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, 2020~~March 31, 2021

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) 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 ~~August~~May 3, ~~2020,~~2021, DENTSPLY SIRONA Inc. had ~~218,496,392~~218,318,121 shares of 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 March 31,
		2020		2019		2020		2019			2021		2020

Net sales	Net sales	$	490.6	$	1,009.4	$	1,364.9	$	1,955.6	Net sales	$	1,027	$	874
Cost of products sold	Cost of products sold	314.5		468.6		721.0		915.1		Cost of products sold	448		406

Gross profit	Gross profit	176.1		540.8		643.9		1,040.5		Gross profit	579		468
Selling, general, and administrative expenses	Selling, general, and administrative expenses	279.1		430.9		672.6		862.8		Selling, general, and administrative expenses	385		359
Research and development expenses										Research and development expenses	37		34
Goodwill impairment	Goodwill impairment	—		—		156.6		—		Goodwill impairment	0		157
Restructuring and other costs	Restructuring and other costs	1.3		42.4		43.8		62.9		Restructuring and other costs	3		43

Operating (loss) income		(104.3)		67.5		(229.1)		114.8
Operating income (loss)										Operating income (loss)	154		(125)

Other income and expenses:	Other income and expenses:									Other income and expenses:
Interest expense		12.3		8.0		19.0		16.4
Interest income		(1.0)		(0.2)		(1.4)		(1.3)
Interest expense, net										Interest expense, net	14		7

Other expense (income), net	Other expense (income), net	4.3		12.1		2.9		(1.7)		Other expense (income), net	(9)		(2)

(Loss) income before income taxes		(119.9)		47.6		(249.6)		101.4
(Benefit) provision for income taxes		(24.0)		11.2		(13.8)		25.8
Income (loss) before income taxes										Income (loss) before income taxes	149		(130)
Provision for income taxes										Provision for income taxes	32		10

Net (loss) income		(95.9)		36.4		(235.8)		75.6
Net income (loss)										Net income (loss)	117		(140)

Less: Net loss attributable to noncontrolling interest		(0.5)		—		(0.5)		—
Less: Net income (loss) attributable to noncontrolling interest										Less: Net income (loss) attributable to noncontrolling interest	0		0

Net (loss) income attributable to Dentsply Sirona		$	(95.4)	$	36.4	$	(235.3)	$	75.6
Net income (loss) attributable to Dentsply Sirona										Net income (loss) attributable to Dentsply Sirona	$	117	$	(140)

Net (loss) income per common share attributable to Dentsply Sirona:
Net income (loss) per common share attributable to Dentsply Sirona:										Net income (loss) per common share attributable to Dentsply Sirona:
Basic	Basic	$	(0.44)	$	0.16	$	(1.07)	$	0.34	Basic	$	0.53	$	(0.63)
Diluted	Diluted	$	(0.44)	$	0.16	$	(1.07)	$	0.34	Diluted	$	0.53	$	(0.63)

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	218.7		224.2		219.8		223.7		Basic	218.8		220.9
Diluted	Diluted	218.7		225.7		219.8		225.3		Diluted	219.9		220.9

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,
2020 2019 2020 2019
Net (loss) income $ (95.9) $ 36.4 $ (235.8) $ 75.6
Other comprehensive income (loss), net of tax:
Foreign currency translation gain (loss) 73.6 43.7 (44.8) (17.3)
Net loss on derivative financial instruments (7.5) (9.8) (2.9) (8.1)
Pension liability gain 1.5 0.9 3.1 1.8
Total other comprehensive income (loss), net of tax 67.6 34.8 (44.6) (23.6)
Total comprehensive (loss) income (28.3) 71.2 (280.4) 52.0
Less: Comprehensive income attributable to noncontrolling interests 0.1 — 0.4 0.3
Total comprehensive (loss) income attributable to Dentsply Sirona $ (28.4) $ 71.2 $ (280.8) $ 51.7


	Three Months Ended March 31,
		2021		2020

Net income (loss)		$	117	$	(140)

Other comprehensive loss, net of tax:
Foreign currency translation loss		(99)		(119)
Net gain on derivative financial instruments		5		5

Pension liability gain		4		2
Total other comprehensive loss, net of tax		(90)		(112)

Total comprehensive income (loss)		27		(252)

Less: Comprehensive income (loss) attributable to noncontrolling interests		0		0

Total comprehensive income (loss) attributable to Dentsply Sirona		$	27	$	(252)

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, 2020		December 31, 2019			March 31, 2021		December 31, 2020

Assets	Assets					Assets
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,109.1	$	404.9	Cash and cash equivalents	$	318	$	438
Accounts and notes receivables-trade, net	Accounts and notes receivables-trade, net	500.2		782.0		Accounts and notes receivables-trade, net	643		673
Inventories, net	Inventories, net	548.9		561.7		Inventories, net	500		466
Prepaid expenses and other current assets, net		204.7		251.3
Prepaid expenses and other current assets						Prepaid expenses and other current assets	235		214
Total Current Assets	Total Current Assets	2,362.9		1,999.9		Total Current Assets	1,696		1,791

Property, plant and equipment, net		771.7		802.4
Property, plant, and equipment						Property, plant, and equipment	758		791��
Operating lease right-of-use assets, net	Operating lease right-of-use assets, net	138.8		159.3		Operating lease right-of-use assets, net	168		176
Identifiable intangible assets, net	Identifiable intangible assets, net	2,039.6		2,176.3		Identifiable intangible assets, net	2,461		2,504
Goodwill, net		3,227.2		3,396.5
Other noncurrent assets, net		64.0		68.5
Goodwill						Goodwill	3,952		3,986
Other noncurrent assets						Other noncurrent assets	102		94
Total Assets	Total Assets	$	8,604.2	$	8,602.9	Total Assets	$	9,137	$	9,342

Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities:	Current Liabilities:					Current Liabilities:
Accounts payable	Accounts payable	$	214.1	$	307.9	Accounts payable	$	283	$	305
Accrued liabilities	Accrued liabilities	486.9		629.2		Accrued liabilities	557		653
Income taxes payable	Income taxes payable	61.7		56.1		Income taxes payable	44		60
Notes payable and current portion of long-term debt	Notes payable and current portion of long-term debt	0.3		2.3		Notes payable and current portion of long-term debt	328		299
Total Current Liabilities	Total Current Liabilities	763.0		995.5		Total Current Liabilities	1,212		1,317

Long-term debt	Long-term debt	2,182.7		1,433.1		Long-term debt	1,923		1,978
Operating lease liabilities	Operating lease liabilities	101.0		119.5		Operating lease liabilities	125		130
Deferred income taxes	Deferred income taxes	439.2		479.6		Deferred income taxes	411		393
Other noncurrent liabilities	Other noncurrent liabilities	472.9		480.3		Other noncurrent liabilities	536		554
Total Liabilities	Total Liabilities	3,958.8		3,508.0		Total Liabilities	4,207		4,372

Commitments and contingencies		—		—

Equity:	Equity:					Equity:
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	—		—		Preferred stock, $1.00 par value; 0.25 million shares authorized; 0 shares issued	0		0
Common stock, $0.01 par value;	Common stock, $0.01 par value;	2.6		2.6		Common stock, $0.01 par value;	3		3
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
400.0 million shares authorized, and 264.5 million shares issued at March 31, 2021 and December 31, 2020						400.0 million shares authorized, and 264.5 million shares issued at March 31, 2021 and December 31, 2020
218.2 million and 218.7 million shares outstanding at March 31, 2021 and December 31, 2020, respectively						218.2 million and 218.7 million shares outstanding at March 31, 2021 and December 31, 2020, respectively
Capital in excess of par value	Capital in excess of par value	6,576.7		6,586.7		Capital in excess of par value	6,618		6,604
Retained earnings	Retained earnings	1,124.7		1,404.2		Retained earnings	1,328		1,233
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(644.7)		(599.7)		Accumulated other comprehensive loss	(554)		(464)
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)
Treasury stock, at cost, 46.3 million and 45.8 million shares at March 31, 2021 and December 31, 2020, respectively						Treasury stock, at cost, 46.3 million and 45.8 million shares at March 31, 2021 and December 31, 2020, respectively	(2,468)		(2,409)
Total Dentsply Sirona Equity	Total Dentsply Sirona Equity	4,643.1		5,092.5		Total Dentsply Sirona Equity	4,927		4,967

Noncontrolling interests	Noncontrolling interests	2.3		2.4		Noncontrolling interests	3		3
Total Equity	Total Equity	4,645.4		5,094.9		Total Equity	4,930		4,970
Total Liabilities and Equity	Total Liabilities and Equity	$	8,604.2	$	8,602.9	Total Liabilities and Equity	$	9,137	$	9,342

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			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)
Balance at December 31, 2020																		Balance at December 31, 2020	$	3	$	6,604	$	1,233	$	(464)	$	(2,409)	$	4,967	$	3	$	4,970
Net income																		Net income	—		—		117		—		—		117		—		117
Other comprehensive loss																		Other comprehensive loss	—		—		—		(90)		—		(90)		—		(90)

Exercise of stock options	Exercise of stock options	—		(0.5)		—		—		4.3		3.8		—		3.8		Exercise of stock options	—		11		—		—		22		33		—		33
Stock based compensation expense	Stock based compensation expense	—		9.4		—		—		—		9.4		—		9.4		Stock based compensation expense	—		13		—		—		—		13		—		13
Funding of employee stock purchase plan	Funding of employee stock purchase plan	—		0.8		—		—		1.3		2.1		—		2.1		Funding of employee stock purchase plan	—		1		—		—		2		3		—		3
Treasury shares purchased	Treasury shares purchased	—		(28.0)		—		—		(112.0)		(140.0)		—		(140.0)		Treasury shares purchased	—		—		—		—		(90)		(90)		—		(90)

Restricted stock unit distributions	Restricted stock unit distributions	—		(14.8)		—		—		8.7		(6.1)		—		(6.1)		Restricted stock unit distributions	—		(11)		—		—		7		(4)		—		(4)
Restricted stock unit dividends		—		0.3		(0.3)		—		—		—		—		—

Cash dividends ($0.1000 per share)	Cash dividends ($0.1000 per share)	—		—		(21.8)		—		—		(21.8)		—		(21.8)		Cash dividends ($0.1000 per share)	—		—		(22)		—		—		(22)		—		(22)
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
Balance at March 31, 2021																		Balance at March 31, 2021	$	3	$	6,618	$	1,328	$	(554)	$	(2,468)	$	4,927	$	3	$	4,930

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


	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	$	3	$	6,587	$	1,404	$	(600)	$	(2,301)	$	5,093	$	2	$	5,095
Net loss	—		—		(140)		—		—		(140)		—		(140)
Other comprehensive loss	—		—		—		(112)		—		(112)		—		(112)

Exercise of stock options	—		—		—		—		4		4		—		4
Stock based compensation expense	—		9		—		—		—		9		—		9
Funding of employee stock purchase plan	—		1		—		—		1		2		—		2
Treasury shares purchased	—		(28)		—		—		(112)		(140)		—		(140)
Restricted stock unit distributions	—		(15)		—		—		9		(6)		—		(6)

Cash dividends ($0.1000 per share)	—		—		(22)		—		—		(22)		—		(22)
Balance at March 31, 2020	$	3	$	6,554	$	1,242	$	(712)	$	(2,399)	$	4,688	$	2	$	4,690

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,							Three Months Ended March 31,
		2020		2019			2021		2020

Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) income		$	(235.8)	$	75.6
Net income (loss)						Net income (loss)	$	117	$	(140)

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	Depreciation	64.5		70.4		Depreciation	32		32
Amortization of intangible assets	Amortization of intangible assets	93.8		95.5		Amortization of intangible assets	56		47
Amortization of deferred financing costs	Amortization of deferred financing costs	1.8		1.4		Amortization of deferred financing costs	2		1
Fixed asset impairment		—		33.2

Goodwill impairment	Goodwill impairment	156.6		—		Goodwill impairment	0		157
Indefinite-lived intangible asset impairment	Indefinite-lived intangible asset impairment	38.7		5.3		Indefinite-lived intangible asset impairment	0		39

Deferred income taxes	Deferred income taxes	(32.4)		(18.4)		Deferred income taxes	(3)		(8)
Stock based compensation expense	Stock based compensation expense	19.7		34.4		Stock based compensation expense	13		10
Restructuring and other costs - non-cash		4.5		14.8

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

Other non-cash expense						Other non-cash expense	17		10

Gain on sale of non-strategic businesses and product lines						Gain on sale of non-strategic businesses and product lines	(13)		0

