What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-06 · 230 added, 173 removed, 559 unchanged (42% of the section changed)

4 unchanged sentences

(in millions, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net sales $ 1,067 $ 491 $ 2,094 $ 1,365

10 unchanged sentences

Income (loss) before income taxes 134 ( 120 ) 283 ( 250 )

Provision for income taxes 32 10

Provision (benefit) for income taxes 35 ( 24 ) 67 ( 14 )

Net income (loss) 99 ( 96 ) 216 ( 236 )

12 unchanged sentences

(in millions)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income (loss) $ 99 $ ( 96 ) $ 216 $ ( 236 )

Other comprehensive loss, net of tax:

Foreign currency translation loss ( 99 ) ( 119 )

Net gain on derivative financial instruments 5 5

Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) 37 75 ( 62 ) ( 44 )

Net gain (loss) on derivative financial instruments 4 ( 8 ) 9 ( 3 )

Pension liability gain 2 1 6 3

Total other comprehensive loss, net of tax ( 90 ) ( 112 )

Total other comprehensive income (loss), net of tax 43 68 ( 47 ) ( 44 )

Total comprehensive income (loss) 142 ( 28 ) 169 ( 280 )

6 unchanged sentences

(in millions, except per share amounts)

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Current Assets:

26 unchanged sentences

Common stock, $ 0.01 par value;

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

400.0 million shares authorized, and 264.5 million shares issued at June 30, 2021 and December 31, 2020

218.5 million and 218.7 million shares outstanding at June 30, 2021 and December 31, 2020

Capital in excess of par value 6,638 6,604

1 unchanged sentence

Accumulated other comprehensive loss ( 511 ) ( 464 )

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, 46.0 million and 45.8 million shares at June 30, 2021 and December 31, 2020, respectively

( 2,458 ) ( 2,409 )

27 unchanged sentences

Balance at March 31, 2021 $ 3 $ 6,618 $ 1,328 $ ( 554 ) $ ( 2,468 ) $ 4,927 $ 3 $ 4,930

Net income — — 99 — — 99 — 99

Other comprehensive income — — — 43 — 43 — 43

Exercise of stock options — 3 — — 9 12 — 12

Stock based compensation expense — 19 — — — 19 — 19

Restricted stock unit distributions — ( 2 ) — — 1 ( 1 ) — ( 1 )

Cash dividends ($ 0.1100 per share)

— — ( 25 ) — — ( 25 ) — ( 25 )

Balance at June 30, 2021 $ 3 $ 6,638 $ 1,402 $ ( 511 ) $ ( 2,458 ) $ 5,074 $ 3 $ 5,077

Stock Capital in

17 unchanged sentences

Balance at March 31, 2020 $ 3 $ 6,554 $ 1,242 $ ( 712 ) $ ( 2,399 ) $ 4,688 $ 2 $ 4,690

Net loss — — ( 95 ) — — ( 95 ) ( 1 ) ( 96 )

Other comprehensive income — — — 68 — 68 — 68

Exercise of stock options — — — — 1 1 — 1

Stock based compensation expense — 10 — — — 10 — 10

Treasury shares purchased — 28 — — ( 28 ) — — —

Restricted stock unit distributions — ( 16 ) — — 10 ( 6 ) — ( 6 )

Cash dividends ($ 0.1000 per share)

— — ( 22 ) — — ( 22 ) — ( 22 )

Balance at June 30, 2020 $ 3 $ 6,576 $ 1,125 $ ( 644 ) $ ( 2,416 ) $ 4,644 $ 1 $ 4,645

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

3 unchanged sentences

(in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

3 unchanged sentences

Amortization of intangible assets 112 94

Amortization of deferred financing costs 2 1

Goodwill impairment — 157

3 unchanged sentences

Other non-cash expense 20 4

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

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

Changes in operating assets and liabilities, net of acquisitions:

7 unchanged sentences

Other noncurrent liabilities 8 ( 9 )

Net cash provided by (used in) operating activities 49 ( 10 )

Net cash provided by operating activities 263 164

Cash flows from investing activities:

4 unchanged sentences

Proceeds from sale of property, plant, and equipment 1 1

Net cash used in investing activities ( 103 ) ( 16 )

Net cash (used in) provided by investing activities ( 279 ) 20

Cash flows from financing activities:

Proceeds on short-term borrowings 30 31

Proceeds (repayments) on short-term borrowings, net 6 ( 1 )

Cash paid for treasury stock ( 90 ) ( 140 )

3 unchanged sentences

Proceeds from exercised stock options 45 6

Cash paid on derivative contracts — ( 31 )

Other financing activities, net ( 8 ) ( 3 )

Net cash used in financing activities ( 53 ) ( 130 )

Net cash (used in) provided by financing activities ( 78 ) 528

Effect of exchange rate changes on cash and cash equivalents ( 12 ) ( 8 )

Net decrease in cash and cash equivalents ( 120 ) ( 169 )

Net (decrease) increase in cash and cash equivalents ( 106 ) 704

Cash and cash equivalents at beginning of period 438 405

13 unchanged sentences

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, 2020, except as may be indicated below.

