility serves as a back-stop credit facility for the Company's commercial paper program. At June 30, 2020 and December 31, 2019, there were no outstanding borrowings under the commercial paper program.

The Company’s revolving credit ~~facility, term loans~~facilities and senior unsecured notes contain certain affirmative and negative covenants relating to the Company's operations and financial condition. At June 30, ~~2019,~~2020, the Company was in compliance with all debt covenants.

~~On March 11, 2019, the Company entered into a T-Lock which expires on September 30, 2021, to hedge the base interest rate variability exposure on a planned~~ ~~ten~~-year debt issuance in 2021. The T-Lock is designated as a cash flow hedge of interest rate risk fixing the base rate at 2.84% on a notional amount of $150 million. The T-Lock will be cash settled when the debt is issued, with the fair value of the T-Lock recognized as an asset or liability with an offsetting position in AOCI. As interest is accrued on this debt, a proportional amount from AOCI will be released and recorded in Other expense (income), net in the Consolidated Statements of Operation.

~~On May~~

28 ~~2019, the Company pre-paid the PNC Term Loan for a total of $131.3 million using cash and short-term commercial paper.~~

~~On June 24, 2019, the Company entered into a Private Placement Note Purchase Agreement (“PPN”) to borrow 12.5 billion Japanese yen for a term of twelve years at a coupon of 0.99%.~~ ~~The PPN will be funded on a delayed draw basis on September 25, 2019 and the proceeds~~ ~~will be used to repay the 12.5 billion Japanese yen Term Loan maturing September 30, 2019.~~

~~On July 31, 2019, the Company amended its $700.0 million revolving credit facility to extend the maturity date one year to July 26, 2024.~~

NOTE 1412 – GOODWILL AND INTANGIBLE ASSETS

2020 Annual Goodwill Impairment Testing

The Company performed ~~its~~the required annual impairment tests of goodwill at April 30, ~~2019~~2020 on its 5 reporting units. As discussed in Note 6, Segment Information, effective in the first quarter of 2019, the Company realigned certain businesses between segments. As a result, the Company transferred goodwill between segments due to changes in the reporting units. Affected reporting units were tested for potential impairment of goodwill before the transfers. No goodwill impairment was identified due to the realignment.

To determine the fair value of ~~the Company’s~~these reporting units, the Company uses a discounted cash flow model with market-based support as its valuation technique to measure the fair value for its reporting units. The discounted cash flow model uses ~~five- to ten- year~~five-to-ten-year forecasted cash flows plus a terminal value based on a multiple of earnings or by capitalizing the last period’s cash flows using a perpetual growth rate. InThe Company's significant assumptions in the ~~development~~discounted cash flow models include, but are not limited to: the weighted average cost of capital, revenue growth rates, including perpetual revenue growth rates, and operating margin percentages of the reporting unit's business. The Company considered the current market conditions when determining its assumptions. The total forecasted cash flows were discounted based on a range between 9.0% to 11.5%, which included assumptions regarding the Company’s weighted average cost of capital ("WACC"). Lastly, the Company ~~applies revenue, gross profit and operating expense assumptions taking into consideration historical trends as well as future expectations.~~reconciled the aggregate fair values of its reporting units to its market capitalization, which included a reasonable control premium based on market conditions. These future expectations include, but are not limited to, the current and ongoing impact of the COVID-19 pandemic and new product development ~~and distribution channel~~ changes for ~~the respective~~these reporting units. The Company also considers the current and projected market and economic conditions amid the ongoing pandemic for the dental ~~and medical device industries,~~industry both in the U.S. and globally, when determining its assumptions. The ~~total~~use of estimates and the development of assumptions results in uncertainties around forecasted cash flows are discounted based on a range between 8.0% to 11.3%. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected cash flows. The Company’s significant estimates in the discounted cash flow models include, but is not limited to, the weighted average cost of capital, long-term rate of growth and profitability of the reporting unit’s business and working capital effects. As a result of the annual ~~impairment~~ tests of goodwill, no impairment was identified.

For the Company's goodwill that was not impaired at March 31, 2020 (see March 31, 2020 Impairment Testing below), the Company applied a hypothetical sensitivity analysis to its reporting units. If the WACC rate of these reporting units had been hypothetically increased by 100 basis points at April 30, 2020, one reporting unit within the Company's Technologies & Equipment segment would have a fair value that would approximate book value. If the fair value of each of these reporting units had been hypothetically reduced by 10% at April 30, 2020, one reporting unit, as disclosed above, would have a fair value that approximates net book value. Goodwill for this reporting unit totals $1.1 billion at June 30, 2020. For the Equipment & Instruments reporting unit that recorded goodwill impairment at March 31, 2020, the implied fair value continues to approximate net book value at April 30, 2020. Goodwill for this reporting unit totals $290.8 million at June 30, 2020.

A change in any of these estimates and assumptions used in the annual test, as well as unfavorable changes in the ongoing COVID-19 pandemic, a degradation in the overall markets served by these reporting units, among other factors, could ~~produce~~have a ~~different~~negative material impact to the fair value ~~which~~of the reporting units and could result in a future impairment charge. There can be no assurance that the Company’s future goodwill impairment testing will not result in a charge to earnings. This impairment charge could have a negative material impact on the Company’s results of operations.

~~In addition, the~~2020 Annual Indefinite-Lived Intangibles Impairment Testing

The Company also assessed the annual impairment of indefinite-lived intangible assets at April 30, ~~2019,~~2020, which largely consists of acquired tradenames and trademarks, in conjunction with the annual impairment tests of goodwill. ~~The performance~~As a result of the ~~Company’s~~ annual impairment test ~~did not result in any impairment~~ of ~~the Company’s~~ indefinite-lived intangible ~~assets.~~assets, no impairment was identified.

~~Unfavorable developments~~For the Company's indefinite-lived intangible assets that were not impaired at March 31, 2020 (see March 31, 2020 Impairment Testing below), the Company applied a hypothetical sensitivity analysis. If the fair value of each of these indefinite-lived intangibles assets had been hypothetically reduced by 10% or the discount rate had been hypothetically increased by 100 basis points at April 30, 2020, the fair value of these assets would still exceed their book value. For the indefinite-lived intangible assets that were impaired at March 31, 2020, the implied fair values continue to approximate net book values at April 30, 2020.

Should the Company’s analysis in the ~~market for~~future indicate additional unfavorable impacts related to the ~~dental or medical device industries,~~ongoing COVID-19 pandemic, an increase in discount rates, ~~unfavorable changes in earnings multiples~~ or a ~~decline~~degradation in the use of the tradenames and trademarks, any of which could have a negative material impact to the implied fair values and could result in a future ~~cash flow projections, among other factors, may cause a change in circumstances indicating that~~impairment to the carrying value of the indefinite-lived ~~assets~~intangible assets. There can be no assurance that the Company’s future indefinite-lived intangible asset impairment testing will not result in a charge to earnings. This impairment charge could have a negative material impact on the Company’s results of operations.

March 31, 2020 Impairment Testing

In preparing the financial statements for the three months ended March 31, 2020, the Company identified an impairment triggering event related to 4 of its reporting units. The Company has experienced a meaningful decrease in customer demand for its products as a result of stay-at-home orders, travel restrictions, and social distancing guidelines set forth by governmental authorities throughout the world in response to the COVID-19 pandemic. These actions meaningfully impacted end-user demand for routine dental procedures in most of the Company's markets. The Company updated its future forecasted revenues, operating margins and weighted average cost of capital for all 4 of the reporting units which were impacted by the continuing pandemic. Based on the Company's best estimates and assumptions at March 31, 2020, the Company believed forecasted future revenue growth related to the Equipment & Instruments reporting unit will experience an extended recovery period in returning to the pre-COVID-19 levels. The Company believed that dental practitioners will focus their initial post-COVID-19 equipment spending on products that deliver short-term revenue gains for their practices before replacing the Imaging, Treatment Center and Instruments products that comprise the Equipment & Instruments reporting unit. After this extended recovery period, the Company expects the growth rates of Equipment & Instruments reporting unit to return to pre-COVID-19 levels.

To determine the fair value of these 4 reporting units, the Company used a discounted cash flow model with market-based support as its valuation technique to measure the fair value for its reporting units. The discounted cash flow model used five-to-ten-year forecasted cash flows plus a terminal value based on a multiple of earnings or by capitalizing the last period’s cash flows using a perpetual growth rate. The Company's significant assumptions in the discounted cash flow models included, but are not limited to: the weighted average cost of capital, revenue growth rates, including perpetual revenue growth rates, and operating margin percentages of the reporting unit's business. The Company considered the current market conditions when determining its assumptions. The total forecasted cash flows were discounted based on a range between 9.5% to 11.5%, which included assumptions regarding the Company’s weighted average cost of capital. Lastly, the Company reconciled the aggregate fair values of its reporting units to its market capitalization, which included a reasonable control premium based on market conditions. These future expectations included, but are not limited to, the current and ongoing impact of the COVID-19 pandemic and new product development changes for these reporting units. The Company also considered the current and projected market and economic conditions amid the ongoing pandemic for the dental industry both in the U.S. and globally, when determining its assumptions. The use of estimates and the development of assumptions results in uncertainties around forecasted cash flows. A change in any of these estimates and assumptions, as well as unfavorable changes in the ongoing pandemic, could produce a different fair value, which could have a negative impact and result in a future impairment charge and could have a negative material impact the Company’s results of operations.

As a result of updating the estimates and assumptions in the ongoing COVID-19 pandemic and with the preparation of the financial statements for the three months ended March 31, 2020, the Company determined that the goodwill associated with the Equipment & Instruments reporting unit was impaired. As a result, the Company recorded a goodwill impairment charge of $156.6 million. This reporting unit is within the ~~Company’s~~Technologies & Equipment segment. At March 31, 2020, the remaining goodwill related to the Equipment & Instruments reporting unit was $290.5 million. Based on the quantitative assessments performed for the three other reporting units, the Company believes that its adjusted long-term forecasted cash flows did not indicate that the fair value of these reporting units may ~~not~~ be ~~recoverable.~~below their carrying value.

In preparing the financial statements for the three months ended March 31, 2020 in conjunction with the goodwill impairment, the Company tested the indefinite-lived intangible assets related to the businesses within the 4 reporting units for impairment. The Company performed impairment tests using an income approach, more specifically a relief from royalty method. In the development of the forecasted cash flows, the Company applied significant judgment to determine key assumptions, including royalty rates and discount rates. Royalty rates used are consistent with those assumed for the original purchase accounting valuation. If the carrying value exceeds the fair value, an impairment loss in the amount equal to the excess is recognized. As a result, the Company identified that certain tradenames and trademarks related to businesses in the Equipment & Instruments reporting unit, within the Technologies & Equipment segment, were impaired. The Company recorded an impairment charge of $38.7 million for the three months ended March 31, 2020, which was recorded in Restructuring and other costs in the Consolidated Statements of Operations. The impairment charge was driven by a decline in forecasted sales as a result of the COVID-19 pandemic as discussed above, as well as an unfavorable change in the discount rate. The Company utilized discount rates ranging from 10.0% to 17.5%. The assumptions and estimates used in determining the fair value of the indefinite-lived intangible assets contain uncertainties and any changes to these assumptions and estimates, including unfavorable changes related to the COVID-19 pandemic, could have a negative impact and result in a future impairment charge and could have a negative material impact the Company's results of operations. At March 31, 2020, the remaining indefinite-lived tradenames and trademarks related to the Equipment & Instruments reporting unit was $75.0 million. Based on the quantitative assessments performed for the indefinite-lived intangible assets related to the businesses in the three other reporting units, the Company believed that its adjusted long-term forecasted cash flows did not indicate that the fair value of the indefinite-lived intangible assets may be below their carrying value.

A reconciliation of changes in the Company’s goodwill by reportable segment iswere as ~~follows (the segment information below reflects the current structure for all periods shown):~~follows:

(in millions) Technologies & Equipment Consumables Total
Balance at December 31, 2018 $ 2,579.8 $ 851.5 $ 3,431.3
Business unit transfers (37.1) 37.1 —
Divestiture of a business (4.1) — (4.1)
Effects of exchange rate changes (11.9) (2.6) (14.5)
Balance at June 30, 2019 $ 2,526.7 $ 886.0 $ 3,412.7


(in millions)	Technologies & Equipment		Consumables		Total

Balance at December 31, 2019	$	2,515.7	$	880.8	$	3,396.5




Impairment	(156.6)		—		(156.6)
Effects of exchange rate changes	(1.5)		(11.2)		(12.7)
Balance at June 30, 2020	$	2,357.6	$	869.6	$	3,227.2

The ~~following provides the~~ gross carrying amount of goodwill and the cumulative goodwill ~~impairment:~~impairment were as follows:


		June 30, 2019										December 31, 2018											June 30, 2020				December 31, 2019
(in millions)	(in millions)	Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount		Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount		(in millions)	Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount		Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount

Technologies & Equipment	Technologies & Equipment	$	5,263.3	$	(2,736.6)	$	2,526.7	$	5,247.9	$	(2,668.1)	$	2,579.8	Technologies & Equipment	$	5,250.8	$	(2,893.2)	$	2,357.6	$	5,252.3	$	(2,736.6)	$	2,515.7
Consumables	Consumables	886.0		—		886.0		920.0		(68.5)		851.5		Consumables	869.6		—		869.6		880.8		—		880.8
Total effect of cumulative impairment	Total effect of cumulative impairment	$	6,149.3	$	(2,736.6)	$	3,412.7	$	6,167.9	$	(2,736.6)	$	3,431.3	Total effect of cumulative impairment	$	6,120.4	$	(2,893.2)	$	3,227.2	$	6,133.1	$	(2,736.6)	$	3,396.5

3431

Identifiable definite-lived and indefinite-lived intangible assets ~~consist of the following:~~were as follows:


		June 30, 2019										December 31, 2018											June 30, 2020				December 31, 2019
(in millions)	(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Patents	Patents	$	1,368.5	$	(465.1)	$	903.4	$	1,376.4	$	(407.1)	$	969.3	Patents	$	1,350.9	$	(574.5)	$	776.4	$	1,351.3	$	(517.9)	$	833.4
Tradenames and trademarks	Tradenames and trademarks	79.9		(63.3)		16.6		81.1		(62.5)		18.6		Tradenames and trademarks	78.5		(64.9)		13.6		79.0		(63.4)		15.6
Licensing agreements	Licensing agreements	36.0		(27.1)		8.9		36.1		(26.3)		9.8		Licensing agreements	36.1		(28.9)		7.2		36.0		(27.9)		8.1
Customer relationships	Customer relationships	1,078.1		(367.2)		710.9		1,085.3		(334.4)		750.9		Customer relationships	1,064.7		(431.9)		632.8		1,070.5		(399.2)		671.3
Total definite-lived	Total definite-lived	$	2,562.5	$	(922.7)	$	1,639.8	$	2,578.9	$	(830.3)	$	1,748.6	Total definite-lived	$	2,530.2	$	(1,100.2)	$	1,430.0	$	2,536.8	$	(1,008.4)	$	1,528.4

Indefinite-lived tradenames and trademarks	Indefinite-lived tradenames and trademarks	$	656.1	$	—	$	656.1	$	671.7	$	—	$	671.7	Indefinite-lived tradenames and trademarks	$	609.6	$	—	$	609.6	$	647.9	$	—	$	647.9

Total identifiable intangible assets	Total identifiable intangible assets	$	3,218.6	$	(922.7)	$	2,295.9	$	3,250.6	$	(830.3)	$	2,420.3	Total identifiable intangible assets	$	3,139.8	$	(1,100.2)	$	2,039.6	$	3,184.7	$	(1,008.4)	$	2,176.3

During the ~~three~~six months ended ~~March 31,~~June 30, 2019, the Company impaired $5.3 million of product tradenames and trademarks within the Technologies & Equipment segment. The impairment was the result of a change in forecasted sales related to divestitures of non-strategic product lines.

3532

NOTE 1513 – COMMITMENTS AND CONTINGENCIES

Litigation

The SEC’s Division of Enforcement has asked the Company to provide documents and information concerning the Company’s accounting and disclosures. The Company is cooperating with the SEC’s investigation. The Company is unable to predict the ultimate outcome of this matter, or whether it will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

On January 11, 2018, Tom Redlich, a former employee, filed a lawsuit against the Company, demanding supplemental compensation pursuant to an agreement allegedly entered into with Sirona Dental GmbH which was intended to entice Mr. Redlich to continue to work for the ~~company~~Company for no less than eight years following the date of this agreement. The Company filed its response on April 4, 2018, denying the authenticity and enforceability of, and all liability under, the alleged agreement. The court held an initial hearing on the matter on April 11, 2018. Mr. Redlich filed his reply on July 9, 2018. The Company filed its response to that reply on August 23, 2018, refuting the allegations in Mr. Redlich’s reply and continuing to deny liability under the alleged agreement. Following that, Mr. Jost Fischer, upon invitation of the Company, joined the litigation against Mr. Redlich as a third party. ~~The court held a hearing on August 30, 2018 where the parties outlined their respective legal positions.~~ In ~~late November 2018, Mr. Fischer filed a statement~~his submission to the ~~court in which he~~Court, Mr. Fischer disputed the central allegations raised by Mr. Redlich in his lawsuit and his supplemental submissions to the court. Based on Mr. Fischer’s statement, the Company filed a further written statement to the court, therein insisting on its previous legal position and presenting new factual submissions and evidence. In response, Mr. Redlich filed a written statement rejecting the positions of Mr. Fischer and the Company. In late January 2019, the courtlawsuit. The Court held several hearings in ~~which Mr. Redlich and a number of witnesses provided oral testimony to the court. In early April 2019, the court held a hearing, receiving additional testimony and the court held a further hearing in~~ the matter, ~~on June 22, 2019,~~ and then closed the hearings in June 2019 pending athe Court’s decision on the capacity of Mr. Fischer to enter into a binding agreement of the type alleged by Mr. Redlich in the manner alleged. On November 5, 2019, the Company received the Court’s judgment rejecting Mr. Redlich’s lawsuit and dismissing his claims. Mr. Redlich appealed in December 2019 and the Company filed its response in January 2020 seeking to uphold the Court’s ruling. On February 27, 2020, the Company received the Appellate Court’s decision rejecting Mr. Redlich’s appeal and upholding the decision of the lower court dismissing his claims. The Court of Appeals has denied Mr. Redlich the right to file a further appeal in this matter, however, on March 23, 2020, Mr. Redlich filed an extraordinary appeal with the Austrian Supreme Court which will assess the appeal. If the Austrian Supreme Court accepts Mr. Redlich’s extraordinary appeal, the Company ~~continues to defend against this claim vigorously.~~will then file its response.

