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8-K - FORM 8-K - SIRONA DENTAL SYSTEMS, INC.d537012d8k.htm

Exhibit 99.1

 

LOGO

Sirona Reports Fiscal 2013 Second Quarter Results

 

   

Second quarter revenues of $267.3 million, up 15.3% compared to prior year, or up 14.7% constant currency*.

 

   

Second quarter diluted earnings per share of $0.56 on a GAAP reported basis compared to $0.54 in the prior year. Second quarter non-GAAP adjusted EPS* of $0.75, up 11.3% compared to $0.67 in the prior year.

 

   

Management now anticipates FY13 constant currency revenue growth at 10% to 12% (previously 9% to 11%), and non-GAAP adjusted EPS* in the range of $3.36 to $3.43 (reflecting growth of approximately 11% to 13%, compared to previous guidance of $3.33 to $3.43).

Long Island City, New York, May 10, 2013 – Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the quarter ended March 31, 2013.

Second Quarter Fiscal 2013 vs. Second Quarter Fiscal 2012 Financial Results

Revenue was $267.3 million, an increase of $35.5 million or up 15.3% (and up 14.7% on a constant currency basis). The Company’s business segments performed as follows: CAD/CAM Systems increased 21.1% (up 20.6% on a constant currency basis), Treatment Centers increased 17.6% (up 16.7% on a constant currency basis), Imaging Systems increased 11.8% (up 11.3% on a constant currency basis), and Instruments increased 2.9% (up 2.2% on a constant currency basis).

Revenue in the United States increased 12.1%, and revenues outside the United States increased 16.5% (up 15.7% constant currency). U.S. revenues benefited from strong demand for our Imaging and CAD/CAM products and the expanded agreement with Patterson. International sales were led by Germany and our non-European markets and were particularly strong in the CAD/CAM and Treatment Center segments.

Gross profit was $144.7 million, up $20.1 million. Gross profit margin was 54.1% in the second quarter of Fiscal 2013, compared to 53.8% in the prior year. Gross profit margin as a percent of sales was positively impacted by lower deal related amortization which more than offset margin compression mainly due to product mix.

 

* Non-GAAP adjusted EPS and constant currency growth and results are non-GAAP financial measures that exclude certain items. Please refer to “Reconciliation of GAAP and non-GAAP Information (unaudited)” in the attached exhibits for a description of these items.


Net income for the second quarter of 2013 was $31.7 million, or $0.56 per diluted share, versus $30.5 million, or $0.54 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share for the second quarter of 2013 was $0.75 compared to $0.67 in the prior year quarter or an increase of 11.3%. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.

At March 31, 2013, the Company had cash and cash equivalents of $156.1 million and total debt of $75.3 million, resulting in net cash of $80.7 million. This compares to net cash of $75.6 million at September 30, 2012.

Jeffrey Slovin, President and CEO of Sirona commented: “Sirona’s strong second quarter reflects our continued momentum in the marketplace. We posted record quarters in both CAD/CAM and Treatment Centers, up 20.6% and 16.7% respectively, on a constant currency basis. Importantly, our double digit growth was broad based, with the U.S. up 12.1%, and International markets up 15.7%, constant currency, led by Germany and non-European markets.”

Mr. Slovin continued: “Sirona once again demonstrated its market leadership at this year’s International Dental Show. We launched a record number of new products that improve the patient experience and dental practice. We launched “CAD/CAM for Everyone,” a significant expansion of our CAD/CAM product line to meet the diverse needs of our dentists and labs. With our current innovative product portfolio and our exceptional sales and service infrastructure, we are confident that Sirona is well positioned for future growth.”

Fiscal 2013 Guidance

Management now anticipates FY13 constant currency revenue growth at 10% to 12% (previously 9% to 11%), and non-GAAP adjusted EPS* in the range of $3.36 to $3.43 (reflecting growth of approximately 11% to 13%, compared to previous guidance of $3.33 to $3.43).

First Six Months Fiscal 2013 vs. First Six Months Fiscal 2012 Financial Results

Revenue was $539.7 million, an increase of $49.8 million or up 10.2% (up 11.4% on a constant currency basis). The Company’s business segments performed as follows: CAD/CAM Systems increased 17.3% (up 18.5% on a constant currency basis), Treatment Centers increased 10.6% (up 12.4% on a constant currency basis), Imaging Systems increased 6.7% (up 7.7% on a constant currency basis), and Instruments decreased 1.7% (down 0.1% on a constant currency basis).