Certain prior period amounts within the Consolidated Statements of Operations have been reclassified in order to conform with the current year presentation of separately reported Research and development expenses.

Use of Estimates

2 unchanged sentences

Revenue Recognition

At March 31, 2021, the Company had $ 44 million of deferred revenue recorded predominantly in Accrued liabilities in the Consolidated Balance Sheets, with an immaterial portion recorded in Other noncurrent liabilities.

At June 30, 2021, the Company had $ 47 million of deferred revenue recorded predominantly in Accrued liabilities in the Consolidated Balance Sheets, with an immaterial portion recorded in Other noncurrent liabilities.

The Company expects to recognize significantly all of this deferred revenue within the next 12 months.

1 unchanged sentence

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 $ 18 million at March 31, 2021 and $ 18 million at December 31, 2020.

Accounts and notes receivables – trade, net are stated net of allowances for doubtful accounts and trade discounts , which were $ 14 million at June 30, 2021 and $ 18 million at December 31, 2020.

As of June 30, 2021, all of the Company's inventories were determined by the first-in, first-out (“FIFO”) or average cost methods.

As of the end of the first quarter of 2021, the Company had $ 1 million of inventories accounted for under the Last in first out (“LIFO”) method of inventory costing.

Effective as of the beginning of the second quarter, the method of accounting for these inventories was changed from LIFO to FIFO.

This change in accounting is preferable as the value of inventory for which cost was previously determined using a LIFO cost flow assumption has declined from prior years due to changes in the business, and it also allows for a more consistent methodology being utilized across the Company, and provides improved comparability with industry peers.

The change in accounting principle was recognized during the second quarter of 2021 by adjusting these inventories to cost as determined using the FIFO method, resulting in an increase in inventories of $ 4 million and a corresponding reduction to Cost of products sold in the Company's Consolidated Statements of Operations.

The impact of this change is not material to the Company’s financial position as of December 31, 2020, the Company’s results of operations for any previously reported prior periods nor is the cumulative effect of the change material to the results of operations for the second quarter of 2021.

Therefore, prior period amounts have not been retrospectively adjusted.

Goodwill & Intangible Assets

Effective 2021 and prospectively, the Company will perform its required annual goodwill impairment test as of April 1 rather than on April 30 which was the Company’s previous practice.

The Company believes this change is preferable as it more closely aligns with the timing of the Company’s strategic business planning process.

The Company does not believe this change resulted in any delay, acceleration or avoidance of impairment.

Furthermore, a retrospective application to prior periods is impracticable as the Company is unable to objectively determine, without the use of hindsight, the assumptions which would be used in earlier periods.

Additional information related to the annual impairment test is provided in Note 13, Goodwill and Intangible Assets.

Accounting Pronouncements Not Yet Adopted

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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 months ended March 31, 2021 and 2020 were as follows:

Three Months Ended

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, 2021 and 2020 were as follows:

Three Months Ended Six Months Ended

(in millions) 2021 2020 2021 2020

3 unchanged sentences

Related deferred income tax benefit $ 2 $ 1 $ 4 $ 2

For the three months ended March 31, 2021 and 2020, stock compensation expense was $ 13 million and $ 9 million respectively, and was recorded in Selling, general, and administrative expense in the Consolidated Statements of Operations.

The amount of stock compensation expense recorded in Cost of products sold, Selling, general, and administrative expense, and Research and development expense in the Company's Consolidated Statement of Operations for the three and six months ended June 30, 2021 and 2020, were as follows:

Three Months Ended Six Months Ended

(in millions) 2021 2020 2021 2020

Cost of products sold

$ 2 $ 1 $ 2 $ 1

Selling, general, and administrative expense 16 9 29 18

Research and development expense 1 — 1 —

Total stock based compensation expense $ 19 $ 10 $ 32 $ 19

NOTE 3 – COMPREHENSIVE INCOME (LOSS)

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:

Changes in Accumulated other comprehensive income (loss) ("AOCI"), net of tax, by component for the six months ended June 30, 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

