What changed in this filing

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Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-01 · 94 added, 73 removed, 185 unchanged (47% of the section changed)

Controls and Procedures

Internal Investigation

As described in the Explanatory Note to the Form 10-K for the year ended December 31, 2021 as amended and filed on November 7, 2022 (the "2021 Form 10-K/A") the Audit and Finance Committee, assisted by independent legal counsel and forensic accountants, commenced an internal investigation in March 2022 of allegations regarding certain financial reporting matters submitted by current and former employees of the Company, which was completed in the fourth quarter of 2022 ("the Investigation").

The findings of the Investigation are described in the Explanatory Note of the 2021 Form 10-K/A referenced above.

Accounting Errors

Distinct from the matters pertaining to the Investigation, and as a consequence of a separate but concurrent accounting review, management identified certain errors in the manner in which it recognized variable consideration related to certain incentive programs.

During this review, it was also determined that the Company utilized incorrect accounting and assumptions in the determination of estimates related to its sales returns provisions, warranty reserve provisions, and variable consideration.

In connection with the Investigation and the subsequent accounting review, management reevaluated the effectiveness of the Company’s internal control over financial reporting and identified control deficiencies related to these matters, which the Company concluded represented material weaknesses in the Company’s internal control over financial reporting as of December 31, 2021.

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 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.

Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures 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.

Management’s Annual Report on Internal Control Over Financial Reporting

Management’s report on the Company’s internal control over financial reporting is included under Item 8 of this Form 10-K.

The Company has established disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The Company's management, with the participation of the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2022 and concluded the Company’s disclosure controls and procedures are not effective due to the material weaknesses in internal control over financial reporting described in Management’s Report on Internal Control Over Financial Reporting included under Item 8 of this Form 10-K.

Management’s Report on Internal Control Over Financial Reporting

Management’s report on the Company’s internal control over financial reporting, including the description of the material weaknesses determined to exist as of December 31, 2022, is included under Item 8 of this Form 10-K.

Remediation Plan and Status

While the material weaknesses previously disclosed have not yet been remediated as of December 31, 2022, management is devoting substantial resources to the ongoing implementation of remediation efforts to address the material weaknesses described herein, as well as other identified areas of risk.

These remediation efforts, summarized below, which either have already been implemented or are continuing to be implemented, are intended to address both the identified material weaknesses and to enhance the Company’s overall internal control over financial reporting and disclosure controls and procedures.

With oversight from the Audit and Finance Committee and input from the Board of Directors, management is continuing to enhance and implement changes in processes and controls to remediate the material weaknesses described in Management’s Report on Internal Control Over Financial Reporting and to improve our internal control over financial reporting as noted below.

Management and the Board of Directors, including the Audit and Finance Committee, are working to remediate the material weaknesses identified herein.

Actions taken to date include:

Appointment of a new Chief Executive Officer, a new Chief Financial Officer and a new Chief Accounting Officer;

Termination of certain members of senior management as well as non-executive employees for violations of the Code of Ethics and Business Conduct;

Reviewed and enhanced the Company's Code of Ethics and Business Conduct including to clarify responsibilities related to the Company's financial reporting and disclosures;

Implementation of general training programs on revenue recognition for commercial and finance personnel.

In addition to the remedial actions taken to date, the Company is taking, or plans to take, the following actions to remediate the material weaknesses identified herein:

Provide incremental training to Company personnel on the updated Code of Ethics and Business Conduct;

Implement written policies and procedures to provide governance and establish responsibility for oversight of incentive arrangements provided to customers, including the appropriate delegation of authority for such approvals;

Formalize written policies and procedures to provide governance and establish responsibility for guidelines, documentation and oversight of product returns from customers when a contractual right to return exists in a customer agreement;

Require and provide trainings for employees who have a role in negotiating, assessing, agreeing, and accounting for customer incentive arrangements with distributors;

Provide training on new processes to individuals responsible for execution, oversight and review of customer incentive arrangements with customers;

Enhance processes to ensure all applicable terms and conditions for incentive-based programs and customer agreements are timely communicated to individuals responsible for accounting and financial reporting;

Strengthen internal controls over the accounting for customer incentive arrangements, including:

(i) implementing formal controls to continuously review and document the methodology and assumptions used in estimating variable based incentives and (ii) formal controls to ensure the accuracy of the estimated accrued liability analysis;

Evaluate finance and commercial operations talent and address identified gaps;

Establish a recurring cadence for future training programs on revenue recognition for commercial and finance personnel.