Revenue in the United States increased 21.0%, and revenues outside the United States increased 6.1% (up 7.8% constant currency), with particularly strong performance in the CAD/CAM and Treatment Center segments.

Gross profit was $296.6 million, up $33.1 million. Gross profit margin was 54.9% in the first half of Fiscal 2013, compared to 53.8% in the prior year. Gross profit margin as a percentage of sales was positively impacted by lower levels of deal related amortization.


Net income for the six months ended March 31, 2013 was $70.0, or $1.24 per diluted share, versus $68.8 million, or $1.21 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share was $1.69 in the first half of Fiscal 2013 compared to $1.54 in the first half of Fiscal 2012 or an increase of 9.6%.

Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on May 10, 2013. The teleconference can be accessed by calling +1 866.318.8620 (domestic) or +1 617.399.5139 (international) using passcode # 33101324. The webcast will be available via the Internet at http://ir.sirona.com and a presentation relating to the call will be available on our website. A replay of the conference call will be available through May 17, 2013 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode #64526160. A web archive will be available for 30 days at www.sirona.com.

About Sirona Dental Systems, Inc.

Sirona, the dental technology leader, has served dealers and dentists worldwide for more than 130 years. Sirona develops, manufactures, and markets a complete line of dental products, including CAD/CAM restoration systems (CEREC), digital intra-oral, panoramic and 3D imaging systems, dental treatment centers and handpieces. Visit http://www.sirona.com for more information about Sirona and its products.

Contact information:

Joshua Zable

Vice President, Investor Relations

+1 718 482 2184

Joshua.Zable@Sirona.com

This press release contains forward-looking information about Sirona Dental Systems, Inc.’s financial results, guidance and estimates, business prospects, and products and services that involve substantial risks and uncertainties or other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. You can identify these statements by the use of words such as “may,” “could,” “estimate,” “will,” “believe,” “anticipate,” “think,” “intend,” “expect,” “project,” “plan,” “target,” “forecast”, and similar words and expressions which identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and involve known and unknown risks and uncertainties, and other factors. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date hereof. For a discussion of such risks, uncertainties and other matters that could cause actual results to differ materially, including risks relating to, among other factors, the market for dental product and services, pricing, future sales volume of the Company’s products, the possibility of changing economic, market and competitive conditions, dependence on products, dependence on key personnel, technological developments, intense competition, market uncertainties, dependence on distributors, ability to manage growth, dependence on key suppliers, dependence on key members of


management, government regulation, acquisitions and affiliations and currency exchange rate fluctuations, readers are urged to carefully review and consider various disclosures made by the Company in its Annual Report on Form 10-K and in its reports on Forms 10-Q and 8-K filed with the U.S. Securities and Exchange Commission, which can be accessed through the SEC’s website, www.sec.gov. This presentation contains non GAAP financial measures, which should not be viewed in isolation and do not purport to be an alternative to net income (loss) as an indicator of operating performance or an alternative to cash flows from operating activities as a measure of liquidity. The Company assumes no obligation to and expressly disclaims any obligation to update or revise any forward-looking statements contained in this document to reflect new information or future events or developments after the date any such statement is made.


SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(UNAUDITED)

 

     Three months ended     Six months ended  
     March 31,     March 31,  
     2013     2012     2013     2012  
     $‘000s (except per share amounts)     $‘000s (except per share amounts)  

Revenue

   $ 267,326      $ 231,864      $ 539,730      $ 489,980   

Cost of sales

     122,620        107,215        243,153        226,548   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     144,706        124,649        296,577        263,432   

Selling, general and administrative expense

     83,992        72,667        169,775        146,313   

Research and development

     15,102        13,638        29,197        26,924   

Provision for doubtful accounts and notes receivable

     547        728        617        767   

Net other operating income

     (2,500     (2,500     (9,414     (5,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     47,565        40,116        106,402        94,428   

(Gain)/loss on foreign currency transactions, net

     1,417        1,350        5,997        3,580   

(Gain)/loss on derivative instruments

     2,564        (2,936     1,218        (2,500

Interest expense, net

     830        1,014        1,800        1,917   

Other expense/(income)

     342        228        682        490   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     42,412        40,460        96,705        90,941   

Income tax provision

     10,179        9,305        25,405        20,916   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     32,233        31,155        71,300        70,025   

Less: Net income attributable to noncontrolling interests

     575        634        1,340        1,227   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Sirona Dental Systems, Inc.