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	268.7		(1.5)		Accounts and notes receivable-trade, net	11		53
Inventories, net	Inventories, net	(1.0)		(18.3)		Inventories, net	(50)		(57)
Prepaid expenses and other current assets, net		33.0		7.9
Other noncurrent assets, net		5.9		6.9
Prepaid expenses and other current assets						Prepaid expenses and other current assets	(27)		(27)
Other noncurrent assets						Other noncurrent assets	(13)		(7)
Accounts payable	Accounts payable	(88.7)		(32.2)		Accounts payable	(17)		(29)
Accrued liabilities	Accrued liabilities	(138.6)		(81.1)		Accrued liabilities	(81)		(95)
Income taxes	Income taxes	(14.6)		(11.0)		Income taxes	(8)		7
Other noncurrent liabilities	Other noncurrent liabilities	(8.6)		1.8		Other noncurrent liabilities	13		(3)
Net cash provided by operating activities		164.4		174.4
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	49		(10)

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(38.8)		(63.5)		Capital expenditures	(30)		(26)

Cash paid for acquisitions of businesses and equity investments, net of cash acquired						Cash paid for acquisitions of businesses and equity investments, net of cash acquired	(92)		0
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	19		0
Cash received on derivative contracts	Cash received on derivative contracts	57.5		27.0		Cash received on derivative contracts	0		9

Purchase of short term investments		—		(0.3)

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

Proceeds from sale of property, plant, and equipment						Proceeds from sale of property, plant, and equipment	0		1
Net cash used in investing activities						Net cash used in investing activities	(103)		(16)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Repayments on short-term borrowings		(1.2)		(23.3)
Proceeds on short-term borrowings						Proceeds on short-term borrowings	30		31
Cash paid for treasury stock	Cash paid for treasury stock	(140.0)		(60.0)		Cash paid for treasury stock	(90)		(140)
Cash dividends paid	Cash dividends paid	(44.0)		(39.1)		Cash dividends paid	(22)		(22)

Proceeds from long-term borrowings		1,448.4		1.7
Repayments of long-term borrowings		(700.9)		(134.6)
Deferred financing costs		(6.3)		—
Proceeds from long-term borrowings, net of deferred financing costs						Proceeds from long-term borrowings, net of deferred financing costs	4		0
Repayments on long-term borrowings, net						Repayments on long-term borrowings, net	0		(1)

Proceeds from exercised stock options	Proceeds from exercised stock options	5.4		76.4		Proceeds from exercised stock options	33		4
Cash paid for contingent consideration on prior acquisitions		(2.7)		(30.6)

Other financing activities, net						Other financing activities, net	(8)		(2)

Cash paid on derivative contracts		(30.5)		—
Net cash provided by (used in) financing activities		528.2		(209.5)

Net cash used in financing activities						Net cash used in financing activities	(53)		(130)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(7.8)		0.1		Effect of exchange rate changes on cash and cash equivalents	(13)		(13)
Net increase (decrease) in cash and cash equivalents		704.2		(59.5)
Net decrease in cash and cash equivalents						Net decrease in cash and cash equivalents	(120)		(169)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	404.9		309.6		Cash and cash equivalents at beginning of period	438		405
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,109.1	$	250.1	Cash and cash equivalents at end of period	$	318	$	236

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 (“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, ~~2019.~~2020.

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, ~~2019,~~2020, 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 materially 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 p~~andemic 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, 2020,~~March 31, 2021, the Company had ~~$25.7~~$44 million of deferred revenue recorded predominantly in Accrued liabilities in the Consolidated Balance ~~Sheets.~~Sheets, with an immaterial portion recorded in Other noncurrent liabilities. The Company expects to recognize significantly all of ~~the~~this deferred revenue within the next 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 ~~$37.4~~$18 million at ~~June 30, 2020~~March 31, 2021 and ~~$29.4~~$18 million at December 31, ~~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 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. 2019-12 "Income Taxes (Topic 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 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 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 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. 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)~~848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Reporting." This newly issued accounting~~Reporting", which was subsequently amended by ASU No. 2021-01 "Reference Rate Reform (Topic 848): Scope" in January 2021. The new standard provides ~~guidance on whether the change in~~optional expedients and exceptions to contracts, hedging relationships, and other transactions that 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~~ or another rate ~~debt that use LIBOR as a~~expected to be discontinued due to the reference ~~rate. The guidance provided by this accounting~~rate reform. This standard ~~may~~is permitted to be ~~used for contracts entered into on or before~~adopted any time through December 31, 2022, ~~on a prospective basis.~~and does not apply to contract modifications made or hedging relationships entered into or evaluated after December 31, 2022. 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

Total stock based compensation expense for non-qualified stock options, restricted stock units ("RSU"), and the tax related benefit for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:


		Three Months Ended						Six Months Ended					Three Months Ended
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)	2021		2020

Stock option expense	Stock option expense	$	1.9	$	2.8	$	3.5	$	5.0	Stock option expense	$	2	$	1
RSU expense	RSU expense	8.0		22.1		15.6		28.8		RSU expense	11		8
Total stock based compensation expense	Total stock based compensation expense	$	9.9	$	24.9	$	19.1	$	33.8	Total stock based compensation expense	$	13	$	9

Related deferred income tax benefit	Related deferred income tax benefit	$	1.1	$	3.6	$	2.1	$	5.0	Related deferred income tax benefit	$	2	$	1

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, stock compensation expense was ~~$9.9~~$13 million and ~~$19.1~~$9 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.

NOTE 3 – COMPREHENSIVE INCOME (LOSS)

~~Components of Other comprehensive income (loss), net of tax, 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
Foreign currency translation gains (losses) $ 83.5 $ 54.9 $ (39.5) $ (17.0)
Foreign currency translation loss on hedges of net investments (10.0) (11.2) (5.7) (0.6)

~~These amounts are recorded~~Changes in Accumulated other comprehensive income (loss) ("AOCI"), net of tax, by component for the three months ended March 31, 2021 and 2020 were as follows:



(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, 2020	$	(187)	$	(25)	$	(119)	$	(133)	$	(464)
Other comprehensive (loss) income before reclassifications and tax impact	(74)		(6)		9		3		(68)
Tax (expense) benefit	(25)		2		(2)		(1)		(26)
Other comprehensive (loss) income, net of tax, before reclassifications	(99)		(4)		7		2		(94)
Amounts reclassified from accumulated other comprehensive income, net of tax	0		2		0		2		4
Net (decrease) increase in other comprehensive loss	(99)		(2)		7		4		(90)


Balance, net of tax, at March 31, 2021	$	(286)	$	(27)	$	(112)	$	(129)	$	(554)


(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, 2019	$	(368)	$	(11)	$	(101)	$	(120)	$	(600)
Other comprehensive (loss) income before reclassifications and tax impact	(117)		(16)		25		0		(108)
Tax (expense) benefit	(2)		4		(8)		0		(6)
Other comprehensive (loss) income, net of tax, before reclassifications	(119)		(12)		17		0		(114)
Amounts reclassified from accumulated other comprehensive income, net of tax	0		0		0		2		2
Net (decrease) increase in other comprehensive loss	(119)		(12)		17		2		(112)

Balance, net of tax, at March 31, 2020	$	(487)	$	(23)	$	(84)	$	(118)	$	(712)

These amounts are recorded in AOCI, net of any related tax adjustments. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the cumulative tax adjustments were ~~$172.0~~$190 million and ~~$173.0~~$216 million, respectively, primarily related to foreign currency translation gains and losses.

The cumulative foreign currency translation adjustments included translation losses of ~~$299.7~~$159 million and ~~$260.2~~$25 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively, and cumulative losses on loans designated as hedges of net investments of ~~$113.8~~$127 million and ~~$108.1~~$162 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, 2020 and 2019 were as follows:~~

(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, 2019 $ (368.3) $ (10.6) $ (100.7) $ (120.1) $ (599.7)
Other comprehensive (loss) income before reclassifications and tax impact (41.1) (15.9) 9.8 — (47.2)
Tax (expense) benefit (4.1) 3.8 (0.7) — (1.0)
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 — 0.1 — 3.1 3.2
Net (decrease) increase in other comprehensive loss (45.2) (12.0) 9.1 3.1 (45.0)
Balance, net of tax, at June 30, 2020 $ (413.5) $ (22.6) $ (91.6) $ (117.0) $ (644.7)

(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)
Other comprehensive (loss) income before reclassifications and tax impact (13.4) (15.4) 6.7 — (22.1)
Tax (expense) benefit (4.2) 4.0 (4.6) — (4.8)
Other comprehensive (loss) income, net of tax, before reclassifications (17.6) (11.4) 2.1 — (26.9)
Amounts reclassified from accumulated other comprehensive income, net of tax — 1.2 — 1.8 3.0
Net (decrease) increase in other comprehensive loss (17.6) (10.2) 2.1 1.8 (23.9)
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,~~March 31, 2021 and 2020 ~~and 2019~~ were insignificant.

NOTE 4 – EARNINGS PER COMMON SHARE

The computation of basic and diluted earnings per common share for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows:


Basic Earnings Per Common Share Computation		Three Months Ended						Six Months Ended
Basic Earnings (Loss) Per Common Share										Basic Earnings (Loss) Per Common Share	Three Months Ended
(in millions, except per share amounts)	(in millions, except per share amounts)	2020		2019		2020		2019		(in millions, except per share amounts)		2021		2020

Net (loss) income attributable to Dentsply Sirona		$	(95.4)	$	36.4	$	(235.3)	$	75.6
Net income (loss) attributable to Dentsply Sirona										Net income (loss) attributable to Dentsply Sirona		$	117	$	(140)

Weighted average common shares outstanding	Weighted average common shares outstanding	218.7		224.2		219.8		223.7		Weighted average common shares outstanding		218.8		220.9

(Loss) earnings per common share - basic		$	(0.44)	$	0.16	$	(1.07)	$	0.34
Earnings (loss) per common share - basic										Earnings (loss) per common share - basic		$	0.53	$	(0.63)

Diluted Earnings Per Common Share Computation		Three Months Ended						Six Months Ended
Diluted Earnings (Loss) Per Common Share										Diluted Earnings (Loss) Per Common Share	Three Months Ended
(in millions, except per share amounts)	(in millions, except per share amounts)	2020		2019		2020		2019		(in millions, except per share amounts)		2021		2020

Net (loss) income attributable to Dentsply Sirona		$	(95.4)	$	36.4	$	(235.3)	$	75.6
Net income (loss) attributable to Dentsply Sirona										Net income (loss) attributable to Dentsply Sirona		$	117	$	(140)

Weighted average common shares outstanding	Weighted average common shares outstanding	218.7		224.2		219.8		223.7		Weighted average common shares outstanding		218.8		220.9
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		1.1		0
Total weighted average diluted shares outstanding	Total weighted average diluted shares outstanding	218.7		225.7		219.8		225.3		Total weighted average diluted shares outstanding		219.9		220.9

(Loss) earnings per common share - diluted		$	(0.44)	$	0.16	$	(1.07)	$	0.34
Earnings (loss) per common share - diluted										Earnings (loss) per common share - diluted		$	0.53	$	(0.63)

The calculation of weighted average diluted common shares outstanding excluded ~~0.7 million and 1.0~~1.4 million of potentially diluted common shares because the Company reported a net loss for the three ~~and six~~ months ended ~~June 30, 2020, respectively.~~ March 31, 2020.

Stock options and RSUs of ~~4.2~~0.8 million and ~~3.1~~2.6 million equivalent shares of common stock that were outstanding during the three and six months ended June 30, 2020 were excluded because their effect would be antidilutive. There were 3.1 million and 3.6 million antidilutive equivalent shares of common stock outstanding during the three ~~and six~~ months ended ~~June 30, 2019.~~March 31, 2021 and 2020, respectively were excluded from the computation of weighted average diluted shares outstanding because their effect would be antidilutive.

OnDuring the quarter ended March ~~9, 2020,~~31, 2021, the Company ~~entered into an accelerated share repurchase agreement with a financial institution~~repurchased approximately 1.5 million shares pursuant to its open market shares repurchase plan for a net cost of $90 million at 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 marketaverage 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.$60.62.

1310

NOTE 5 – BUSINESS COMBINATIONS

Acquisitions

2021 Transactions

On January 21, 2021, the effective date of the transaction, the Company paid $94 million with the potential for additional earn-out provision payments of up to $10 million, to acquire 100% of the outstanding shares of Datum Dental, Ltd., a privately-owned producer and distributor of specialized regenerative dental material based in Israel. The fair value of the earn-out provision has been valued at $9 million as of the transaction date, resulting in a total purchase price of $103 million.

The preliminary fair values of the assets acquired and liabilities assumed in connection with the Datum acquisition were as follows:


(in millions)

Cash and cash equivalents	$	2
Other current assets	2
Intangible assets	81
Current liabilities	(2)
Other long-term assets (liabilities), net	(13)
Net assets acquired	70
Goodwill	33
Purchase consideration	$	103

The purchase price has been allocated on the basis of the preliminary estimates of fair values of assets acquired and liabilities assumed, resulting in the recording of $33 million in goodwill, which is considered to represent the value associated with the acquired workforce and synergies the two companies anticipate realizing as a combined company. The goodwill is not expected to be deductible for tax purposes. Management is continuing to finalize its valuation of certain assets including other intangible assets and will conclude its valuation no later than one year from the acquisition date.