On January 25, 2018, Futuredontics, Inc., a former wholly-owned subsidiary of the Company, received service of a purported class action lawsuit brought by Henry Olivares and other similarly situated individuals in the Superior Court of the State of California for the County of Los Angeles. In January 2019, an amended complaint was filed adding another named plaintiff, Rachael Clarke, and various claims. The plaintiff class alleges several violations of the California wage and hours laws, including, but not limited to, failure to provide rest and meal breaks and the failure to pay overtime. The parties have engaged in written and other discovery. On February 5, 2019, Plaintiff Calethia Holt (represented by the same counsel as Mr. Olivares and Ms. Clarke) filed a separate representative action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. On April 5, 2019, Plaintiff Kendra Cato filed a similar action in Los Angeles Superior Court alleging a single violation of the Private Attorneys’ General Act that is based on the same underlying claims as the Olivares/Clarke lawsuit. The parties intend to participate in a mediation later in 2020 and the case will be stayed until that time. The Company continues to vigorously defend against these matters.

On June 7, 2018, and August 9, 2018, ~~two~~2 putative class action suits were filed, and later consolidated, in the Supreme Court of the State of New York, County of New York claiming that the Company and certain individual defendants, violated U.S. securities laws (the "State Court Class Action") by making material misrepresentations and omitting required information in the December 4, 2015 registration statement filed with the SEC in connection with the Merger. The amended complaint alleges that the defendants failed to disclose, among other things, that a distributor had purchased excessive inventory of legacy Sirona products and that ~~three~~3 distributors of the Company's products had been engaging in anticompetitive conduct. The plaintiffs seek to recover damages on behalf of a class of former Sirona shareholders who exchanged their shares for shares of the Company's stock in the Merger. The Company has filed motions to dismiss the amended complaint, to stay discovery pending resolution of the motion to dismiss, and to stay all proceedings pending resolution of the Federal Class Action described below. ~~These~~On August 2, 2019, the Court denied the Company's motions ~~are pending before~~to stay discovery and to stay all proceedings. On August 21, 2019, the ~~court.~~Company filed a notice of appeal of that decision. Briefing has not yet commenced on that appeal. On September 26, 2019, the Court granted the Company's motion to dismiss all claims. The associated judgment was entered on September 30, 2019. On October 25, 2019, the plaintiffs filed a notice of appeal of the motion to dismiss decision and the judgment. On November 4, 2019, the Company filed a notice of cross-appeal of select rulings in the Court's motion to dismiss decision. On October 9, 2019, the plaintiffs moved by order to show cause to vacate or modify the judgment and grant plaintiffs leave to amend their complaint. On February 4, 2020, the Court denied the plaintiffs' motion. On March 5, 2020, the plaintiffs also filed a notice of appeal from the denial of their motion to vacate or modify the judgment and for leave to amend their complaint.

On December 19, 2018, a related putative class action was filed in the U.S. District Court for the Eastern District of New York against the Company and certain individual defendants (the "Federal Class Action"). The plaintiff makes similar allegations and asserts the same claims as those asserted in the State Court Class Action. In addition, the plaintiff alleges that the defendants violated U.S. securities laws by making false and misleading statements in quarterly and annual reports and other public statements between February 20, 2014, and August 7, 2018. The plaintiff asserts claims on behalf of a putative class consisting of (a) all purchasers of the Company's stock during the period February 20, 2014 through August 7, 2018 and (b) former shareholders of Sirona who exchanged their shares of Sirona stock for shares of the Company's stock in the Merger. The Company's motion to dismiss the amended complaint ~~is due to be filed by~~was served on August 15, 2019. Briefing was completed on October 21, 2019 and the Company is awaiting the decision of the Court.

On April 29, 2019, ~~two~~2 purported stockholders of the Company filed a derivative action on behalf of the Company in the U.S. District Court for the District of Delaware against the Company's directors (the "Stockholder's Derivative Action"). Based on allegations similar to those asserted in the class actions described above, the plaintiffs allege that the directors caused the Company to misrepresent its business prospects and thereby subjected the Company to multiple securities class actions and other litigation. On September 20, 2019, the plaintiffs in the Stockholder's Derivative Action filed an amended derivative complaint on behalf of the Company in the U.S. District Court for the District of Delaware against the Company's directors. The plaintiffs assert claims for breach of fiduciary duty, unjust enrichment, ~~gross mismanagement,~~ waste of corporate assets, and violations of the U.S. securities laws. The ~~Plaintiffs~~plaintiffs seek relief that includes, among other things, monetary damages and various corporate governance reforms. The Company filed a motion to dismiss, and on July 31, 2020 the Magistrate Judge issued a report and recommendation to the District Court Judge recommending dismissal of the case with prejudice. The Company is awaiting a decision by the District Court Judge adopting the Magistrate Judge's decision.

The Company intends to defend itself vigorously in these actions.

As a result of an audit by the IRS for fiscal years 2012 through 2013, on February 11, 2019, the IRS issued to the Company a “30-day letter” and a Revenue Agent’s Report (“RAR”), relating to the Company’s worthless stock deduction in 2013 in the amount of $546.0 million. The RAR disallows the deduction and, after adjusting the Company’s net operating loss carryforward, asserts that the Company is entitled to a refund of $4.7 million for 2012, has no0 tax liability for 2013, and owes a deficiency of $17.1 million in tax for 2014, excluding interest. In accordance with ASC 740, the Company recorded the tax benefit associated with the worthless stock deduction in the Company’s 2012 financial statements. The Company has submitted a formal protest disputing on multiple grounds the proposed taxes.

The Company believes the ~~IRS~~IRS' position is without merit and believes that it is ~~more likely-than-not~~more-likely-than-not the Company’s position will be sustained upon further review. The Company has not accrued a liability relating to the proposed tax adjustments. However, the outcome of this dispute involves a number of uncertainties, including those inherent in the valuation of various assets at the time of the worthless stock deduction, and those relating to the application of the Internal Revenue Code and other federal income tax authorities and judicial precedent. Accordingly, there can be no assurance that the dispute with the IRS will be resolved favorably. If determined adversely, the dispute would result in a current period charge to earnings and could have a material adverse effect in the consolidated results of operations, financial position, and liquidity of the Company.

The Swedish Tax Agency has disallowed certain of the Company’s interest expense deductions for the tax years from 2013 to 2017 and is also expected to do the same for the 2018 tax year. If such interest expense deductions were disallowed, the Company would be subject to an additional $41.0 million in tax expense. The Company has appealed the disallowance to the Swedish ~~administrative court.~~Administrative Court. With respect to such deductions taken in the tax years from 2013 to 2014, the ~~court~~Court ruled against the Company on July 5, 2017. On August 7, 2017, the Company appealed the unfavorable decision of the Swedish ~~administrative court.~~Administrative Court. On November 5, 2018, the Company delivered its final argument to the ~~administrative court~~Administrative Court of ~~appeal~~Appeals at a hearing. The European Union Commission has taken the view that Sweden’s interest deduction limitation rules are incompatible with European Union law and supporting legal opinions, and therefore the Company has not paid the tax or made provision in its financial statements for such potential expense. The Company intends to vigorously defend its position and pursue related appeals.

In addition to the matters disclosed above, the Company is, from time to time, subject to a variety of litigation and similar proceedings incidental to its business. These additional legal matters ~~primarily~~ involve a variety of matters, including claims for damages arising out of the use of the Company’s products and services and claims relating to intellectual property matters including patent infringement, employment matters, tax matters, commercial disputes, competition and sales and trading practices, personal injury, and insurance coverage. The Company may also become subject to lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection with, divested businesses. Some of these lawsuits may include claims for punitive and consequential, as well as compensatory damages. Based upon the Company’s experience, current information and applicable law, it does not believe that these ~~proceedings and claims~~additional legal matters will have a material adverse effect on its consolidated results of operations, financial position or liquidity. However, in the event of unexpected further developments, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s business, financial condition, results of operations or liquidity.

While the Company maintains general, product, property, workers’ compensation, automobile, cargo, aviation, crime, fiduciary and directors’ and officers’ liability insurance up to certain limits that cover certain of these claims, this insurance may be insufficient or unavailable to cover such losses. In addition, while the Company believes it is entitled to indemnification from third parties for some of these claims, these rights may also be insufficient or unavailable to cover such losses.

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~~Purchase Commitments~~

From time to time, the Company enters into long-term inventory purchase commitments with minimum purchase requirements for raw materials and finished goods to ensure the availability of products for production and distribution. These commitments may have a significant impact on levels of inventory maintained by the Company.

DENTSPLY SIRONA Inc. and Subsidiaries

Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information included in or incorporated by reference in this Form 10-Q, and other filings with the ~~U. S.~~U.S. Securities and Exchange Commission (the “SEC”) and the Company’s press releases or other public statements, contains or may contain forward-looking statements. Please refer to a discussion of the Company’s forward-looking statements and associated risks in Part I, “Forward-Looking ~~Statements”~~Statements,” Part I, Item 1, “Business” and Part I, Item ~~1. “Business”~~1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, ~~2018.~~

~~OVERVIEW~~

~~Highlights~~

•For the three months ended June 30, 2019, reported net sales decreased 3.1% compared to the three months ended June 30, 2018. On a constant currency basis sales increased 1.1% compared to the three months ended June 30, 2018.

•~~For the three months ended June 30, 2019, the Company generated earnings per diluted common share~~2019. See updated risk factors in Part II, Item 1A, "Risk Factors" of $0.16 compared to a loss per basic common share of $4.98 for the three months ended June 30, 2018. Adjusted earnings per diluted common share (a non-US GAAP measure as reconciled under net income attributable to Dentsply Sirona below) for the three months ended June 30, 2019 was $0.66 compared to $0.60 earnings per diluted common share for the three months ended June 30, 2018.

•~~Cash flow from operations for the six months ended June 30, 2019 was $174.4 million, as compared to $172.0 million during the six months ended June 30, 2018.~~this Form 10-Q.

Company Profile

DENTSPLY SIRONA Inc. ("Dentsply ~~Sirona~~Sirona" or the "Company"), is the world’s largest manufacturer of professional dental products and technologies, with ~~over~~ a ~~century~~133-year history of innovation and service to the dental industry and patients worldwide. Dentsply Sirona develops, manufactures, and markets a comprehensive solutions offering including dental equipment and ~~oral health~~dental consumable products ~~as well as other consumable medical devices~~ under a strong portfolio of world class brands. The Company also manufactures and markets healthcare consumable products. As The Dental Solutions Company, Dentsply Sirona’s products provide innovative, high-quality and effective solutions to advance patient care and deliver better, safer and faster dentistry. Dentsply Sirona’s ~~global~~worldwide headquarters is located in Charlotte, North Carolina. The Company’s shares of common stock are listed in the United States on Nasdaq under the symbol XRAY.

BUSINESS

The Company operates in two ~~business segments:~~operating segments, Technologies & Equipment and Consumables.

The Technologies & Equipment segment is responsible for the worldwide design, manufacture, sales and distribution of the Company’s Dental Technology and Equipment Products and Healthcare Consumable Products. These products include dental implants, CAD/CAM systems, orthodontic ~~dental~~clear aligner products, imaging systems, treatment centers, instruments, as well as consumable medical device products.

The Consumables segment is responsible for the worldwide design, manufacture, sales and distribution of the Company’s Dental Consumable Products which include preventive, restorative, endodontic, and dental laboratory ~~dental~~ products.

The impact of COVID-19 and the Company’s response

The impact to the Company’s net sales and net income during the six months ended June 30, 2020 were as follows:

•As previously announced, in the early part of the first quarter, the Company started to experience declines in customer demand in Asia as a result of the effects of COVID-19. As COVID-19 spread to other geographies during the first quarter, the Company experienced effects on customer demand in those regions as well. In early March, the Company experienced declines in demand in the European region, followed by North and South America in the second half of March. These decreases in demand were primarily driven by the government actions taken to limit the spread of COVID-19. Additionally, end-user demand was affected by guidance from professional dental associations recommending practitioners only perform emergency procedures.

•The Company continued to see lower levels of customer demand on a global basis as a result of government authorities extending actions taken in response to COVID-19. The Company experienced the lowest sales levels in April and began to see an increase in sales during May and June as most stay-at-home orders were lifted and dental practices started to re-open particularly in the United States, Europe and certain Asian countries within the Rest of World region.

•While government authorities have lifted many of these restrictions, the end dates for all restrictions being lifted are still unknown. It is also uncertain when customer demand will return to pre-COVID-19 levels upon lifting these restrictions.

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~~Principal Measurements~~•The demand for the Company's products has been, and continues to be, affected by social distancing guidelines, newly implemented dental practice safety protocols which reduces patient traffic, and patient reluctance to seek dental care. At this time, it is uncertain how long these impacts will continue.

The ~~principal measurements used~~Company’s response to the pandemic through June 30, 2020 was as follows:

•A COVID-19 infection crisis management process was implemented by the Company to have a unified approach to responding to employees infected by COVID-19. All potential and actual cases across the Company were reviewed to ensure that the Company managed exposed employees appropriately, consistently and safely. No major outbreaks have occurred at any of the Company's locations.

•The Company put in ~~evaluating~~place a travel ban, implemented a work from home policy where possible and prohibited all meetings of more than 10 people. These measures were taken to limit employee exposure to COVID-19 as well as comply with stay-at-home and social distancing guidelines.

•A customer service support continuity plan was implemented to meet customer needs. Technical support was maintained to assist the Company’s customers during this period while still ensuring employees' safety.

•The Company remained focused on maintaining a high level of customer support through robust virtual training and development courses.

•The Company suspended or significantly reduced operations at most of its principal manufacturing and distribution locations, which included furloughing employees related to these locations. While the operations were suspended or significantly reduced, the Company continued to fulfill customer demand. The Company also continued sales and manufacturing operations at normal levels within the Healthcare business.

•The Company reduced spending on sales, marketing, and other related expenses due to the decrease in customer demand. Additionally, the Company instituted a global hiring freeze, a reduction in temporary employees and consultants as well as curtailed or stopped all projects that are not critical to the continuity of the business. Despite these reductions, the Company maintained investment in critical capital and research and development projects as well as global efficiency and cost savings initiatives.

•During April, the Company announced additional furloughs or the reduction of working hours for employees throughout its organization. The total number of employees impacted by these measures represented approximately 52% of the workforce. The furloughs remained in place throughout the second quarter.

•For the safety of all employees and customers, the Company established additional protocols as well as following all mandated regulatory requirements imposed by the country, the state and the local jurisdictions in which the Company operates.

•The Company implemented salary reductions of up to 25% for most employees of the Company who were not furloughed during the second quarter where allowed by law, including members of management. These reductions were in place for 90 days. The CEO relinquished all but the portion of his base salary necessary to fund, on an after-tax basis, his contributions to continue to participate in the Company’s health benefits plan and meet certain other legal requirements. In addition, each member of the Board of Directors agreed to waive one quarter of his or her annual cash retainer for 2020.

•Many governments across the world instituted programs to reimburse business ~~are: (1) constant currency~~entities for a portion of employee compensation expense for employees that are furloughed or that are working reduced hours. The Company applied for and has received relief under these programs as well as certain other programs instituted by governments to mitigate the negative impacts of COVID-19.

•In an effort to preserve liquidity, the Company took action related to deferring the payment of income and payroll tax related liabilities where governments have allowed such deferrals. Additionally, the Company implemented cost containment measures to ensure the preservation of cash.

•Further, out of an abundance of caution in order to support its liquidity, the Company entered into and announced on April 9, 2020, a $310.0 million revolving credit facility, on May 5, 2020 entered into a 40.0 million euro revolving credit facility, on May 26, 2020 issued $750.0 million of senior unsecured notes, on May 12, 2020 entered into a 30.0 million euro revolving credit facility, and on June 11, 2020 entered into a 3.3 billion Japanese yen revolving credit facility. These liquidity measures are in addition to the Company’s $700.0 million revolving credit facility disclosed in its Form 10-K for December 31, 2019 filed on March 2, 2020.

•The Company elected to drawdown the full amount of the $700.0 million revolving credit facility to provide additional liquidity and financial flexibility in light of current economic conditions and uncertainties arising in connection with the COVID-19 pandemic. Upon the issuance of the $750.0 million of senior unsecured notes, the Company subsequently repaid the $700.0 million revolving credit facility.

In addition to continuing the above measures, subsequent to the six months ended June 30, 2020, the Company’s additional actions were as follows:

•The Company continues to prioritize employee safety and preventing the possible spread of COVID-19 by encouraging ongoing work-from-home where possible and maintaining travel restrictions.

•The Company continues to take measures to contain costs in light of lower sales levels. The Company is also taking actions to accelerate the cost improvement initiatives included in the previously announced restructuring plan.

Up through the date of the filing of this Form 10-Q, the Company continues to operate its principal manufacturing facilities and other operations at a reduced capacity with the exception of its Healthcare business which is operating at normal capacity. While at a reduced level, the Company is still selling all products in its portfolio. The Company cannot estimate when its net sales will return to pre-COVID-19 levels or when manufacturing facilities and other operations will resume operating at a normal capacity. The Company continues to monitor the COVID-19 pandemic. As governmental authorities adjust restrictions globally, the Company will appropriately staff sales, manufacturing, and other functions to meet customer demand and deliver on continuing critical projects while also complying with all government requirements.