   $ 31,658      $ 30,521      $ 69,960      $ 68,798   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income per share (attributable to Sirona Dental Systems, Inc. common shareholders):

        

- Basic

   $ 0.58      $ 0.55      $ 1.27      $ 1.23   

- Diluted

   $ 0.56      $ 0.54      $ 1.24      $ 1.21   

Weighted average shares - basic

     54,928,332        55,683,043        55,083,264        55,804,656   

Weighted average shares - diluted

     56,202,296        56,916,390        56,384,483        57,025,942   


SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

     March 31,     September 30,  
     2013     2012  
     (unaudited)        
     $‘000s (except per share amounts)  

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 156,088      $ 151,088   

Restricted cash

     167        —      

Accounts receivable, net of allowance for doubtful accounts of $1,535 and $1,408, respectively

     126,311        132,569   

Inventories, net

     106,376        81,007   

Deferred tax assets

     28,271        24,781   

Prepaid expenses and other current assets

     24,211        17,622   

Income tax receivable

     1,946        2,213   
  

 

 

   

 

 

 

Total current assets

     443,370        409,280   

Property, plant and equipment, net of accumulated depreciation and amortization of $139,845 and $125,706, respectively

     146,496        143,351   

Goodwill

     644,134        631,077   

Intangible assets, net of accumulated amortization of $463,173 and $446,447, respectively

     309,924        288,556   

Other non-current assets

     4,337        9,382   

Deferred tax assets

     13,011        12,888   
  

 

 

   

 

 

 

Total assets

   $ 1,561,272      $ 1,494,534   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities

    

Trade accounts payable

   $ 67,442      $ 51,961   

Short-term debt and current portion of long-term debt

     344        478   

Income taxes payable

     10,729        14,906   

Deferred tax liabilities

     336        817   

Accrued liabilities and deferred income

     115,753        118,075   
  

 

 

   

 

 

 

Total current liabilities

     194,604        186,237   

Long-term debt

     75,000        75,000   

Deferred tax liabilities

     131,350        122,441   

Other non-current liabilities

     24,372        16,852   

Pension related provisions

     61,313        61,629   

Deferred income

     35,000        40,000   
  

 

 

   

 

 

 

Total liabilities

     521,639        502,159   
  

 

 

   

 

 

 

Shareholders’ equity

    

Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued and outstanding)

     0        0   

Common stock ($0.01 par value; 95,000,000 shares authorized; 56,868,619 shares issued and 54,937,167 shares outstanding at Mar. 31, 2013; 56,598,045 shares issued and 55,051,673 shares outstanding at Sept. 30, 2012

     569        566   

Additional paid-in capital

     708,241        699,279   

Treasury stock (at cost) 1,931,452 shares held at cost at Mar. 31, 2013; 1,546,372 shares held at cost at Sept. 30, 2012

     (92,926     (69,058

Excess of purchase price over predecessor basis

     (49,103     (49,103

Retained earnings

     507,431        437,471   

Accumulated other comprehensive income/(loss)

     (36,420     (29,797
  

 

 

   

 

 

 

Total Sirona Dental Systems, Inc. shareholders’ equity

     1,037,792        989,358   
  

 

 

   

 

 

 

Noncontrolling interests

     1,841        3,017   
  

 

 

   

 

 

 

Total shareholders’ equity

     1,039,633        992,375   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 1,561,272      $ 1,494,534   
  

 

 

   

 

 

 

 

Page 6


SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

     Six months ended  
     March 31,  
     2013     2012  
     $‘000s  

Cash flows from operating activities

    

Net income

   $ 71,300      $ 70,025   

Adjustments to reconcile net income to net cash provided by operating activities

    

Depreciation and amortization

     36,457        38,460   

(Gain)/loss on disposal of property, plant and equipment

     93        —      

(Gain)/loss on derivative instruments

     1,218        (2,500

(Gain)/loss on foreign currency transactions

     5,997        3,580   

Deferred income taxes

     5,374        (8,147

Amortization of debt issuance cost

     277        351   

Share-based compensation expense

     8,352        4,290   

Changes in assets and liabilities

    

