Sirona Dental Systems (SIRO) 8-K Sirona Reports Fiscal 2010 Second Quarter Results

Exhibit 99.1

Sirona Reports Fiscal 2010 Second Quarter Results

• Revenue was $190.1 million, an increase of 15.4% compared to prior year, or up 11.0% on a constant currency basis.

• Operating income excluding amortization expense was $46.1 million, up 47.2% versus $31.3 million in the prior year.

• Cash flow from Operations was $34.2 million, compared to $23.4 million in the prior year quarter.

• Early debt repayment of $78.1 million.

• Sirona increases FY10 guidance – revenue growth of 6% to 8% constant currency (prev. 4% to 6%) and operating income excluding amortization expense of $178 to $184 million (prev. $170 to $176 million).

Long Island City, New York, May 5, 2010 – Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the three and six months ended March 31, 2010.

Second Quarter Fiscal 2010 vs. Second Quarter Fiscal 2009 Financial Results

Revenue was $190.1 million, an increase of $25.3 million or 15.4% (up 11.0% on a constant currency basis), with growth rates for the Company’s business segments as follows: Instruments increased 22.0% (up 15.1% constant currency); Treatment Centers increased 20.7% (up 13.9% constant currency); Imaging Systems increased 20.4% (up 16.6% constant currency); and CAD/CAM increased 6.3% (up 3.4% constant currency). Revenue in the United States increased by 7.7%, particularly driven by strong sales of our Galileos 3D imaging system. Outside the United States, revenue increased by 19.2% (up 12.5% constant currency), driven by strength in Germany and Australia.

Gross profit was $99.3 million, up $19.0 million. Gross profit margin was 52.2% in the second quarter of Fiscal 2010, compared to 48.7% in the prior year. The gross profit margin expansion was the result of product and regional mix and lower levels of amortization expense.

Second quarter 2010 operating income excluding amortization expense was $46.1 million (operating income of $30.6 million plus amortization expense of $15.5 million), compared to $31.3 million (operating income of $13.7 million plus amortization expense of $17.6 million) in the prior year.

Net income for the second quarter of 2010 was $17.5 million, or $0.31 per diluted share, compared to $0.6 million, or $0.01 per diluted share in the prior year period. Second quarter 2010 earnings per share included $0.21 of amortization and

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depreciation expense attributable to the write-up in value of assets due to purchase accounting, a loss of $0.07 related to the revaluation of the Patterson exclusivity fee, a loss of $0.06 resulting from the revaluation of short-term intra-group loans and a $0.01 gain on the sale of a subsidiary. For the second quarter of 2009, earnings per share included $0.23 of amortization and depreciation expense attributable to the write-up in value of assets due to purchase accounting, a loss of $0.05 related to the revaluation of the Patterson exclusivity fee, a $0.03 loss resulting from the revaluation of short-term intra-group loans and a $0.04 restructuring expense.

At March 31, 2010, the Company had cash and cash equivalents of $162.4 million and total debt of $367.3 million, resulting in net debt of $204.9 million. This compares to net debt of $293.8 million at September 30, 2009. The decrease in net debt was driven by strong cash flow from operations. In March, the Company paid back the second scheduled debt repayment of $78.1 million, eight months ahead of schedule.

Chairman, President & CEO, Jost Fischer commented; “We are pleased with our strong performance in the second quarter. Our innovative product launches and technologically advanced portfolio continue to drive our performance. This was highlighted by robust sales of our Galileos 3D imaging system, which benefited from heightened interest in our Galileos CEREC integration. Our bottom line benefited from strong sales growth, margin expansion and deleveraging. As a result of our first half 2010 performance, and our confidence in the remainder of the year, we are increasing our Fiscal 2010 guidance.”

Fiscal 2010 Guidance Update

The Company expects to achieve constant currency revenue growth in the range of 6% to 8% in Fiscal 2010, up from the previous guidance range of 4% to 6%. Operating income excluding amortization expense is expected to be in the range of $178 to $184 million, up from the previous guidance range of $170 million to $176 million.