Identifiable intangible assets acquired were as follows:


			Weighted Average
			Useful Life
(in millions, except for useful life)	Amount		(in years)

Developed technology	$	70	15-20
In-process R&D	11		Indefinite
Total	$	81

2020 Transactions

On December 31, 2020, the effective date of the transaction, the Company acquired 100% of the outstanding interests of Straight Smile, LLC ("Byte"), a privately-held company, for approximately $1.0 billion using cash on hand. Byte is a doctor-directed, direct-to-consumer, clear aligner business. The acquisition is expected to enhance scale and accelerate the growth and profitability of the Company's combined clear aligners business.

The preliminary fair values of the assets acquired and liabilities assumed in connection with the Byte acquisition for the year ended December 31, 2020 were as follows:


(in millions)

Cash and cash equivalents	$	13
Current assets	17
Intangible assets	416
Current liabilities	(30)
Long-term assets (liabilities), net	1
Net assets acquired	417
Goodwill	628
Purchase consideration	$	1,045

The purchase price has been allocated on the basis of the preliminary estimates of fair values of assets acquired and liabilities assumed, which resulted in the recording of $628 million in goodwill. The amount of goodwill is considered to represent the value associated with the acquired workforce and synergies the two companies anticipate realizing as a combined company, including alignment with the Company’s existing clear aligner business, and is deductible for tax purposes. Measurement period adjustments made to the fair values of the assets acquired and liabilities assumed during the first quarter of 2021 were immaterial to the financial statements, resulting in a reduction to goodwill of less than $3 million. Final determination of consideration as well as valuation of certain current assets are subject to a post-closing adjustment for the change in working capital to the date of closing, which is expected to be completed by the end of the second quarter of 2021.

Intangible assets acquired were as follows:


			Weighted Average
			Useful Life
(in millions, except for useful life)	Amount		(in years)

Non-compete agreements	$	16	5
Technology know-how	210		10
Tradenames and trademarks	190		20
Total	$	416

The results of operations for both the Byte and Datum businesses upon the effective date of each transaction have been included in the accompanying financial statements. These results, as well as the historical results for the above acquired businesses for the periods ended March 31, 2021 and 2020, are not material in relation to the Company’s net sales and earnings for those periods. The Company therefore does not believe these acquisitions represent material transactions either individually or in the aggregate requiring the supplemental pro-forma information prescribed by ASC 805 and accordingly, this information is not presented.

Divestitures

On February 1, 2021, the company disposed of an investment casting business previously included as part of the Consumables segment in exchange for a cash receipt of $19 million. The divestiture resulted in a gain of $13 million recorded in Other expense (income), net in the Consolidated Statements of Operations for the three months ended March 31, 2021.

NOTE 56 – 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 88%, respectively, of net sales for the three and six months ended June 30, 2020 and 91% for the three and six months ended June 30, 2019.

~~The operating businesses are combined into~~Company’s 2 operating ~~groups, which~~segments are organized primarily by product and generally have overlapping geographical presence, customer bases, distribution channels, and regulatory oversight. These operating ~~groups are considered~~segments also comprise the Company’s reportable segments asin accordance with how the Company’s chief operating decision-maker regularly reviews financial results ~~at the operating group level~~ and uses this information to ~~manage~~evaluate 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.~~performance and allocate resources.

The Company evaluates performance of the segments based on ~~the groups’~~ net sales and ~~segment~~ adjusted operating income. ~~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 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-GAAP measure.~~

A description of the products and services provided within each of the Company’s 2 ~~operating~~reportable segments is provided below.

Technologies & Equipment

This segment is responsible for the ~~worldwide~~ design, manufacture, ~~sales~~ and ~~distribution~~sales of the Company’s Dental Technology and Equipment Products and Healthcare Consumable Products. These products include dental implants, CAD/CAM systems, orthodontic clear ~~aligners,~~aligner products, 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~~sales of the Company’s Dental Consumable Products which include preventive, restorative, endodontic, and dental laboratory ~~dental~~ products.

The Company’s segment information for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was as follows:

Net Sales


		Three Months Ended						Six Months Ended					Three Months Ended
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)	2021		2020

Technologies & Equipment	Technologies & Equipment	$	303.9	$	558.4	$	824.2	$	1,079.2	Technologies & Equipment	$	597	$	520
Consumables	Consumables	186.7		451.0		540.7		876.4		Consumables	430		354
Total net sales	Total net sales	$	490.6	$	1,009.4	$	1,364.9	$	1,955.6	Total net sales	$	1,027	$	874

Segment Adjusted Operating ~~(Loss)~~ Income


		Three Months Ended						Six Months Ended					Three Months Ended
(in millions)	(in millions)	2020		2019		2020		2019		(in millions)	2021		2020

Technologies & Equipment	Technologies & Equipment	$	(3.8)	$	96.0	$	107.3	$	167.8	Technologies & Equipment	$	126	$	111
Consumables	Consumables	(17.6)		121.8		44.0		227.5		Consumables	150		62
Segment adjusted operating (loss) income		(21.4)		217.8		151.3		395.3
Segment adjusted operating income										Segment adjusted operating income	276		173

Reconciling items expense (income):	Reconciling items expense (income):									Reconciling items expense (income):
All other (a)	All other (a)	33.5		58.9		83.2		118.6		All other (a)	62		49
Goodwill impairment	Goodwill impairment	—		—		156.6		—		Goodwill impairment	0		157
Restructuring and other costs	Restructuring and other costs	1.3		42.4		43.8		62.9		Restructuring and other costs	3		43
Interest expense	Interest expense	12.3		8.0		19.0		16.4		Interest expense	14		7
Interest income		(1.0)		(0.2)		(1.4)		(1.3)

Other expense (income), net	Other expense (income), net	4.3		12.1		2.9		(1.7)		Other expense (income), net	(9)		(2)
Amortization of intangible assets	Amortization of intangible assets	46.6		47.3		93.8		95.5		Amortization of intangible assets	55		47
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		Depreciation resulting from the fair value step-up of property, plant, and equipment from business combinations	2		2
(Loss) income before income taxes		$	(119.9)	$	47.6	$	(249.6)	$	101.4
Income (loss) before income taxes										Income (loss) before income taxes	$	149	$	(130)

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

NOTE 67 – INVENTORIES

Inventories are stated at the lower of cost and net realizable value. ~~The cost~~All of the Company's inventories ~~determined by the last-in, first-out (“LIFO”) method at June 30, 2020 and December 31, 2019~~ were ~~$7.9 million and $5.0 million, respectively. The cost of remaining inventories was~~ determined by the first-in, first-out (“FIFO”) or average cost ~~methods. If~~methods, with the ~~FIFO~~exception of immaterial amounts determined using the last-in, first-out ("LIFO") method ~~had been used to determine the cost of LIFO inventories, the amounts~~totaling $1 million and $3 million at ~~which net inventories are stated would be higher than reported at June 30, 2020~~March 31, 2021 and December 31, ~~2019 by $15.9 million and $14.3 million,~~2020, respectively.

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


(in millions)	(in millions)	June 30, 2020		December 31, 2019		(in millions)	March 31, 2021		December 31, 2020

Finished goods	Finished goods	$	322.3	$	356.4	Finished goods	$	303	$	264
Work-in-process	Work-in-process	78.8		82.5		Work-in-process	75		68
Raw materials and supplies	Raw materials and supplies	147.8		122.8		Raw materials and supplies	122		134
Inventories, net	Inventories, net	$	548.9	$	561.7	Inventories, net	$	500	$	466

The Company's inventory ~~valuation~~ reserve was ~~$102.0~~$95 million and ~~$85.0~~$117 million at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 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.~~

NOTE 78 – RESTRUCTURING AND OTHER COSTS

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2021, the Company recorded net restructuring and other costs of $1 million which consists of $3 million in severance and other restructuring related costs offset by $2 million in adjustments to inventory reserves.

During the three months ended March 31, 2020, the Company recorded restructuring and other costs of ~~$1.3~~$42 million which consists of asset impairments of $39 million and ~~$43.8 million, respectively. During the three and six months ended June 30, 2019, the Company recorded restructuring and other~~severance costs of ~~$42.4 million and $62.9 million, respectively.~~

~~Restructuring Costs~~

During the three and six months ended June 30, 2020 the Company recorded net restructuring costs of $2.2 million and $4.5 million, respectively. During the three and six months ended June 30, 2019, the Company recorded net restructuring costs of $10.7 million and $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.$3 million.

The ~~Company’s~~details of total restructuring ~~accruals at June 30, 2020 were as follows:~~

Severance
(in millions) 2018 and
Prior Plans 2019 Plans 2020 Plans Total
Balance at December 31, 2019 $ 7.2 $ 19.8 $ — $ 27.0
Provisions 1.0 0.9 4.1 6.0
Amounts applied (2.2) (5.6) (0.3) (8.1)
Change in estimates (0.4) (1.5) — (1.9)
Balance at June 30, 2020 $ 5.6 $ 13.6 $ 3.8 $ 23.0

Lease/Contract Terminations
(in millions) 2018 and
Prior Plans 2020 Plans Total
Balance at December 31, 2019 $ 0.5 $ — $ 0.5
Provisions 0.3 0.1 0.4
Amounts applied (0.3) (0.1) (0.4)
Balance at June 30, 2020 $ 0.5 $ — $ 0.5

Other Restructuring Costs
(in millions) 2018 and
Prior Plans 2019 Plans 2020 Plans Total
Balance at December 31, 2019 $ 2.2 $ 0.3 $ — $ 2.5
Provisions — 0.3 (0.2) 0.1
Amounts applied — (0.5) 0.2 (0.3)
Change in estimate — (0.1) — (0.1)
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

~~OtherCosts~~

~~Other~~other costs for the three months ended ~~June 30, 2020,~~March 31 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.as follows:


Affected Line Item in the Consolidated Statements of Operations	Three Months Ended
(in millions)		2021		2020

Cost of products sold		$	(2)	$	0
Selling, general, and administrative expenses		0		(1)
Restructuring and other costs		3		43

Total restructuring and other costs		$	1	$	42

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.

~~These other costs are recorded in Restructuring and other costs in the Consolidated Statements of Operations.~~

The Company announced on August 6, 2020 that it will ~~close~~exit its traditional orthodontics business as well as ~~close~~both exit 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~~is exiting several of its facilities and ~~reduce~~reducing its workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of ~~$80~~$60 million to ~~$90~~$70 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~~recorded total expenses of approximately $57 million related to ~~$55~~these actions which consists primarily of inventory write-downs of approximately $29 million, accelerated depreciation of approximately $14 million, and severance costs of approximately $9 million. For the three months ended March 31, 2021, the Company made a $2 million adjustment related to inventory reserves. The Company expects most of the remaining 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~~recorded during the ~~third and fourth~~second quarter of ~~2020.~~

2021.

1814

The Company’s restructuring accruals at March 31, 2021 were as follows:


	Severance
(in millions)	2019 and Prior Plans		2020 Plans		2021 Plans		Total

Balance at December 31, 2020	$	12	$	17	$	0	$	29
Provisions	1		0		2		3
Amounts applied	(7)		(7)		0		(14)
Change in estimates	0		(1)		0		(1)
Balance at March 31, 2021	$	6	$	9	$	2	$	17


	Other Restructuring Costs
(in millions)	2019 and Prior Plans		2020 Plans		2021 Plans		Total

Balance at December 31, 2020	$	3	$	2	$	0	$	5
Provisions	1		0		0		1
Amounts applied	(1)		(1)		0		(2)

Balance at March 31, 2021	$	3	$	1	$	0	$	4

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


(in millions)	December 31, 2020		Provisions		Amounts Applied		Change in Estimates		March 31, 2021

Technologies & Equipment	$	16	$	0	$	(8)	$	(1)	$	7
Consumables	17		3		(7)		0		13
All Other	1		1		(1)		0		1
Total	$	34	$	4	$	(16)	$	(1)	$	21

The associated restructuring liabilities are recorded in Accrued liabilities and Other noncurrent liabilities in the Consolidated Balance Sheets.

NOTE 89 – 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 has utilized interest rate swaps to convert variable rate debt to fixed rate debt. The Company does not hold derivative instruments for trading or speculative purposes.

Derivative Instruments ~~Designated as Hedging~~

~~Cash Flow Hedges~~

The following summarizes the notional amounts of cash flow hedges, hedges of net investments, fair value hedges, and derivative instruments not designated as hedges for accounting purposes by derivative instrument type at ~~June 30, 2020~~March 31, 2021 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:~~months.