Accounts receivable

     2,689        (18,606

Inventories

     (25,333     (8,262

Prepaid expenses and other current assets

     (6,902     (6

Restricted cash

     (167     646   

Other non-current assets

     (5     (234

Trade accounts payable

     16,118        (5,431

Accrued liabilities and deferred income

     (24,252     (16,932

Other non-current liabilities

     2,386        522   

Income taxes receivable

     260        1,208   

Income taxes payable

     (4,208     6,140   
  

 

 

   

 

 

 

Net cash provided by operating activities

     89,654        65,104   

Cash flows from investing activities

    

Investment in property, plant and equipment

     (22,270     (18,208

Proceeds from sale of property, plant and equipment

     83        —      

Prepayments for other assets

     —           (4,612

Purchase of intangible assets

     (39     (72

Acquisition of business, net of cash acquired

     (35,019     —      
  

 

 

   

 

 

 

Net cash used in investing activities

     (57,245     (22,892

 

Page 7


     Six months ended  
     March 31,  
     2013     2012  
     $‘000s  

Cash flows from financing activities

    

Repayments of short-term and long-term debt

     (98     (433,093

Proceeds from borrowings

     —           141,783   

Purchase of treasury stock

     (23,868     (16,779

Debt issuance cost

     —           (2,765

Purchase of shares from noncontrolling interest

     (870     —      

Dividend distributions to noncontrolling interest

     (1,435     (1,689

Common shares issued under share based compensation plans

     3,582        1,664   

Tax effect of common shares issued under share based compensation plans

     (3,290     (1,067
  

 

 

   

 

 

 

Net cash used in financing activities

     (25,979     (311,946

Change in cash and cash equivalents

     6,430        (269,734

Effect of exchange rate change on cash and cash equivalents

     (1,430     1,665   

Cash and cash equivalents at beginning of period

     151,088        345,859   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 156,088      $ 77,790   
  

 

 

   

 

 

 

 

Page 8


Reconciliation of GAAP and Non-GAAP Information (unaudited)

HISTORICAL

Non-GAAP Adjusted Net Income Financial Measures (unaudited)

 

     GAAP Reconciliation to Non-GAAP  
     Three months ended March 31, 2013  
     Pre Tax      Tax Impact*      After Tax      Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 31,658       $ 0.56   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 9,766       $ 2,344         7,422      

(Gain)/loss on foreign currency transactions, net

     1,417         340         1,077      

(Gain)/loss on derivative instruments

     2,564         615         1,949      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 42,106       $ 0.75   
        

 

 

    

 

 

 

 

* tax impact calculated using estimated effective tax rate of 24%

 

     GAAP Reconciliation to Non-GAAP  
     Three months ended March 31, 2012  
     Pre Tax     Tax Impact**     After Tax     Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 30,521      $ 0.54   

Adjustments

        

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 11,707      $ 2,693        9,014     

(Gain)/loss on foreign currency transactions, net

     1,350        311        1,040     

(Gain)/loss on derivative instruments

     (2,936     (675     (2,261  
      

 

 

   

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 38,314      $ 0.67   
      

 

 

   

 

 

 

 

** tax impact calculated using estimated effective tax rate of 23%

 

Page 9


     GAAP Reconciliation to Non-GAAP  
     Six months ended March 31, 2013  
     Pre Tax      Tax Impact*      After Tax      Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 69,960       $ 1.24   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 19,399       $ 4,656         14,743      

(Gain)/loss on foreign currency transactions, net

     5,997         1,439         4,558      

(Gain)/loss on derivative instruments

     1,218         292         926      

Other items:

           

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2,196            2,196      

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the previous CEO and Chairman

     3,764         903         2,861      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 95,243       $ 1.69   
        

 

 

    

 

 

 

 

* tax impact calculated using estimated effective tax rate of 24%

 

     GAAP Reconciliation to Non-GAAP  
     Six months ended March 31, 2012  
     Pre Tax     Tax Impact**     After Tax     Per Diluted
Share
 
     $‘000s, except per share amount  

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 68,798      $ 1.21   

Adjustments

        

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 23,666      $ 5,443        18,223     

(Gain)/loss on foreign currency transactions, net

     3,580        823        2,757     

(Gain)/loss on derivative instruments

     (2,500     (575     (1,925  
      

 

 

   

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

       $ 87,852      $ 1.54   
      

 

 

   

 

 

 

 

** tax impact calculated using estimated effective tax rate of 23%

 

Page 10


FORWARD-LOOKING

Non-GAAP Adjusted EPS Guidance (unaudited)

 