6 unchanged sentences

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

Other comprehensive income before reclassifications and tax impact 31 3 1 — 35

Tax benefit (expense) 6 ( 2 ) ( 1 ) — 3

Other comprehensive income, net of tax, before reclassifications 37 1 — — 38

Amounts reclassified from accumulated other comprehensive income, net of tax — 3 — 2 5

Net increase in other comprehensive income 37 4 — 2 43

Balance, net of tax, at June 30, 2021 $ ( 249 ) $ ( 23 ) $ ( 112 ) $ ( 127 ) $ ( 511 )

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

6 unchanged sentences

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

Other comprehensive income (loss) before reclassifications and tax impact 77 — ( 15 ) — 62

Tax (expense) benefit ( 2 ) — 7 — 5

Other comprehensive income (loss), net of tax, before reclassifications 75 — ( 8 ) — 67

Amounts reclassified from accumulated other comprehensive income, net of tax — — — 1 1

Net increase (decrease) in other comprehensive loss 75 — ( 8 ) 1 68

Balance, net of tax, at June 30, 2020 $ ( 412 ) $ ( 23 ) $ ( 92 ) $ ( 117 ) $ ( 644 )

These amounts are recorded in AOCI, net of any related tax adjustments.

At March 31, 2021 and December 31, 2020, the cumulative tax adjustments were $ 190 million and $ 216 million, respectively, primarily related to foreign currency translation gains and losses.

The cumulative foreign currency translation adjustments included translation losses of $ 159 million and $ 25 million at March 31, 2021 and December 31, 2020, respectively, and cumulative losses on loans designated as hedges of net investments of $ 127 million and $ 162 million, respectively.

At June 30, 2021 and December 31, 2020, the cumulative tax adjustments were $ 193 million and $ 216 million, respectively, primarily related to foreign currency translation gains and losses.

The cumulative foreign currency translation adjustments included translation losses of $ 113 million and $ 25 million at June 30, 2021 and December 31, 2020, respectively, and cumulative losses on loans designated as hedges of net investments of $ 135 million and $ 162 million, respectively.

These foreign currency translation losses were partially offset by movements on derivative financial instruments.

Reclassifications out of AOCI to the Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020 were insignificant.

Reclassifications out of AOCI to the Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 were insignificant.

NOTE 4 – EARNINGS PER COMMON SHARE

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

Basic Earnings (Loss) Per Common Share Three Months Ended

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

Basic Earnings (Loss) Per Common Share Three Months Ended Six Months Ended

(in millions, except per share amounts) 2021 2020 2021 2020

2 unchanged sentences

Earnings (loss) per common share - basic $ 0.45 $ ( 0.44 ) $ 0.99 $ ( 1.07 )

Diluted Earnings (Loss) Per Common Share Three Months Ended

Diluted Earnings (Loss) Per Common Share Three Months Ended Six Months Ended

(in millions, except per share amounts) 2021 2020 2021 2020

4 unchanged sentences

Earnings (loss) per common share - diluted $ 0.45 $ ( 0.44 ) $ 0.98 $ ( 1.07 )

The calculation of weighted average diluted common shares outstanding excluded 1.4 million of potentially diluted common shares because the Company reported a net loss for the three months ended March 31, 2020.

Stock options and RSUs of 0.8 million and 2.6 million equivalent shares of common stock outstanding during the three months ended March 31, 2021 and 2020, respectively were excluded from the computation of weighted average diluted shares outstanding because their effect would be antidilutive.

During the quarter ended March 31, 2021, the Company repurchased approximately 1.5 million shares pursuant to its open market shares repurchase plan for a net cost of $ 90 million at an average price of $ 60.62 .

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

For the three and six months ended June 30, 2021, the Company excluded from the computation of weighted average diluted shares outstanding 0.5 million and 0.7 million of equivalent shares of common stock from stock options and RSUs because their effect would be antidilutive.

For the three and six months ended June 30, 2020, the company excluded 4.2 million and 3.1 million equivalent shares of common stock outstanding from stock options and RSUs because their effect would be antidilutive.

During the six months ended June 30, 2021, the Company repurchased approximately 1.5 million shares pursuant to its open market shares repurchase plan for a net cost of $ 90 million at an average price of $ 60.62 .

NOTE 5 – BUSINESS COMBINATIONS

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.

On June 1, 2021, the effective date of the transaction, the Company paid $ 132 million to acquire substantially all of the assets of Propel Orthodontics LLC, a privately-held company based in New York and California.

Propel Orthodontics manufactures and sells orthodontic devices and provides in-office and at-home orthodontic accessory devices to orthodontists and their patients primarily within the clear aligner market.