Restructuring Announcement

In November 2018, the Board of Directors of the Company approved a plan to restructure and simplify the Company’s business. The goal of the restructuring is to drive annualized net sales growth ~~by segment~~of 3% to 4% and ~~geographic region; (2) internal sales growth by segment and geographic region; and (3)~~ adjusted operating income ~~and~~ margins of ~~each reportable segment, which excludes~~22% by the ~~impacts~~end of ~~purchase accounting, corporate expenses,~~2022 as well as achieve net annual cost savings of $200 million to $225 million by 2021. In July 2020, the Board of Directors of the Company approved an expansion of this plan that further optimizes the Company’s product portfolio and ~~certain other items to enhance the comparability of results period to period. These principal measurements are not calculated in accordance with accounting principles generally accepted~~reduces operating expenses. The product portfolio optimization will result in the ~~United States; therefore, these items represent non-US GAAP measures. These non-US GAAP measures may differ from other companies and should not be considered in isolation from,~~divestiture or closure of certain underperforming businesses. The operating expense reductions will come as a ~~substitute~~result of additional leverage from continued integration and simplification of the business. The Company had initially anticipated one-time expenditures and charges of approximately $275 million yielding annual cost savings of $200 million to $225 million by 2021. The program expansion will result in total charges of approximately $375 million and is expected to result in annual cost savings of approximately $250 million. The Company expects that these expanded actions will result in incremental global headcount reductions of 6% to 7% in addition to the original projections of 6% to 8%. Since November 2018, the Company has incurred expenditures of approximately $225 million under this program, of which, approximately $75 million were non-cash charges.

As part of this expanded plan, the Company announced on August 6, 2020 that it will close its traditional orthodontics business as well as close and restructure certain portions of its laboratory business. The traditional orthodontics business is part of the Technologies & Equipment segment and the laboratory business is part of the Consumables segment. The Company intends to close several of its facilities and reduce its workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of $80 million to $90 million for ~~measures~~inventory write-downs, severance costs, fixed asset write-offs and other facility closure costs. It is expected that the majority of ~~financial performance prepared~~these charges will be taken during the remainder of 2020. The Company estimates that $45 million to $55 million of the restructuring charges will be non-cash charges related to inventory write-downs and fixed asset write-offs. The Company does not expect a significant impact to net sales in ~~accordance with US GAAP.~~the third and fourth quarter of 2020. Both businesses have been experiencing negative sales growth and are dilutive to the Company’s operating income rate.

The ~~Company defines “constant currency” sales growth as the increase or decrease in~~Company’s traditional orthodontics business, which includes brackets, bands, tubes and wires, had net sales ~~from period to period excluding precious metal content and the impact~~ of ~~changes~~$132 million in foreign currency exchange rates. This impact is calculated by comparing current-period revenues to prior-period revenues, with both periods converted at the U.S. dollar to local currency foreign exchange rate for each month2019. The portion of the ~~prior period, for the currencies in which~~laboratory business the Company ~~does business.~~is closing manufactures removable dentures and related products and had net sales of $44 million in 2019. The ~~Company defines “internal” sales growth as constant currency sales growth excluding~~net income of these businesses is not material to the ~~impacts of net acquisitions and divestitures and discontinued products.~~Company’s consolidated results.

Business Drivers

The primary drivers of ~~internal~~sales growth include macroeconomic factors, global dental market ~~growth,~~demand, innovation and new product launches by the ~~Company;~~Company, as well as continued investments in sales and marketing resources, including clinical education. Management believes that the Company’s ability to execute its strategies should allow it to grow faster than the underlying dental market over time. On a short-term basis, sudden changes in the macroeconomic environment such as COVID-19, changes in strategy, or distributor inventory levels can ~~impact~~and have impacted the ~~Company’s internal growth.~~Company's sales.

The Company has a focus on maximizing operational efficiencies on a global basis. The Company has expanded the use of technology as well as process improvement initiatives to enhance global efficiency. In addition, management continues to evaluate the worldwide consolidation of operations and functions to further reduce costs. While the Company continues consolidation initiatives which can have an adverse impact on reported results in the short-term, the Company expects that the continued benefits from these global efficiency efforts will improve its cost ~~structure.~~

In connection with these initiatives, the Board of Directors of the Company approved a plan to restructure the Company’s business to support revenue growth and margin expansion and to simplify the organization, with the understanding that the restructuring plan may continue to evolve as the Company progresses through the continued planning and execution of the plan. The plan includes a restructuring of the business through streamlining the organization and consolidating functions. The restructuring plan anticipates a net reduction in the Company’s global workforce of approximately 6% to 8%, and the Company will consult with employee representation in connection with the execution of the restructuring plan where required. The Company's goal is that the restructuring will result in annualized topline growth of 3% to 4%, an adjusted operating income margin of 20% by the end of the year 2020, an adjusted operating income margin of 22% by the year 2022 and $200 million to $225 million in net annual cost savings by 2021. As part of the restructuring plan announced on November 18, 2018, the Company put in place a plan to reduce headcount from 16,300 as of that date, to a range of 15,300 and 15,000 before the end of 2022. Since the announcement, the Company has made significant progress in reducing headcount, and has reduced overall headcount by approximately 1,000 as of June 30, 2019. The Company is currently in the process of making strategic headcount additions to support revenue growth and other initiatives. At the same time, the Company continues to execute on additional cost reduction programs which are anticipated to incrementally reduce headcountstructure over ~~the remaining time period required to fully execute its cost containment programs.~~ The Company expects to incur approximately $275 million in one-time expenditures and charges. During the six months ended June 30, 2019, the Company has recorded expenses and charges of approximately $135 million related to this restructuring plan, of which, approximately $70 million were non-cash charges. There can be no assurance that the cost reductions and results will be achieved.

~~As part of this restructuring plan, the Company has introduced five key operating principles in order to achieve this goal:~~

•~~Approach customers as one:~~ Put the customer at the center of how Dentsply Sirona is organized. The Company is creating one integrated approach to customer service, direct and indirect selling, and clinical education to strengthen the relationship with the customer and better serve the customers' needs.

•~~Assume greater responsibility for Dentsply Sirona’s demand creation:~~ ~~To better support dealer partners and end-user customers, the Company launched a sales force effectiveness program, with a view to improving returns on sales and marketing investments.~~

•~~Ensure that innovation is substantial and supported:~~ ~~Create a comprehensive R&D program that prioritizes spending across the entire Company portfolio resulting in more impactful innovations each year.~~

•~~Lead in clinical education:~~ ~~Dentsply Sirona is investing to further its leadership position through local training events and enhancing online training presence to strengthen the relationship with the dental professionals.~~

•~~Take advantage of scale:~~ The Company is focused on integrating its dental product portfolios to unlock operational efficiencies, including performance improvements in procurement, logistics, manufacturing, sales force and marketing programs. In addition, Dentsply Sirona is taking significant measures to simplify the business. In combination, these initiatives will improve organizational efficiency and better leverage the Company’s selling, general and administrative infrastructure.time.

Product innovation is a key component of the Company’s overall growth strategy. New advances in technology are anticipated to have a significant influence on future products in the dentistry and consumable medical device markets in which the Company operates. As a result, the Company continues to pursue research and development initiatives to support technological development, including collaborations with various research institutions and dental schools. In addition, the Company licenses and purchases technologies developed by third parties. Although the Company believes these activities will lead to new innovative dental and healthcare ~~consumable, and dental technology products;~~products, they involve new technologies and there can be no assurance that ~~commercialized~~marketable products will be developed.

~~The~~Subject to the pace of the post-pandemic recovery, the Company ~~will~~intends to continue ~~to pursue~~pursuing opportunities to expand the Company’s product offerings, technologies, and sales and service infrastructure through partnerships and acquisitions. Although the professional dental and the consumable medical device markets in which the Company operates have experienced consolidation, they remain fragmented. Management believes that there will continue to be adequate opportunities to participate as a consolidator in the industry for the foreseeable future.

The Company’s business is subject to quarterly fluctuations of consolidated net sales and net income. Price increases, promotional activities, as well as changes in inventory levels at distributors contribute to this fluctuation. The Company typically implements most of its price increases in ~~October~~January or ~~January~~October of a given year across most of its businesses. Distributor inventory levels tend to increase in the period leading up to a price increase and decline in the period following the implementation of a price increase. Required minimum purchase commitments under agreements with key distributors may increase inventory levels in excess of retail demand. These net inventory changes have impacted the Company’s consolidated net sales and net income in the past, and may continue to do so in the future, over a given period or multiple periods. In addition, the Company may from time to time, engage in new distributor relationships that could cause ~~quarterly~~ fluctuations of consolidated net sales and net income. Distributor inventory levels may fluctuate, and may differ from the Company’s predictions, resulting in the Company’s projections of future results being different than expected. There can be no assurance that the Company’s dealers and customers will maintain levels of inventory in accordance with the Company’s predictions or past history, or that the timing of customers’ inventory build or liquidation will be in accordance with the Company’s predictions or past history. The Company anticipates that inventory levels will fluctuate as dealers and customers manage the effects of COVID-19 on their businesses. Any of these fluctuations could be material to the Company’s consolidated financial statements.

Impact of Foreign Currencies ~~and Interest Rates~~

Due to the Company’s significant international presence, movements in foreign currency exchange ~~and interest rates~~ may impact the Consolidated Statements of Operations. With approximately two-thirds of the Company’s net sales located ~~in regions~~ outside the United States, the Company’s consolidated net sales are impacted negatively by the strengthening or positively impacted by the weakening of the U.S. dollar. Additionally, movements in certain foreign exchange rates may unfavorably or favorably impact the Company’s results of operations, financial condition and liquidity as a number of the Company’s manufacturing and distribution operations are located outside of the U.S.

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~~Reclassification of Prior Year Amounts~~

During the three and six months ended June 30, 2019, certain reclassifications have been made to prior year’s data in order to conform to current year presentation. Specifically, during the three months ended March 31, 2019, the Company's laboratory dental business moved into the Consumables segment as the products sold from this business are typically made on a recurring basis and have similar sales and operating characteristics as the other businesses in this segment. The Company moved the orthodontics business into the Technologies & Equipment segment to take advantage of the synergies related to digital planning and treatment within this segment. The Company also moved the instruments business into the Technologies & Equipment segment in order to take advantage of the synergies that stem from pairing equipment with instruments, which are often sold in conjunction with each other. The segment information reflects the revised structure for all periods shown.

RESULTS OF OPERATIONS, ~~QUARTER~~THREE MONTHS ENDED JUNE 30, ~~2019~~2020 COMPARED TO ~~QUARTER~~THREE MONTHS ENDED JUNE 30, ~~2018~~2019

Net Sales

The discussion below summarizes the Company’s sales growth which excludes precious metal content, into the following components: (1) constant currency sales growth, which includes internal sales growth and net acquisition sales growth, and (2) foreign currency impacts. These disclosures ofCompany presents reported net sales ~~growth provide~~comparing the ~~reader with~~current year periods to the prior year periods. In addition, the Company also compares reported net sales ~~results~~ on an organic sales basis, which is a ~~comparable basis between periods.~~Non-GAAP measure.

The Company defines ~~“constant currency” sales growth~~"organic sales" as the increase or decrease in net sales excluding: (1) net sales from ~~period~~acquired and divested businesses recorded prior to ~~period excluding precious metal content~~the first anniversary of the acquisition or divestiture, (2) net sales attributable to discontinued product lines in both the current and prior year periods, and (3) the impact of ~~changes in~~ foreign currency ~~exchange rates. This impact~~translation, which is calculated by comparing current-period ~~revenues~~sales to prior-period ~~revenues,~~sales, with both periods converted atto the U.S. dollar torate at local currency foreign exchange ~~rate~~rates for each month of the prior period, for the currencies in which the Company does business. The Company defines “internal” sales growth as constant currency sales growth excluding the impacts of net acquisitions and divestitures and discontinued products.

Management believes that the presentation of net sales, excluding precious metal content, provides useful information to investors because a portion of Dentsply Sirona’s net sales is comprised of sales of precious metals generated through sales of the Company’s precious metal dental alloy products, which are used by third parties to construct crown and bridge materials. Due to the fluctuations of precious metal prices and because the cost of the precious metal content of the Company’s sales is largely passed through to customers and has minimal effect on earnings, Dentsply Sirona reports net sales both with and without precious metal content to show the Company’s performance independent of precious metal price volatility and to enhance comparability of performance between periods. The Company uses its cost of precious metal purchased as a proxy for the precious metal content of sales, as the precious metal content of sales is not separately tracked and invoiced to customers. The Company believes that it is reasonable to use the cost of precious metal content purchased in this manner since precious metal dental alloy sale prices are typically adjusted when the prices of underlying precious metals change.period.

The ~~presentation of net sales, excluding precious metal content,~~"organic sales" measure is ~~considered a measure~~ not calculated in accordance with accounting principles generally accepted in the United States ("US ~~GAAP, and is~~GAAP"); therefore, ~~considered~~this item represents a ~~non-US GAAP~~Non-GAAP measure. The Company provides the following reconciliation of net sales to net sales, excluding precious metal content. The Company’s definitions and calculations of net sales, excluding precious metal content, and other operating measures derived using net sales, excluding precious metal content,This Non-GAAP measure may ~~not necessarily be the same as~~differ from those used by other ~~companies.~~

Three Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
Net sales $ 1,009.4 $ 1,042.1 $ (32.7) (3.1%)
Less: precious metal content of sales 8.9 9.4 (0.5) (5.3%)
Net sales, excluding precious metal content $ 1,000.5 $ 1,032.7 $ (32.2) (3.1%)

~~Reported net~~companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP. Organic sales is an important internal measure for the ~~three months ended June 30, 2019 were $1,009.4 million,~~Company. The Company's senior management receives a ~~decrease~~monthly analysis of $32.7 million from the three months ended June 30, 2018. For the three months ended June 30, 2019 net sales, excluding precious metal content were $1,000.5 million, a decrease of $32.2 million from the three months ended June 30, 2018.operating results that includes organic sales. The second quarter of 2018 included an estimated decrease in inventory at certain distributors of $26 million. Net sales, excluding precious metal content, were negatively impacted by approximately 4.4% due to the strengtheningperformance of the ~~U.S. dollar as compared to the same prior year period.~~

~~For the three months ended~~ ~~June 30, 2019, net sales, excluding precious metal content, increased~~ ~~3.0%~~Company is measured on ~~an internal sales growth basis. On a constant currency basis, revenue increased~~ ~~1.1%. The constant currency increase included a~~ ~~1.3%~~ reduction due to discontinued products and 60 basis points negative impact from divestitures of non-strategic businesses. Internal sales growth was attributable to the Technologies & Equipment revenue growth.

~~Sales Growth by Region~~

~~Net sales, excluding precious metal content, by geographic region is as follows:~~

Three Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
United States $ 328.0 $ 337.1 $ (9.1) (2.7%)
Europe 415.4 419.4 (4.0) (1.0%)
Rest of World 257.1 276.2 (19.1) (6.9%)

~~A reconciliation of reported net sales to non-US GAAP net sales, excluding precious metal content, by geographic region is as follows:~~

Three Months Ended June 30, 2019
(in millions) United States Europe Rest of World Total
Net sales $ 329.5 $ 422.0 $ 257.9 $ 1,009.4
Less: precious metal content of sales 1.5 6.6 0.8 8.9
Net sales, excluding precious metal content $ 328.0 $ 415.4 $ 257.1 $ 1,000.5

Three Months Ended June 30, 2018
(in millions) United States Europe Rest of World Total
Net sales $ 338.4 $ 426.7 $ 277.0 $ 1,042.1
Less: precious metal content of sales 1.3 7.3 0.8 9.4
Net sales, excluding precious metal content $ 337.1 $ 419.4 $ 276.2 $ 1,032.7
Acquisition related adjustments (a)
2.1 — — 2.1
Non-US GAAP net sales, excluding precious metal content $ 339.2 $ 419.4 $ 276.2 $ 1,034.8

~~(a) Represents an adjustment to reflect deferred revenue that was eliminated under business combination accounting standards.~~

~~United States~~

Reported net sales decreased by 2.6% in the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Net sales, excluding precious metal content, decreased by 2.7% during the second quarter of 2019 as compared to the second quarter of 2018. The second quarter of 2018 included an estimated decrease in inventory by certain distributors at $24 million.

For the three month period ended June 30, 2019, net sales, excluding precious metal content, decreased by 1.5% on an internal sales growth basis. On a constant currency basis, revenue decreased 3.2%. The constant currency decrease included a 1.3% reduction from divestitures of non-strategic businesses and 40 basis points negative impact from discontinued products. The declining internal sales growth was attributable to the Consumables segment, partially offset by internal growth the Technologies & Equipment segment.

~~Europe~~

Reported net sales decreased by 1.1% during the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Net sales, excluding precious metal content, decreased by 1.0% in the second quarter of 2019 as compared to the second quarter of 2018, which was negatively impacted by approximately 6.9% due to the strengthening of the U.S. dollar as compared to the prior year period.

For the three month period ended June 30, 2019, net sales, excluding precious metal content, increased by 7.1% on an internal sales growth basis. On a constant currency basis, revenue increased 5.9%. The constant currency increase included a 1.0% reduction due to discontinued products and 20 basis points negative impact from divestitures of non-strategic businesses. The internal sales growth was driven primarily by the Technologies and Equipment segment.

~~Rest of World~~

Reported net sales decreased by 6.9% in the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Net sales, excluding precious metal content, decreased 6.9% in the second quarter of 2019 as compared to the second quarter of 2018. The three months ended June 30, 2019 was negatively impacted by approximately 6.0% due to the strengthening of the U.S. dollar as compared to the same prior year period.

For the three month period ended June 30, 2019, net sales, excluding precious metal content, increased by 2.4% on an internal sales growth basis. On a constant currency basis, revenue declined 90 basis points. The constant currency decrease included a 3.0% reduction due to discontinued products and 30 basis points negative impact from divestitures of non-strategic businesses. The internal sales growth was driven by the Technologies & Equipment segment.

~~Gross Profit~~

Three Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
Gross profit $ 540.8 $ 552.8 $ (12.0) (2.2%)
Gross profit as a percentage of net sales, including precious metal content 53.6 % 53.0 %
Gross profit as a percentage of net sales, excluding precious metal content 54.1 % 53.5 %

Gross profit as a percentage of net sales, excluding precious metal content, increased by 60 basis points for the three months ended June 30, 2019 as compared to the same three month period ended June 30, 2018.

For the three months ended June 30, 2019, the increase in the gross profit rate was primarily driven by cost savings initiatives and the favorable impact of foreign currency which together impacted the rate by approximately 180 basis points, partially offset by expenses related to the divestiture of non-strategic businesses as compared to the three months ended June 30, 2018.