In addition, the Company took the following remedial actions to improve disclosure controls and procedures:

Enhanced existing Disclosure Committee responsibilities through adoption of a formal charter, which identifies members and sets forth the roles and responsibilities of the Disclosure Committee, among other requirements;

Implemented additional and enhanced existing sub-certifications and internal management representation letters, including providing training on the purpose of the sub-certification and the process for evaluating the representations.

Management developed a detailed plan and timetable for the implementation of the foregoing remediation efforts and continues to oversee the effective execution of the plan.

In addition, under the direction of the Audit and Finance Committee, management will continue to identify and implement actions to improve the effectiveness of its disclosure controls and procedures and internal control over financial reporting, including plans to enhance its resources and training with respect to financial reporting and disclosure responsibilities and make necessary changes to policies and procedures to improve the overall effectiveness of such controls.

Management believes the foregoing efforts will effectively remediate the material weaknesses described above.

As the Company continues to evaluate and improve its internal control over financial reporting and disclosure controls and procedures, management may determine to take additional measures to improve controls or determine to modify the remediation plan described above.

The Company is working to remediate the material weaknesses as efficiently and effectively as possible with the goal of remediating each of the material weaknesses described above as soon as possible.

At this time, the Company cannot provide an estimate of costs expected to be incurred in connection with implementing this remediation plan;

however, these remediation measures will be time consuming, will result in the Company incurring significant costs, and will place significant demands on financial and operational resources.

As of the filing of this Form 10-K, the material weaknesses described above have not been remediated.

The material weaknesses described above cannot be considered remediated until the applicable controls have operated for a sufficient period of time and management has concluded, through testing, that these controls are designed and operating effectively.

Accordingly, management will continue to monitor and evaluate the effectiveness of our internal control over financial reporting in the activities affected by the material weaknesses described above.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Other Information

9 unchanged sentences

Executive Compensation

The information required under this item will be included under the captions “Directors’ Compensation,” “Executive Compensation” and “Human Resources Committee Interlocks and Insider Participation” in our 2022 Proxy Statement and is incorporated herein by reference.

The information required under this item will be included under the captions “Directors’ Compensation,” “Executive Compensation” and “Human Resources Committee Interlocks and Insider Participation” in our 2023 Proxy Statement and is incorporated herein by reference except as to information required pursuant to Item 402(v) of Regulation S-K relating to pay versus performance.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

25 unchanged sentences

Certificate of Amendment to Second Amended and Restated Certificate of Incorporation of Dentsply Sirona Inc., dated as of May 23, 2018 (14)

Fifth Amended and Restated By-Laws, dated as of February 14, 2018 (20)

Sixth Amended and Restated By-Laws, dated as of May 25, 2022 (28)

United States Commercial Paper Dealer Agreement dated as of March 28, 2002 between the Company and Citigroup Global Markets Inc.

29 unchanged sentences

Form of 3.250% Notes due 2030 (included in Exhibit 4.13).

Opinion of Skadden, Arps, Slate, Meagher & Flom LLP (34)

2002 Amended and Restated Equity Incentive Plan* (5)

Consent Memorandum, dated August 11, 2022, by and among DENTSPLY SIRONA Inc., the Subsidiary Borrowers from time to time party thereto, the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent.

Note Purchase Agreement Amendment and Consent, dated August 26, 2022, by and among DENTSPLY SIRONA Inc.

and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement, dated December 11, 2015, by and among the Issuers and the holders of Notes set forth therein.

Note Purchase and Guarantee Agreement Amendment and Consent, dated August 26, 2022, by and among DENTSPLY SIRONA Inc., Sirona Dental Services GmbH and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement and Guarantee Agreement, dated October 27, 2016, by and among the Issuers and the holders of Notes set forth therein.

Note Purchase Agreement Amendment and Consent, dated August 26, 2022, by and among DENTSPLY SIRONA Inc.

and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement, dated June 24, 2019, by and among the Issuers and the holders of Notes set forth therein.

Consent Memorandum, dated September 14, 2022, by and among DENTSPLY SIRONA Inc., the Subsidiary Borrowers from time to time party thereto, the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent.

Consent Memorandum, dated November 4, 2022, by and among DENTSPLY SIRONA Inc., the Subsidiary Borrowers from time to time party thereto, the lender parties thereto and JPMorgan Chase Bank, N.A., as administrative agent.

Note Purchase Agreement Amendment No.

2 and Consent, dated November 5, 2022, by and among DENTSPLY SIRONA Inc and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement, dated December 11, 2015, by and among the Issuers and the holders of Notes set forth therein.

Note Purchase and Guarantee Agreement Amendment No.

2 and Consent, dated November 5, 2022, by and among DENTSPLY SIRONA Inc, Sirona Dental Services GmbH and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement and Guarantee Agreement, dated October 27, 2016, by and among the Issuers and the holders of Notes set forth therein.

Note Purchase Agreement Amendment No.

2 and Consent, dated November 5, 2022, by and among DENTSPLY SIRONA Inc and each of the holders of Notes parties thereto, with respect to that certain Note Purchase Agreement, dated June 24, 2019, by and among the Issuers and the holders of Notes set forth therein.

Restricted Stock Unit Deferral Plan* (9)

8 unchanged sentences

Supplemental Executive Retirement Plan, as amended and restated January 1, 2019* (17)

Incentive Compensation Plan, amended and restated* (9)

AZ Trade Marks License Agreement, dated January 18, 2001 between AstraZeneca AB and Maillefer Instruments Holdings, S.A.

Precious metal inventory Purchase and Sale Agreement dated November 30, 2001, as amended October 10, 2006 between Bank of Nova Scotia and the Company (4)

Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between JPMorgan Chase Bank and the Company (2)

Precious metal inventory Purchase and Sale Agreement dated December 20, 2001 between Mitsui & Co., Precious Metals Inc.

and the Company (2)

Precious metal inventory Purchase and Sale Agreement dated January 30, 2002 between Commerzbank AG (formerly known as Dresdner Bank AG), Frankfurt, and the Company (5)

Precious metal inventory Purchase and Sale Agreement dated December 6, 2010, as amended February 8, 2013 between HSBC Bank USA, National Association and the Company (12)

Precious metal inventory Purchase and Sale Agreement dated April 29, 2013 between The Toronto-Dominion Bank and the Company (12)

2010 Equity Incentive Plan, amended and restated* (9)

1 unchanged sentence

2016 Omnibus Incentive Plan, as amended and restated effective February 14, 2018* (13)

Amended and Restated U.S.

Distributorship Agreement, dated May 31, 2012, by and between Patterson Companies, Inc.

and Sirona Dental Systems, Inc.

Amended and Restated U.S.

CAD-CAM Distributorship Agreement, dated May 31, 2012, by and between Patterson Companies, Inc.

and Sirona Dental Systems GmbH (16)

Sirona Dental Systems, Inc.

Equity Incentive Plan, as Amended* (10)

Sirona Dental Systems, Inc.

2015 Long-Term Incentive Plan* (17)

Employment Agreement, dated October 10, 2017, between DENTSPLY SIRONA Inc.

and Nicholas W.

First Amendment dated as of March 5, 2019 to Employment Agreement by and between DENTSPLY SIRONA Inc.

and Nicholas W.

Separation and Release of Claims Agreement, between DENTSPLY SIRONA Inc.

and Nicholas W.

Alexos, dated May 24, 2019* (27)

Employment Agreement, dated October 10, 2017, between DENTSPLY SIRONA Inc.

and Keith Ebling* (21)

First Amendment dated as of March 5, 2019 to Employment Agreement by and between DENTSPLY SIRONA Inc.

Employment Agreement, dated February 12, 2018, between DENTSPLY SIRONA Inc.

10 unchanged sentences

Form of Amended and Restated DENTSPLY SIRONA Inc.

Indemnification Agreement* (Filed herewith)

Indemnification Agreement dated as of December 15, 2021* (27)

Form of Amended and Restated DENTSPLY SIRONA Inc.

Indemnification Agreement dated as of December 14, 2022 (Filed herewith)

Form of Option Grant Notice Under the DENTSPLY SIRONA Inc.

9 unchanged sentences

Non-Employee Director Compensation Policy, effective September 30, 2020* (24)

Non-Employee Director Compensation Policy, effective February 23, 2022* (Filed herewith)

Non-Employee Director Compensation Policy, effective February 23, 2022* (27)

Form of Performance Restricted Stock Unit Award Agreement* (18)

4 unchanged sentences

and Jorge Gomez* (20)

First Amendment to Employment Agreement, dated August 6, 2018, between DENTSPLY SIRONA Inc.

and William E.

Employment Agreement, dated May 27, 2017, between DENTSPLY SIRONA Inc.

and William E.

Separation Agreement with General Release, dated July 20, 2020, by and between William E.

Newell and DENTSPLY SIRONA Inc* (35)

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 (32)

Employment Agreement, dated October 28, 2019, between Dentsply Sirona Deutschland GmbH and Walter Petersohn (33)

Separation and Release of Claims Agreement, dated May 31, 2021, by and between DENTSPLY SIRONA Inc and Keith J.

Preferability letter of PricewaterhouseCoopers, LLP, Independent Registered Public Accounting Firm (39)

Interim Chief Executive Officer Employment Agreement by and between DENTSPLY SIRONA Inc.

Groetelaars, dated April 16, 2022 (29)

Interim Chief Financial Officer Employment Agreement by and between DENTSPLY SIRONA Inc.

and Barbara W.

Bodem, dated April 16, 2022 (29)

Dentsply Sirona Inc.

Key Employee Severance Benefits Plan, dated May 25, 2022* (29)

Dentsply Sirona Inc.

Amended and Restated Key Employee Severance Benefits Plan, dated September 22, 2022.

Employment Agreement between DENTSPLY SIRONA Inc.

Campion, entered into as of August 22, 2022.

First Amendment to the Interim Chief Financial Officer Employment Agreement between DENTSPLY SIRONA Inc.

and Barbara W.

Bodem, dated as of September 22, 2022.

Offer Letter between DENTSPLY SIRONA Inc.

and Glenn Coleman, entered into as of September 22, 2022.

Subsidiaries of the Company (Filed herewith)

Consent of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP (Filed herewith)

Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) (34)

Section 302 Certification Statements Chief Executive Officer (Filed herewith)

11 unchanged sentences

(2) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2002, File 0-16211.

(3) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2002, File 0-16211.

(3) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2007, File No.

(4) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2008, File No.

(6) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2008, File No.

(7) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2009, File no.

(8) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2010, File no.

(9) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2011, File no.

(5) Incorporated by reference to exhibit included in the Company’s Registration Statement on Form S-3 dated August 15, 2011 (No.

1 unchanged sentence

(7) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2014, File no.

(13) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2014, File no.

(8) Incorporated by reference to exhibit included in the Company’s Form 8-K dated September 16, 2015, File no.

(9) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2015, File no.

(16) Incorporated by reference to exhibit included in the Form 8-K/A, filed by Sirona Dental Systems, Inc.

on July 12, 2012 (File no 000-22673).

(10) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2016, File no.

(18) Incorporated by reference to exhibit included in the Company’s Form 8-K, dated November 3, 2017, File no.0-16211.

(11) Incorporated by reference to exhibit included in the Company’s Form 8-K, dated January 17, 2018, File no.0-16211.

6 unchanged sentences

(18) Incorporated by reference to exhibit included in the Company's Form 8-K, dated March 8, 2019, File no.

(27) Incorporated by reference to exhibit included in the Company's Form 8-K, dated May 31, 2019, File no.

(19) Incorporated by reference to exhibit included in the Company's Form 8-K, dated June 26, 2019, File no.

2 unchanged sentences

(22) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2019, File no.

(32) Incorporated by reference to exhibit included in the Company's Form 8-K, dated April 9, 2020, File no.

(33) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended March 31, 2020, File no.

(23) Incorporated by reference to exhibit included in the Company's Form 8-K, dated May 26, 2020, File no.

(35) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended June 30, 2020, File no.

(24) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended September 30, 2020, File no.

(25) Incorporated by reference to exhibit included in the Company's Form 8-K, dated January 4, 2021, File no.

(38) Incorporated by reference to exhibit included in the Company's Form 8-K, dated June 1, 2021, File no.

(26) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended June 30, 2021, File no.

(27) Incorporated by reference to exhibit included in the Company's Form 10-K for the fiscal year ended December 31, 2021, File no.

(28) Incorporated by reference to exhibit included in the Company's Form 8-K, dated May 31, 2022, File no.

(29) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended June 30, 2022, File no.

(30) Incorporated by reference to exhibit included in the Company's Form 8-K, dated August 25, 2022, File no.

(31) Incorporated by reference to exhibit included in the Company's Form 8-K, dated September 22,, 2022, File no.

(32) Incorporated by reference to exhibit included in the Company’s Form 10-Q for the quarterly period ended September 30, 2022, File no.

Form 10-K Summary

1 unchanged sentence

DENTSPLY SIRONA Inc.

/s/ Donald M.

Chief Executive Officer

1 unchanged sentence

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Donald M.

March 1, 2022

Campion March 1, 2023

Chief Executive Officer and Director

(Principal Executive Officer)

Gomez March 1, 2022

Coleman March 1, 2023

Executive Vice President and

1 unchanged sentence

(Principal Financial Officer)

/s/ Ranjit S.

Chadha March 1, 2022

/s/ Richard M.

Wagner March 1, 2023

Chief Accounting Officer

4 unchanged sentences

Deese March 1, 2023

Groetelaars March 1, 2023

Groetelaars Date

Holden March 1, 2023

Betsy D Holden Date

Hosein March 1, 2023

2 unchanged sentences

Jansen Kraemer, Jr.

/s/ Arthur D.

Kowaloff March 1, 2022

Kowaloff Date

/s/ Gregory T.

6 unchanged sentences

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-K

Item 9A. Controls and Procedures