The acquisition is expected to further 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 Propel Orthodontics acquisition were as follows:

(in millions)

Other current assets $ 4

Intangible assets 64

Current liabilities ( 1 )

Net assets acquired 67

Purchase consideration $ 132

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 $ 65 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 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

(in millions, except for useful life) Amount (in years)

Developed technology $ 64 10

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-held 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.

9 unchanged sentences

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 $ 39 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.

The goodwill is not deductible for tax purposes.

Measurement period adjustments made to the fair values of the assets acquired and liabilities assumed during the first six months of 2021 were immaterial to the financial statements, resulting in an increase to goodwill of $ 6 million.

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.

14 unchanged sentences

Current liabilities ( 28 )

Long-term assets (liabilities), net 1

Net assets acquired 419

2 unchanged sentences

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:

4 unchanged sentences

Tradenames and trademarks 190 20

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 results of operations for the Byte, Datum, and Propel 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 June 30, 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.

Investments in Affiliates

On June 4, 2021, the effective date of the transaction, the Company paid $ 16 million to acquire a minority interest in a privately-held provider of healthcare consumables.

The Company records this investment and subsequent profit or losses under equity method accounting within Other noncurrent assets.

On April 1, 2021, the Company disposed of certain orthodontics businesses based in Japan previously included as part of the Technologies and Equipment segment in exchange for a cash receipt of $ 8 million.

The divestiture resulted in an immaterial loss recorded in Other expense (income), net in the Consolidated Statements of Operations for the three and six months ended June 30, 2021.

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.

The divestiture resulted in a pre-tax gain of $ 13 million recorded in Other expense (income), net in the Consolidated Statements of Operations for the six months ended June 30, 2021.

NOTE 6 – SEGMENT INFORMATION

2 unchanged sentences

The Company evaluates performance of the segments based on net sales and adjusted operating income.

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.

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, net, other expense (income), net, amortization of intangible assets and depreciation resulting from the fair value step-up of property, plant, and equipment from acquisitions.

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

3 unchanged sentences

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

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

Three Months Ended

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

Three Months Ended Six Months Ended

(in millions) 2021 2020 2021 2020

3 unchanged sentences

Segment Adjusted Operating Income

Three Months Ended

Three Months Ended Six Months Ended

(in millions) 2021 2020 2021 2020

Technologies & Equipment $ 126 $ 111

Consumables 150 62

Segment adjusted operating income 276 173

Technologies & Equipment (a)

$ 135 $ ( 4 ) $ 261 $ 107

Consumables (a)

154 ( 17 ) 304 45

Segment adjusted operating income (loss) 289 ( 21 ) 565 152

Reconciling items expense (income):

All other (a)

All other (b)

Goodwill impairment — — — 157

Restructuring and other costs 5 1 8 44

Interest expense 14 7

Interest expense, net 16 11 30 18

Other expense (income), net 5 5 ( 4 ) 3

2 unchanged sentences

Income (loss) before income taxes $ 134 $ ( 120 ) $ 283 $ ( 250 )

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

(a) Certain charges related to discontinuance of product lines which were previously reported in adjusted operating income for the reportable segments, $ 7 million for the three and six months June 30, 2020, respectively, have been reclassified to the "All other" category to conform to current year presentation and the Company's internal reporting in the Chief Operating Decision Maker package.

These amounts are not material to the measure of segment results for the years presented.

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

NOTE 7 – INVENTORIES

Inventories are stated at the lower of cost and net realizable value.

All of the Company's inventories were determined by the first-in, first-out (“FIFO”) or average cost methods, with the exception of immaterial amounts determined using the last-in, first-out ("LIFO") method totaling $ 1 million and $ 3 million at March 31, 2021 and December 31, 2020, respectively.

Inventories, net were as follows:

(in millions) March 31, 2021 December 31, 2020

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

Finished goods $ 336 $ 264

2 unchanged sentences

Inventories, net $ 539 $ 466

The Company's inventory reserve was $ 95 million and $ 117 million at March 31, 2021 and December 31, 2020, respectively.

The Company's inventory reserve was $ 93 million and $ 117 million at June 30, 2021 and December 31, 2020, respectively.

Inventories are stated at the lower of cost and net realizable value.

NOTE 8 – RESTRUCTURING AND OTHER COSTS

During the three months ended 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 $ 42 million which consists of asset impairments of $ 39 million and severance costs of $ 3 million.