~~Operating Expenses~~

Three Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
Selling, general, and administrative expenses (“SG&A”) $ 430.9 $ 432.2 $ (1.3) (0.3%)
Goodwill impairment — 1,085.8 (1,085.8) NM
Restructuring and other costs 42.4 188.9 (146.5) NM
SG&A as a percentage of net sales, including precious metal content 42.7 % 41.5 %
SG&A as a percentage of net sales, excluding precious metal content 43.1 % 41.9 %

~~NM - Not meaningful~~

~~SG&A Expense~~

SG&A expenses, including research and development expenses, as a percentage of net sales, excluding precious metal content, for the three months ended June 30, 2019 increased 120 basis points as compared to the three months ended June 30, 2018.

For the three months ended June 30, 2019, the higher rate was driven primarily by higher performance-based compensation of $33.0 million and certain severance costs related to the Chief Financial Officer and Chief Human Resources Officer of $11.0 million, partially offset by cost savings initiatives including head count reductions and the divestiture of non-strategic businesses.

~~Goodwill impairment~~

For the three months ended June 30, 2018, the Company recorded a goodwill impairment charge of $1,085.8 million. The charge is related to two reporting units within the Technologies & Equipment segment.

~~Restructuring and Other Cost~~this metric along with other performance metrics.

The Company ~~recorded restructuring and other costs of $42.4 million for the three months ended June 30, 2019 compared to $188.9 million for the three months ended June 30, 2018.~~

~~The Company recorded $10.7 million of restructuring costs during the three months ended June 30, 2019.~~

~~During the three months ended June 30, 2019, the Company recorded $31.7 million of other costs which consist primarily of fixed asset impairments.~~

During the three months ended June 30, 2018, the Company recorded an impairment charge of $179.2 million related to certain tradenames and trademarks within the reporting units in the Technologies & Equipment segment that were impaired during the Company's annual impairment testing.

~~Other Income and Expense~~

Three Months Ended June 30,
(in millions) 2019 2018 Change
Net interest expense $ 7.8 $ 9.2 $ (1.4)
Other expense (income), net 12.1 (1.0) 13.1
Net interest and other expense $ 19.9 $ 8.2 $ 11.7

~~Net Interest Expense~~

Net interest expense for the three months ended June 30, 2019 decreased $1.4 million as compared to the three months ended June 30, 2018. The Company maintained lower average debt levels during the three months ended June 30, 2019 when compared to the same period in the prior year resulting in lower net interest expense.

~~Other Expense (Income), Net~~

Other expense (income), net for the three months ended June 30, 2019 was an expense of $12.1 million, comprised primarily of net loss of $14.5 million on the divestitures of non-strategic businesses partially offset by foreign currency transaction gains of $5.5 million, primarily on net investment hedges. Other expense (income), net for the three months ended June 30, 2018 was income of $1.0 million, comprised primarily of $5.7 million curtailment gain recorded on the termination of a post-employment medical benefit plan partially offset by $2.0 million currency transaction losses and $2.7 million of other non-operating expense.

~~Income Taxes and Net Income (Loss)~~

Three Months Ended June 30,
(in millions, except per share data and percentages) 2019 2018 $ Change
Provision (benefit) for income taxes $ 11.2 $ (41.3) $ 52.5
Effective income tax rate 23.5 % NM
Net income (loss) attributable to Dentsply Sirona $ 36.4 $ (1,122.0) $ 1,158.4
Net income (loss) per common share - diluted $ 0.16 $ (4.98)

~~NM - Not meaningful~~

~~Provision for Income Taxes~~

~~For the three months ended June 30, 2019, income taxes were a provision of $11.2 million as compared to a net benefit of $41.3 million during the three months ended June 30, 2018.~~

~~During the three months ended June 30, 2019, the Company recorded $1.8 million of~~ excess tax benefit related to employee share-based compensation. The Company also recorded a $10.1 million tax benefit as a discrete item related to the fixed asset impairment charge. Excluding these discrete tax items and adjusting pretax income to exclude the pretax charge related to the impairment of fixed assets and the losses related to the divestitures of non-strategic businesses, the Company’s effective tax rate wa~~s 25.2%.~~

During the quarter ended June 30, 2018, the Company recorded the following discrete tax items, $0.5 million of excess tax benefit related to employee share-based compensation, tax benefits of $0.7 million related to valuation allowances, $2.5 million related to enacted statutory rate changes and $0.6 million of tax benefit for other discrete tax matters. The Company also recorded a $50.4 million tax benefit as a discrete item related to the indefinite-lived intangible asset impairment charge, $1.1 million for the fixed asset impairment charge, and $3.3 million related to tax-deductible goodwill for the three months ended June 30, 2018. In addition the Company also recorded $0.6 million of tax benefit as a discrete item related to the gain on sale of marketable securities. Excluding these discrete tax items and adjusting pretax income for the gain on the sale of marketable securities and adjusting for the pretax loss related to the impairment of indefinite-lived intangible assets, tax deductible and non-deductible goodwill impairment charges, the Company’s effective tax rate was 17.02%.

The Company’s effective income tax rate for the second quarter of 2019 included the net impact of the restructuring program related costs and other costs, amortization of purchased intangible assets, business combination related costs, credit risk and fair value adjustments, and income tax related adjustments which impacted income before income taxes and the provision for income taxes by $150.3 million and $38.8 million, respectively.

The Company’s effective income tax rate for the second quarter of 2018 included the net impact of restructuring program related costs and other costs, amortization of purchased intangible assets, business combination related costs, credit risk and fair value adjustments, and income tax related adjustments which impacted income before income taxes and the provision for income taxes by $1,337.7 million and $78.9 million, respectively.

~~Net Income attributable to Dentsply Sirona~~

In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to Dentsply Sirona and adjusted earnings per diluted common share (“adjusted EPS”). The Company discloses ~~adjusted net income attributable to Dentsply Sirona~~organic sales to allow investors to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the ~~Company and certain large non-cash charges related to intangible assets either purchased or acquired through a business combination.~~Company. The Company believes that this information is helpful in understanding underlying ~~operating trends and cash flow generation.~~net sales trends.

Adjusted net income and adjusted EPS are important internal measures for the Company. Senior management receives a monthly analysis of operating results that includes adjusted net income and adjusted EPS and the performance of the Company is measured on this basis along with other performance metrics.

~~The adjusted net income attributable to Dentsply Sirona consists of net income attributable to Dentsply Sirona adjusted to exclude the following:~~


	Three Months Ended June 30,
(in millions, except percentages)	2020		2019		$ Change		% Change

Net sales	$	490.6	$	1,009.4	$	(518.8)	(51.4	%)

~~(1)~~ ~~Business combination~~Net sales for the three months ended June 30, 2020 were $490.6 million, a decrease of $518.8 million or 51.4% from the three months ended June 30, 2019. The decrease in net sales was driven by both the Consumables segment and the Technologies & Equipment segment which were impacted by reduced demand for dental related ~~costs and fair value adjustments. These adjustments include costs related to integrating and consummating mergers and recently acquired businesses,~~procedures as ~~well as costs, gains and losses related~~a result of the COVID-19 pandemic. Net sales were negatively impacted by approximately 1.0% due to the ~~disposal~~strengthening of ~~businesses or significant product lines. In addition, this category includes~~ the ~~roll off~~U.S. dollar as compared to the ~~consolidated statement~~same prior year period. This decrease included the negative impact of ~~operations~~0.4% from divestitures of ~~fair value adjustments related~~non-strategic businesses and a 0.1% reduction due to business combinations, except for amortization expense noted below. These items are irregular in timing and as such may not be indicative of past and future performance of the Company and are therefore excluded to allow investors to better understand underlying operating trends.discontinued products.

~~(2)~~For the three months ended June 30, 2020, net sales decreased 49.9% ~~Restructuring program related costs~~on an organic sales basis. The decline in organic sales was attributable to both the Consumables segment and ~~other costs~~the Technologies & Equipment segment which was the result of the COVID-19 pandemic.

During the three months ended June 30, 2020, the Company experienced the lowest sales levels in April and began to see an increase in sales during May and June as most stay-at-home orders were lifted and dental practices started to re-open particularly in the United States and Europe.

The ultimate impact that COVID-19 will have on 2020 results is still unknown at this time and will depend heavily on the substance and pace of the post-pandemic recovery. However, a~~. These adjustments include costs related~~t this time the Company expects that the COVID-19 pandemic will continue to have a negative material impact on 2020 net sales.

Net Sales by Region

Net sales by geographic region were as follows:


	Three Months Ended June 30,
(in millions, except percentages)	2020		2019		$ Change		% Change

United States	$	130.9	$	329.5	$	(198.6)	(60.3	%)

Europe	215.3		422.0		(206.7)		(49.0	%)

Rest of World	144.4		257.9		(113.5)		(44.0	%)

United States

Net sales for the three months ended June 30, 2020 were $130.9 million, a decrease of $198.6 million or 60.3% from the three months ended June 30, 2019. Both the Consumables segment and the Technologies & Equipment segment saw a decline in net sales which was the result of the COVID-19 pandemic. The decrease also included a 0.3% reduction from divestitures of non-strategic businesses.

For the three months ended June 30, 2020, net sales decreased by 60.0% on an organic sales basis. The decline in organic sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was the result of the COVID-19 pandemic.

Europe

Net sales for the three months ended June 30, 2020 were $215.3 million, a decrease of $206.7 million or 49.0% from the three months ended June 30, 2019. Both the Technologies & Equipment segment and the Consumables segment saw a decline in net sales which was the result of the COVID-19 pandemic. The three months ended June 30, 2020 was negatively impacted by approximately 1.1% due to the ~~implementation~~strengthening of ~~restructuring initiatives~~the U.S. dollar as ~~well~~compared to the same prior year period. The decrease included reductions of 0.9% from divestitures of non-strategic businesses and 0.1% due to discontinued products.

For the three month period ended June 30, 2020, net sales decreased by 46.9% on an organic sales basis. The decline in organic sales was attributable to both the Technologies & Equipment segment and the Consumables segment which was the result of the COVID-19 pandemic.

Rest of World

Net sales for the three months ended June 30, 2020 were $144.4 million, a decrease of $113.5 million or 44.0% from the three months ended June 30, 2019. Both the Consumables segment and the Technologies & Equipment segment saw a decline in net sales which was the result of the COVID-19 pandemic. The three months ended June 30, 2020 was negatively impacted by approximately 2.0% due to the strengthening of the U.S. dollar as ~~certain other costs. These costs can~~compared to the same prior year period. The decrease included a 0.1% reduction from divestitures of non-strategic businesses.

For the three month period ended June 30, 2020, net sales decreased by 41.9% on an organic sales basis. The decline in organic sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was the result of the COVID-19 pandemic.

Gross Profit


	Three Months Ended June 30,
(in millions, except percentages)	2020			2019			$ Change		% Change

Gross profit	$	176.1		$	540.8		$	(364.7)	(67.4%)

Gross profit as a percentage of net sales	35.9		%	53.6		%

For the three months ended June 30, 2020, the decrease in the gross profit rate was driven by the decline in net sales and the resulting unfavorable manufacturing variances due to the COVID-19 pandemic, as compared to the same period ended June 30, 2019.

For the remainder of 2020, the Company believes the gross profit rate will be unfavorably impacted as a result of lower net sales and manufacturing facilities operating at reduced volume until market demand returns to normal levels.

Operating Expenses


	Three Months Ended June 30,
(in millions, except percentages)	2020			2019			$ Change		% Change

Selling, general, and administrative expenses	$	279.1		$	430.9		$	(151.8)	(35.2	%)

Restructuring and other costs	1.3			42.4			(41.1)		(96.9	%)

SG&A as a percentage of net sales	56.9		%	42.7		%

Selling, general, and administrative expenses

For the three months ended June 30, 2020, Selling, general, and administrative expenses ("SG&A"), including research and development expenses, as a percentage of net sales had a higher rate driven by lower sales which more than offsets the cost reduction measures implemented by the Company in response to COVID-19.

For the remainder of 2020, the Company believes SG&A expenses will be lower than 2019, primarily due to the cost reduction measures including COVID-19 related actions. The cost reduction measures include, but are not limited to severance costs, facility closure costs, lease and contract terminations costs, related professional service costs, duplicate facility and labor costs associated with specific restructuring initiatives, as well as, legal settlements and impairments of assets. These items are irregular in timing, amount and impact to the ~~Company’s financial performance. As such, these items may not be indicative of past and future performance~~reduction of the following expense categories: marketing and promotion expenses, travel and meeting expenses, salary expenses, and professional services. The Company ~~and are therefore excluded for the purpose of understanding underlying operating trends.~~expects to continue these measures until sales start to return to a more normal level.

~~(3)~~ ~~Amortization of purchased intangible assets.~~ This adjustment excludes the periodic amortization expense related to purchased intangible assets. Amortization expense has been excluded from adjusted net income attributed to Dentsply Sirona to allow investors to evaluateRestructuring and ~~understand operating trends excluding these large non-cash charges.~~Other Costs

~~(4)~~ ~~Credit risk~~The Company recorded restructuring and ~~fair value adjustments. These adjustments include both~~other costs of $1.3 million for the ~~cost and income impacts of adjustments in certain assets and liabilities including~~three months ended June 30, 2020 compared to $42.4 million for the Company’s pension obligations, that are recorded through net income which are due solely to the changes in fair value and credit risk. These items can be variable and driven more by market conditions than the Company’s operating performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.three months ended June 30, 2019.

~~(5)~~ ~~Gain on sale~~The Company recorded $2.2 million of ~~marketable securities.~~ ~~This adjustment represents~~restructuring costs for the ~~gain on~~three months ended June 30, 2020 compared to $10.7 million for the sale of marketable securities held by the Company. The gain has been excluded from adjusted net income attributed to Dentsply Sirona to allow investors to evaluate and understand operating trends excluding this gain.three months ended June 30, 2019.

During the three months ended June 30, 2020, the Company recorded a benefit of $0.9 million of other costs. During the three months ended June 30, 2019, the Company recorded $31.7 million of other costs, which consist primarily of fixed asset impairments.

4843

~~(6)~~ ~~Income tax related adjustments.~~ ~~These adjustments include both income tax expenses and income tax benefits~~The Company announced on August 6, 2020 that ~~are representative of income tax adjustments mostly related to prior periods,~~it will close its traditional orthodontics business as well as close and restructure certain portions of its laboratory business. The traditional orthodontics business is part of the ~~final settlement of income tax audits, and discrete tax items resulting from the implementation of restructuring initiatives~~Technologies & Equipment segment and the ~~vesting~~laboratory business is part of the Consumables segment. The Company intends to close several of its facilities and ~~exercise~~reduce it's workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of ~~employee share-based compensation. These adjustments~~$80 million to $90 million for inventory write-downs, severance costs, fixed asset write-offs and other facility closure costs. It is expected that the majority of these charges will be taken during the remainder of 2020. The Company estimates that $45 million to $55 million of the restructuring charges will be non-cash charges related to inventory write-downs and fixed asset write-offs The Company does not expect a significant impact to net sales in the third and fourth quarter of 2020. Both businesses have been experiencing negative sales growth and are ~~irregular in timing and amount and may significantly impact~~dilutive to the Company’s operating ~~performance. As such, these items may not be indicative of past and future performance of the Company and therefore are excluded for comparability purposes.~~income rate.

Adjusted earnings per diluted common share is calculated by dividing adjusted net income attributable to Dentsply Sirona by diluted weighted-average common shares outstanding. Adjusted net income attributable to Dentsply SironaOther Income and adjusted earnings per diluted common share are considered measures not calculated in accordance with US GAAP, and therefore are non-US GAAP measures. These non-US GAAP measures may differ from other companies. Income tax related adjustments may include the impact to adjust the interim effective income tax rate to the expected annual effective tax rate. The non-US GAAP financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.Expense

Three Months Ended
June 30, 2019
(in millions, except per share amounts) Net
Income Per Diluted Common Share
Net income attributable to Dentsply Sirona $ 36.4 $ 0.16
Pre-tax non-US GAAP adjustments:
Restructuring program related costs and other costs (a)
99.7
Amortization of purchased intangible assets 47.3
Business combination related costs and fair value adjustments 2.0
Credit risk and fair value adjustments 1.3
Tax impact of the pre-tax non-US GAAP adjustments (b)
(38.0)
Subtotal non-US GAAP adjustments 112.3 0.50
Income tax related adjustments (0.8) —
Adjusted non-US GAAP net income $ 147.9 $ 0.66
(a) Certain severance costs related to the Chief Financial Officer and Chief Human Resources Officer of $11.0 million are included within this item.
(b) The tax amount was calculated using the applicable statutory tax rate in the tax jurisdiction where the non-US GAAP adjustments were generated.


	Three Months Ended June 30,
(in millions)	2020		2019		$ Change

Net interest expense	$	11.3	$	7.8	$	3.5

Other expense (income), net	4.3		12.1		(7.8)

Net interest and other expense (income)	$	15.6	$	19.9	$	(4.3)

Net Interest Expense

Net interest expense for the three months ended June 30, 2020 increased $3.5 million as compared to the three months ended June 30, 2019. Higher average debt levels in 2020 was the primary driver when compared to the prior year period resulting in higher net interest expense.

On April 17, 2020 the Company drew down $700.0 million under its 2018 revolving credit facility. On May 26, 2020, the Company issued $750.0 million of senior unsecured notes with a final maturity date of June 1, 2030 at a semi-annual coupon of 3.25%. The net proceeds were $748.4 million, net of discount of $1.6 million. Issuance fees totaled $6.4 million. The Company paid $30.5 million to settle its $150.0 million notional T-Lock contract which partially hedged the interest rate risk of the note issuance. The Company repaid the $700.0 million revolver borrowing on May 26, 2020 from the net proceeds of the note issuance.

As a result of the additional financing, the Company's interest expense will increase throughout the remainder of 2020. See Part I, Item 1, Note 11, Financing Arrangements, in the Notes to the Unaudited Interim Consolidated Financial Statements of this Form 10-Q for further details.

Other Expense (Income), Net

Other expense (income), net for the three months ended June 30, 2020 was expense of $4.3 million. Other expense (income), net for the three months ended June 30, 2019 was expense of $12.1 million.

On April 7, 2020, the Company terminated its entire net investment hedge portfolio. As a result, the Company expects other income related to this hedge portfolio will decline throughout the remainder of 2020.

