EX-99.1 2 d633124dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

    LOGO

Sirona Reports Record Fiscal 2013 Fourth Quarter and Full Year Results

 

    Record fourth quarter revenues of $278.6 million, up 12.6% compared to prior year, or up 8.3% constant currency*. Fiscal year 2013 revenues increased 12.5%, or up 11.7% constant currency.

 

    Fourth quarter diluted earnings per share of $0.65 on a GAAP reported basis compared to $0.62 in the prior year. Fourth quarter non-GAAP adjusted EPS* of $0.81, up 10.8% compared to $0.73 in the prior year. Fiscal 2013 EPS of $2.61 on a GAAP reported basis compared to $2.36 in the prior year. Fiscal 2013 non-GAAP adjusted EPS* of $3.41, up 12.4% compared to $3.03 in the prior year.

 

    Sirona announces fiscal 2014 guidance: revenue growth of 4% to 6% constant currency, and non-GAAP adjusted EPS* of $3.60 to $3.70 (reflecting growth of approximately 6% to 9%).

Long Island City, New York, November 22, 2013 – Sirona (Nasdaq: SIRO), the dental technology leader, today announced its financial results for the quarter and fiscal year ended September 30, 2013.

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

Revenue was $278.6 million, an increase of $31.2 million or up 12.6% (and up 8.3% on a constant currency basis). The Company’s business segments performed as follows: CAD/CAM Systems increased 35.2% (up 30.3% on a constant currency basis), Imaging Systems increased 5.5% (up 2.7% on a constant currency basis), Instruments increased 3.0% (down 2.6% on a constant currency basis), and Treatment Centers decreased 3.6% (down 8.9% on a constant currency basis).

Revenue in the United States increased another 2.8% on top of last year’s 34.1% growth. Q4 2012 was the first full quarter to benefit from the expanded exclusivity with Patterson and saw increased demand from the CEREC 27.5 event. Q4 2013 sales were particularly driven by the delivery of CAD/CAM trade-up units. Sales in international markets were strong, up 17.0% (up 10.6% constant currency), led by CAD/CAM and Imaging in Europe. Sales were exceptionally strong in Germany, which benefited from a CAD/CAM trade-up program as well as generally increasing demand for products in this segment.

Gross profit was $143.3 million, up $11.2 million. Gross profit margin was 51.4% in the fourth quarter of Fiscal 2013, compared to 53.4% in the prior year. Gross profit margin as a percent of sales was negatively impacted by unfavorable product mix which was partially offset by lower deal-related amortization.

 

* 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 fourth quarter of 2013 was $36.2 million, or $0.65 per diluted share, versus $34.7 million, or $0.62 per diluted share in the prior year period. Non-GAAP adjusted earnings per diluted share for the fourth quarter of 2013 was $0.81 compared to $0.73 in the prior year quarter, or an increase of 10.8%. A reconciliation of the non-GAAP measure to earnings per share calculated on a GAAP basis is provided in the attached table.

At September 30, 2013, the Company had cash and cash equivalents of $241.7 million and total debt of $75.4 million, resulting in net cash of $166.3 million. This compares to net cash of $75.6 million at September 30, 2012.

Jeffrey Slovin, President and CEO of Sirona commented: “Our record fourth quarter was led by CAD/CAM’s 30.3% constant currency growth, driven by robust trade-up programs and new user demand. On a regional basis, Germany had another exceptional quarter, ending the year with 23.4% growth, constant currency.”

Mr. Slovin continued: “I am pleased to report that fiscal 2013 was an extremely successful year filled with many strategic and operational accomplishments. We delivered on our goals, including double digit top and bottom line growth. This marks the third consecutive year of double digit revenue growth which is the result of increasing adoption of Sirona’s technology and products around the world.”

Fiscal 2013 vs. Fiscal 2012 Financial Results

Revenue was $1,101.5 million, an increase of $122.1 million or up 12.5% (and up 11.7% on a constant currency basis). The Company’s business segments grew as follows: CAD/CAM Systems increased 22.4% (up 21.6% on a constant currency basis), Imaging Systems increased 10.0% (up 9.5% on a constant currency basis), Treatment Centers increased 6.9% (up 5.8% on a constant currency basis), and Instruments increased 1.0% (flat on a constant currency basis).