The details of total restructuring and other costs for the three months ended March 31 were as follows:

Affected Line Item in the Consolidated Statements of Operations Three Months Ended

During the three and six months ended June 30, 2021, the Company recorded net restructuring and other costs of $ 7 million and $ 8 million, respectively, which consists of severance and other restructuring costs of $ 8 million and $ 11 million offset by adjustments to inventory reserves of $ 1 million and $ 3 million, respectively.

During the three and six months ended June 30, 2020, the Company recorded restructuring and other costs of $ 1 million and $ 44 million, respectively, which consists of asset impairments of $ 39 million for the six months ended, and severance costs of $ 1 million and $ 5 million for the periods respectively.

The details of total restructuring and other costs for the three and six months ended June 30, 2021 and 2020 were as follows:

Affected Line Item in the Consolidated Statements of Operations Three Months Ended Six Months Ended

(in millions) 2021 2020 2021 2020

8 unchanged sentences

The Company recorded total expenses of approximately $ 57 million related to these actions which consists primarily of inventory write-downs of approximately $ 28 million, accelerated depreciation of approximately $ 14 million, and severance costs of approximately $ 10 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 recorded during the second quarter of 2021.

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

For the six months ended June 30, 2021, the Company made a $ 3 million adjustment related to inventory reserves and recorded severance costs of $ 1 million.

The Company expects nearly all of the remaining restructuring charges to be completed by the first quarter of 2022.

The Company’s restructuring accruals at June 30, 2021 were as follows:

(in millions) 2019 and

4 unchanged sentences

Change in estimates ( 1 ) ( 1 ) — ( 2 )

Balance at March 31, 2021 $ 6 $ 9 $ 2 $ 17

Balance at June 30, 2021 $ 5 $ 15 $ 4 $ 24

Other Restructuring Costs

4 unchanged sentences

Amounts applied ( 1 ) ( 1 ) ( 1 ) ( 3 )

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

Balance at June 30, 2021 $ 3 $ 1 $ 1 $ 5

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

Applied Change in Estimates June 30, 2021

Technologies & Equipment $ 16 $ 5 $ ( 6 ) $ — $ 15

9 unchanged sentences

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.

Additionally, the Company utilizes interest rate swaps to convert fixed rate debt into variable rate debt or variable rate debt to fixed rate debt.

The Company does not hold derivative instruments for trading or speculative purposes.

Derivative Instruments

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 March 31, 2021 and the notional amounts expected to mature during the next 12 months.

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, 2021 and the notional amounts expected to mature during the next 12 months.

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

3 unchanged sentences

Hedges of Net Investments

Foreign exchange forward contracts $ 95 $ 47

Cross currency basis swaps 312 312

20 unchanged sentences

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 Statements of Operations during the next 12 months.

At June 30, 2021, the Company expects to reclassify $ 6 million of deferred net losses on cash flow hedges recorded in AOCI in the Consolidated Statements of Operations during the next 12 months.

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

11 unchanged sentences

The effective portion of the change in the value of these derivatives is recorded in AOCI, net of tax effects.

On May 25, 2021, the Company re-established its euro net investment hedge portfolio by entering into eight foreign exchange forward contracts, each with a notional amount of 10 million euro.

The contracts have quarterly maturity dates through March 31, 2023.

Fair Value Hedges

13 unchanged sentences

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.

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.

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

Any cash flows associated with these instruments are included in cash from operating activities in the Consolidated Statements of Cash Flows.

Gains and (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, 2021 and 2020 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

The amount of gains and losses recorded in AOCI in the Consolidated Balance Sheets, Costs of products sold, Interest expense, net, and Other expense (income), net in the Company's Consolidated Statement of Operations related to all derivative instruments for the three months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30, 2021

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

1 unchanged sentence

Foreign exchange forward contracts $ 3 Cost of products sold $ ( 1 ) $ 1

Interest rate swaps ( 29 ) Interest expense ( 1 ) —

Interest rate swaps ( 27 ) Interest expense, net ( 2 ) —

Total for cash flow hedging $ ( 24 ) $ ( 3 ) $ 1

Hedges of Net Investments

Cross currency basis swaps $ 9 Interest expense $ — $ 2

Cross currency basis swaps $ ( 2 ) Interest expense, net $ — $ 2

Foreign exchange forward contracts 3 Other expense (income), net — —

Total for net investment hedging $ 1 $ — $ 2

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Total for fair value hedging $ — $ — $ ( 4 )

March 31, 2020

Three Months Ended June 30, 2020

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

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Foreign exchange forward contracts $ 2 Cost of products sold $ — $ 1