Three Months Ended
June 30, 2018
(in millions, except per share amounts) Net (Loss)
Income Per Diluted Common Share
Net loss attributable to Dentsply Sirona $ (1,122.0) $ (4.98)
Pre-tax non-US GAAP adjustments:
Restructuring program related costs and other costs 1,278.5
Amortization of purchased intangible assets 50.1
Business combination related costs and fair value adjustments 6.6
Credit risk and fair value adjustments 2.5
Tax impact of the pre-tax non-US GAAP adjustments (a)
(72.6)
Subtotal non-US GAAP adjustments 1,265.1 5.57
Adjustment for calculating non-US GAAP net income per diluted common share (b)
0.04
Income tax related adjustments (6.3) (0.03)
Adjusted non-US GAAP net income $ 136.8 $ 0.60
(a) The tax amount was calculated using the applicable statutory tax rate in the tax jurisdiction where the non-US GAAP adjustments were generated.
(b) The Company had a net loss for the three months ended June 30, 2018, but had net income on a non-US GAAP basis. The shares used in calculating diluted non-US GAAP net income per share includes the dilutive effect of common stock.
Shares used in calculating US GAAP net loss per share 225.2
Shares used in calculating diluted non-US GAAP net income per share 226.9

Income Taxes and Net (Loss) Income


	Three Months Ended June 30,
(in millions, except per share data and percentages)	2020		2019			$ Change

(Benefit) provision for income taxes	$	(24.0)	$	11.2		$	(35.2)

Effective income tax rate	NM		23.5		%





Net (loss) income attributable to Dentsply Sirona	$	(95.4)	$	36.4		$	(131.8)

Net (loss) income per common share - diluted	$	(0.44)	$	0.16

NM - Not meaningful

~~Adjusted Operating Income and Margin~~(Benefit) provision for income taxes

~~Adjusted operating~~For the three months ended June 30, 2020, income ~~and margin is another important internal measure for~~taxes were a benefit of $24.0 million as compared to a net provision of $11.2 million during the Company. Operating income in accordance with US GAAP is adjusted for the items noted above which are excluded on a pre-tax basis to arrive at adjusted operating income, a non-US GAAP measure. The adjusted operating margin is calculated by dividing adjusted operating income by net sales, excluding precious metal content.three months ended June 30, 2019.

~~Senior management receives a monthly analysis of operating results that includes adjusted operating income. The performance of~~During the three months ended June 30, 2020, the Company ~~is measured on this basis along with~~recorded $0.9 million of tax expense for other discrete tax matters. Excluding these discrete tax items, the adjusted non-US GAAP earnings noted above as well as other performance metrics. This non-US GAAP measure may differ from other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.Company’s effective tax rate was 20.8%.

Three Months Ended
June 30, 2019
(in millions, except percentages) Operating
Income Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 67.5 6.7%
Restructuring program related costs and other costs 85.2 8.5%
Amortization of purchased intangible assets 47.3 4.8%
Business combination related costs and fair value adjustments 1.8 0.2%
Adjusted non-US GAAP Operating Income $ 201.8 20.2%
During the three months ended June 30, 2019, the Company recorded $1.8 million of excess tax benefit related to employee share-based compensation. The Company also recorded a $10.1 million tax benefit as a discrete item related to a fixed asset impairment charge. Excluding these discrete tax items and adjusting pretax income to exclude the pretax charge related to the impairment of fixed assets and the losses related to the divestitures of non-strategic businesses, the Company’s effective tax rate was 25.2%.

Three Months Ended
June 30, 2018
(in millions, except percentages) Operating (Loss) Income Percentage of Net Sales, Excluding Precious Metal Content
Operating Loss $ (1,154.1) (111.8%)
Restructuring program related costs and other costs 1,278.5 123.8%
Amortization of purchased intangible assets 50.1 4.8%
Business combination related costs and fair value adjustments 5.8 0.6%
Adjusted non-US GAAP Operating Income $ 180.3 17.4%
The Company is restructuring its business through streamlining of the organization and consolidating functions. Realization of the benefits of these plans could give rise to the release of a valuation allowance that has been established on the Company’s deferred tax assets in a future period.

Operating Segment Results

~~Third Party~~ Net Sales ~~Excluding Precious Metal Content~~


		Three Months Ended June 30,														Three Months Ended June 30,
(in millions, except percentages)	(in millions, except percentages)	2019		2018		$ Change		% Change	(in millions, except percentages)	2020		2019		$ Change		% Change

Technologies & Equipment	Technologies & Equipment	$	558.4	$	553.2	$	5.2	0.9%	Technologies & Equipment	$	303.9	$	558.4	$	(254.5)	(45.6	%)

Consumables	Consumables	442.1		479.5		(37.4)		(7.8%)	Consumables	186.7		451.0		(264.3)		(58.6	%)

Segment Operating (Loss) Income


	Three Months Ended June 30,
(in millions, except percentages)	2020		2019		$ Change		% Change

Technologies & Equipment	$	(3.8)	$	96.0	$	(99.8)	(104.0	%)

Consumables	(17.6)		121.8		(139.4)		(114.4	%)

~~Segment Operating Income~~

Three Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
Technologies & Equipment $ 96.0 $ 68.8 $ 27.2 39.5%
Consumables 121.8 143.4 (21.6) (15.1%)

~~A reconciliation of reported net sales to non-US GAAP net sales, excluding precious metal content, by segment is as follows:~~

Three Months Ended June 30, 2019
(in millions) Technologies & Equipment Consumables Total
Net sales $ 558.4 $ 451.0 $ 1,009.4
Less: precious metal content of sales — 8.9 8.9
Net sales, excluding precious metal content $ 558.4 $ 442.1 $ 1,000.5

5145

Three Months Ended June 30, 2018
(in millions) Technologies & Equipment Consumables Total
Net sales $ 553.2 $ 488.9 $ 1,042.1
Less: precious metal content of sales — 9.4 9.4
Net sales, excluding precious metal content $ 553.2 $ 479.5 $ 1,032.7
Merger related adjustments (a) 2.1 — 2.1
Non-US GAAP net sales, excluding precious metal content $ 555.3 $ 479.5 $ 1,034.8

Technologies & Equipment

~~Reported net~~Net sales ~~increased by 0.9% in~~for the three months ended June 30, ~~2019 as compared to~~2020 were $303.9 million, a decrease of $254.5 million or 45.6% from the three months ended June 30, ~~2018.~~2019. The decrease in net sales was across all businesses which were impacted by reduced demand for dental related procedures as a result of the COVID-19 pandemic. Net sales ~~excluding precious metal content, increased by 0.9% in the second quarter of 2019 as compared to the second quarter of 2018. Net sales, excluding precious metal content,~~ were negatively impacted by approximately ~~4.9%~~1.0% due to the strengthening of the U.S. dollar over the prior year period. The ~~second quarter~~increase included a 0.9% negative impact from divestitures of ~~2019 continues~~non-strategic businesses and a 0.1% reduction due to ~~benefit from new product sales. The second quarter of 2018 included an estimated decrease in inventory at certain distributors of $26 million.~~discontinued products.

For the three months ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content, increased 9.3%~~decreased 43.6% on an ~~internal~~organic sales ~~growth~~ basis. ~~On a constant currency basis, revenue increased 5.5%. The constant currency increase included a 2.7% reduction~~Organic sales decline was across all regions which was due to ~~discontinued products and~~reduced demand for dental related procedures as a ~~1.1% negative impact from divestitures~~result of ~~non-strategic businesses. All geographic regions experienced internal sales growth, led by~~ the ~~Europe region.~~COVID-19 pandemic.

~~The operating income increased $27.2 million or 39.5%~~Key drivers of the decrease in organic sales for the three months ended June 30, ~~2019~~2020, were Equipment & Instruments, Digital Dentistry, and Implants businesses.

Operating income decreased $99.8 million for the three months ended June 30, 2020 as compared to the same ~~three month~~prior year period ~~in 2018~~. The ~~increase~~decrease in operating income was ~~related~~driven by lower sales volume and unfavorable manufacturing variances due to ~~higher sales, cost savings initiatives and~~ the ~~divestiture~~impact of ~~non-strategic businesses,~~COVID-19, partially offset by ~~higher performance-based compensation.~~cost reduction measures in both gross profit and SG&A.

Consumables

~~Reported net sales decreased by 7.8% in the three months ended June 30, 2019 as compared to the three months ended June 30, 2018.~~ Net sales ~~excluding precious metal content, decreased 7.8%~~ for the three months ended June 30, ~~2019 as compared to~~2020 were $186.7 million, a decrease of $264.3 million or 58.6% from the three months ended June 30, ~~2018.~~2019. The decrease in net sales was across all businesses which were impacted by reduced demand for dental related procedures as a result of the COVID-19 pandemic. Net sales ~~excluding precious metal content,~~ were negatively impacted by approximately ~~3.7%~~0.9% due to the strengthening of the U.S. dollar ~~over~~as compared to the same prior year period.

For the three ~~month period~~months ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content,~~ decreased ~~4.1%~~57.7% on an organic sales basis. The decline in organic sales was across all regions which was due to reduced demand for dental related procedures as a ~~constant currency and internal sales growth basis. All geographic regions experienced declining internal sales growth, with~~result of the ~~highest declines in the U.S. region.~~COVID-19 pandemic.

~~The operating income decreased $21.6 million or 15.1%~~Key drivers of the decline in organic sales for the three months ended June 30, ~~2019~~2020, were the Endodontic, Restorative, and Preventive businesses driven by the COVID-19 pandemic.

Operating income decreased $139.4 million for the three months ended June 30, 2020 as compared to the same ~~three month period in 2018.~~prior year period. The decrease in operating income was ~~primarily related to higher performance-based compensation and~~driven by lower sales ~~level,~~volume and unfavorable manufacturing variances due to the impact of COVID-19, partially offset by cost ~~savings initiatives.~~reduction measures in both gross profit and SG&A.

5246

RESULTS OF OPERATIONS, SIX MONTHS ENDED JUNE 30, ~~2019~~2020 COMPARED TO SIX MONTHS ENDED JUNE 30, ~~2018~~2019

Net Sales


		Six Months Ended June 30,														Six Months Ended June 30,
(in millions, except percentages)	(in millions, except percentages)	2019		2018		$ Change		% Change	(in millions, except percentages)	2020		2019		$ Change		% Change

Net sales	Net sales	$	1,955.6	$	1,998.2	$	(42.6)	(2.1%)	Net sales	$	1,364.9	$	1,955.6	$	(590.7)	(30.2	%)
Less: precious metal content of sales		20.1		19.7		0.4		2.0%
Net sales, excluding precious metal content		$	1,935.5	$	1,978.5	$	(43.0)	(2.2%)

~~Reported net~~Net sales for the six months ended June 30, ~~2019,~~2020 were ~~$1,955.6~~$1,364.9 million, a decrease of ~~$42.6~~$590.7 million or 30.2% from the six months ended June 30, ~~2018.~~2019. The decrease in net sales was attributable to both the Consumables segment and the Technologies & Equipment segment which were impacted by reduced demand for dental related procedures as a result of the COVID-19 pandemic, partially offset by new product sales. Net sales ~~excluding precious metal content, for~~were negatively impacted by approximately 1.4% due to the ~~six months ended June 30, 2019 were $1,935.5 million,~~strengthening of the U.S. dollar as compared to the same prior year period. This decrease included the negative impact of 0.9% from divestitures of non-strategic businesses and a ~~decrease of $43.0 million from the six months ended June 30, 2018. The first six months of 2018 included an estimated decrease in inventory at certain distributors of $34 million.~~0.1% reduction due to discontinued products.

For the six months ended June 30, ~~2019~~2020, net sales ~~excluding precious metal content, increased~~ ~~3.5%~~.decreased 27.8% on an ~~internal~~organic sales ~~growth basis. On a constant currency basis, revenue~~ b~~increased~~asis. ~~2.3%.~~ The ~~constant currency increase~~ ~~included a~~ ~~1.2%~~ ~~reduction due to discontinued products. Net~~decrease in organic sales ~~excluding precious metal content, were negatively impacted by approximately 4.6% due to the strengthening of the U.S. dollar over the prior year period. The~~ ~~internal sales growth~~ was attributable to both the Consumables segment and the Technologies & Equipment ~~segment.~~segment which was the result of the COVID-19 pandemic.

During the six months ended June 30, 2020, the Company saw normal sales levels for the months of January and February and started to experience a decline in sales volume during March which continued to its lowest levels in April as certain countries in Asia and Europe began to issue stay-at-home and social distancing guidelines which were quickly adopted in the United States as well. The Company then began to see an increase in sales during May and June as most stay-at-home orders were lifted and dental practices started to re-open particularly in the United States and Europe.

The ultimate impact that COVID-19 will have on 2020 results is still unknown at this time and will depend heavily on the substance and pace of the post-pandemic recovery. However, at this time the Company expects that the COVID-19 pandemic will continue to have a negative material impact to 2020 net sales.

Net Sales ~~Growth~~ by Region

Net sales ~~excluding precious metal content,~~ by geographic region iswere as follows:

Six Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
United States $ 639.9 $ 627.6 $ 12.3 2.0%
Europe 802.3 836.8 (34.5) (4.1%)
Rest of World 493.3 514.1 (20.8) (4.0%)

~~A reconciliation of reported net sales to non-US GAAP net sales, excluding precious metal content, by geographic region is as follows:~~

Six Months Ended June 30, 2019
(in millions) United States Europe Rest of World Total
Net sales $ 642.9 $ 817.8 $ 494.9 $ 1,955.6
Less: precious metal content of sales 3.0 15.5 1.6 20.1
Net sales, excluding precious metal content 639.9 802.3 493.3 1,935.5

Six Months Ended June 30, 2018
(in millions) United States Europe Rest of World Total
Net sales $ 630.2 $ 852.2 $ 515.8 $ 1,998.2
Less: precious metal content of sales 2.6 15.4 1.7 19.7
Net sales, excluding precious metal content 627.6 836.8 514.1 1,978.5
Acquisition related adjustments (a)
2.1 — — 2.1
Non-US GAAP net sales, excluding precious metal content $ 629.7 $ 836.8 $ 514.1 $ 1,980.6

~~(a) Represents an adjustment to reflect deferred revenue that was eliminated under business combination accounting standards.~~


	Six Months Ended June 30,
(in millions, except percentages)	2020		2019		$ Change		% Change

United States	$	431.4	$	642.9	$	(211.5)	(32.9	%)

Europe	588.4		817.8		(229.4)		(28.1	%)

Rest of World	345.1		494.9		(149.8)		(30.3	%)

United States

Net sales ~~increased by 2.0% in~~for the six months ended June 30, ~~2019 as compared to~~2020 were $431.4 million, a decrease of $211.5 million or 32.9% from the six months ended June 30, ~~2018. Net sales, excluding precious metal content, increased by 2.0% in the six months ended June 30, 2019 as compared to the same six month period of 2018.~~2019. The ~~first six months of 2018 included an estimated~~ decrease in ~~inventory at certain distributors of $30 million.~~

~~For the six months ended June 30, 2019,~~ net sales ~~excluding precious metal content, increased by 2.1% on an internal sales growth basis. On a constant currency basis, revenue increased 1.8%. The constant currency increase included 30 basis points due~~was attributable to ~~discontinued products. The internal sales growth was driven by~~both the Consumables segment and the Technologies & Equipment segment ~~partially offset by lower Consumable revenues.~~

~~Europe~~

Net sales decreased by 4.0% in the six months ended June 30, 2019 as compared to the six months ended June 30, 2018. Net sales, excluding precious metal content, decreased by 4.1% in the six months ended June 30, 2019 as compared to the six months ended June 30, 2018, which ~~were negatively impacted by approximately 6.8% due to the strengthening~~was a result of the ~~U.S. dollar over~~COVID-19 pandemic. The decrease also included a 1.2% reduction from divestitures of non-strategic businesses in the prior year period.

For the six months ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content, increased~~decreased by ~~3.5%~~31.3% on an ~~internal~~organic sales ~~growth~~ basis. OnThe decline in organic sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was a ~~constant currency basis, revenue increased 2.6%.~~result of the COVID-19 pandemic.

Europe

Net sales for the six months ended June 30, 2020 were $588.4 million, a decrease of $229.4 million or 28.1% from the six months ended June 30, 2019. The ~~constant currency increase included 80 basis points~~decrease in net sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was the result of the COVID-19 pandemic. The six months ended June 30, 2020 was negatively impacted by approximately 1.8% due to ~~discontinued products and 10 basis points negative impact~~the strengthening of the U.S. dollar as compared to the same prior year period. The decrease included reductions of 0.9% from divestitures of non-strategic ~~businesses.~~businesses and 0.1% due to discontinued products.

For the six month period ended June 30, 2020, net sales decreased by 25.2% on an organic sales basis. The ~~internal~~decline in organic sales ~~growth~~ was ~~driven primarily~~attributable to both the Consumables segment and the Technologies & Equipment ~~segment.~~segment which was the result of the COVID-19 pandemic.

Rest of World

Net sales ~~decreased by 4.1% in~~for the six months ended June 30, ~~2019 as compared to~~2020 were $345.1 million, a decrease of $149.8 million or 30.3% from the six months ended June 30, ~~2018. Net~~2019. The decrease in net sales ~~excluding precious metal content, decreased 4.0% in~~was attributable to both the Technologies & Equipment segment and the Consumables segment which was the result of the COVID-19 pandemic. The six months ended June 30, ~~2019 as compared to the six months ended June 30, 2018, which~~2020 was negatively impacted by approximately ~~6.5%~~2.2% due to the strengthening of the U.S. dollar ~~over~~as compared to the same prior year period. The decrease included reductions of 0.3% from divestitures of non-strategic businesses and 0.2% due to discontinued products.

For the six ~~months~~month period ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content, increased~~decreased by ~~5.1%~~27.6% on an ~~internal~~organic sales ~~growth~~ basis. ~~On a constant currency basis, revenue increased 2.5%.~~ The ~~constant currency increase included a 2.6% reduction due to discontinued products. The internal~~decline in organic sales ~~growth~~ was ~~primarily~~ driven by both the Technologies & Equipment ~~segment.~~segment and the Consumables segment which was the result of the COVID-19 pandemic.

