Second Quarter Fiscal 2009 vs. Second Quarter Fiscal 2008 Financial Results

Gross profit decreased by $6.1 million to $80.3 million, down 7%. Gross profit margins expanded 3.1%, mainly due to lower deal related amortization and product mix.

Second quarter 2009 operating income excluding amortization expense was $31.3 million (operating income of $13.7 million plus amortization expense of $17.6 million), against $39 million (operating income of $16.2 million plus amortization expense of $22.8 million) in the prior year. Second quarter 2009 results included a $2.8 million restructuring expense.

As of March 31, 2009, the company had cash and cash equivalents of $157.5 million and total debt of $520.0 million, resulting in net debt of $362.5 million. This compares to net debt of $403.8 million at September 30, 2008. The decrease in net debt was the result of positive cash flow from operations and a stronger US dollar relative to the Euro as the majority of Sirona’s debt is Euro denominated.

Chairman, president and chief executive officer Jost Fischer commented, As expected, our second quarter financial results declined year over year, due to the difficult economic environment, the challenging comparison caused by the MC XL milling unit upgrade program in the prior year quarter, and the timing of the biannual International Dental Show in Cologne. The IDS was a success for Sirona and we are pleased with the level of orders and leads generated at the show. Continuing our long standing tradition as the leading innovator of dental technology, we introduced a significant number of new products that showcased Sirona’s ongoing commitment to research and development.”

Fischer continued: “Our performance at the IDS, the success of our CEREC AC digital impression system, the upcoming AC trade-up program, and sales of our TENEO treatment center resulted in a solid start to our third quarter. We are encouraged by this positive business momentum and the market acceptance of our new product launches.”

Fiscal 2009 Outlook

The company reaffirmed its fiscal 2009 outlook and expects both revenues on a constant currency basis, and operating income excluding amortization to be flat as compared to fiscal 2008.

First Half Fiscal 2009 vs. First Half Fiscal 2008 Financial Results

Revenue was $344.5 million, a decline of $45.1 million or 11.6% (down 4.4% constant currency) with growth rates for the company’s business segments as follows: CAD/CAM Systems declined 9.5% (down 4.1% constant currency), Imaging Systems declined 10.8% (down 5.0% constant currency), Treatment Centers declined 14.0% (down 3.9% constant currency), and Instruments declined 15.2% (down 5.4% constant currency). Revenue in the US decreased 3.6%. Outside the US, revenue decreased 15.1% (down 4.8% constant currency) as positive revenue growth in non-US, non-European markets, driven by Sirona’s expanded presence in Japan and Australia, was more than off-set by declines in Europe.

Gross profit decreased by $13.4 million to $167.3 million, down 7.4%. Gross profit margins expanded 2.2%, mainly due to a lower level of deal related amortization and product mix.

First half 2009 operating income excluding amortization expense was $70.7 million (operating income of $35.5 million plus amortization expense of $35.2 million), against $88.5 million (operating income of $43.4 million plus amortization expense of $45.1 million) in the prior year. First half 2009 results included a $2.8 million restructuring expense.