(in millions) Aggregate Notional Amount Aggregate Notional Amount Maturing within 12 Months
Foreign exchange forward contracts $ 312.9 $ 226.1
Total derivative instruments designated as cash flow hedges $ 312.9 $ 226.1


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

Cash Flow Hedges
Foreign exchange forward contracts	$	230	$	169


Total derivative instruments designated as cash flow hedges	$	230	$	169

Hedges of Net Investments
Cross currency basis swaps	$	309	309
Total derivative instruments designated as hedges of net investments	$	309	$	309

Fair Value Hedges
Foreign exchange forward contracts	$	240	104
Total derivative instruments designated as fair value hedges	$	240	$	104

Derivative Instruments not Designated as Hedges
Foreign exchange forward contracts	$	218	218
Total derivative instruments not designated as hedges	$	218	$	218

Cash Flow Hedges

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.~~earnings. 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 component of the fair value of the derivative is reported on a 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, 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, which is the period over which the Company is hedging exposures to variability of cash flows and the counterparties to the transactions are typically large international financial institutions.

Interest Rate Risk Management

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.

~~Cash Flow Hedge Activity~~AOCI Release

~~Gains and~~Overall, the derivatives designated as cash flow hedges are considered to be highly effective for accounting purposes. At March 31, 2021, the Company expects to reclassify $7 million of deferred net losses on cash flow hedges 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~~during 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 six months ended June 30, 2019 were insignificant.

next 12 months. For the rollforward of derivative instruments designated as cash flow hedges in AOCI see Note 3, Comprehensive ~~Income~~ (Loss). Income.

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.~~subsidiaries. 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 component of the fair value of the derivative is reported on a straight-line basis in Other expense (income), net in the Consolidated Statements of Operations in the 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.

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

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

~~(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 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 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 Consolidated Statements of Operations related to the hedges of net investments for the three months ended June 30, 2020 and 2019 were as follows:

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

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 were as follows:

Six 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 $ 3.4 Interest expense $ 4.4
Foreign exchange forward contracts 6.4 Other expense (income), net 6.2
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~~loans denominated in Swedish kronor that isare exposed to volatility in currency exchange rates. The Company employs derivative financial instruments to hedge ~~this exposure.~~these exposures. 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. The time-value component of the fair value of the derivative is reported on a straight-line basis in Other expense (income), net in the Consolidated Statements of Operations in the applicable period. Any cash flows associated with these instruments are included in ~~investing~~operating activities in the Consolidated Statements of Cash Flows.

On January 6, 2021 the Company entered into foreign exchange forward contracts with a notional value of SEK 1.3 billion as a result of an increase in intercompany loans denominated in Swedish kronor. The ~~notional amounts of~~foreign exchange forwards are designated as fair value ~~hedges by derivative instrument type at~~ ~~June 30, 2020~~ ~~and the notional amounts expected to mature during the next 12 months were as follows:~~hedges.

(in millions) Aggregate
Notional
Amount Aggregate Notional Amount Maturing within 12 Months
Foreign exchange forward contracts $ 94.5 $ 57.9
Total derivative instruments as fair value hedges $ 94.5 $ 57.9

~~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, 2020 and 2019~~ ~~were insignificant.~~

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 Company primarily uses foreign exchange forward contracts to hedge these risks. 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 aggregate notional amounts of the Company’s economic hedges not designated as hedges by derivative instrument types at June 30, 2020 and the notional amounts expected to mature during the next 12 months were as follows:

(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~~(losses) recorded in the Company’s Consolidated Statements of Operations related to the economic hedges not designated as hedges for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ were insignificant.

Derivative Instrument Activity

The amount of gains and losses recorded in AOCI in the Consolidated Balance Sheets, Costs of products sold, Interest expense, and Other expense (income), net in the Company's Consolidated Statement of Operations related to all derivative instruments were as follows:


	March 31, 2021
(in millions)	Gain (Loss) in AOCI		Consolidated Statements of Operations Location	Effective Portion Reclassified from AOCI into Income (Expense)		Recognized in Income (Expense)

Cash Flow Hedges
Foreign exchange forward contracts	$	(6)	Cost of products sold	$	(1)	$	0
Interest rate swaps	(29)		Interest expense	(1)		0


Total for cash flow hedging	$	(35)		$	(2)	$	0

Hedges of Net Investments
Cross currency basis swaps	$	9	Interest expense	$	0	$	2



Total for net investment hedging	$	9		$	0	$	2

Fair Value Hedges
Foreign exchange forward contracts	$	0	Other (expense) income, net	$	0	$	16

Total for fair value hedging	$	0		$	0	$	16


	March 31, 2020
(in millions)	Gain (Loss) in AOCI		Consolidated Statements of Operations Location	Effective Portion Reclassified from AOCI into Income (Expense)		Recognized in Income (Expense)

Cash Flow Hedges
Foreign exchange forward contracts	$	2	Cost of products sold	$	1	$	1
Interest rate swaps	(18)		Interest expense	(1)		0


Total for cash flow hedging	$	(16)		$	0	$	1

Hedges of Net Investments
Cross currency basis swaps	$	9	Interest expense	$	0	$	2

Foreign exchange forward contracts	16		Other expense (income), net	0		6

Total for net investment hedging	$	25		$	0	$	8

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

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															March 31, 2021
(in millions)	(in millions)	Prepaid Expenses and Other Current Assets, Net		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities		(in millions)	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Accrued Liabilities		Other Noncurrent Liabilities

Designated as Hedges:	Designated as Hedges:									Designated as Hedges:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	6.5	$	3.3	$	0.2	$	0.7	Foreign exchange forward contracts	$	6	$	9	$	6	$	1

Cross currency basis swaps	Cross currency basis swaps	—		10.3		—		—		Cross currency basis swaps	0		0		10		0
Total	Total	$	6.5	$	13.6	$	0.2	$	0.7	Total	$	6	$	9	$	16	$	1

Not Designated as Hedges:	Not Designated as Hedges:									Not Designated as Hedges:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	2.4	$	—	$	1.0	$	—	Foreign exchange forward contracts	$	1	$	0	$	3	$	0
Total	Total	$	2.4	$	—	$	1.0	$	—	Total	$	1	$	0	$	3	$	0

		December 31, 2019															December 31, 2020
(in millions)	(in millions)	Prepaid Expenses and Other Current Assets, Net		Other Noncurrent Assets, Net		Accrued Liabilities		Other Noncurrent Liabilities		(in millions)	Prepaid Expenses and Other Current Assets		Other Noncurrent Assets		Accrued Liabilities		Other Noncurrent Liabilities

Designated as Hedges:	Designated as Hedges:									Designated as Hedges:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	26.9	$	11.3	$	1.3	$	1.8	Foreign exchange forward contracts	$	5	$	2	$	10	$	3
Interest rate swaps		—		—		—		10.8

Cross currency basis swaps	Cross currency basis swaps	—		6.9		—		—		Cross currency basis swaps	0		0		20		0
Total	Total	$	26.9	$	18.2	$	1.3	$	12.6	Total	$	5	$	2	$	30	$	3

Not Designated as Hedges:	Not Designated as Hedges:									Not Designated as Hedges:
Foreign exchange forward contracts	Foreign exchange forward contracts	$	2.0	$	—	$	1.5	$	—	Foreign exchange forward contracts	$	3	$	0	$	2	$	0
Total	Total	$	2.0	$	—	$	1.5	$	—	Total	$	3	$	0	$	2	$	0

Balance Sheet Offsetting

Substantially all of the Company’s derivative contracts are subject to netting 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.

2419

Offsetting of financial assets and liabilities under netting arrangements at ~~June 30, 2020~~March 31, 2021 were as follows:


								Gross Amounts Not Offset in the Consolidated Balance Sheets															Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)	(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		(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	Assets													Assets
Foreign exchange forward contracts	Foreign exchange forward contracts	$	12.2	$	—	$	12.2	$	(0.8)	$	—	$	11.4	Foreign exchange forward contracts	$	16	$	0	$	16	$	(10)	$	0	$	6

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

Total assets	Total assets	$	22.5	$	—	$	22.5	$	(1.6)	$	—	$	20.9	Total assets	$	16	$	0	$	16	$	(10)	$	0	$	6

Liabilities	Liabilities													Liabilities
Foreign exchange forward contracts	Foreign exchange forward contracts	$	1.9	$	—	$	1.9	$	(1.6)	$	—	$	0.3	Foreign exchange forward contracts	$	10	$	0	$	10	$	(6)	$	0	$	4

Cross currency basis swaps														Cross currency basis swaps	10		0		10		(4)		0		6

Total liabilities	Total liabilities	$	1.9	$	—	$	1.9	$	(1.6)	$	—	$	0.3	Total liabilities	$	20	$	0	$	20	$	(10)	$	0	$	10

Offsetting of financial assets and liabilities under netting arrangements at December 31, ~~2019~~2020 were as follows:


								Gross Amounts Not Offset in the Consolidated Balance Sheets															Gross Amounts Not Offset in the Consolidated Balance Sheets
(in millions)	(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		(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	Assets													Assets
Foreign exchange forward contracts	Foreign exchange forward contracts	$	38.8	$	—	$	38.8	$	(7.8)	$	—	$	31.0	Foreign exchange forward contracts	$	9	$	0	$	9	$	(9)	$	0	$	0

Cross currency basis swaps		6.9		—		6.9		(0.9)		—		6.0

Total assets	Total assets	$	45.7	$	—	$	45.7	$	(8.7)	$	—	$	37.0	Total assets	$	9	$	0	$	9	$	(9)	$	0	$	0

Liabilities	Liabilities													Liabilities
Foreign exchange forward contracts	Foreign exchange forward contracts	$	3.2	$	—	$	3.2	$	(3.0)	$	—	$	0.2	Foreign exchange forward contracts	$	15	$	0	$	15	$	0	$	0	$	15

Interest rate swaps	Interest rate swaps	10.8		—		10.8		(5.7)		—		5.1		Interest rate swaps	20		0		20		(7)		0		13

Total liabilities	Total liabilities	$	14.0	$	—	$	14.0	$	(8.7)	$	—	$	5.3	Total liabilities	$	35	$	0	$	35	$	(7)	$	0	$	28

NOTE 910 – FAIR VALUE MEASUREMENT

Assets and ~~Liabilities Measured~~liabilities measured at ~~Fair Value~~fair value on a ~~Recurring Basis~~recurring basis

The Company ~~estimates~~estimated the fair value and carrying value of its total long term debt, including current portion ~~using Level 1 inputs.~~was $2,382 million and $2,251 million, respectively, at March 31, 2021. At ~~June 30,~~December 31, 2020, the Company estimated the fair value and carrying value of this debt were ~~$2,238.4~~$2,509 million and ~~$2,183.0~~$2,281 million, respectively. AtThe fair value of long-term debt is based on recent trade information in the financial markets of the Company’s public debt or is determined by discounting future cash flows using interest rates available at March 31, 2021 and December 31, ~~2019, the Company estimated the~~2020 to companies with similar credit ratings for issues with similar terms and maturities. It is considered a Level 2 fair value ~~and carrying value of this debt were $1,440.8 million and $1,433.3 million, respectively.~~measurement.

The Company’s financial assets and liabilities set forth by level within the fair value hierarchy that were accounted for at fair value on a recurring basis were as follows:


		June 30, 2020															March 31, 2021
(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		$	10.3	$	—	$	10.3	$	—

Foreign exchange forward contracts	Foreign exchange forward contracts	12.2		—		12.2		—		Foreign exchange forward contracts	$	16	$	0	$	16	$	0

Total assets	Total assets	$	22.5	$	—	$	22.5	$	—	Total assets	$	16	$	0	$	16	$	0

Liabilities	Liabilities									Liabilities

Cross currency basis swaps										Cross currency basis swaps	$	10	$	0	$	10	$	0
Foreign exchange forward contracts	Foreign exchange forward contracts	$	1.9	$	—	$	1.9	$	—	Foreign exchange forward contracts	10		0		10		0

Contingent considerations on acquisitions	Contingent considerations on acquisitions	5.9		—		—		5.9		Contingent considerations on acquisitions	13		0		0		13
Total liabilities	Total liabilities	$	7.8	$	—	$	1.9	$	5.9	Total liabilities	$	33	$	0	$	20	$	13


		December 31, 2019															December 31, 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		$	6.9	$	—	$	6.9	$	—

Foreign exchange forward contracts	Foreign exchange forward contracts	40.2		—		40.2		—		Foreign exchange forward contracts	$	10	$	0	$	10	$	0

Total assets	Total assets	$	47.1	$	—	$	47.1	$	—	Total assets	$	10	$	0	$	10	$	0

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

Cross currency basis swaps										Cross currency basis swaps	$	20	$	0	$	20	$	0
Foreign exchange forward contracts	Foreign exchange forward contracts	4.6		—		4.6		—		Foreign exchange forward contracts	15		0		15		0

Contingent considerations on acquisitions	Contingent considerations on acquisitions	8.7		—		—		8.7		Contingent considerations on acquisitions	5		0		0		5

Total liabilities	Total liabilities	$	24.1	$	—	$	15.4	$	8.7	Total liabilities	$	40	$	0	$	35	$	5

There have been no transfers between levels during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

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 rates swaps and foreign exchange forward contracts that are considered cash flow hedges. In addition, the Company may at times employ certain cross currency interest rate swaps and forward exchange contracts that are considered hedges of net investment in foreign operations. Both types of designated derivative instruments are further discussed in Note 8, Financial Instruments and Derivatives.