Revenue in the United States increased 18.2% and benefitted from strong demand for our Imaging and CAD/CAM products, the impact of implementation of the Medical Device Tax in 2013 and anticipated changes in tax benefits in the first quarter, the delivery of Omnicam trade-ups particularly in the third and fourth quarters, and the expanded agreement with Patterson. Revenues outside the United States increased 10.1% (up 9.1% constant currency) and were particularly driven by Germany, which increased 23.4% at constant currency. In Germany, we benefitted from orders following the International Dental Show in Cologne in March 2013, where we introduced a record 25 new products, a successful trade-up program in the CAD/CAM segment, as well as last-edition sales of our renowned M1+ treatment center unit.

Gross profit was $591.4 million, up $67.4 million. Gross profit margin was 53.7% for Fiscal 2013, compared to 53.5% in the prior year. Gross profit margin as a percent of sales was positively impacted by lower deal-related amortization which more than offset unfavorable product mix.

Fiscal 2013 net income was $146.7 million, or $2.61 per diluted share, versus $133.8 million, or $2.36 per diluted share in the prior year period. Fiscal 2013 Non-GAAP adjusted earnings per diluted share was $3.41 compared to $ 3.03 in Fiscal 2012, or an increase of 12.4%.


Fiscal 2014 Guidance

Management anticipates fiscal year 2014 constant currency revenue growth to be in the range of 4% to 6%, and EPS on a non-GAAP adjusted basis* in the range of $3.60 to $3.70 (reflecting growth of approximately 6% to 9%).

“In fiscal 2014 we continue to see strong demand for our products and expect to generate solid bottom line leverage. The 4% to 6% revenue guidance range reflects the difficult comparisons created by this year’s 20% constant currency growth in our two largest markets, the U.S. and Germany,” said Mr. Slovin.

Conference Call/Webcast Information

Sirona will hold a conference call to discuss its financial results at 8:30 a.m. Eastern Time on November 22, 2013. The teleconference can be accessed by calling +1-877-703-6107 (domestic) or +1-857-244-7306 (international) using passcode # 17519230. 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 November 29, 2013 by calling +1-888-286-8010 (domestic) or +1-617-801-6888 (international) using passcode #73844233. 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 month ended
September 30,

   

Year ended

September 30,

 
     2013     2012     2013     2012  
     $‘000s (except per share amounts)     $‘000s (except per share amounts)  

Revenue

   $ 278,604      $ 247,364      $ 1,101,491      $ 979,351   

Cost of sales

     135,313        115,285        510,136        455,400   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     143,291        132,079        591,355        523,951   

Selling, general and administrative expense

     83,372        76,912        332,849        295,659   

Research and development

     14,649        12,606        59,575        52,622   

Provision for doubtful accounts and notes receivable

     (152     (338     613        (75

Net other operating income

     (2,500     (2,500     (14,414     (10,000
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     47,922        45,399        212,732        185,745   

(Gain)/loss on foreign currency transactions, net

     1,848        (382     12,355        5,873   

(Gain)/loss on derivative instruments

     (738     (2,147     (421     (1,961

Interest expense, net

     822        984        3,410        3,767   

Other (income)/expense

     (1,227     (529     (183     (257
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before taxes

     47,217        47,473        197,571        178,323   

Income tax provision

     10,741        12,622        49,022        42,718   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     36,476        34,851        148,549        135,605   

Less: Net income attributable to noncontrolling interests

     241        115        1,804        1,773   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Sirona Dental Systems, Inc.