First Half Fiscal 2010 vs. First Half Fiscal 2010 Financial Results

Revenue was $405.0 million, an increase of $60.4 million or up 17.5% (up 10.9% constant currency) with growth rates for the Company’s business segments as follows: CAD/CAM Systems increased 20.8% (up 15.5% constant currency); Instruments increased 20.4% (up 10.6% constant currency); Treatment Centers increased 16.1% (up 6.6% constant currency); and Imaging Systems increased 14.1% (up 9.2% constant currency). Revenue in the United States increased 10.0%. Outside the United States, revenue increased 21.4% (up 11.3% constant currency) driven by solid performance in Germany and Asia Pacific.

Gross profit increased by $44.4 million to $211.7 million, up 26.5%. Gross profit margins expanded 370 basis points to 52.3 percent, due to product and regional mix and lower levels of amortization expense.

First half 2010 operating income excluding amortization expense was $105.8 million (operating income of $74.1 million plus amortization expense of $31.7 million), compared to $70.7 million (operating income of $35.5 million plus amortization expense of $35.2 million) in the prior year. First half 2009 results included a $2.8 million restructuring expense.

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Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on May 5, 2010. The teleconference can be accessed by calling +1 866 730 5767 (domestic) or +1 857 350 1591(international) using passcode # 89692964. The webcast will be available via the Internet atwww.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 12, 2010 by calling +1 888 286 8010 (domestic) or +1 617 801 6888 (international) using passcode # 83030087. 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:

John Sweeney, CFA

Vice President, Investor Relations

Sirona Dental Systems, Inc.

+1 718 482 2184

john.sweeney@sirona.com

This press release and any attachment thereto 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 exspressions 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, readers are urged to carefully review and consider various disclosures made by the

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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. The Company assumes no obligation to update any forward-looking statements contained in this document or the attachments to reflect new information or future events or developments after the date any such statement is made.

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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENT

(UNAUDITED)

	Three months						Six months
	ended						ended
	March 31,						March 31,
	2010			2009			2010			2009
	$’000s (except per share amounts)						$’000s (except��per share amounts)
Revenue	$	190,136		$	164,822		$	404,959		$	344,543
Cost of sales		90,803			84,507			193,256			177,227
Gross profit		99,333			80,315			211,703			167,316
Selling, general and administrative expense		60,354			56,048			120,206			113,470
Research and development		11,690			10,043			23,155			21,101
Provision for doubtful accounts and notes receivable		72			221			136			446
Net other operating (income)/loss and restructuring costs		(3,408	)		270			(5,908	)		(3,191	)
Operating income		30,625			13,733			74,114			35,490
Loss on foreign currency transactions, net		5,049			7,077			4,416			10,669
(Gain)/loss on derivative instruments		(1,712	)		(240	)		(2,735	)		4,727
Interest expense, net		4,141			5,593			9,343			11,657
Other expense		404			—			784			—
Income before taxes		22,743			1,303			62,306			8,437
Income tax provision		4,548			364			12,461			2,362
Net income		18,195			939			49,845			6,075
Less: Net income attributable to noncontrolling interests		656			344			1,131			(79	)
Net income attributable to Sirona Dental Systems, Inc.	$	17,539		$	595		$	48,714		$	6,154
Income per share (attributable to Sirona Dental Systems, Inc. common shareholders):
- Basic	$	0.32		$	0.01		$	0.88		$	0.11
- Diluted	$	0.31		$	0.01		$	0.86		$	0.11
Weighted average shares - basic		55,122,944			54,818,604			55,044,832			54,856,537
Weighted average shares - diluted		56,610,111			55,044,094			56,490,563			55,103,133