NOTE 1011 – INCOME TAXES

Uncertainties in Income Taxes

The Company recognizes the impact of a tax position in the interim consolidated financial statements 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 12 months are not expected to be significant.

Other Tax Matters

During the three months ended ~~June 30, 2020,~~March 31, 2021, the Company recorded ~~$0.9~~$1 million of tax ~~expense~~benefit for other discrete tax matters. The Company also recorded a $4 million tax expense as a discrete item related to business divestitures.

During the three months ended ~~June 30, 2019,~~March 31, 2020, the Company recorded ~~$1.8~~$6 million of tax expense for discrete tax matters. The Company also recorded a ~~$10.1~~$11 million tax benefit as a discrete item related to ~~a fixed~~the indefinite-lived intangible asset impairment charge.

NOTE 1112 – FINANCING ARRANGEMENTS

At ~~June 30, 2020,~~March 31, 2021, the Company had ~~$1,156.1~~$1,139 million of borrowing available under lines of credit, including lines available under its short-term arrangements and revolving credit facility. ~~Through the date of the filing of this Form 10-Q, the~~

The Company has noa $500 million commercial paper program. The $700 million multi-currency revolving credit facility serves as a back-stop credit facility for the Company's commercial paper program. At March 31, 2021 and December 31, 2020, there were 0 outstanding borrowings under ~~any of these~~the multi-currency revolving credit ~~agreements.~~facility. The company borrowed and had $27 million outstanding under the commercial paper facility at March 31, 2021 and 0 outstanding borrowings under the commercial paper facility at December 31, 2020.

~~In response to the COVID-19 pandemic~~Additionally, at both March 31, 2021 and December 31, 2020, the Company ~~took~~had multiple short-term facilities available as a result of the following actions ~~during the six months ended June 30,~~taken in 2020 to strengthen its liquidity and ~~financial flexibility:~~flexibility in response to the COVID-19 pandemic:

•On April 9, 2020, the Company entered into a ~~$310.0~~$310 million 364-day revolving credit facility ~~with a maturity date of~~which matured on 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 conditionAs of ~~the Company.~~March 31, 2021 there were 0 outstanding borrowings under this facility.

•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,~~Credit Facility, which is equal to ~~$700.0~~$700 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~~$700 million revolver borrowing on May 26, 2020.

•On May 26, 2020, the Company issued ~~$750.0~~$750 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~~$748 million, net of discount of ~~$1.6~~$2 million. Issuance fees totaled ~~$6.4~~$6 million. The Company paid ~~$30.5~~$31 million to settle the ~~$150.0~~$150 million notional ~~T-Lock~~Treasury Rate Lock ("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~~$700 million ~~revolver borrowing~~borrowed against the 2018 Credit Facility and the remaining proceeds will be used for working capital and other general corporate purposes.

•~~Various~~During the second quarter of 2020 the company entered into various other credit ~~facilities:~~

◦~~On May 5, 2020, the Company entered into~~facilities including a ~~40.0~~40 million euro 364-day revolving credit facility ~~with a maturity date of~~which matured on April 30, ~~2021.~~

◦~~On May 12, 2020 the Company entered into~~2021, a ~~30.0~~30 million euro 364-day revolving credit facility with a maturity date of May 6, ~~2021.~~

◦~~On June 11, 2020, the Company entered into~~2021, and 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~~ As 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~~March 31, ~~2019,~~2021 there were no0 outstanding borrowings under ~~the commercial paper program.~~these facilities.

The Company’s revolving credit facilities and senior unsecured notes contain certain affirmative and negative debt covenants relating to the Company's operations and financial condition. At ~~June 30, 2020,~~March 31, 2021, the Company was in compliance with all affirmative and negative debt covenants.

NOTE 1213 – GOODWILL AND INTANGIBLE ASSETS

~~2020 Annual Goodwill Impairment Testing~~

The Company ~~performed~~assesses both goodwill and indefinite-lived intangible assets for impairment annually during the ~~required~~second quarter, or from time to time when warranted by facts and circumstances. In conjunction with the most recent annual ~~impairment tests~~test of goodwill at April 30, 2020, on its 5 reporting units. To determine the fair value of 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 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 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 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 changes for these reporting units. The Company also considers 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. As a result of the annual 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~~discount rate of these reporting units had been hypothetically increased by 100 basis points, ~~at April 30, 2020, one~~or, in a separate test, each reporting unit ~~within~~were subject to a 10% hypothetical reduction in fair value, it is noted that the ~~Company's Technologies & Equipment segment~~Implants reporting unit would have had a fair value ~~that would approximate~~approximating 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~~which recorded ~~goodwill~~an impairment ~~at March 31,~~during the first quarter of 2020, the implied fair value ~~continues~~was found to approximate net book value at April 30, ~~2020. Goodwill for~~2020, and therefore this reporting unit ~~totals $290.8~~is noted to be sensitive to any unfavorable change in assumptions. Goodwill associated with the Implants and Equipment & Instruments reporting units was $1,222 million ~~at June 30, 2020.~~and $292 million respectively as of March 31, 2021.

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 have a negative material impact to the fair value 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.

~~2020 Annual Indefinite-Lived Intangibles Impairment Testing~~

The Company also ~~assessed~~previously applied a hypothetical sensitivity analysis as part of the ~~annual impairment of indefinite-lived intangible assets at~~ April 30, 2020 ~~which largely consists of acquired tradenames and trademarks, in conjunction with the annual impairment tests of goodwill. As a result of the~~ annual impairment test of indefinite-lived ~~intangible assets, no impairment~~intangibles. It was ~~identified.~~

~~For the Company's indefinite-lived intangible assets~~noted that ~~were not impaired at March 31, 2020 (see March 31, 2020 Impairment Testing below), the Company applied a hypothetical sensitivity analysis. If~~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.~~value, with the exception of certain assets including tradenames and trademarks related to the Equipment & Instruments reporting unit for which an impairment was previously recorded in March 2020. For ~~the indefinite-lived intangible~~these assets, ~~that were impaired at March 31, 2020,~~ the implied fair values ~~continue~~continued to approximate net book values at April 30, ~~2020.~~

~~Should the Company’s analysis in the future indicate additional unfavorable impacts related~~2020 and are therefore noted to ~~the ongoing COVID-19 pandemic, an increase in discount rates, or a degradation in the use of the tradenames and trademarks,~~be sensitive to any of which could have a negative material impact to the implied fair values and could result in a future impairment to the carrying value of the indefinite-lived 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 Technolog~~ies & 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 be below their carrying value.

~~In preparing the financial statements for the three months ended March 31, 2020 in conjunction with the goodwill impairment, the Co~~mpany 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.assumptions. At March 31, ~~2020~~,2021, the remaining indefinite-lived tradenames and trademarks related to the Equipment & Instruments reporting unit was ~~$75.0 million~~$79 million.

~~. Based on~~

During the ~~quantitative assessments performed for~~time subsequent to the annual evaluation, and at March 31, 2021, the Company considered whether any events or changes in circumstances had resulted in the likelihood that the goodwill or indefinite-lived intangible assets ~~related to~~may have been impaired. It is management's assessment that no such events have occurred. A change in any of the ~~businesses~~estimates and assumptions used in the ~~three~~annual test, a decline in the overall markets or in the use of intangible assets among other ~~reporting units, the Company believed that its adjusted long-term forecasted cash flows did not indicate that~~factors, could have a negative material impact to the fair value of either the ~~indefinite-lived~~reporting units or intangible assets ~~may~~and could result in a future impairment charge. There can be ~~below their carrying value.~~no assurance that the Company’s future asset impairment testing will not result in a material charge to earnings.

A reconciliation of changes in the Company’s goodwill by reportable segment ~~wer~~ewere as follows:

(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


(in millions)	Technologies & Equipment		Consumables		Total

Balance at December 31, 2020	$	3,092	$	894	$	3,986

Acquisition related additions	33		0		33
Divestiture of a business	0		(3)		(3)
Measurement period adjustments on prior acquisitions	(3)		0		(3)

Effects of exchange rate changes	(47)		(14)		(61)
Balance at March 31, 2021	$	3,075	$	877	$	3,952

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


		June 30, 2020										December 31, 2019											March 31, 2021				December 31, 2020
(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	$	5,250.8	$	(2,893.2)	$	2,357.6	$	5,252.3	$	(2,736.6)	$	2,515.7	Technologies & Equipment	$	5,968	$	(2,893)	$	3,075	$	5,985	$	(2,893)	$	3,092
Consumables	Consumables	869.6		—		869.6		880.8		—		880.8		Consumables	877		0		877		894		0		894
Total effect of cumulative impairment	Total effect of cumulative impairment	$	6,120.4	$	(2,893.2)	$	3,227.2	$	6,133.1	$	(2,736.6)	$	3,396.5	Total effect of cumulative impairment	$	6,845	$	(2,893)	$	3,952	$	6,879	$	(2,893)	$	3,986

3123

Identifiable definite-lived and indefinite-lived intangible assets were as follows:


	March 31, 2021						December 31, 2020
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Developed technology and patents	$	1,702	$	(685)	$	1,017	$	1,681	$	(677)	$	1,004
Tradenames and trademarks	269		(70)		199		273		(70)		203
Licensing agreements	36		(30)		6		37		(30)		7
Customer relationships	1,112		(500)		612		1,142		(494)		648
Total definite-lived	$	3,119	$	(1,285)	$	1,834	$	3,133	$	(1,271)	$	1,862

Indefinite-lived tradenames and trademarks	$	616	$	—	$	616	$	642	$	—	$	642
In-process R&D (a)	11		—		11		0		—		0
Total indefinite-lived	$	627	$	—	$	627	$	642	$	—	$	642

Total identifiable intangible assets	$	3,746	$	(1,285)	$	2,461	$	3,775	$	(1,271)	$	2,504

June 30, 2020 December 31, 2019
(in millions) Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Patents $ 1,350.9 $ (574.5) $ 776.4 $ 1,351.3 $ (517.9) $ 833.4
Tradenames and trademarks 78.5 (64.9) 13.6 79.0 (63.4) 15.6
Licensing agreements 36.1 (28.9) 7.2 36.0 (27.9) 8.1
Customer relationships 1,064.7 (431.9) 632.8 1,070.5 (399.2) 671.3
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 $ 609.6 $ — $ 609.6 $ 647.9 $ — $ 647.9
Total identifiable intangible assets $ 3,139.8 $ (1,100.2) $ 2,039.6 $ 3,184.7 $ (1,008.4) $ 2,176.3
(a) Intangible assets acquired in a business combination that are in-process and used in research and development ("R&D") activities are considered indefinite-lived until the completion or abandonment of the R&D efforts. The useful life and amortization of those assets will be determined once the R&D efforts are completed.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, as a result of updating the estimates and assumptions pertaining to the impact of the ongoing COVID-19 pandemic the Company ~~impaired $5.3 million of product tradenames and trademarks~~determined that the goodwill associated with the Equipment & Instruments reporting unit within the Technologies & Equipment ~~segment. The~~segment was impaired. As a result, the Company recorded a goodwill impairment ~~was~~charge of $157 million. During the ~~result~~same period, the Company also recorded impairment charges of $39 million related to indefinite-lived intangible assets within the Technologies & Equipment segment driven by a ~~change~~decline in forecasted sales ~~related to divestitures~~as a result of ~~non-strategic product lines.~~the COVID-19 pandemic as well as an unfavorable change in the discount rate.

NOTE 1314 – 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. Mr. Jost Fischer, upon invitation of the Company, joined the litigation against Mr. Redlich as a third party. In his submission to the Court, Mr. Fischer disputed the central allegations raised by Mr. Redlich in his lawsuit. The Court held several hearings in the matter, and then closed the hearings in June 2019 pending the 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~~Court. On March 30, 2021, the Austrian Supreme Court ~~accepts~~rejected Mr. ~~Redlich’s extraordinary~~Redlich's appeal, ~~the Company will then file its response.~~leaving Mr. Redlich with no further possibility or right of appeal in this case.