   $ 36,235      $ 34,736      $ 146,745      $ 133,832   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

- Basic

   $ 0.66      $ 0.63      $ 2.67      $ 2.41   

- Diluted

   $ 0.65      $ 0.62      $ 2.61      $ 2.36   

Weighted average shares - basic

     54,980,287        55,128,904        54,979,044        55,524,188   

Weighted average shares - diluted

     56,090,777        56,388,273        56,213,992        56,755,396   


SIRONA DENTAL SYSTEMS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

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

ASSETS

    

Current assets

    

Cash and cash equivalents

   $ 241,745      $ 151,088   

Restricted cash

     681        —     

Accounts receivable, net of allowance for doubtful accounts of $1,588 and $1,408, respectively

     145,212        132,569   

Inventories, net

     109,175        81,007   

Deferred tax assets

     31,370        24,781   

Prepaid expenses and other current assets

     32,556        17,622   

Income tax receivable

     2,345        2,213   
  

 

 

   

 

 

 

Total current assets

     563,084        409,280   

Property, plant and equipment, net of accumulated depreciation and amortization of $156,730 and $125,706, respectively

     182,737        143,351   

Goodwill

     672,086        631,077   

Intangible assets, net of accumulated amortization of $503,130 and $446,447, respectively

     301,718        288,556   

Other non-current assets

     5,620        9,382   

Deferred tax assets

     13,174        12,888   
  

 

 

   

 

 

 

Total assets

   $ 1,738,419      $ 1,494,534   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities

    

Trade accounts payable

   $ 73,235      $ 51,961   

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

     447        478   

Income taxes payable

     9,319        14,906   

Deferred tax liabilities

     745        817   

Accrued liabilities and deferred income

     162,341        118,075   
  

 

 

   

 

 

 

Total current liabilities

     246,087        186,237   

Long-term debt

     75,000        75,000   

Deferred tax liabilities

     131,455        122,441   

Other non-current liabilities

     27,447        16,852   

Indebtedness to related parties

    

Pension related provisions

     65,985        61,629   

Deferred income

     34,401        40,000   
  

 

 

   

 

 

 

Total liabilities

     580,375        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;
57,213,615 shares issued and 54,999,436 shares outstanding at Sept. 30, 2013;
56,598,045 shares issued and 55,051,673 shares outstanding at Sept. 30, 2012

     572        566   

Additional paid-in capital

     723,288        699,279   

Treasury stock (at cost)
2,214,179 shares held at cost at Sept. 30, 2013;
1,546,372 shares held at cost at Sept. 30, 2012

     (111,955     (69,058

Excess of purchase price over predecessor basis

     (49,103     (49,103

Retained earnings

     584,216        437,471   

Accumulated other comprehensive income/(loss)

     8,607        (29,797
  

 

 

   

 

 

 

Total Sirona Dental Systems, Inc. shareholders’ equity

     1,155,625        989,358   
  

 

 

   

 

 

 

Noncontrolling interests

     2,419        3,017   
  

 

 

   

 

 

 

Total shareholders’ equity

     1,158,044        992,375   

Total liabilities and shareholders’ equity

   $ 1,738,419      $ 1,494,534   
  

 

 

   

 

 

 


SIRONA DENTAL SYSTEMS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Year ended
September 30,
2013
    Year ended
September 30,
2012
 
     $‘000s  

Cash flows from operating activities

    

Net income

   $ 148,549      $ 135,605   

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

    

Depreciation and amortization

     75,596        77,749   

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

     93        (91

(Gain)/loss on derivative instruments

     (421     (1,961

(Gain)/loss on foreign currency transactions

     12,355        5,873   

Deferred income taxes

     (2,665     (17,274

Amortization of debt issuance cost

     554        631   

Share-based compensation expense

     12,813        8,623   

Changes in assets and liabilities

    

Accounts receivable

     (13,174     (38,301

Inventories

     (26,778     8,824   

Prepaid expenses and other current assets

     (14,345     (1,935

Restricted cash

     (698     646   

Other non-current assets

     (278     (290

Trade accounts payable

     16,398        4,600   

Accrued liabilities and deferred income

     22,857        (6,674

Other non-current liabilities

     7,555        15,144   

Income taxes receivable

     (59     1,954   

Income taxes payable

     (6,327     8,246   
  

 

 

   

 

 

 

Net cash provided by operating activities

   $ 232,025      $ 201,369   

Cash flows from investing activities

    

Investment in property, plant and equipment

     (70,715     (47,131

Proceeds from sale of property, plant and equipment

     83        105   

Prepayments for other assets

     —          (4,612

Purchase of intangible assets

     (1,194     (514

Acquisition of business, net of cash acquired

     (35,019     —     
  

 