Interest rate swaps ( 18 ) Interest expense ( 1 ) —

Interest rate swaps ( 2 ) Interest expense, net — —

Total for cash flow hedging $ — $ — $ 1

Hedges of Net Investments

Cross currency basis swaps $ 9 Interest expense $ — $ 2

Cross currency basis swaps $ ( 5 ) Interest expense, net $ — $ 2

Foreign exchange forward contracts ( 10 ) Other expense (income), net — 1

Total for net investment hedging $ ( 15 ) $ — $ 3

The amount of gains and losses recorded in AOCI in the Consolidated Balance Sheets, Costs of products sold, Interest expense, net, and Other expense (income), net in the Company's Consolidated Statement of Operations related to all derivative instruments for the six months ended June 30, 2021 and 2020 were as follows:

Six Months Ended June 30, 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 $ ( 3 ) Cost of products sold $ ( 2 ) $ 1

Interest rate swaps ( 27 ) Interest expense, net ( 3 ) —

Total for cash flow hedging $ ( 30 ) $ ( 5 ) $ 1

Hedges of Net Investments

Cross currency basis swaps $ 7 Interest expense, net $ — $ 4

Foreign exchange forward contracts 3 Other expense (income), net — —

Total for net investment hedging $ 10 $ — $ 4

Fair Value Hedges

Foreign exchange forward contracts $ — Other expense (income), net $ — 12

Total for fair value hedging $ — $ — $ 12

Six Months Ended June 30, 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 $ 4 Cost of products sold $ ( 1 ) $ 2

Interest rate swaps ( 20 ) Interest expense, net 1 —

Total for cash flow hedging $ ( 16 ) $ — $ 2

Hedges of Net Investments

Cross currency basis swaps $ 3 Interest expense, net $ — $ 5

Foreign exchange forward contracts 7 Other expense (income), net — 6

Total for net investment hedging $ 10 $ — $ 11

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

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The fair value and the location of the Company's derivatives in the Consolidated Balance Sheets were as follows:

March 31, 2021

June 30, 2021

(in millions) Prepaid Expenses and Other Current Assets Other Noncurrent Assets Accrued Liabilities Other Noncurrent Liabilities

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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.

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

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

Gross Amounts Not Offset in the Consolidated Balance Sheets

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NOTE 10 – FAIR VALUE MEASUREMENT

Assets and liabilities measured at fair value on a recurring basis

The Company estimated the fair value and carrying value of its total long term debt, including current portion was $ 2,382 million and $ 2,251 million, respectively, at March 31, 2021.

The Company estimated the fair value and carrying value of its total long term debt, including current portion was $ 2,411 million and $ 2,251 million, respectively, at June 30, 2021.

At December 31, 2020, the Company estimated the fair value and carrying value of this debt were $ 2,509 million and $ 2,281 million, respectively.

The 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, 2020 to companies with similar credit ratings for issues with similar terms and maturities.

The 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 June 30, 2021 and December 31, 2020 to companies with similar credit ratings for issues with similar terms and maturities.

It is considered a Level 2 fair value measurement.

Assets and liabilities measured at fair value on a recurring basis

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:

March 31, 2021

June 30, 2021

(in millions) Total Level 1 Level 2 Level 3

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Total liabilities $ 40 $ — $ 35 $ 5

There have been no transfers between levels during the three months ended March 31, 2021.

There have been no transfers between levels during the six months ended June 30, 2021.

NOTE 11 – INCOME TAXES

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Other Tax Matters

During the three months ended March 31, 2021, the Company recorded $ 1 million of tax 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 March 31, 2020, the Company recorded $ 6 million of tax expense for discrete tax matters.

The Company also recorded a $ 11 million tax benefit as a discrete item related to the indefinite-lived intangible asset impairment charge.

During the three months ended June 30, 2021, the Company recorded $ 3 million of tax expense for other discrete tax matters.

During the three months ended June 30, 2020, the Company recorded $ 1 million of tax expense for discrete tax matters.

NOTE 12 – FINANCING ARRANGEMENTS

At March 31, 2021, the Company had $ 1,139 million of borrowing available under lines of credit, including lines available under its short-term arrangements and revolving credit facility.

At June 30, 2021, the Company had $ 744 million of borrowing available under lines of credit, including lines available under its short-term arrangements and revolving credit facility.

The Company has a $ 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 no outstanding borrowings under the multi-currency revolving credit facility.

The company borrowed and had $ 27 million outstanding under the commercial paper facility at March 31, 2021 and no outstanding borrowings under the commercial paper facility at December 31, 2020.