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 Company has agreed to resolve all three actions (Olivares, Holt, and Cato), the parties ~~intend~~ to ~~participate~~each action are in ~~a mediation later in 2020~~the process of finalizing the settlement terms, and the ~~case~~parties will ~~be stayed until that time.~~then seek court approval of the settlements. The ~~Company continues~~expected settlement amount, which is immaterial to ~~vigorously defend against these matters.~~the financial statements, has been recorded as an accrued liability within the Company's consolidated balance sheet as of March 31, 2021.

On June 7, 2018, and August 9, 2018, 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 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. On August 2, 2019, the Court denied the Company's motions to stay discovery and to stay all proceedings. On August 21, 2019, the 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~~claims and a judgment dismissing the case 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.subsequently entered. 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~~post-judgment motion to vacate or modify the judgment and ~~for~~to grant them leave to amend their complaint. The plaintiffs appealed the dismissal and the denial of the post-judgment motion to the Supreme Court of the State of New York, Appellate Division, First Department, and the Company cross-appealed select rulings in the Court's decision dismissing the action. The plaintiffs' appeals and the Company's cross-appeal were consolidated and argued on January 12, 2021. On February 2, 2021, the Appellate Division issued its decision upholding the dismissal of the State Court Action with prejudice on statute of limitations grounds. The Plaintiffs did not appeal the Appellate Division decision.

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~~Company moved to dismiss the amended complaint ~~was served~~ on August 15, 2019. ~~Briefing was~~On January 8, 2021, the parties filed a stipulation, which is subject to the Court's approval, (1) withdrawing the Company's motion to dismiss without prejudice, (2) allowing plaintiff to file a second amended complaint by January 22, 2021, and (3) providing for a briefing schedule on a motion to dismiss that will be completed by May 13, 2021. The plaintiff filed its second amended complaint on ~~October 21, 2019~~January 22, 2021, and the Company ~~is awaiting~~filed a motion to dismiss the ~~decision of the Court.~~second amended complaint on March 8, 2021.

On April 29, 2019, 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, waste of corporate assets, and violations of the U.S. securities laws. The 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~~On September 25, 2020, the District Court Judge issued an order adopting the Magistrate ~~Judge's~~Judge’s report dismissing the case, but without prejudice, and provided the plaintiffs with three weeks to file a motion to amend their complaint. On October 16, 2020, the plaintiffs filed a notice advising the Court that they would not be amending their complaint. On October 23, 2020, the Court issued an order dismissing the case with prejudice as to the plaintiffs. The same day, the plaintiffs submitted a letter to the Board of Directors demanding that the Board investigate and commence legal proceedings against the same current and former directors and officers of the Company previously named as defendants in the Stockholder's Derivative Action on the basis of the same claims alleged in the Stockholder's Derivative Action. On November 6, 2020, the Company sent a letter to counsel for the plaintiffs stating that the Board would consider the litigation demand and respond with its decision. On March 25, 2021, the Company sent a letter to counsel for the plaintiffs relaying that the Board considered the litigation demand, and determined that it was not in the best interests of the Company to pursue the actions identified in the litigation demand. On April 8, 2021, the plaintiffs submitted a letter in response, requesting certain documents from the Company related to the Board’s decision to refuse the litigation demand. On April 19, 2021, counsel for the Company responded to plaintiffs' April 8, 2021 letter, explaining the reasons why plaintiffs are not entitled to the requested documents.

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~~$546 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~~$5 million for 2012, has 0 tax liability for 2013, and owes a deficiency of ~~$17.1~~$17 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~~In March 2019, the Company ~~has~~ submitted a formal protest disputing on multiple grounds the proposed taxes.

The Company and its advisors discussed its position with the IRS Appeals Office Team on October 28, 2020 and, on November 13, 2020, submitted a supplemental response to questions raised by the Appeals Team. The Company’s position continues to be reviewed by the IRS Appeals Office team. The Company believes the 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 in 2021 upon further ~~review.~~review by the IRS Appeals Office Team. 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.~~2018. If such interest expense deductions were disallowed, the Company would be subject to an additional ~~$41.0~~$57 million in tax expense. The Company has appealed the disallowance to the Swedish Administrative Court. With respect to such deductions taken in the tax years from 2013 to 2014, the Court ruled against the Company on July 5, 2017. On August 7, 2017, the Company appealed the unfavorable decision of the Swedish Administrative Court. On November 5, 2018, the Company delivered its final argument to the Administrative Court of 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. This view has now been confirmed by the European Union Court of Justice in a preliminary ruling requested by the Swedish Supreme Administrative Court in a pending case. The Company intends to vigorously defend its position and pursue related appeals.

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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 ~~additional legal matters~~proceedings and claims 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.

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. Future minimum annual payments for inventory purchase commitments were immaterial as of March 31, 2021.

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. 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,” Part I, Item 1, “Business” and Part I, Item 1A, "Risk Factors" of the Company's Form 10-K for the year ended December 31, ~~2019.~~2020. See updated risk factors in Part II, Item 1A, "Risk Factors" of this Form 10-Q.

Company Profile

DENTSPLY SIRONA Inc. ("Dentsply Sirona" or the "Company"), is the world’s largest manufacturer of professional dental products and technologies, with a ~~133-year~~134-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 dental consumable products 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 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 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 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 products.

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

~~The impact~~Information pertaining to the ~~Company’s net sales~~impact of the COVID-19 pandemic on the Company's operations and ~~net income~~financial results during the ~~six~~course of 2020 as well as the Company's overall response can be found in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Updates to that summary of impact for the three months ended ~~June 30, 2020 were~~March 31, 2021 are as follows:

•~~As previously announced, in~~Continuing 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 intrend from the second half of ~~March. These decreases in demand were primarily driven by~~2020, 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 has 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 liftedimprove and dental ~~practices started to re-open particularly~~patient traffic normalize in ~~the United States, Europe and certain Asian countries within the Rest of World region.~~

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

•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 Company’s response to the pandemic through June 30, 2020 was as follows:~~

•AThe Company's COVID-19 infection crisis management process ~~was~~ implemented byin 2020 remains in effect, and there have been no significant disruptions to operations as a result of infections. During the course of the pandemic, the Company has utilized this process to ~~have a unified approach to responding to employees infected by COVID-19.~~manage several incidents of exposure at facilities. All potential and actual cases ~~across the Company were~~have been reviewed to ensure that the Company managed exposed employees appropriately, consistently and safely. ~~No major outbreaks~~None of these incidents have ~~occurred at any~~resulted in a material loss of production or financial impact to the ~~Company's locations.~~results for the three months ended March 31, 2021.

•The Company put in 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~~previously undertook various initiatives 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 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 measures2020, to ensure ~~the preservation of cash.~~

•~~Further, out of an abundance of caution in order to support~~ its ongoing liquidity ~~the Company entered~~which included, among other actions, entering into ~~and announced~~a $310 million revolving credit facility on April 9, 2020, a ~~$310.0~~40 million euro revolving credit ~~facility,~~ on May 5, 2020, ~~entered into~~ a ~~40.0~~30 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.~~facility on June 11, 2020. These ~~liquidity measures~~additional short-term facilities were entered into in an abundance of caution and are ~~in addition~~all set to expire during the ~~Company’s $700.0 million revolving credit facility disclosed in its Form 10-K for December~~second quarter. At March 31, ~~2019 filed on March 2, 2020.~~2021, there were no outstanding borrowings under these facilities.

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•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~~During the first quarter the Company ~~continues~~has continued 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~~Company’s principal manufacturing facilities and other operations have remained operational at a ~~reduced capacity with~~more normalized level than during 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.preceding year. The Company continues to monitor the COVID-19 pandemic. As governmental authorities adjust restrictions globally, the Company ~~will~~plans to 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 of 3% to 4% and adjusted operating income margins of 22% by the end of 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 is intended to further ~~optimizes~~optimize the Company’s product portfolio and reduces operating expenses. The product portfolio optimization ~~will result~~has resulted in the divestiture or closure of certain underperforming businesses. The operating expense reductions will come as a 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~~is expected to 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~~$314 million under this program, of which, approximately ~~$75~~$122 million were non-cash charges. These amounts include the charges for the portfolio shaping initiatives announced on August 6, 2020 which are further discussed below.

As part of this expanded plan, the Company announced on August 6, 2020 that it will ~~close~~exit its traditional orthodontics business as well as ~~close~~both exit 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~~is exiting several of its facilities and ~~reduce~~reducing its workforce by approximately 4% to 5%.The Company expects to record restructuring charges in a range of ~~$80~~$60 million to ~~$90~~$70 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~~has recorded expenses of approximately $57 million related to these actions, of which approximately $46 million were non-cash charges. For the three months ended March 31, 2021, the Company made a ~~significant impact~~$2 million adjustment related to ~~net sales in~~inventory reserves. The Company expects most of the ~~third and fourth~~remaining restructuring charges will be recorded during the second quarter of ~~2020. Both businesses have been experiencing negative sales growth and are dilutive to the Company’s operating income rate.~~2021.

The Company’s traditional orthodontics business, which includes brackets, bands, tubes and wires, had net sales of $132 million in 2019. The portion of the laboratory business the Company is closing manufactures removable dentures and related products and had net sales of $44 million in 2019. The net income of these businesses is not material to the Company’s consolidated results.

~~Business Drivers~~

The primary drivers of sales growth include macroeconomic factors, global dental market demand, innovation and new product launches by the 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 and have impacted the 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 over 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 products, they involve new technologies and there can be no assurance that marketable products will be developed.

Subject to the pace of the post-pandemic recovery, the Company intends to continue 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 January or 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 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~~

Due to the Company’s significant international presence, movements in foreign currency exchange may impact the Consolidated Statements of Operations. With approximately two-thirds of the Company’s net sales located 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.

RESULTS OF OPERATIONS, THREE MONTHS ENDED ~~JUNE 30, 2020~~MARCH 31, 2021 COMPARED TO THREE MONTHS ENDED ~~JUNE 30, 2019~~MARCH 31, 2020

Net Sales

The Company presents ~~reported~~ net sales comparing the current year periods to the prior year periods. In addition, the Company also compares ~~reported~~ net sales on an organic sales basis, which is a Non-GAAP measure.

The Company defines "organic sales" as the increase or decrease in net sales excluding: (1) net sales from acquired and divested businesses recorded prior to 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 foreign currency translation, which is calculated by comparing current-period sales to prior-period sales, with both periods converted to the U.S. dollar rate at local currency foreign exchange rates for each month of the prior period.

The "organic sales" measure is not calculated in accordance with ~~accounting principles generally accepted in the United States ("~~US ~~GAAP");~~GAAP; therefore, this item represents a Non-GAAP measure. This Non-GAAP measure may differ from those used by 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. Organic sales is an important internal measure for the Company. The Company's senior management receives a monthly analysis of operating results that includes organic sales. The performance of the Company is measured on this metric along with other performance metrics.

The Company discloses 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. The Company believes that this information is helpful in understanding underlying net sales trends.

Three Months Ended June 30,
(in millions, except percentages) 2020 2019 $ Change % Change
Net sales $ 490.6 $ 1,009.4 $ (518.8) (51.4 %)

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 procedures as a result of the COVID-19 pandemic. Net sales were negatively impacted by approximately 1.0% due to the strengthening of the U.S. dollar as compared to the same prior year period. ~~This decrease included the negative impact of 0.4% from divestitures of non-strategic businesses~~ ~~and a 0.1% reduction due to discontinued products.~~

~~For the three months ended~~ ~~June 30, 2020, net sales decreased~~ ~~49.9%~~ ~~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.~~

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, at 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~~


	Three Months Ended March 31,
(in millions, except percentages)	2021		2020		$ Change		% Change

Net sales	$	1,027	$	874	$	153	17.5	%

Net sales for the three months ended ~~June 30, 2020~~March 31, 2021 were ~~$130.9~~$1,027 million, ~~a decrease~~an increase of ~~$198.6~~$153 million or ~~60.3%~~17.5% from the three months ended ~~June 30, 2019. Both the Consumables segment and the Technologies & Equipment segment saw a decline~~March 31, 2020. The increase 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 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 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 Consumables segments which were impacted by overall higher volumes during the ~~Consumables segment which was~~first quarter partly due to a recovery in demand from the ~~result~~impact 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 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 the 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.

~~Restructuring and Other Costs~~

~~The Company recorded restructuring and other costs of $1.3 million for the three months ended June 30, 2020 compared to $42.4 million for the three months ended June 30, 2019.~~

~~The Company recorded $2.2 million of restructuring costs for the three months ended June 30, 2020 compared to $10.7 million for the 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.

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 it's 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. Both businesses have been experiencing negative sales growth and are dilutive to the Company’s operating income rate.

~~Other Income and Expense~~

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.