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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			September 30,
	2010			2009
	(unaudited)
	$’000s (except per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	162,439		$	181,098
Restricted cash		721			902
Accounts receivable, net of allowance for doubtful accounts of $2.201 and $2,088, respectively		99,700			98,277
Inventories, net		73,144			74,525
Deferred tax assets		17,045			16,483
Prepaid expenses and other current assets		16,839			20,239
Income tax receivable		2,578			3,956
Total current assets		372,466			395,480
Property, plant and equipment, net of accumulated depreciation and amortization of $72,435 and $70,061, respectively		93,637			102,775
Goodwill		648,233			696,355
Investments		1,802			1,739
Intangible assets, net of accumulated amortization of $335,340 and $327,183, respectively		389,220			447,946
Other non-current assets		1,425			2,837
Deferred tax assets		1,107			943
Total assets	$	1,507,890		$	1,648,075
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	39,798		$	38,463
Short-term debt and current portion of long-term debt		2,988			4,688
Income taxes payable		7,821			5,191
Deferred tax liabilities		1,502			466
Accrued liabilities and deferred income		75,079			95,602
Total current liabilities		127,188			144,410
Long-term debt		364,336			470,224
Deferred tax liabilities		139,970			159,659
Other non-current liabilities		12,144			8,699
Pension related provisions		46,234			50,328
Deferred income		65,000			70,000
Total liabilities		754,872			903,320
Shareholders’ equity
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued and outstanding)		—			—
Common stock ($0.01 par value; 95,000,000 shares authorized; 55,241,095 shares issued and 55,213,372 shares outstanding at Mar. 31, 2010 and 54,972,754 shares issued and 54,945,031 shares outstanding at Sept. 30, 2009)		553			550
Additional paid-in capital		645,807			637,264
Treasury stock (27,723 shares at cost)		(284	)		(284	)
Excess of purchase price over predecessor basis		(49,103	)		(49,103	)
Retained earnings		140,571			91,857
Accumulated other comprehensive income		13,542			63,154
Total Sirona Dental Systems, Inc. shareholders’ equity		751,086			743,438
Noncontrolling interests		1,932			1,317
Total shareholders’ equity		753,018			744,755
Total liabilities and shareholders’ equity	$	1,507,890		$	1,648,075

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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six months ended March 31,
	2010			2009
	$’000s
Cash flows from operating activities
Net income	$	49,845		$	6,075
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		42,589			44,572
Loss on disposal of property, plant and equipment		15			80
(Gain)/loss on derivative instruments		(2,735	)		4,727
Loss on foreign currency transactions		4,416			10,669
Deferred income taxes		(9,491	)		(14,010	)
Amortization of debt issuance cost		586			597
Compensation expense from stock options		8,048			7,794
Changes in assets and liabilities
Accounts receivable		(7,288	)		(24,724	)
Inventories		(3,601	)		(1,776	)
Prepaid expenses and other current assets		6,701			(11,834	)
Restricted cash		109			(16	)
Other non-current assets		26			(664	)
Trade accounts payable		3,353			(3,177	)
Accrued interest on long-term debt		(1,412	)		(4,043	)
Accrued liabilities and deferred income		(25,309	)		6,371
Other non-current liabilities		4,037			(2,702	)
Income taxes receivable		1,506			2,066
Income taxes payable		3,415			1,867
Net cash provided by operating activities		74,810			21,872
Cash flows from investing activities
Investment in property, plant and equipment		(9,566	)		(10,137	)
Proceeds from sale of property, plant and equipment		150			283
Purchase of intangible assets		—			(64	)
Purchase of long-term investments		(230	)		(63	)
Sale of businesses, net of cash sold		1,928			4,985
Net cash used in investing activities		(7,718	)		(4,996	)
Cash flows from financing activities
Repayments of short-term and long-term debt		(78,072	)		(1,153	)
Purchase of treasury stock		—			(285	)
Common shares issued under share based compensation plans		2,973			134
Tax effect of common shares exercised under share based compensation plans		1,181			34
Net cash used in financing activities		(73,918	)		(1,270	)
Change in cash and cash equivalents		(6,826	)		15,606
Effect of exchange rate change on cash and cash equivalents		(11,833	)		(7,765	)
Cash and cash equivalents at beginning of period		181,098			149,663
Cash and cash equivalents at end of period	$	162,439		$	157,504