Additionally, at both March 31, 2021 and December 31, 2020, the Company had multiple short-term facilities available as a result of the following actions taken in 2020 to strengthen its liquidity and flexibility in response to the COVID-19 pandemic:

• On April 9, 2020, the Company entered into a $ 310 million 364 -day revolving credit facility which matured on April 8, 2021.

As of March 31, 2021 there were no 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 Credit Facility, which is equal to $ 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 million revolver borrowing on May 26, 2020.

• On May 26, 2020, the Company issued $ 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 million, net of discount of $ 2 million.

Issuance fees totaled $ 6 million.

The Company paid $ 31 million to settle the $ 150 million notional 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 million borrowed against the 2018 Credit Facility and the remaining proceeds will be used for working capital and other general corporate purposes.

• During the second quarter of 2020 the company entered into various other credit facilities including a 40 million euro 364 -day revolving credit facility which matured on April 30, 2021, a 30 million euro 364 -day revolving credit facility with a maturity date of May 6, 2021, and a 3.3 billion Japanese yen 364 -day revolving credit facility with a maturity date of June 11, 2021.

As of March 31, 2021 there were no outstanding borrowings under these facilities.

At June 30, 2021 and December 31, 2020, there were no outstanding borrowings under the multi-currency revolving credit facility.

The company had no outstanding borrowings under the commercial paper facility at June 30, 2021 and December 31, 2020.

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 March 31, 2021, the Company was in compliance with all affirmative and negative debt covenants.

At June 30, 2021, the Company was in compliance with all affirmative and negative debt covenants.

NOTE 13 – GOODWILL AND INTANGIBLE ASSETS

The Company assesses both goodwill and indefinite-lived intangible assets for impairment annually during the second quarter, or from time to time when warranted by facts and circumstances.

In conjunction with the most recent annual test of goodwill at April 30, 2020, the Company applied a hypothetical sensitivity analysis to its reporting units.

If the discount rate of these reporting units had been hypothetically increased by 100 basis points, or, in a separate test, each reporting unit were subject to a 10% hypothetical reduction in fair value, it is noted that the Implants reporting unit would have had a fair value approximating book value.

For the Equipment & Instruments reporting unit which recorded an impairment during the first quarter of 2020, the implied fair value was found to approximate net book value at April 30, 2020, and therefore this reporting unit 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 and $ 292 million respectively as of March 31, 2021.

The Company also previously applied a hypothetical sensitivity analysis as part of the April 30, 2020 annual impairment test of indefinite-lived intangibles.

It was noted that 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, 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 these assets, the implied fair values continued to approximate net book values at April 30, 2020 and are therefore noted to be sensitive to any unfavorable changes in assumptions.

At March 31, 2021, the remaining indefinite-lived tradenames and trademarks related to the Equipment & Instruments reporting unit was $ 79 million.

During the 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 may have been impaired.

It is management's assessment that no such events have occurred.

A change in any of the estimates and assumptions used in the annual test, a decline in the overall markets or in the use of intangible assets among other factors, could have a negative material impact to the fair value of either the reporting units or intangible assets and could result in a future impairment charge.

The Company assesses both goodwill and indefinite-lived intangible assets for impairment annually during the second quarter or more frequently if events or changes in circumstances indicate the asset might be impaired.

The Company conducted its annual goodwill and indefinite-lived intangible assets impairment test as of April 1, 2021.

Based on the Company's 2021 impairment test, it was determined that the fair values of its reporting units and indefinite-lived intangible assets more likely than not exceed their respective carrying values, resulting in no impairment.

The fair values of reporting units were computed using a discounted cash flow model with inputs developed using both internal and market-based data.

Intangible assets were evaluated for impairment using an income approach, specifically a relief from royalty method, or using a qualitative assessment.

A change in any of the estimates and assumptions used in the annual test, a decline in the overall markets or in the use of intangible assets among other factors, could have a material adverse effect to the fair value of either the reporting units or intangible assets and could result in a future impairment charge.

There can be no assurance that the Company’s future asset impairment testing will not result in a material charge to earnings.

Subsequent to the annual impairment test, as of June 30, 2021, the Company considered whether any events or changes in circumstances had resulted in the likelihood that the goodwill or indefinite-lived intangible assets may have become impaired during the course of the quarter, and concluded that there were no such indicators.

During the first six months ended June 30, 2020, as a result of updating the estimates and assumptions pertaining to the impact of the ongoing COVID-19 pandemic, the Company recorded a goodwill impairment charge of $ 157 million related to the goodwill associated with the Technologies & Equipment segment.

Additionally, during the same first six months of 2020, the Company recorded an indefinite-lived intangible asset impairment charge of $ 39 million within the Technologies & Equipment segment which was driven by a decline in forecasted sales as a result of the COVID-19 pandemic and an unfavorable change in the discount rate.