~~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~~

~~(Benefit) provision for income taxes~~

~~For the three months ended June 30, 2020, income taxes were a benefit of $24.0 million as compared to a net provision of $11.2 million during the three months ended June 30, 2019.~~

During the three months ended June 30, 2020, the Company recorded $0.9 million of tax expense for other discrete tax matters. Excluding these discrete tax items, the Company’s effective tax rate was 20.8%.

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%.

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~~

~~Net Sales~~

Three Months Ended June 30,
(in millions, except percentages) 2020 2019 $ Change % Change
Technologies & Equipment $ 303.9 $ 558.4 $ (254.5) (45.6 %)
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 %)

~~Technologies & Equipment~~

Net sales for the three months ended June 30, 2020 were $303.9 million, a decrease of $254.5 million or 45.6% from the three months ended June 30, 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 were negatively impacted by approximately 1.0% due to the strengthening of the U.S. dollar over the prior year period. The increase included a 0.9% negative impact from divestitures of non-strategic businesses and a 0.1% reduction due to discontinued products.

For the three months ended June 30, 2020, net sales decreased 43.6% on an organic sales basis. Organic sales decline was across all regions which was due to reduced demand for dental related procedures as a result of the COVID-19 pandemic.

~~Key drivers of the decrease in organic sales for the three months ended June 30, 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 prior year period~~. The decrease in operating income was 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.

~~Consumables~~

Net sales for the three months ended June 30, 2020 were $186.7 million, a decrease of $264.3 million or 58.6% from the three months ended June 30, 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 were negatively impacted by approximately 0.9% due to the strengthening of the U.S. dollar as compared to the same prior year period.

For the three months ended June 30, 2020, net sales decreased 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 result of the COVID-19 pandemic.

~~Key drivers of the decline in organic sales for the three months ended June 30, 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 prior year period. The decrease in operating income was 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.

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

~~Net Sales~~

Six Months Ended June 30,
(in millions, except percentages) 2020 2019 $ Change % Change
Net sales $ 1,364.9 $ 1,955.6 $ (590.7) (30.2 %)

Net sales for the six months ended June 30, 2020 were $1,364.9 million, a decrease of $590.7 million or 30.2% from the six months ended June 30, 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 were negatively impacted by approximately 1.4% due to the 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 0.1% reduction due to discontinued products.~~

~~For the~~ ~~six~~ ~~months ended~~ ~~June 30, 2020, net sales decreased 27.8% on an~~ ~~organic sales basis.~~ ~~The decrease in organic sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was the result of the COVID-19 pandemic.~~

~~During the six months ended June 30,~~March 31, 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~~due 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~~the onset of the pandemic. As a result, organic sales increased 12.1% in the ~~United States as well. The Company then began~~first three months of 2021 relative 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.~~comparative quarter.

~~The ultimate impact that COVID-19 will have on 2020 results is still unknown at this time and will depend heavily on~~Net sales were also positively impacted by approximately 5.3% due to the ~~substance and pace~~weakening of the ~~post-pandemic recovery. However,~~U.S. dollar as compared to the same prior year period as well as a~~t this time the Company expects that the COVID-19 pandemic will continue~~ benefit of 5.1% from acquisitions offset by a reduction of 5.0% due to ~~have a negative material impact to 2020 net sales.~~divestitures of non-strategic businesses and discontinued products.

Net Sales by Region

Net sales by geographic region were as follows:


		Six Months Ended June 30,															Three Months Ended March 31,
(in millions, except percentages)	(in millions, except percentages)	2020		2019		$ Change		% Change		(in millions, except percentages)	2021		2020		$ Change		% Change

United States	United States	$	431.4	$	642.9	$	(211.5)	(32.9	%)	United States	$	347	$	300	$	47	15.7	%

Europe	Europe	588.4		817.8		(229.4)		(28.1	%)	Europe	418		373		45		12.1	%

Rest of World	Rest of World	345.1		494.9		(149.8)		(30.3	%)	Rest of World	262		201		61		30.3	%

United States

~~Net~~The increase in net sales ~~for~~was attributable to both the ~~six months ended June 30, 2020 were $431.4 million, a decrease~~Technologies & Equipment and the Consumables segments and was primarily due to overall higher volumes during the quarter following periods of ~~$211.5 million or 32.9%~~lower demand resulting from the ~~six months ended June 30, 2019.~~COVID-19 pandemic. As a result, organic sales increased by 4.8% as compared to the same prior year period. The ~~decrease~~increase in net sales also included a benefit of 14.8% from acquisitions offset by a reduction of 5.3% due to divestitures of non-strategic businesses and discontinued products.

Europe

The increase in net sales was attributable to both the Consumables ~~segment~~ and the Technologies & Equipment ~~segment which~~segments and was ~~a result~~primarily due to overall higher volumes during the quarter following periods of lower demand resulting from the COVID-19 pandemic. ~~The decrease also included~~As a ~~1.2% reduction from divestitures of non-strategic businesses in~~result, organic sales increased by 8.1% as compared to the same prior year period.

For the six months ended June 30, 2020, net sales decreased by 31.3% on an organic sales basis. The decline in organic sales was attributable to both the Consumables segment and the Technologies & Equipment segment which was a result of the COVID-19 pandemic.

~~Europe~~

Net sales for the ~~six months~~quarter 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 decrease in net sales~~March 31, 2021 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~~also positively impacted by ~~approximately 1.8%~~8.6% due to the ~~strengthening~~weakening of the U.S. dollar as compared to the same prior year ~~period. The decrease included reductions~~period, offset by a reduction of ~~0.9% from~~4.6% due to divestitures of non-strategic 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 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.

Rest of World

~~Net sales for the six months ended June 30, 2020 were $345.1 million, a decrease of $149.8 million or 30.3% from the six months ended June 30, 2019.~~ The ~~decrease~~increase in net sales was attributable to both the Consumables and the Technologies & Equipment ~~segment~~segments and was primarily due to the ~~Consumables segment which was~~negative impact in the ~~result~~comparative quarter of 2020 from the COVID-19 pandemic. ~~The six~~During the three months ended ~~June 30,~~March 31, 2020, ~~was negatively impacted by approximately 2.2%~~the Company started to experience a decline in sales volume during March due to the ~~strengthening~~COVID-19 pandemic, particularly in China and other Asian markets. As a result, organic sales increased by 30.8% as compared to the same prior year period. Net sales for the quarter ended March 31, 2021 was also positively impacted by 5.0% due to the weakening of the U.S. dollar as compared to the same prior year ~~period. The decrease included reductions~~period, as well as a benefit of ~~0.3%~~0.1% from acquisitions offset by a reduction of 5.6% due to divestitures of non-strategic businesses and ~~0.2% due to~~ discontinued products.

For the six month period ended June 30, 2020, net sales decreased by 27.6% on an organic sales basis. The decline in organic sales was driven by both the Technologies & Equipment segment and the Consumables segment which was the result of the COVID-19 pandemic.

Gross Profit


		Six Months Ended June 30,																			Three Months Ended March 31,
(in millions, except percentages)	(in millions, except percentages)	2020			2019			$ Change		% Change		(in millions, except percentages)	2021			2020			$ Change		% Change

Gross profit	Gross profit	$	643.9		$	1,040.5		$	(396.6)	(38.1	%)	Gross profit	$	579		$	468		$	111	23.7	%

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	56.4		%	53.5		%

Gross profit as a percentage of net sales ~~decreased~~increased by ~~603~~290 basis points for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 as compared to the ~~six~~three months ended ~~June 30, 2019.~~

March 31, 2020,

~~For the six months ended June 30, 2020, the decrease in the gross profit rate was~~ primarily driven by favorable mix and the ~~decline~~increase in net sales ~~and the resulting unfavorable manufacturing variances due to the COVID-19 pandemic, as compared to the six months ended June 30, 2019.~~

for higher margin products.

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,																			Three Months Ended March 31,
(in millions, except percentages)	(in millions, except percentages)	2020			2019			$ Change		% Change		(in millions, except percentages)	2021			2020			$ Change		% Change

Selling, general, and administrative expenses (“SG&A”)		$	672.6		$	862.8		$	(190.2)	(22.0	%)
Selling, general and administrative expenses ("SG&A")												Selling, general and administrative expenses ("SG&A")	$	385		$	359		$	26	7.2	%
Research and development expenses ("R&D")												Research and development expenses ("R&D")	37			34			3		8.8	%
Goodwill impairment	Goodwill impairment	156.6			—			156.6		NM		Goodwill impairment	—			157			(157)		NM
Restructuring and other costs	Restructuring and other costs	43.8			62.9			(19.1)		(30.4	%)	Restructuring and other costs	3			43			(40)		NM

SG&A as a percentage of net sales	SG&A as a percentage of net sales	49.3		%	44.1		%					SG&A as a percentage of net sales	37.5		%	41.1		%

NM - Not meaningful

SG&A Expenses

SG&A expenses ~~including research and development expenses,~~ as a percentage of net sales decreased 360 basis points for the ~~six~~three months ended ~~June 30, 2020 increased 516 basis points~~March 31, 2021 as compared to the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020, primarily driven by greater absorption of expenses due to higher sales as well as continued expense discipline.

~~For the six months ended June 30, 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.~~R&D Expenses

~~For~~The increase in R&D expenses from the ~~remainder~~comparable quarter of ~~2020, the Company believes SG&A expenses will be lower than 2019,~~prior year was primarily due to ~~the cost reduction measures including COVID-19 related actions. The cost reduction measures include, but are not limited~~an increase in spending on product development initiatives particularly in our Technology & Equipment businesses and in research investments specific to ~~the reduction~~our recent acquisitions of ~~the following expense categories: marketing~~Byte 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.~~Datum Dental.

Goodwill ~~impairment~~Impairment

~~For~~There were no impairments recorded in the ~~six~~three months ended ~~June 30,~~March 31, 2021. During the three months ended March 31, 2020, as a result of updating the estimates and assumptions pertaining to the impact of the ongoing COVID-19 pandemic the Company ~~recorded a~~determined that the goodwill ~~impairment charge of $156.6 million. The impairment charge is related to~~associated with the Equipment & Instruments reporting unit within the Technologies & Equipment segment was impaired. As a result, the Company 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~~a goodwill impairment charge of ~~this Form 10-Q.~~$157 million.

Restructuring and Other Cost

~~The~~In connection with the various restructuring initiatives, as described earlier, the Company recorded restructuring ~~and other~~ costs of ~~$43.8~~$3 million for ~~the six months ended June 30, 2020 compared to $62.9 million for the six months ended June 30, 2019.~~

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

During the six months ended June 30, 2020, the Company recorded $39.3 million of other costs, which consist primarily of impairment charges of $38.7 million related to indefinite-lived intangible assets 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.~~ 2021.

During the ~~six~~three months ended ~~June 30, 2019,~~March 31, 2020, the Company recorded ~~$38.0~~$2 million of restructuring costs and $41 million of other costs, which consisted primarily of ~~fixed asset impairments of $32.8 million and an~~ impairment charges of ~~$5.3~~$39 million related to indefinite-lived intangible ~~assets.~~

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 ofassets within the Technologies & Equipment segment ~~and the laboratory business is part~~driven by a decline in forecasted sales as a result 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 salesCOVID-19 pandemic as well as an unfavorable change in the ~~third and fourth quarter of 2020. Both businesses have been experiencing negative sales growth and are dilutive to the Company’s operating income~~discount rate.

Other Income and Expense


		Six Months Ended June 30,											Three Months Ended March 31,
(in millions)	(in millions)	2020		2019		Change		(in millions)	2021		2020		Change

Net interest expense	Net interest expense	$	17.6	$	15.1	$	2.5	Net interest expense	$	14	$	7	$	7
Other expense (income), net	Other expense (income), net	2.9		(1.7)		4.6		Other expense (income), net	(9)		(2)		(7)
Net interest and other expense	Net interest and other expense	$	20.5	$	13.4	$	7.1	Net interest and other expense	$	5	$	5	$	—

~~Net Interest Expense~~

~~Net~~The increase in net interest expense ~~for the six months ended June 30, 2020 increased $2.5 million as compared~~was due to ~~the six months ended June 30, 2019. Higher~~higher average debt levels ~~in 2020 was~~during the ~~primary driver when~~three months ended March 31, 2021 compared to the prior year ~~period resulting in higher net interest expense.~~period.

~~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~~other expense (income), net for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~expense of $2.9 million. Other expense (income), net for the six months ended June 30, 2019 was income of $1.7~~primarily due to a $13 million ~~and consisted primarily of a~~ gain on ~~the~~a sale of a ~~non-strategic business.~~

~~On April 7, 2020,~~business during 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 March 31, 2021.