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Other Financial Data (unaudited)

	Three  months ended March 31,				Six  months ended March 31,
	2010		2009		2010		2009
	$’000s				$’000s
Net income attributable to Sirona Dental Systems, Inc.	$	17,539	$	595	$	48,714	$	6,154
Net interest expense		4,141		5,593		9,343		11,657
Provision for income taxes		4,548		364		12,461		2,362
Depreciation		5,307		4,792		10,929		9,400
Amortization		15,503		17,600		31,660		35,213
EBITDA	$	47,038	$	28,944	$	113,107	$	64,786

Supplemental Information (unaudited)

	Three  months ended March 31,				Six  months ended March 31,
	2010		2009		2010		2009
	$’000s				$’000s
Share-based compensation	$	4,109	$	3,959	$	8,048	$	7,794
Unrealized, non-cash loss on revaluation of the carrying value of the $-denominated exclusivity fee		5,099		4,034		6,451		6,325
Unrealized, non-cash loss on revaluation of the carrying value of short-term intra-group loans		4,404		2,510		5,671		3,912
	$	13,612	$	10,503	$	20,170	$	18,031

Notes to Tables Above

EBITDA is a non-GAAP financial measure that is reconciled to net income, its most directly comparable GAAP measure, in the accompanying financial tables. EBITDA is defined as net earnings before interest, taxes, depreciation and amortization. Sirona’s management utilizes EBITDA as an operating performance measure in conjunction with GAAP measures, such as net income and gross margin calculated in conformity with GAAP. EBITDA should not be considered in isolation or as a substitute for net income prepared in conformity with GAAP. There are material limitations associated with making adjustments to Sirona’s earnings to calculate EBITDA and using this non-GAAP financial measure as compared to the most directly comparable GAAP financial measure. For instance, EBITDA does not include:

• interest expense, and because Sirona has borrowed money in order to finance its operations, interest expense is a necessary element of its costs and ability to generate revenue;

• depreciation and amortization expense, and because Sirona uses capital assets, depreciation and amortization expense is a necessary element of its costs and ability to generate revenue; and

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• tax expense, and because the payment of taxes is part of Sirona’s operations, tax expense is a necessary element of costs and impacts Sirona’s ability to operate.

In addition, other companies may define EBITDA differently. EBITDA, as well as the other information in this filing, should be read in conjunction with Sirona’s financial statements and footnotes contained in the documents that Sirona files with the U.S. Securities and Exchange Commission.

In addition to EBITDA, the accompanying financial tables also set forth certain supplementary information that Sirona believes is useful for investors in evaluating Sirona’s underlying operations. This supplemental information includes share-based compensation expense and revaluation of the carrying value of the dollar-denominated exclusivity payment and on the carrying value of short-term intra-group loans. Sirona’s management believes that these items, which are noncash in nature, should be considered by investors in assessing Sirona’s financial condition, operating performance and underlying strength.

Sirona’s management uses EBITDA together with this supplemental information as an integral part of its reporting and planning processes and as one of the primary measures to, among other things:

(i) monitor and evaluate the performance of Sirona’s business operations;

(ii) facilitate management’s internal comparisons of the historical operating performance of Sirona’s business operations;

(iii) facilitate management’s external comparisons of the results of Sirona’s overall business to the historical operating performance of other companies that may have different capital structures and debt levels;

(iv) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and

(v) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.

Sirona’s management believes that EBITDA and the supplemental information provided is useful to investors as it provides them with disclosure of Sirona’s operating results on the same basis as that used by Sirona’s management.

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 supplementally 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 monthly exchange for the six months period that ended March 31, 2010 varied from $1.48102 to $1.35825 and was $1.43 on average. For the three and six

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months ended March 31, 2009, an average quarterly foreign exchange rate converting Euro-denominated revenues into U.S. Dollars of $1.30799 and $1.31347, respectively, was applied.

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