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

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

Acquisition related additions 33 — 33

Divestiture of a business — ( 3 ) ( 3 )

Measurement period adjustments on prior acquisitions ( 3 ) — ( 3 )

Effects of exchange rate changes ( 47 ) ( 14 ) ( 61 )

Balance at March 31, 2021 $ 3,075 $ 877 $ 3,952

Acquisition related additions (a)

Translation and other ( 47 ) ( 9 ) ( 56 )

Balance at June 30, 2021 $ 3,148 $ 885 $ 4,033

(a) Refer to Note 5, "Business Combinations" for more information regarding recent acquisitions.

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in millions) Gross Carrying Amount Cumulative Impairment Net Carrying Amount Gross Carrying Amount Cumulative Impairment Net Carrying Amount

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

(in millions) Gross

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The useful life and amortization of those assets will be determined once the R&D efforts are completed.

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 determined that the goodwill associated with the Equipment & Instruments reporting unit within the Technologies & Equipment segment was impaired.

As a result, the Company recorded a goodwill impairment charge of $ 157 million.

During the 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 decline in forecasted sales as a result of the COVID-19 pandemic as well as an unfavorable change in the discount rate.

During the second quarter, the Company purchased certain developed technology rights for an initial payment of $ 3 million.

The purchase consideration also includes contingent payments of $ 17 million to be made upon reaching certain regulatory and commercial milestones which were not yet deemed probable at June 30, 2021.

NOTE 14 – COMMITMENTS AND CONTINGENCIES

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 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.

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.

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.

On March 30, 2021, the Austrian Supreme Court rejected Mr.

Redlich's appeal, 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.

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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 to each action are in the process of finalizing the settlement terms, and the parties will then seek court approval of the settlements.

The expected settlement amount, which is immaterial to the financial statements, has been recorded as an accrued liability within the Company's consolidated balance sheet as of March 31, 2021.

The Company has agreed to resolve all three actions (Olivares, Holt, and Cato).

The court in Cato approved the settlement in that case, the settlement payment has been made, and the court is expected to dismiss the lawsuit.

The parties to Olivares and Holt are in the process of finalizing the settlement terms, and the parties will then seek court approval of that settlement.

The expected settlement amount, which is immaterial to the financial statements, has been recorded as an accrued liability within the Company's consolidated balance sheet as of June 30, 2021.

On June 7, 2018, and August 9, 2018, two 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.

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The Company moved to dismiss the amended complaint on August 15, 2019.

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 January 22, 2021, and the Company filed a motion to dismiss the second amended complaint on March 8, 2021.

On April 29, 2019, two 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.

On September 25, 2020, the District Court Judge issued an order adopting the Magistrate 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.

Briefing on the motion to dismiss was fully submitted on May 21, 2021, and that motion is currently pending before the Court.

The Company intends to defend itself vigorously in these actions.

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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.

Future minimum annual payments for inventory purchase commitments were immaterial as of June 30, 2021.

NOTE 15 – SUBSEQUENT EVENTS

On July 1, 2021, the effective date of the transaction, the Company paid $ 10 million to acquire the remaining interest in the dental business of a partially owned affiliate based in Switzerland that primarily develops highly specialized software with a focus on CAD/CAM systems.

The Company is in the process of determining fair values of assets acquired and liabilities assumed.

On July 1, 2021, the Company entered into variable interest rate swaps with a notional amount of $ 250 million, which effectively converts a portion of the underlying fixed rate of 3.3 % on the $ 750 million Senior Notes due June 2030 to a variable interest rate.

Of the $ 250 million notional amount, $ 100 million has a term of five-years maturing on June 1, 2026 and $ 150 million has a term of nine-years maturing on March 1, 2030.

On July 2, 2021, the Company entered into a cross currency basis swap totaling a notional amount of $ 300 million which matures on June 3, 2030.

The cross currency basis swap is designated as a hedge of net investments.

This contract effectively converts a portion of the $ 750 million bond coupon from 3.3 % to 1.7 %, which will result in a net reduction of interest expense in 2021.

On July 2, 2021 the Company pre-paid the fixed rate Senior Notes totaling $ 296 million that were scheduled to mature on August 16, 2021 using cash and short-term commercial paper.

On July 28, 2021, the Board of Directors of the Company approved an increase in the value of shares of common stock that may be repurchased under the share repurchase program, up to $ 1.0 billion.

Share repurchases 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.

DENTSPLY SIRONA Inc.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements