What changed in this filing

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Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-01 · 43 added, 74 removed, 205 unchanged (36% 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 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.

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 December 31, 2023, 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 or submitted 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 Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm

Management’s report on the Company’s internal control over financial reporting and the report of our independent registered public accounting firm on the effectiveness of our internal control over financial reporting are included under Item 8 of this Form 10-K.

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 quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting

As previously described in the Explanatory Note to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as amended and filed on November 7, 2022, and the Company’s Current Report on Form 8-K filed August 2, 2023, the Company identified four material weaknesses in internal control over financial reporting and has devoted substantial resources to the implementation of remediation efforts, as described most recently in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

During the fourth quarter of 2023, the Company has successfully completed the testing and evaluation necessary to conclude that, as of December 31, 2023, the previously identified material weaknesses have been remediated.

Other Information

Not Applicable

Rule 10b5-1 Trading Plans

During the year ended December 31, 2023, none of the Company’s directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

Disclosure Regarding Foreign Jurisdiction that Prevent Inspections

4 unchanged sentences

The Company has a Code of Ethics and Business Conduct that applies to the Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and the Board of Directors and substantially all of the Company’s management level employees.

A copy of the Code of Ethics and Business Conduct is available in the Investor Relations section of the Company’s website at www.dentsplysirona.com.

The Company intends to disclose any amendment to its Code of Ethics and Business Conduct that relates to any element enumerated in Item 406(b) of Regulation S-K, and any waiver from a provision of the Code of Ethics and Business Conduct granted to any director, principal executive officer, principal financial officer, principal accounting officer, or any of the Company’s other executive officers, in the Investor Relations section of the Company’s website at www.dentsplysirona.com, within four business days following the date of such amendment or waiver.

A copy of the Code of Ethics and Business Conduct is available in the Investors section of the Company’s website at www.dentsplysirona.com.

The Company intends to disclose any amendment to its Code of Ethics and Business Conduct that relates to any element enumerated in Item 406(b) of Regulation S-K, and any waiver from a provision of the Code of Ethics and Business Conduct granted to any director, principal executive officer, principal financial officer, principal accounting officer, or any of the Company’s other executive officers, in the Investors section of the Company’s website at www.dentsplysirona.com, within four business days following the date of such amendment or waiver.

Executive Compensation

12 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021

Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income or Loss for the years ended December 31, 2023, 2022, and 2021

Consolidated Balance Sheets as of December 31, 2023 and 2022

12 unchanged sentences

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

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

Seventh Amended and Restated By-laws of DENTSPLY SIRONA Inc.

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

73 unchanged sentences

Form of Amended and Restated DENTSPLY SIRONA Inc.

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

Indemnification Agreement dated as of December 14, 2022* (33)

Form of Amended and Restated DENTSPLY SIRONA Inc.

Indemnification Agreement dated as of February 27, 2024* (Filed herewith)

Form of Option Grant Notice Under the DENTSPLY SIRONA Inc.

5 unchanged sentences

Employee Stock Purchase Plan, dated May 23, 2018* (16)

Non-Employee Director Compensation Policy, effective March 27, 2019* (21)

Non-Employee Director Compensation Policy, effective May 22, 2019* (20)

Non-Employee Director Compensation Policy, effective January 1, 2020* (22)

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

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

Non-Employee Director Compensation Policy, effective July 27, 2023* (Filed herewith)

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

20 unchanged sentences

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

Credit Agreement, dated as of May 12, 2023, among DENTSPLY SIRONA Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Citibank, N.A., as Syndication Agent, Bank of America, N.A., Commerzbank AG, New York Branch, PNC Bank, National Association, TD Bank, N.A., Truist Bank and Wells Fargo Bank, National Association as Co-Documentation Agents, JPMorgan Chase Bank, N.A., and Citibank N.A., as Joint Bookrunners and Joint Leader Arrangers, and the several lenders party thereto (34)

Insider Trading Policy revised July 26, 2022 (Filed herewith)

Dodd-Frank Act Restatement Clawback Policy dated November 21, 2023 (Filed herewith)

Subsidiaries of the Company (Filed herewith)

43 unchanged sentences

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

(33) Incorporated by reference to exhibit included in the Company’s Form 10-K for the fiscal year ended December 31, 2022, File no.

(34) Incorporated by reference to exhibit included in the Company’s Form 8-K, dated May 12, 2023, File no.

(35) Incorporated by reference to exhibit included in the Company’s Form 8-K, dated August 2, 2023, File no.

Form 10-K Summary

1 unchanged sentence

DENTSPLY SIRONA Inc.

President and

Chief Executive Officer

March 1, 2023

February 29, 2024

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.

Campion March 1, 2023

Chief Executive Officer and Director

Campion February 29, 2024

President and

Chief Executive Officer

(Principal Executive Officer)

Coleman March 1, 2023

Coleman February 29, 2024

Executive Vice President and

2 unchanged sentences

/s/ Richard M.

Wagner March 1, 2023

Wagner February 29, 2024

Chief Accounting Officer

(Principal Accounting Officer)

Brandt March 1, 2023

/s/ Gregory T.

Lucier February 29, 2024

Chairman of the Board of Directors

Brandt February 29, 2024

/s/ Willie A.

Deese March 1, 2023

Groetelaars March 1, 2023

Groetelaars Date

Holden March 1, 2023

Hosein March 1, 2023

/s/ Harry M Jansen Kraemer, Jr.

March 1, 2023

Jansen Kraemer, Jr.

/s/ Gregory T.

Lucier March 1, 2023

Deese February 29, 2024

Gladden February 29, 2024

Holden February 29, 2024

Hosein February 29, 2024

/s/ Jonathan J.

Mazelsky February 29, 2024

Mazelsky Date

/s/ Leslie F.

Varon March 1, 2023

Vergis March 1, 2023

/s/ Dorothea Wenzel March 1, 2023

Varon February 29, 2024

Vergis February 29, 2024

/s/ Dorothea Wenzel February 29, 2024

Dorothea Wenzel Date

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