Gross Profit


		Six Months Ended June 30,																		Six Months Ended June 30,
(in millions, except percentages)	(in millions, except percentages)	2019			2018			$ Change		% Change	(in millions, except percentages)	2020			2019			$ Change		% Change

Gross profit	Gross profit	$	1,040.5		$	1,066.9		$	(26.4)	(2.5%)	Gross profit	$	643.9		$	1,040.5		$	(396.6)	(38.1	%)

Gross profit as a percentage of net sales, including precious metal content		53.2		%	53.4		%
Gross profit as a percentage of net sales, excluding precious metal content		53.8		%	53.9		%
Gross profit as a percentage of net sales											Gross profit as a percentage of net sales	47.2		%	53.2		%

Gross profit as a percentage of net sales ~~excluding precious metal content,~~ decreased by 10603 basis points for the six months ended June 30, ~~2019~~2020 as compared to the ~~same~~ six ~~month period~~months ended June 30, ~~2018.~~2019.

For the six months ended June 30, ~~2019,~~2020, the decrease in the gross profit rate was primarily driven by ~~expenses related~~the decline in net sales and the resulting unfavorable manufacturing variances due to the ~~divestitures of non-strategic businesses which impacted the rate by approximately 100 basis points, partially offset by cost savings initiatives~~COVID-19 pandemic, as compared to the six months ended June 30, ~~2018.~~2019.

For the remainder of 2020, the Company believes the gross profit rate will be unfavorably impacted as a result of manufacturing facilities operating at reduced volume until market demand returns to normal levels.

Operating Expenses


		Six Months Ended June 30,																		Six Months Ended June 30,
(in millions, except percentages)	(in millions, except percentages)	2019			2018			$ Change		% Change	(in millions, except percentages)	2020			2019			$ Change		% Change

Selling, general, and administrative expenses (“SG&A”)	Selling, general, and administrative expenses (“SG&A”)	$	862.8		$	867.4		$	(4.6)	(0.5%)	Selling, general, and administrative expenses (“SG&A”)	$	672.6		$	862.8		$	(190.2)	(22.0	%)
Goodwill impairment	Goodwill impairment	—			1,085.8			(1,085.8)		NM	Goodwill impairment	156.6			—			156.6		NM
Restructuring and other costs	Restructuring and other costs	62.9			199.1			(136.2)		NM	Restructuring and other costs	43.8			62.9			(19.1)		(30.4	%)

SG&A as a percentage of net sales, including precious metal content		44.1		%	43.4		%
SG&A as a percentage of net sales, excluding precious metal content		44.6		%	43.8		%
SG&A as a percentage of net sales											SG&A as a percentage of net sales	49.3		%	44.1		%

NM - Not meaningful

SG&A ~~Expense~~Expenses

SG&A expenses, including research and development expenses, as a percentage of net sales ~~excluding precious metal content,~~ for the six months ended June 30, ~~2019~~2020 increased 80516 basis points as compared to the six months ended ~~ended~~ June 30, ~~2018.~~2019.

For the six months ended June 30, ~~2019,~~2020, the higher rate was primarily driven by lower sales which more than offsets the cost reduction measures implemented by the Company in response to COVID-19.

For the remainder of 2020, the Company believes SG&A expenses will be lower than 2019, primarily ~~by higher performance-based compensation of $30.0 million, certain severance costs related~~due to the ~~Chief Financial Officer and Chief Human Resources Officer of $11.0 million and the biennial International Dental Show expenses, partially offset by~~ cost ~~savings initiatives~~reduction measures including ~~head count reductions as compared~~COVID-19 related actions. The cost reduction measures include, but are not limited to the ~~six months ended June 30, 2018.~~reduction of the following expense categories: marketing and promotion expenses, travel and meeting expenses, salary expenses, and professional services. The Company expects to continue these measures until sales start to return to a more normal level.

Goodwill impairment

For the six months ended June 30, ~~2018,~~2020, the Company recorded a goodwill impairment charge of ~~$1,085.8~~$156.6 million. The impairment charge ~~was~~is related to ~~two~~the Equipment & Instruments reporting ~~units~~unit within the Technologies & Equipment ~~segment.~~segment recorded in the three months ended March 31, 2020. For further details see Part 1, Item 1, Note 12, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q.

Restructuring and Other Cost

The Company recorded ~~net~~ restructuring and other costs of $43.8 million for the six months ended June 30, 2020 compared to $62.9 million for the six months ended June 30, ~~2019~~2019.

The Company recorded $4.5 million of restructuring costs for the six months ended June 30, 2020 compared to ~~$199.1~~$24.9 million for the six months ended June 30, ~~2018. The Company recorded $24.9 million in restructuring costs during~~2019.

During the six months ended June 30, ~~2019 compared~~2020, the Company recorded $39.3 million of other costs, which consist primarily of impairment charges of $38.7 million related to ~~$10.8 million~~indefinite-lived intangible assets recorded in ~~restructuring costs during~~ the ~~six~~three months ended ~~June 30, 2018.~~

March 31, 2020. For further details see Part 1, Item 1, Note 12, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q. During the six months ended June 30, 2019, the Company recorded $38.0 million of other costs, which ~~consist~~consisted primarily of fixed ~~assets~~asset impairments of $32.8 million and an impairment charges of $5.3 million related to indefinite-lived ~~tradenames and trademarks within the Technologies & Equipment segment.~~intangible assets.

~~During the six months ended June 30, 2018, the~~The Company ~~recorded $188.3 million~~announced on August 6, 2020 that it will close its traditional orthodontics business as well as close and restructure certain portions of ~~other costs which consist primarily~~its laboratory business. The traditional orthodontics business is part of ~~an impairment charge of $179.2 million related to certain tradenames and trademarks within~~ the Technologies & Equipment segment and the laboratory business is part of the Consumables segment. The Company intends to close several of its facilities and reduce its workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of $80 million to $90 million for inventory write-downs, severance costs, fixed asset write-offs and other facility closure costs. It is expected that ~~were impaired~~the majority of these charges will be taken during the remainder of 2020. The Company estimates that $45 million to $55 million of the restructuring charges will be non-cash charges related to inventory write-downs and fixed asset write-offs The Company does not expect a significant impact to net sales in the third and fourth quarter of 2020. Both businesses have been experiencing negative sales growth and are dilutive to the Company’s ~~annual impairment testing.~~operating income rate.

Other Income and Expense


		Six Months Ended June 30,											Six Months Ended June 30,
(in millions)	(in millions)	2019		2018		Change		(in millions)	2020		2019		Change

Net interest expense	Net interest expense	$	15.1	$	17.2	$	(2.1)	Net interest expense	$	17.6	$	15.1	$	2.5
Other expense (income), net	Other expense (income), net	(1.7)		(35.1)		33.4		Other expense (income), net	2.9		(1.7)		4.6
Net interest and other expense	Net interest and other expense	$	13.4	$	(17.9)	$	31.3	Net interest and other expense	$	20.5	$	13.4	$	7.1

Net Interest Expense

Net interest expense for the six months ended June 30, ~~2019 decreased $2.1~~2020 increased $2.5 million as compared to the six months ended June 30, ~~2018. Lower~~2019. Higher average debt levels in ~~2019~~2020 was the primary driver when compared to the prior year period ~~resulted~~resulting in ~~lower~~higher net interest expense.

Other Expense (Income), Net

Other expense (income), net for the six months ended June 30, ~~2019~~2020 was ~~income~~expense of $1.7 million, comprised primarily of foreign currency transaction gains of $13.3 million, primarily on net investment hedges, partially offset by the net loss of $5.8 million on the divestitures of non-strategic businesses.$2.9 million. Other expense (income), net for the six months ended June 30, ~~2018~~2019 was income of ~~$35.1~~$1.7 million ~~comprised~~and consisted primarily of a gain ~~recorded~~ on the sale of ~~marketable securities.~~a non-strategic business.

Income Taxes and Net (Loss) Income

Six Months Ended June 30,
(in millions, except per share data and percentages) 2019 2018 $ Change
Provision (benefit) for income taxes $ 25.8 $ (27.6) $ 53.4
Effective income tax rate 25.4 % NM
Net income (loss) attributable to Dentsply Sirona $ 75.6 $ (1,040.8) $ 1,116.4
Net income (loss) per common share - diluted $ 0.34 $ (4.60)


	Six Months Ended June 30,
(in millions, except per share data and percentages)	2020		2019			$ Change

(Benefit) provision for income taxes	$	(13.8)	$	25.8		$	(39.6)

Effective income tax rate	NM		25.4		%





Net (loss) income attributable to Dentsply Sirona	$	(235.3)	$	75.6		$	(310.9)

Net (loss) income per common share - diluted	$	(1.07)	$	0.34

NM - Not ~~meaningful~~meaningful.

~~Provision~~(Benefit) provision for ~~Income Taxes~~income taxes

For the six months ended June 30, ~~2019,~~2020, income taxes were a ~~net expense~~benefit of ~~$25.8~~$13.8 million as compared to a net ~~benefit~~provision of ~~$27.6~~$25.8 million induring the six months ended June 30, ~~2018.~~2019.

During the six months enended June 30, 2020, the Company recorded $6.9 million of tax expense for other discrete tax matters. The Company also recorded a $10.6 million tax benefit as a discrete item related to the indefinite-lived intangible asset impairment charge. Excluding these discrete tax items and adjusting pretax income to exclude the pretax charge related to the impairment of the intangible assets and non-deductible goodwill impairment charge, the Company’s effective tax rate was 18.6%.

~~ded~~

During the six months ended June 30, 2019, thethe Company recorded the following discrete tax items, $1.5 million of ~~excess~~ tax benefit related to e~~mployee~~employee share-based compensation and $2.1 million of tax expense for other discrete tax matters. The Company also recorded a $10.1 million tax benefit as a discrete item related to the fixed asset impairment charge and $1.5 million tax benefit related to the indefinite-lived intangible asset impairment charge. Excluding these discrete tax items and

adjusting pretax income to exclude the pretax charge related to the impairment of fixed assets, impairment of the indefinite-lived intangible assets, and the losses related to the divestitures of non-strategic businesses, the Company’s effective tax rate was 24.4%.

The Company ~~has outlined~~is restructuring its ~~global~~ business ~~improvement plans which, upon realization~~through streamlining of the organization and consolidating functions. Realization of the benefits of these plans could give rise to the release of a valuation allowance that has been established on the Company’s deferred tax assets in a future period.

In the first six months of 2018, the Company recorded the following discrete tax items, $2.7 million of excess tax benefit related to employee share-based compensation, tax expense of $0.5 million related to valuation allowances, tax benefit of $2.3 million related to enacted statutory rate changes, and tax expense of $6.6 million for other discrete tax matters and $3.4 million tax benefit related to U.S. tax reform. The Company also recorded a $50.4 million tax benefit as a discrete item related to the indefinite-lived intangible asset impairment charge, $1.1 million for the fixed asset impairment charge, and $3.3 related to tax-deductible goodwill for the six months ended June 30, 2018. In additional the Company also recorded $0.5 million of tax expense as a discrete item related to the gain on sale of marketable securities. Excluding these discrete tax items and adjusting pretax income for the gain on the sale of marketable securities, net of tax and adjusting for the pretax loss related to the impairment of indefinite-lived intangible assets, tax deductible and non-deductible goodwill impairment charges, the Company’s effective tax rate was 17.6%.

The Company’s effective income tax rate for the first six months of 2019 included the net impact of restructuring program related costs and other costs, amortization of purchased intangible assets, business combination related costs, credit risk and fair value adjustments, and income tax related adjustments, which impacted income before income taxes and the provision for income taxes by $241.0 million and $58.9 million, respectively.

The Company’s effective income tax rate for the first six months of 2018 included the net impact of restructuring program related costs and other costs, amortization of purchased intangible assets, business combination related costs, income tax related adjustments and the gain on sale of marketable securities which impacted the loss before income taxes and the provision for income taxes by $1,373.5 million and $93.1 million, respectively.

~~Net income attributable to Dentsply Sirona~~

In addition to the results reported in accordance with US GAAP, the Company provides adjusted net income attributable to Dentsply Sirona and adjusted earnings per diluted common share (“adjusted EPS”). The Company discloses adjusted net income attributable to Dentsply Sirona to allow investors to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period and may not be indicative of past or future performance of the normal operations of the Company and certain large non-cash charges related to intangible assets either purchased or acquired through a business combination. The Company believes that this information is helpful in understanding underlying operating trends and cash flow generation.

Six Months Ended
June 30, 2019
(in millions, except per share amounts) Net Income Per Diluted Common Share
Net income attributable to Dentsply Sirona $ 75.6 $ 0.34
Pre-tax non-US GAAP adjustments:
Restructuring program related costs and other costs (a)
138.6
Amortization of purchased intangible assets 95.5
Business combination related costs and fair value adjustments 4.3
Credit risk and fair value adjustments 2.6
Tax impact of the pre-tax non-US GAAP adjustments (b)
(60.5)
Subtotal non-US GAAP adjustments 180.5 0.80
Income tax related adjustments 1.6 —
Adjusted non-US GAAP net income $ 257.7 $ 1.14
(a) Certain severance costs related to the Chief Financial Officer and Chief Human Resources Officer of $11.0 million are included within this item.
(b) The tax amount was calculated using the applicable statutory tax rate in the tax jurisdiction where the non-US GAAP adjustments were generated.

Six Months Ended
June 30, 2018
(in millions, except per share amounts) Net (Loss) Income Per Diluted Common Share
Net loss attributable to Dentsply Sirona $ (1,040.8) $ (4.60)
Pre-tax non-US GAAP adjustments:
Restructuring program related costs and other costs 1,294.3
Amortization of purchased intangible assets 100.1
Credit risk and fair value adjustments 13.3
Business combination related costs and fair value adjustments 9.9
Gain on sale of marketable securities (44.1)
Tax impact of the pre-tax non-US GAAP adjustments (a)
(95.4)
Subtotal non-US GAAP adjustments 1,278.1 5.60
Adjustment for calculating non-US GAAP net income per diluted common share (b)
0.04
Income tax related adjustments 2.3 0.01
Adjusted non-US GAAP net income $ 239.6 $ 1.05
(a) The tax amount was calculated using the applicable statutory tax rate in the tax jurisdiction where the non-US GAAP adjustments were generated.
(b) The Company had a net loss for the six months ended June 30 2018, but had net income on a non-US GAAP basis. The shares used in calculating diluted non-US GAAP net income per common share includes the dilutive effect of common stock.
Shares used in calculating US GAAP net loss per common share 226.2
Shares used in calculating diluted non-US GAAP net income per common share 228.3

~~Adjusted Operating Income and Margin~~

Adjusted operating income and margin is another important internal measure for the Company. Operating income in accordance with US GAAP is adjusted for the items noted above which are excluded on a pre-tax basis to arrive at adjusted

~~operating income, a non-US GAAP measure. The adjusted operating margin is calculated by dividing adjusted operating income by net sales, excluding precious metal content.~~

Senior management receives a monthly analysis of operating results that includes adjusted operating income. The performance of the Company is measured on this basis along with the adjusted non-US GAAP earnings noted above as well as other performance metrics. This non-US GAAP measure may differ from other companies and should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with US GAAP.

Six Months Ended
June 30, 2019
(in millions, except percentages) Operating Income Percentage of Net Sales, Excluding Precious Metal Content
Operating Income $ 114.8 5.9 %
Restructuring program related costs and other costs 133.1 6.9 %
Amortization of purchased intangible assets 95.5 4.9 %
Business combination related costs and fair value adjustments 3.9 0.2 %
Adjusted non-US GAAP Operating Income $ 347.3 17.9 %

Six Months Ended
June 30, 2018
(in millions, except percentages) Operating (Loss) Income Percentage of Net Sales, Excluding Precious Metal Content
Operating Loss $ (1,085.4) (54.9%)
Restructuring program related costs and other costs 1,294.3 65.4 %
Amortization of purchased intangible assets 100.1 5.0 %
Business combination related costs and fair value adjustments 8.8 0.5 %
Adjusted non-US GAAP Operating Income $ 317.8 16.0 %

Operating Segment Results

~~Third Party~~ Net Sales ~~Excluding Precious Metal Content~~


		Six Months Ended June 30,														Six Months Ended June 30,
(in millions, except percentages)	(in millions, except percentages)	2019		2018		$ Change		% Change	(in millions, except percentages)	2020		2019		$ Change		% Change

Technologies & Equipment	Technologies & Equipment	$	1,079.2	$	1,063.3	$	15.9	1.5%	Technologies & Equipment	$	824.2	$	1,079.2	$	(255.0)	(23.6%)

Consumables	Consumables	856.3		915.2		(58.9)		(6.4%)	Consumables	540.7		876.4		(335.7)		(38.3%)

Segment Operating Income

Six Months Ended June 30,
(in millions, except percentages) 2019 2018 $ Change % Change
Technologies & Equipment $ 167.8 $ 137.3 $ 30.5 22.2%
Consumables 227.5 258.1 (30.6) (11.9%)

~~A reconciliation of reported net sales to non-US GAAP net sales, excluding precious metal content, by segment is as follows:~~

Six Months Ended June 30, 2019
(in millions) Technologies & Equipment Consumables Total
Net sales $ 1,079.2 $ 876.4 $ 1,955.6
Less: precious metal content of sales — 20.1 20.1
Net sales, excluding precious metal content $ 1,079.2 $ 856.3 $ 1,935.5

Six Months Ended June 30, 2018
(in millions) Technologies & Equipment Consumables Total
Net sales $ 1,063.3 $ 934.9 $ 1,998.2
Less: precious metal content of sales — 19.7 19.7
Net sales, excluding precious metal content 1,063.3 915.2 1,978.5
Acquisition related adjustments (a)
2.1 — 2.1
Non-US GAAP net sales, excluding precious metal content $ 1,065.4 $ 915.2 $ 1,980.6

~~(a) Represents an adjustment to reflect deferred revenue that was eliminated under business combination accounting standards.~~


	Six Months Ended June 30,
(in millions, except percentages)	2020		2019		$ Change		% Change

Technologies & Equipment	$	107.3	$	167.8	$	(60.5)	(36.1%)

Consumables	44.0		227.5		(183.5)		(80.7%)

Technologies & Equipment

Net sales ~~increased by 1.5% in~~for the six months ended June 30, ~~2019 as compared to~~2020 were $824.2 million, a decrease of $255.0 million or 23.6% from the six months ended June 30, ~~2018. Net~~2019. The decrease in net sales ~~excluding precious metal content, increased by 1.5% in the six months ended June 30, 2019~~was across all businesses as compared to the same six ~~months ended June 30, 2018.~~month period in the prior year was the result of the COVID-19 pandemic. Net sales ~~excluding precious metal content,~~ were negatively impacted by approximately ~~5.0%~~1.6% due to the strengthening of the U.S. dollar over the prior year period. The ~~second quarter~~increase included a 1.6% negative impact from divestitures of ~~2018 included an estimated decrease in inventory at certain distributors of $34 million.~~non-strategic businesses and a 0.1% reduction due to discontinued products.