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

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.~~


	Three Months Ended March 31,
(in millions, except per share data and percentages)	2021			2020			$ Change

Provision for income taxes	$	32		$	10		$	22

Effective income tax rate	21.5		%	(7.7)		%





Net income (loss) attributable to Dentsply Sirona	$	117		$	(140)		$	257

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

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, the provision for income taxes ~~were a benefit of $13.8~~was $32 million as compared to a ~~net~~ provision of ~~$25.8~~$10 million during the ~~six~~three months ended ~~June 30, 2019.~~March 31, 2020.

During the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, the Company recorded ~~$6.9~~$1 million of tax ~~expense~~benefit for other discrete tax matters. The Company also recorded a ~~$10.6~~$4 million tax expense as a discrete item related to business divestitures.

During the three months ended March 31, 2020, the Company recorded $6 million tax expense for other discrete matters. The Company also recorded a $11 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%.

During the six months ended June 30, 2019, the Company recorded the following discrete tax items, $1.5 million of tax benefit related to 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 ~~is restructuring~~continues to reassess the realizability of its ~~business through streamlining of the organization~~deferred tax assets and, ~~consolidating functions. Realization of the benefits of these plans could give rise~~after weighing all positive and negative evidence, continues to ~~the release of~~maintain a valuation allowance ~~that has been established~~ on ~~the Company’s~~certain deferred tax ~~assets in a future period.~~assets.

~~Operating~~

Segment Results

Net Sales


		Six Months Ended June 30,														Three Months Ended March 31,
(in millions, except percentages)	(in millions, except percentages)	2020		2019		$ Change		% Change	(in millions, except percentages)	2021		2020		$ Change		% Change

Technologies & Equipment	Technologies & Equipment	$	824.2	$	1,079.2	$	(255.0)	(23.6%)	Technologies & Equipment	$	597	$	520	$	77	14.8%

Consumables	Consumables	540.7		876.4		(335.7)		(38.3%)	Consumables	430		354		76		21.5%

Segment Adjusted Operating Income


		Six Months Ended June 30,														Three Months Ended March 31,
(in millions, except percentages)	(in millions, except percentages)	2020		2019		$ Change		% Change	(in millions, except percentages)	2021		2020		$ Change		% Change

Technologies & Equipment	Technologies & Equipment	$	107.3	$	167.8	$	(60.5)	(36.1%)	Technologies & Equipment	$	126	$	111	$	15	13.5%

Consumables	Consumables	44.0		227.5		(183.5)		(80.7%)	Consumables	150		62		88		141.9%

Technologies & Equipment

~~Net sales for the six months ended June 30, 2020 were $824.2 million, a decrease of $255.0 million or 23.6% from the six months ended June 30, 2019.~~ The ~~decrease~~increase in net sales ~~was~~occurred across all dental businesses and was the result of overall higher volumes during the first quarter partly due to demand recovery from the impact of the COVID-19 pandemic, partially offset by decreased sales in the Healthcare business. As a result, organic sales increased 5.8% as compared to the same ~~six month period in the~~ prior year ~~was~~period, driven primarily by the ~~result of the COVID-19 pandemic.~~Equipment & Instruments and Implants businesses. Net sales were ~~negatively~~also positively impacted by approximately ~~1.6%~~5.7% due to the ~~strengthening~~weakening of the U.S. dollar over the prior year ~~period. The increase included~~period, as well as a ~~1.6% negative impact~~benefit of 8.6% from acquisitions offset by a reduction of 5.3% due to divestitures of non-strategic businesses and ~~a 0.1% reduction due to~~ discontinued products.

~~For~~The adjusted operating income increase was primarily driven by the ~~six months ended June 30, 2020,~~increase in net sales ~~decreased 20.3% on an organic~~as well as continued expense discipline.

Consumables

The increase in net sales ~~basis. Organic sales decline was~~occurred across all regions ~~which~~and was primarily due to overall higher volumes during the ~~result of~~first quarter partly due to demand recovery from the impact in 2020 from the COVID-19 pandemic.

~~Key drivers of the decrease in~~ As a result, organic sales ~~for the six months ended June 30, 2020, were Equipment & Instruments, Digital Dentistry, and Implants businesses.~~

~~Operating income decreased $60.5 or 36.1% for the six months ended June 30, 2020~~increased 21.2% as compared to the same prior year period,. ~~The decrease in operating income was~~ primarily driven by ~~lower~~the Endodontic, Restorative, and Preventive businesses. Net sales ~~volume and unfavorable manufacturing variances~~were also positively impacted by approximately 4.6% due to the ~~impact of COVID-19, partially offset by cost reduction measures in both gross profit and SG&A.~~

~~Consumables~~

Net sales for the six months ended June 30, 2020 were $540.7 million, a decrease of $335.7 million or 38.3% from the six months ended June 30, 2019. The decrease in net sales was across all businesses which was the result of the COVID-19 pandemic. Net sales were negatively impacted by approximately 1.2% due to the strengtheningweakening of the U.S. dollar as compared to the same prior year ~~period.~~period, offset by a reduction of 4.3% due to divestitures of non-strategic businesses and discontinued products.

~~For the six months ended June 30, 2020, net sales decreased 37.1% on an organic sales basis.~~ The ~~decline in organic sales was due to lower demand in all regions which was a result of the COVID-19 pandemic.~~

~~Key drivers of the decline in organic sales for the six months ended June 30, 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 prior year period. The decrease in~~adjusted operating income increase was primarily driven by ~~lower sales volume~~favorable mix including increased volumes for higher margin products, and ~~unfavorable manufacturing variances due to the impact of COVID-19, partially offset by cost reduction measures in both gross profit and SG&A.~~continued expense discipline.

CRITICAL ACCOUNTING POLICIES

~~Except as noted below, there~~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, ~~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 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 2020 analysis ranged from 9.0% to 11.5%. 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 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, 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 and result in a future impairment of the carrying value of goodwill. There can be no assurance that the Company’s future goodwill impairment testing will not result in a charge 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 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 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.

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, any 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. 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.

LIQUIDITY AND CAPITAL RESOURCES

~~Six months endedJune 30, 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, primarily as a result of reduced demand for dental related procedures due to the COVID-19 pandemic. Cash provided by operating activities during the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$164.4~~$49 million, ~~a decrease~~an increase of ~~$10.0~~$59 million as compared to ~~$174.4~~a use of $10 million during the ~~six~~three months ended ~~June 30, 2019 which~~March 31, 2020. This increase was driven primarily by ~~a reduction in working capital~~the higher cash flow impact of net income in the current ~~period, primarily related to a decrease in accounts receivables and to a lesser extent, a reduction in inventory. The Company’s~~period. Additionally, cash ~~and cash equivalents increased by $704.2 million to $1,109.1 million~~collections during the ~~six months ended June 30, 2020.~~comparative three-month period of 2020 were adversely impacted by the onset of the COVID-19 pandemic late in the quarter.

For the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, on a constant currency basis, the number of days of sales outstanding in accounts receivable increased by ~~26 days~~2 day to 8856 days as compared to 6254 days at December 31, 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.2020. On a constant currency basis, the number of days of sales in inventory increased by 1611 days to ~~132~~113 days at ~~June 30, 2020~~March 31, 2021 as compared to ~~116~~102 days at December 31, ~~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.~~2020. 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 ~~provided from~~used in investing activities during the first ~~six~~three months of ~~2020~~2021 included net cash paid for acquisitions of $92 million and capital expenditures of ~~$38.8~~$30 million, ~~and~~offset by the receipt of $19 million in net cash ~~proceeds~~ from ~~net investment hedges~~the sale of ~~$57.5 million.~~a non-core business. The Company expects critical capital expenditures to be in the range of approximately ~~$75~~$150 million to ~~$100~~$170 million for the full year ~~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.2021.

Cash ~~generated by~~used in financing activities for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 was primarily related to net ~~proceeds on long-term borrowings~~share repurchases of ~~$741.2~~$90 million ~~less payment on a T-Lock of $30.5 million,~~and dividend payments of ~~$44.0~~$22 million. Financing inflows consisted of proceeds from the exercise of stock options of $33 million and ~~share repurchases~~additional short-term borrowings of ~~$140.0 million.~~$30 million, primarily through the Company's commercial paper program.

OnThe Company’s overall cash and cash equivalents decreased by $120 million to $318 million during the three months ended March ~~9, 2020,~~31, 2021.

During the three months ended March 31, 2021, 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~~repurchased approximately 1.5 million shares ~~at the then current price~~under its open market share repurchase plan for a cost of ~~$42.12. The Company received an additional 1.0~~$90 million ~~shares after the trading window closed on May 8, 2020. The final amount repurchased is 3.7 million shares~~ at a ~~volume-weighted~~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.$60.62. Including prior year repurchases, the total amount repurchased under this authorization is ~~$650.2~~$740 million leaving ~~$349.8~~$260 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.

The Company's total borrowings ~~increased~~decreased by a net ~~$747.6~~$26 million during the ~~six~~three months ended ~~June 30, 2020, which includes an increase of $7.9~~March 31, 2021, driven by $60 million due to exchange rate fluctuations on debt denominated in foreign currencies. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company's ratio of total net debt to total capitalization was ~~18.8%~~28.2% and ~~16.8%~~27.0%, 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.

55In response to the COVID-19 pandemic, the Company previously took actions during the course of 2020 to strengthen its liquidity and financial flexibility. See the Company's most recently filed Form 10-K for more information.

At ~~June 30, 2020,~~March 31, 2021, the Company had ~~borrowings~~a borrowing capacity of $1,139 million available under lines of credit, including lines available under its short-term arrangements and revolving credit ~~facility of $1,156.1 million.~~facility. Through the date of 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 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. Under its multi-currency revolving credit agreement, the Company is able to borrow up to $700.0 million through July 28, 2024.

•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 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 also has access to $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, 2020, the Company had $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~~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,~~March 31, 2021, the Company was in compliance with these covenants and expects to remain in compliance with all covenants over the next twelve months.

At ~~June 30, 2020,~~March 31, 2021, the Company held ~~$51.4~~$54 million of precious metals on consignment from several financial institutions. The consignment agreements allow the Company to acquire the precious 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.

The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operating activities and future foreign investments. The Company has the ability to repatriate additional funds to the U.S., which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes, and the impact of foreign currency movements. At ~~June 30, 2020,~~March 31, 2021, 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;~~operations, however, these particular repatriation 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, ~~2019.~~2020.

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 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, ~~2019.~~2020.

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 control over financial reporting that occurred during the three months ended ~~June 30, 2020,~~March 31, 2021, that have materially affected, or are likely to materially affect, its internal control over financial reporting.

5835

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

Reference to Part I, Item 1, Note 1314 Commitments and Contingencies, in the Notes to Unaudited Interim Consolidated Financial Statements of this Form 10-Q.

Item 1A – Risk Factors

~~Except as noted below, there~~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, ~~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, 2020,~~March 31, 2021, the Company had ~~$349.8~~$260 million available under the stock repurchase program. During the three months ended ~~June 30, 2020,~~March 31, 2021, the Company had the following activity with respect to this repurchase program:

(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


(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

January 1, 2021 to January 31, 2021	—	$	—	$	—	$	350
February 1, 2021 to February 28, 2021	—	—		—		350
March 1, 2021 to March 31, 2021	1.5	60.62		90		260
	1.5	$	—	$	90

~~(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.

6136

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~~

~~Employment Agreement, dated May 27, 2017, between DENTSPLY SIRONA Inc. and William E. Newell.~~

~~10.2~~

~~First Amendment to Employment Agreement, dated August 6, 2018, between DENTSPLY SIRONA Inc. and William E. Newell.~~

~~10.3~~

~~Separation Agreement with General Release, dated July 20, 2020, by and between William E. Newell and DENTSPLY SIRONA Inc.~~

~~10.4~~

364-Day Credit Agreement, dated as of April 9, 2020, among DENTSPLY SIRONA Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, and 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

104

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.~~

6237

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~~May 6, ~~2020~~2021
	Donald M. Casey, Jr.	Date
	Chief Executive Officer


/s/	Jorge M. Gomez	~~August~~May 6, ~~2020~~2021
	Jorge M. Gomez	Date
	Executive Vice President and
	Chief Financial Officer



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	7

	Notes to Unaudited Interim Consolidated Financial Statements	8

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3628

Item 3	Quantitative and Qualitative Disclosures About Market Risk	5835

Item 4	Controls and Procedures	5835

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	5936

Item 1A	Risk Factors	5936

Item 2	Unregistered Sales of Securities and Use of Proceeds	6136

Item 6	Exhibits	6237

Signatures		6338


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

Balance at December 31, 2019	$	7.2	$	19.8	$	—	$	27.0
Provisions	1.0		0.9		4.1		6.0
Amounts applied	(2.2)		(5.6)		(0.3)		(8.1)
Change in estimates	(0.4)		(1.5)		—		(1.9)
Balance at June 30, 2020	$	5.6	$	13.6	$	3.8	$	23.0


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

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

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


	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


	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


(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