     Low End of Guidance  
     Pre Tax      Tax Impact      After Tax      Per Diluted
Share
 
     $ millions, except per share amount         

GAAP net income attributable to Sirona Dental Systems, Inc. Shareholders

         $ 157       $ 2.76   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

   $ 38       $ 9       $ 29      

(Gain)/loss Foreign Currency Transactions, net**

     —           —           —        

(Gain)/loss on derivative instruments, net**

     —           —           —        

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2            2      

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the departing CEO and Chairman

     4         1         3      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 191       $ 3.36   
        

 

 

    

 

 

 
     High End of Guidance  
     Pre Tax      Tax Impact      After Tax      Per Diluted
Share
 
     $ millions, except per share amount         

GAAP net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 161       $ 2.84   

Adjustments

           

Amortization and depreciation expense resulting from the step-up to fair values of intangible assets related to past business combinations

     38       $ 9       $ 29      

(Gain)/loss Foreign Currency Transactions, net**

   $  —           —         $  —        

(Gain)/loss on derivative instruments, net**

     —           —           —        

Non-cash remeasurement of deferred tax assets and liabilities due to an increase in German trade tax rate

     2            2      

Non-cash compensation charge for the revaluation of share based compensation in connection with the Transition Agreement for the departing CEO and Chairman

     4         1         3      
        

 

 

    

 

 

 

Non-GAAP adjusted net income attributable to Sirona Dental Systems, Inc. shareholders

         $ 195       $ 3.43   
        

 

 

    

 

 

 

 

** We are unable to provide estimates for these items because we are unable to predict the 2013 and long-term impact of foreign exchange due to unpredictability of future changes in foreign exchange rates.

To supplement our consolidated financial statements and our business outlook, we use the following non-GAAP financial measures: (i) non-GAAP adjusted net income, and (ii) non-GAAP adjusted earnings per diluted share, which exclude, as applicable, amortization and depreciation expense resulting from the step-up to fair values of intangible and tangible assets related to past business combinations, gain/loss on foreign currency transactions, gain/loss on derivative instruments and any related tax effects and to the extent relevant in a particular period, any other cash or non-cash items that management does not view as indicative of its on-going operating performance. Also set forth above under the heading “FORWARD-LOOKING” are reconciliations of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures.

Management recognizes that the use of these non-GAAP measures has limitations, including the fact that they might not be comparable with similar non-GAAP measures used by other companies and that management must exercise judgment in determining which types of charges and other items should be excluded from its non-GAAP financial measures. Management currently compensates for these limitations by providing full disclosure of each non-GAAP financial measure and a reconciliation to the most directly comparable GAAP measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

 

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We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our “core operating performance”. Management believes that “core operating performance” represents Sirona’s operating performance in the ordinary, ongoing and customary course of its operations. Accordingly, management excludes from “core operating performance” the impact of acquisition-related intangible depreciation and amortization in order to compare our underlying financial performance to prior periods, certain charges related to currency revaluation of assets and liabilities that do not reflect our period-to-period core operating performance, and to the extent relevant in a particular period, any other cash or non-cash items that management does not view as indicative of its on-going operating performance. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management’s internal evaluation of period-to-period comparisons. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are provided to and used by our institutional investors and the analyst community to facilitate comparisons with prior and subsequent reporting periods. Constant Currency: We have included certain revenue information in this press release on a constant currency basis. This information is a non-GAAP financial measure. We additionally present revenue on a constant currency basis because we believe it facilitates a comparison of our operating results from period to period without regard to changes resulting solely from fluctuations in currency rates.

Sirona calculates constant currency revenue growth by comparing current period revenues to prior period revenues with both periods converted at the U.S. Dollar/Euro average foreign exchange rate for each month of the current period. The average exchange rate for the three and six months ended March 31, 2013, were $1.32086 and $1.30884, respectively, and varied from $1.28296 to $1.33851. For the three and six months ended March 31, 2012, an average exchange rate converting Euro denominated revenues into U.S. Dollars of $1.31098 and $1.33027, respectively, was applied.

Our forecasted 2013 constant currency net revenue guidance excludes the impact of foreign exchange. We are unable to reconcile our projected 2013 constant currency net revenue growth to our full-year projected 2013 net revenue growth because we are unable to predict the 2013 and long-term impact of foreign exchange due to the unpredictability of future changes in foreign exchange rates. Therefore, we are unable to provide a reconciliation of these measures.

 

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