For the six months ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content, increased by 8.6%~~decreased 20.3% on an ~~internal~~organic sales ~~growth~~ basis. ~~On a constant currency basis, revenue increased 6.3%. The constant currency increase included a 2.2% reduction due to discontinued products and 10 basis points negative impact from divestitures~~Organic sales decline was across all regions which was the result of ~~non-strategic businesses. All geographic regions experienced internal sales growth.~~the COVID-19 pandemic.

~~The operating income increased $30.5 million or 22.2%~~Key drivers of the decrease in organic sales for the six months ended June 30, ~~2019 as compared to the same six month period in 2018~~2020, were Equipment & Instruments, Digital Dentistry, and Implants businesses.

. ~~The increase in operating~~Operating income ~~was related to higher sales partially offset by higher performance-based compensation~~decreased $60.5 or 36.1% for the six months ended June 30, ~~2019.~~2020 as compared to the same prior year period. The decrease in operating income was primarily driven by lower sales volume and unfavorable manufacturing variances due to the impact of COVID-19, partially offset by cost reduction measures in both gross profit and SG&A.

6051

Consumables

Net sales ~~decreased by 6.3% in the six months June 30, 2019 as compared to the six months ended June 30, 2018. Net sales, excluding precious metal content, decreased 6.4%~~ for the six months ended June 30, ~~2019 as compared to~~2020 were $540.7 million, a decrease of $335.7 million or 38.3% from the six months ended June 30, ~~2018.~~2019. The decrease in net sales was across all businesses which was the result of the COVID-19 pandemic. Net sales ~~excluding precious metal content,~~ were negatively impacted by approximately ~~4.0%~~1.2% due to the strengthening of the U.S. dollar ~~over~~as compared to the same prior year period.

For the six months ended June 30, ~~2019,~~2020, net sales ~~excluding precious metal content,~~ decreased ~~2.4%~~37.1% on ~~a constant currency and internal~~an organic sales basis. The ~~negative internal~~decline in organic sales ~~growth~~ was ~~primarily driven by~~due to lower demand in all regions which was a result of the ~~U.S. and Europe regions.~~COVID-19 pandemic.

~~The operating income decreased $30.6 million or 11.9%~~Key drivers of the decline in organic sales for the six months ended June 30, ~~2019~~2020, were the Endodontic, Restorative, and Preventive businesses.

Operating income decreased $183.5 million or 80.7% for the six months ended June 30, 2020 as compared to the same ~~six month period in 2018.~~prior year period. The decrease in operating income was primarily ~~related to a~~driven by lower sales ~~level~~volume and ~~higher performance-based compensation,~~unfavorable manufacturing variances due to the impact of COVID-19, partially offset by cost ~~savings initiatives.~~reduction measures in both gross profit and SG&A.

6152

CRITICAL ACCOUNTING POLICIES

Except as noted below, there have been no other significant material changes to the critical accounting policies as disclosed in the Company’s Form 10-K for the year ended December 31, ~~2018.~~2019.

Annual Goodwill Impairment Testing

Goodwill

Goodwill is not amortized; instead, it is tested for impairment annually or more frequently if indicators of impairment exist or if a decision is made to sell a business. The valuation date for annual impairment testing is April 30.

The performance of the Company's ~~2019~~2020 annual impairment test did not result in any impairment of the Company's goodwill. The weighted average cost of capital (“WACC”) rates utilized in the ~~2019~~2020 analysis ranged from ~~8.0%~~9.0% to ~~11.3%~~11.5%. ~~Had~~For the Company's reporting units that were not impaired at March 31, 2020 (see March 31, 2020 Impairment Testing below), the Company applied a hypothetical sensitivity analysis. If the WACC rate of ~~each of the Company's~~these reporting units had been hypothetically increased by 100 basis points at April 30, ~~2019,~~2020, one reporting unit within the Company's Technologies & Equipment segment, would have a fair value that would approximate book value. If the fair value of each of these reporting units had been hypothetically reduced by 10% at April 30, 2020, the fair value of those reporting units would still exceed net book value. Goodwill for this reporting unit totals $1.1 billion at June 30, 2020.

If the Company’s analysis in the future indicates additional unfavorable impacts related to the ongoing COVID-19 pandemic, an increase in discount rates or a degradation in the overall markets served by these reporting units, any of which could have a negative material impact to the fair value ~~of each~~and result in a future impairment of the ~~Company's reporting units had been hypothetically reduced by 5% at April 30, 2019, the fair~~carrying value of those reporting units would still exceed book value. If the fair value of each of the Company's reporting units had been hypothetically reduced by 10% at April 30, 2019, the fair value of those reporting units would still exceed net book value. To the extent that future operating results of the reporting units do not meet the forecasted cash flows, the Companygoodwill. There can ~~provide~~be no assurance that athe Company’s future goodwill impairment testing will not result in a charge ~~would not be incurred.~~to earnings.

Indefinite-Lived Assets

Indefinite-lived intangible assets consist of tradenames and trademarks and are not subject to amortization; instead, they are tested for impairment annually or more frequently if indicators of impairment exist or if a decision is made to sell a business. The valuation date for annual impairment testing is April 30.

The performance of the Company’s ~~2019~~2020 annual impairment test did not result in any impairment of the Company’s indefinite-lived assets. For the Company's indefinite-lived intangible assets that were not impaired at March 31, 2020 (see March 31, 2020 Impairment Testing below), the Company applied a hypothetical sensitivity analysis. If the fair value of each of ~~the Company’s~~these indefinite-lived intangibles assets had been hypothetically reduced by 10% or the discount rate had been hypothetically increased by 50100 basis points at April 30, ~~2019,~~2020, the fair value of these assets would still exceed their book value.

Should the Company’s analysis in the future indicate additional unfavorable impacts related to the ongoing COVID-19 pandemic, an increase in discount rates, or a degradation in the use of the tradenames and trademarks, itany of which could have a negative material impact to the fair value and result in a future impairment of the carrying value of the indefinite-lived intangible ~~assets to its implied fair value.~~assets. There can be no assurance that the Company’s future indefinite-lived intangible asset impairment testing will not result in a charge to earnings.

March 31, 2020 Impairment Testing

Goodwill

In conjunction with the preparation of the financial statements for the three months ended March 31, 2020, the Company identified a triggering event, and as a result, the Company recorded a goodwill impairment charge of $156.6 million related to the Equipment & Instruments reporting unit within the Technologies & Equipment segment. The goodwill impairment charge was primarily driven by a change in forecasted sales due to the COVID-19 pandemic which resulted in a lower fair value for this reporting unit. For further information, see Part I, Item 1, Note 12, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q. The assumptions and estimates used in determining the fair value of these reporting units contain uncertainties, and any changes to these assumptions and estimates could have a negative impact and result in a future impairment.

For the Company’s reporting units that were not impaired, the Company applied a hypothetical sensitivity analysis. If the WACC rate of each of these reporting units had been hypothetically increased by 100 basis points at March 31, 2020, one reporting unit, within the Company's Technologies & Equipment segment, would have a fair value that would approximate net book value. If the fair value of each of these reporting units had been hypothetically reduced by 5% at March 31, 2020, the fair value of those reporting units would still exceed net book value. If the fair value of each of these reporting units had been hypothetically reduced by 10% at March 31, 2020, one reporting unit, as disclosed above, would have a fair value that would approximate net book value. Goodwill for this reporting unit totals $1.1 billion at March 31, 2020.

Indefinite-Lived Assets

The Company, in conjunction with the goodwill impairment test, assessed the indefinite-lived intangible assets within the Equipment & Instruments reporting unit as of March 31, 2020 which largely consists of acquired tradenames and trademarks. As a result of the impairment test of indefinite-lived intangible assets, the Company recorded an impairment charge of $38.7 million for the three months ended March 31, 2020 which was recorded in Restructuring and other costs in the Consolidated Statements of Operations. The impaired indefinite-lived intangibles assets are tradenames and trademarks related to the Equipment & Instruments reporting unit. The impairment charge was primarily driven by a decline in forecasted sales due to the COVID-19 pandemic. For further information see Part I, Item 1, Note 12, Goodwill and Intangible Assets, in the Notes to Unaudited Consolidated Financial Statements of this Form 10-Q. The assumptions and estimates used in determining the fair value of the indefinite-lived intangible assets contain uncertainties, and any changes to these assumptions and estimates could have a negative impact and result in a future impairment.

For the Company’s indefinite-lived intangible assets within the Equipment & Instruments reporting unit that were not impaired, the Company applied a hypothetical sensitivity analysis. If the fair value of each of these indefinite-lived intangibles assets had been hypothetically reduced by 10% or the discount rate had been hypothetically increased by 50 basis points at March 31, 2020, the fair value of these assets would still exceed their book value.

6254

LIQUIDITY AND CAPITAL RESOURCES

Six months ended June 30, ~~2019~~2020

Net loss of $235.8 million for the six months ended June 30, 2020, was a decrease of $311.4 million as compared to net income of $75.6 million for the six months ended June 30, 2019, ~~increased $1,115.5 million~~primarily as ~~compared to net loss~~a result of ~~$1,039.9 million~~reduced demand for ~~the six months ended June 30, 2018, primarily~~dental related procedures due to the ~~prior year goodwill and indefinite-lived intangible asset impairments.~~COVID-19 pandemic. Cash ~~flow from~~provided by operating activities during the six months ended June 30, ~~2019~~2020 was ~~$174.4~~$164.4 million, a decrease of $10.0 million as compared to ~~$172.0~~$174.4 million during the six months ended June 30, ~~2018. Cash from operations increased $2.4 million for~~2019 which was driven by a reduction in working capital in the ~~six months of 2019 as compared~~current period, primarily related to ~~the same period~~a decrease in ~~2018.~~accounts receivables and to a lesser extent, a reduction in inventory. The Company’s cash and cash equivalents ~~decreased~~increased by ~~$59.5~~$704.2 million to ~~$250.1~~$1,109.1 million during the six months ended June 30, ~~2019.~~2020.

For the six months ended June 30, ~~2019,~~2020, on a constant currency basis, the number of days of sales outstanding in accounts receivable increased by 326 days to 6288 days as compared to 5962 days at December 31, ~~2018.~~2019. The increase in days of sales outstanding in accounts receivable was primarily due to lower sales for the three months ended June 30, 2020 as compared to the three months ended December 31, 2019 as the COVID-19 pandemic decreased dental products demand in the months of March through June. On a constant currency basis, the number of days of sales in inventory ~~was 124~~increased by 16 days to 132 days at ~~both~~ June 30, ~~2019 and~~2020 as compared to 116 days at December 31, ~~2018.~~2019. Inventory days increased primarily due to the lower sales during the six months ended June 30, 2020, slightly offset by the decrease in inventory as compared to December 31, 2019. The Company calculates “constant currency basis” by removing the impact of foreign currency translation, which is calculated by comparing current-period sales, accounts receivables, and inventory to prior-period sales, accounts receivable, and inventory, with both periods converted to the U.S. dollar rate at local currency foreign exchange rates for each month of the prior period.

Cash ~~used in~~provided from investing activities during the first six months of ~~2019~~2020 included capital expenditures of ~~$63.5~~$38.8 million and cash proceeds from net investment hedges of ~~$27.0~~$57.5 million. The Company expects critical capital expenditures to be in the range of approximately ~~$165~~$75 million to ~~$175~~$100 million for the full year ~~2019.~~2020.

On April 7, 2020, the Company terminated its entire net investment hedge portfolio early which resulted in a $48.1 million cash receipt in the second quarter of 2020. The Company elected to enter into this transaction to convert the favorable gain position into additional liquidity.

Cash ~~used in~~generated by financing activities for the six months ended June 30, ~~2019~~2020 was primarily related to net proceeds on long-term borrowings of $741.2 million, less payment on a T-Lock of $30.5 million, dividend payments of ~~$39.1~~$44.0 million, and ~~net payments~~share repurchases of ~~short term borrowings of $23.3~~$140.0 million.

On March 9, 2020, the Company entered into an Accelerated Share Repurchase Transaction (“ASR Agreement") for $140.0 million. Under the ASR Agreement, the Company received 80% of the then estimated total shares up-front or 2.7 million shares at the then current price of $42.12. The Company ~~has authorization to maintain up to $1.0 billion~~received an additional 1.0 million shares after the trading window closed on May 8, 2020. The final amount repurchased is 3.7 million shares at a volume-weighted average price of $38.25 inclusive of a $0.63 per share discount. At June 30, 2020, the Company held 46.1 million shares of treasury stock. The Company received proceeds of $5.4 million as a result of the exercise of 0.1 million of stock options during the six months ended June 30, 2020. Including prior year repurchases, the total amount repurchased under ~~its stock repurchase program.~~this authorization is $650.2 million leaving $349.8 million available to be repurchased. Additional share repurchases, if any, will be made through open market purchases, Rule 10b5-1 plans, accelerated share repurchases, privately negotiated transactions or other transactions in such amounts and at such times as the Company deems appropriate based upon prevailing market and business conditions and other factors. In the six months ended June 30, 2019, the Company repurchased 1.1 million shares at a cost of $60.0 million for an average price of $53.80. At June 30, 2019, the Company held 40.4 million shares of treasury stock. The Company received proceeds of $76.4 million as a result of the exercise of 1.9 million of stock options during the six months ended June 30, 2019.

The Company's total borrowings ~~decreased~~increased by a net ~~$159.7~~$747.6 million during the six months ended June 30, ~~2019,~~2020, which includes ~~a decrease~~an increase of ~~$1.5~~$7.9 million due to exchange rate fluctuations on debt denominated in foreign currencies. At June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company's ratio of total net debt to total capitalization was ~~19.4%~~18.8% and ~~20.8%~~16.8%, respectively. The Company defines net debt as total debt, including current and long-term portions, less cash and cash equivalents and total capitalization as the sum of net debt plus equity.

~~The~~

At June 30, 2020, the Company ~~pre-paid~~had borrowings available under lines of credit, including lines available under its short-term arrangements and revolving credit facility of $1,156.1 million. Through the ~~PNC Term Loan on May 28, 2019 for a total~~date of ~~$131.3 million using cash and short-term commercial paper.~~the filing of this Form 10-Q, the Company has no outstanding borrowings under any of its credit facilities.

In response to the COVID-19 pandemic the Company took the following actions during the six months ended June 30, 2020 to strengthen its liquidity and financial flexibility:

•On May 26, 2020, the Company issued $750.0 million of 3.25% senior unsecured notes with a final maturity date of June 1, 2030. The net proceeds were $748.4 million, net of discount of $1.6 million. Issuance fees totaled $6.4 million. The Company paid $30.5 million to settle the $150.0 million notional T-Lock contract which partially hedged the interest rate risk of the note issuance. This cost will be amortized over the ten-year life of the notes. The proceeds were used to repay the $700.0 million revolver borrowing and the remaining proceeds will be used for working capital and other general corporate purposes.

•Various other credit facilities:

◦On May 5, 2020, the Company entered into a 40.0 million euro 364-day revolving credit facility iswith a maturity date of April 30, 2021.

◦On May 12, 2020 the Company entered into a 30.0 million euro 364-day revolving credit facility with a maturity date of May 6, 2021.

◦On June 11, 2020, the Company entered into a 3.3 billion Japanese yen 364-day revolving credit facility with a maturity date of June 11, 2021.

These agreements are unsecured and ~~contains~~contain certain affirmative and negative covenants relating to the operations and financial condition of the Company. The most restrictive of these covenants pertain to asset dispositions and prescribed ratios of indebtedness to total capital and operating income, plus depreciation and amortization to interest expense. At June 30, 2019, the Company was in compliance with these covenants. The Company also has available an aggregate $500.0 million under a U.S. dollar commercial paper facility. The revolver serves as a back-up to the commercial paper facility, thus the total available credit under the commercial paper facility and the multi-currency revolving credit facilities in the aggregate is $700.0 million. At June 30, 2019, there were no outstanding borrowings under the $700.0 million multi-currency revolving credit facility. The Company had $43.3 million issued and outstanding under the Commercial Paper facility at June 30, 2019.

The Company also has access to ~~$32.8~~$35.4 million in uncommitted short-term financing under lines of credit from various financial institutions. The lines of credit have no major restrictions and are provided under demand notes between the Company and the lending institutions. At June 30, ~~2019,~~2020, the Company had ~~$12.8~~$0.1 million outstanding under these short-term lines of credit.

The Company also has available an aggregate $500.0 million under a U.S. dollar commercial paper program. The $700.0 million revolver serves as a back-up to the commercial paper program, thus the total available credit under the commercial paper program and the multi-currency revolving credit facilities in the aggregate is $700.0 million. At June 30, 2020 and December 31, 2019, there were no outstanding borrowings under these facilities. The Company had no outstanding borrowings under the commercial paper program at June 30, 2020.

These agreements are unsecured and contain certain affirmative and negative covenants relating to the operations and financial condition of the Company.The most restrictive of these covenants pertain to asset dispositions and prescribed ratios of indebtedness to total capital and operating income, plus depreciation and amortization to interest expense. At June 30, 2020, the Company ~~had total unused lines of credit related~~was in compliance with these covenants and expects to remain in compliance with all covenants over the ~~revolving credit agreement and the uncommitted short-term lines of credit of $676.8 million.~~next twelve months.

6356

At June 30, ~~2019,~~2020, the Company held ~~$45.5~~$51.4 million of precious metals on consignment from several financial institutions. The consignment agreements allow the Company to acquire the precious ~~metal~~metals at market rates at a point in time which is approximately the same time and for the same price as alloys are sold to the Company's customers. In the event that the financial institutions would discontinue offering these consignment arrangements, and if the Company could not obtain other comparable arrangements, the Company may be required to obtain third party financing to fund an ownership position in the required precious metal inventory levels.

~~As a result of U.S. tax reform, $271.7 million of~~The cash ~~and cash equivalents~~ held by foreign subsidiaries for permanent reinvestment is generally used to finance the ~~Company’s non-U.S. subsidiaries was subject~~subsidiaries' operating activities and future foreign investments. The Company has the ability to ~~current tax in the U.S. in 2018. At June 30, 2019 the Company had repatriated $105.3 million of the $271.7 million that was taxable under the Act. However, to the extent the Company repatriates these~~repatriate additional funds to the U.S., which could result in an adjustment to the ~~Company will be required to pay income taxes in certain U.S. states and applicable~~tax liability for foreign withholding taxes, ~~on those amounts during~~foreign and/or U.S. state income taxes and the ~~period when such~~impact of foreign currency movements. At June 30, 2020, management believed that sufficient liquidity was available in the United States and expects this to remain for the next twelve months. The Company has repatriated and expects to continue repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation ~~occurs.~~activities have not and are not expected to result in a significant incremental tax liability to the Company.

Except as stated above, there have been no material changes to the Company's scheduled contractual cash obligations disclosed in its Form 10-K for the year ended December 31, ~~2018.~~2019.

The Company continues to review its debt portfolio and may refinance additional debt or add debt in the near-term as interest rates remain at historically low levels. The Company believes there is sufficient liquidity available for the next twelve months.

NEW ACCOUNTING PRONOUNCEMENTS

Refer to Part 1, Item 1, Note 1, Significant Accounting Policies, to the Unaudited Interim Consolidated Financial Statements of this Form 10-Q for a discussion of recent accounting ~~standards and~~ pronouncements.

Item 3 – Quantitative and Qualitative Disclosures about Market Risk

There have been no significant material changes to the market risks as disclosed in the Company’s Form 10-K for the year ended December 31, ~~2018.~~2019.

Item 4 – Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report were effective to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that it is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal ~~controls~~control over financial reporting that occurred during the three months ended June 30, ~~2019,~~2020, that have materially affected, or are likely to materially affect, its internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

Reference to Part I, Item 1, Note 1513 Commitments and Contingencies, in the Notes to Unaudited Interim Consolidated Financial Statements of this Form 10-Q.

Item 1A – Risk Factors

~~There~~Except as noted below, there have been no significant material changes to the risk factors as disclosed in Part 1A, “Risk Factors” in the Company’s Form 10-K for the year ended December 31, ~~2018.~~2019.

The Company’s revenue, results of operations, cash flow and liquidity have been and may continue to be materially adversely impacted by the ongoing COVID-19 outbreak.

The Company is closely monitoring the global impacts of the COVID-19 pandemic, which has a significant negative effect, and is expected to continue to to have a significant negative effect, revenue, results of operations, cash flow and liquidity. As a result of the global outbreak of COVID-19, which has been declared a global pandemic by the World Health Organization, certain actions are being taken by governmental authorities and private enterprises globally to control the outbreak, including restrictions on public gatherings, travel and commercial operations, temporary closures or decreased operations of dental offices,as well as certain government mandates to limit certain dental procedures to those that could be considered emergency only. These measures, as well as guidance from professional dental associations recommending practitioners only perform emergency procedures, and the impact of COVID-19 generally, may result in, or continue to result in:

•temporary closures or significantly reduced operations at most of the Company’s principal manufacturing and distribution locations, including furloughing employees related to these locations, which have reduced the Company’s ability to manufacture and deliver products to customers;

•global reductions in customer demand for certain of the Company’s products and services;

•fear of exposure to or actual effects of the COVID-19 pandemic in countries where operations or customers are located and may lead to decreased procedures at dental offices. The impacts include, but are not limited to, significant reductions in demand or significant volatility in demand for one or more of the Company's products;

•decreased financial viability of the Company’s suppliers, which could cause them to change the terms on which they are willing to provide products;

•the inability or failure of customers to timely meet payment obligations or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties, which may have a negative material impact on the Company's cash flow, liquidity and statements of operations;

•a recession or prolonged period of economic slowdown, which may significantly reduce the Company’s cash flow and negatively impact the cost and access to capital and funding sources for the Company;

•the Company’s inability to maintain compliance with covenants under the revolving credit facilities; or

•the reduced availability of key employees or members of management due to quarantine or illness as a result of COVID-19 may temporarily affect the financial performance and results of operations. If the Company is unable to mitigate these or other similar risks, its business, results of operations and financial condition may be adversely affected.

The Company does not yet know the full extent of the impact of COVID-19 on its business, operations or the global economy. Given the ongoing and dynamic nature of the COVID-19 outbreak, it is very difficult to predict the severity of the impact on the Company’s business. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the spread and severity of outbreak and actions taken to address its impact, among others. There are no comparable recent events which may provide guidance as to the effect of the spread of the COVID-19. To the extent that the COVID-19 outbreak continues to adversely affect the business and financial performance, it also could heighten many of the other risks described in this report and in the Company’s Form 10-K for the year ended December 31, 2019.

Changes in the Company’s credit ratings or macroeconomic impacts on credit markets, such as the COVID-19 pandemic, may increase cost of capital and limit financing options.

The Company utilizes the short and long-term debt markets to obtain capital from time to time. The Company’s continued access to sources of liquidity depends on multiple factors, including global economic conditions, the condition of global credit markets, the availability of sufficient amounts of financing, operating performance and credit ratings. Macroeconomic conditions, such as the COVID-19 pandemic, have resulted in significant disruption in the credit markets, which may adversely affect the Company’s ability to refinance existing debt or obtain additional financing to support operations or to fund new acquisitions or capital-intensive internal initiatives. During the six months ended June 30, 2020, S&P Global Ratings affirmed the Company’s BBB issuer credit rating, but changed the outlook to negative from stable. Future adverse changes in the Company’s credit ratings may result in increased borrowing costs for future long-term debt or short-term borrowing facilities which may in turn limit financing options, including access to the unsecured borrowing market. The Company issued $750.0 million of senior unsecured notes and currently has access to approximately $1,156.1 million of committed credit facilities and has current availability of $1,010.0 million, 70.0 million euro, and 3.3 billion Japanese yen, all under revolving credit facilities, which provides additional sources of liquidity, but the ability to access these revolving credit facilities depends on, among other things, compliance with certain covenants; and the Company may not be able to maintain compliance with such covenants if the deterioration of its business continues. There is no guarantee that additional debt financing will be available in the future to fund obligations, or that it will be available on commercially reasonable terms, in which case the Company may need to seek other sources of funding. In addition, the terms of future debt agreements could include additional restrictive covenants that would reduce flexibility.

The Company recognized a goodwill impairment charge in the three months ended March 31, 2020 related to the ongoing COVID-19 pandemic and may be required to recognize additional goodwill and intangible asset impairment charges in the future.

Under US GAAP, the Company reviews its goodwill and intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Additionally, goodwill and indefinite-lived intangible assets are required to be tested for impairment at least annually. The valuation models used to determine the fair value of goodwill or indefinite-lived intangible assets are dependent upon various assumptions and reflect management’s best estimates. Significant management assumptions, which are critical in this fair value determination, include, without limitation, revenue growth rates, operating margins, weighted average cost of capital, future economic and market conditions (including with respect to the dental and medical device industries), net sales growth, gross profit rates, discount rates, earnings multiples and future cash flow projections. Any changes to the assumptions and estimates, made by management may cause a change in circumstances indicating that the carrying value of the goodwill and indefinite-lived assets in its reporting unit may not be recoverable.

During the three months ended March 31, 2020, the Company's estimates and assumptions made at its prior year annual impairment test, have been unfavorably impacted by the COVID-19 pandemic. The Company has experienced a meaningful decrease in customer demand for its products as a result of stay-at-home orders, travel restrictions, and social distancing guidelines set forth by governmental authorities throughout the world in response to the COVID-19 pandemic.

In connection with the Company’s preparation of the financial statements for the three months ended March 31, 2020, the Company identified a triggering event where the Company determined it was necessary to record a $156.6 million non-cash impairment charge related to goodwill associated with the Equipment & Instruments reporting unit, within the Technologies & Equipment segment, as well as $38.7 million impairment charge related to indefinite-lived intangible assets held by businesses within this reporting unit. The impairment takes into consideration the Company’s updated business outlook for the remainder of calendar year 2020, pursuant to which the Company updated future assumptions and projections related to its reporting unit amid the ongoing COVID-19 pandemic. After updating the assumptions and projections, the Company then calculated an estimate of the fair value for this reporting unit. As of March 31, 2020, the Company determined that one reporting unit had an indication of impairment. In determining the impairment loss, the Company recorded an amount equal to the excess of the assets’ carrying amount over its fair value as determined by an analysis of discounted future cash flows. See Part I, Item 1, Note 12, Goodwill and Intangible Assets, in the Notes to Unaudited Interim Consolidated Financial Statements of this Form 10-Q. The Company also disclosed in Part I, Item 2, Critical Accounting Policies, had the Company applied a hypothetical 100 basis points increase to the WACC rate or a hypothetical 10% decrease in fair value to its reporting units not impaired, one reporting unit, within the Technologies & Equipment segment, would have a fair value that approximates book value. Goodwill for this reporting unit totals $1.1 billion at March 31, 2020.

The Company also disclosed in Part I, Item 2, Critical Accounting Policies, the results of the Company's annual impairment test for goodwill. The results of the tests indicated no impairment. Had the Company applied a hypothetical 100 basis points

increase to the WACC rate or a hypothetical 10% decrease in fair value to its reporting units not impaired, one reporting unit, within the Technologies & Equipment segment would have a fair value that approximates book value. Goodwill for this reporting unit totals $1.1 billion at June 30, 2020. For the Equipment & Instruments reporting unit that recorded goodwill impairment at March 31, 2020, the implied fair value continues to approximate net book value at April 30, 2020. Goodwill for this reporting unit totals $290.8 million at June 30, 2020.

The goodwill impairment analysis is sensitive to changes in key assumptions used, such as future cash flows, discount rates and growth rates as well as current market conditions in both the U.S. and globally, all of which are being unfavorably impacted by the ongoing COVID-19 pandemic. If the assumptions and projections used in the analysis are not realized, it is possible that an additional impairment charge may need to be recorded in the future. The Company cannot accurately predict the amount and timing of any impairment of goodwill or other indefinite-lived intangible assets. Further, as the year progresses, the Company will need to continue to evaluate the carrying value of goodwill and indefinite-lived intangible assets for all of its reporting units. Any additional impairment charges that the Company may take in the future could be material to Company’s results of operations and financial position.

Item 2 – Unregistered Sales of Securities and Use of Proceeds

Issuer Purchases of Equity Securities

At June 30, ~~2019,~~2020, the Company had ~~authorization to repurchase $1.0 billion of treasury stock~~$349.8 million available under the stock repurchase ~~program as approved by the Board of Directors. At June 30, 2019, the Company had $689.8 million available under this~~ program. During the ~~quarter~~three months ended June 30, ~~2019,~~2020, the Company had the following activity with respect to this repurchase program:

(in millions, except per share amounts) Total Number of Shares Purchased Average Price Paid Per Share Total Cost of Shares Purchased Dollar Value of Shares that May be Purchased Under the Stock Repurchase Program
Period
April 1, 2019 to April 30, 2019 — $ — $ — $ 749.8
May 1, 2019 to May 31, 2019 1.1 53.80 60.00 689.8
June 1, 2019 to June 30, 2019 — — — 689.8
1.1 $ 53.80 $ 60.00


(in millions, except per share amounts)	Total Number of Shares Purchased(a)	Average Price Paid Per Share		Total Cost of Shares Purchased		Dollar Value of Shares that May be Purchased Under the Stock Repurchase Program
Period

April 1, 2020 to April 30, 2020	—	$	—	$	—	$	377.8
May 1, 2020 to May 31, 2020	1.0	27.97		28.0		349.8
June 1, 2020 to June 30, 2020	—	—		—		349.8
	1.0	$	—	$	28.0

(a)

On May 12, 2020, the Company settled the ASR Agreement and received 1.0 million shares of the Company's common stock. For further information see Part I, Item 1, Note 4, Earnings Per Common Share, in the Notes to Unaudited Interim Consolidated Financial Statements of this Form 10-Q.

6661

Item 6 – Exhibits

Exhibit Number

Description

4.1

Indenture, dated as of May 26, 2020, between DENTSPLY SIRONA Inc. and Wells Fargo Bank, National Association. (1)

4.2

First Supplemental Indenture, dated as of May 26, 2020, between DENTSPLY SIRONA Inc. and Wells Fargo Bank, National Association. (1)

4.3

Form of 3.250% Notes due 2030 (included in Exhibit 4.2). (1)

10.1

~~Non-Employee Director Compensation Policy, effective~~Employment Agreement, dated May ~~22, 2019~~27, 2017, between DENTSPLY SIRONA Inc. and William E. Newell.

10.2

~~Form of Restricted Share Unit Grant Notice for Directors under the~~First Amendment to Employment Agreement, dated August 6, 2018, between DENTSPLY SIRONA Inc. ~~2016 Omnibus Incentive Plan as amended~~ and ~~restated~~William E. Newell.

10.3

~~Amended~~Separation Agreement with General Release, dated July 20, 2020, by and Restated Restricted Stock Unit Deferral Plan, effective July 31, 2019*between William E. Newell and DENTSPLY SIRONA Inc.

10.4

~~Offer Letter,~~364-Day Credit Agreement, dated ~~June 27, 2019, between~~as of April 9, 2020, among DENTSPLY SIRONA Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and Jorge Gomez*the lenders party thereto. (2)

31.1

Section 302 Certification Statement Chief Executive Officer

31.2

Section 302 Certification Statement Chief Financial Officer

Section 906 Certification Statements

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Extension Labels Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*Management contract or compensatory plan104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

(1) Incorporated by reference to exhibit included in the Company's Form 8-K dated May 26, 2020.

(2) Incorporated by reference to exhibit included in the Company's Form 8-K dated April 9, 2020.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DENTSPLY SIRONA Inc.


/s/	Donald M. Casey, Jr.	August ~~2, 2019~~6, 2020
	Donald M. Casey, Jr.	Date
	Chief Executive Officer


/s/	~~Nicholas W. Alexos~~Jorge M. Gomez	August ~~2, 2019~~6, 2020
	~~Nicholas W. Alexos~~Jorge M. Gomez	Date
	Executive Vice President and
	Chief Financial Officer

6863



PART I	FINANCIAL INFORMATION	Page

Item 1	Financial Statements (unaudited)	3

	Consolidated Statements of Operations	3

	Consolidated Statements of Comprehensive Income (Loss)	4

	Consolidated Balance Sheets	5

	Consolidated Statements of Changes in Equity	6

	Consolidated Statements of Cash Flows	87

	Notes to Unaudited Interim Consolidated Financial Statements	98

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3936

Item 3	Quantitative and Qualitative Disclosures About Market Risk	6558

Item 4	Controls and Procedures	6558

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	6659

Item 1A	Risk Factors	6659

Item 2	Unregistered Sales of Securities and Use of Proceeds	6661

Item 6	Exhibits	6762

Signatures		6863



Details about AOCI Components	Amounts Reclassified from AOCI					Affected Line Item in the Consolidated Statements of Operations
	Three Months Ended
(in millions)	2019		2018

Loss on derivative financial instruments:
Interest rate swaps	$	(0.5)	$	(0.5)	Interest expense
Foreign exchange forward contracts	(0.5)		(4.3)		Cost of products sold


Net loss before tax	(1.0)		(4.8)
Tax impact	—		0.7		Provision (benefit) for income taxes
Net loss after tax	$	(1.0)	$	(4.1)













Amortization of defined benefit pension and other postemployment benefit items:
Amortization of prior service benefits	$	0.1	$	—	(a)

Amortization of net actuarial losses	(1.3)		(1.7)		(a)
Net loss before tax	(1.2)		(1.7)
Tax impact	0.3		0.5		Provision (benefit) for income taxes
Net loss after tax	$	(0.9)	$	(1.2)

Total reclassifications for the period	$	(1.9)	$	(5.3)


(in millions)	Finance Leases		Operating Leases		Total

2019, excluding the six months ended June 30, 2019	$	0.1	$	23.0	$	23.1
2020	0.3		38.8		39.1
2021	0.3		29.7		30.0
2022	0.3		22.4		22.7
2023	0.2		17.4		17.6
2024 and beyond	0.7		43.8		44.5
Total lease payments	$	1.9	$	175.1	$	177.0
Less imputed interest	0.3		16.1		16.4
Present value of lease liabilities	$	1.6	$	159.0	$	160.6


(in millions)	December 31, 2018 (a)		Provisions		Amounts Applied		Change in Estimates		June 30, 2019

Technologies & Equipment	$	32.9	$	8.2	$	(23.6)	$	1.6	$	19.1
Consumables	13.6		15.7		(8.6)		(1.3)		19.4
All Other	(0.3)		0.9		(0.7)		(0.2)		(0.3)
Total	$	46.2	$	24.8	$	(32.9)	$	0.1	$	38.2


	Three Months Ended June 30, 2018
(in millions)	United States		Europe		Rest of World		Total

Net sales	$	338.4	$	426.7	$	277.0	$	1,042.1
Less: precious metal content of sales	1.3		7.3		0.8		9.4
Net sales, excluding precious metal content	$	337.1	$	419.4	$	276.2	$	1,032.7
Acquisition related adjustments (a)	2.1		—		—		2.1
Non-US GAAP net sales, excluding precious metal content	$	339.2	$	419.4	$	276.2	$	1,034.8


	Six Months Ended June 30, 2018
(in millions)	United States		Europe		Rest of World		Total

Net sales	$	630.2	$	852.2	$	515.8	$	1,998.2
Less: precious metal content of sales	2.6		15.4		1.7		19.7
Net sales, excluding precious metal content	627.6		836.8		514.1		1,978.5
Acquisition related adjustments (a)	2.1		—		—		2.1
Non-US GAAP net sales, excluding precious metal content	$	629.7	$	836.8	$	514.1	$	1,980.6


(in millions, except per share amounts)	Total Number of Shares Purchased	Average Price Paid Per Share		Total Cost of Shares Purchased		Dollar Value of Shares that May be Purchased Under the Stock Repurchase Program
Period

April 1, 2019 to April 30, 2019	—	$	—	$	—	$	749.8
May 1, 2019 to May 31, 2019	1.1	53.80		60.00		689.8
June 1, 2019 to June 30, 2019	—	—		—		689.8
	1.1	$	53.80	$	60.00