 

   

 

 

 

Net cash used in investing activities

   $ (106,845   $ (52,152


     Year ended
September 30,
2013
    Year ended
September 30,
2012
 
     $‘000s  

Cash flows from financing activities

    

Repayments of short-term and long-term debt

   $ (98   $ (434,364

Proceeds from borrowings

     —          138,932   

Purchase of treasury stock

     (42,897     (49,309

Debt issuance cost

     —          (2,765

Purchase of shares from noncontrolling interest

     (1,386     —     

Dividend distributions to noncontrolling interest

     (1,435     (1,689

Common shares issued under share based compensation plans

     7,926        3,932   

Tax effect of common shares exercised under share based compensation plans

     (183     (181
  

 

 

   

 

 

 

Net cash used in financing activities

   $ (38,073   $ (345,444

Change in cash and cash equivalents

     87,107        (196,227

Effect of exchange rate change on cash and cash equivalents

     3,550        1,456   

Cash and cash equivalents at beginning of period

     151,088        345,859   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 241,745      $ 151,088   
  

 

 

   

 

 

 

Supplemental information

    

Interest paid

   $ 2,848      $ 2,966   

Interest capitalized

     184        237   

Income taxes paid

     65,663        44,795   

Acquisition of business

    

Current assets

   $ 5,185      $     

Non-current assets

     61,237     

Current liabilities

     (7,835  

Non-current liabilities

     (11,951  
  

 

 

   

 

 

 
     46,636        —     

Cash paid

     (36,673  

Settlement of balances

     (4,544  
  

 

 

   

 

 

 

Fair value of liabilities incurred

   $ 5,419      $ —     
  

 

 

   

 

 

 

Sale of business, net of cash sold

    

Current assets

   $ —        $ —     

Non-current assets

     —          —     

Current liabilities

     —          —     

Non-current liabilities

     —          —     
  

 

 

   

 

 

 
   $ —        $ —     
  

 

 

   

 

 

 


Reconciliation of GAAP and Non-GAAP Information (unaudited)

HISTORICAL

Non-GAAP Adjusted Net Income Financial Measures

(unaudited)

 

     Three months ended September 30, 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

       $ 36,235      $ 0.65   

Adjustments

        

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

   $ 10,457      $ 2,378        8,079     

(Gain)/loss on foreign currency transactions, net

     1,848        406        1,442     

(Gain)/loss on derivative instruments

     (738     (176     (562  
      

 

 

   

 

 

 

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

       $ 45,193      $ 0.81   
      

 

 

   

 

 

 

 

* tax impact calculated using estimated effective tax rate of 22.5%

 

     Three months ended September 30, 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

       $ 34,736      $ 0.62   

Adjustments

        

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

   $ 11,419      $ 3,092        8,327     

(Gain)/loss on foreign currency transactions, net

     (382     88        (470  

(Gain)/loss on derivative instruments

     (2,147     (571     (1,576  
      

 

 

   

 

 

 

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

       $ 41,017      $ 0.73   
      

 

 

   

 

 

 

 

** tax impact calculated using estimated effective tax rate of 26.6%


     Twelve months ended September 30, 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

       $ 146,745      $ 2.61   

Adjustments

        

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

   $ 40,212      $ 9,530        30,682     

(Gain)/loss on foreign currency transactions, net

     12,355        2,928        9,427     

(Gain)/loss on derivative instruments

     (421     (100     (321  

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 departing CEO and Chairman

     3,764        892        2,872     
      

 

 

   

 

 

 

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

       $ 191,600      $ 3.41   
      

 

 

   

 

 

 

 

* tax impact calculated using estimated effective tax rate of 23.7%

 

     Twelve months ended September 30, 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

       $ 133,832      $ 2.36   

Adjustments

        

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

   $ 46,622      $ 11,189        35,433     

(Gain)/loss on foreign currency transactions, net

     5,873        1,526        4,347     

(Gain)/loss on derivative instruments

     (1,961     (528     (1,433  
      

 

 

   

 

 

 

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

       $ 172,178      $ 3.03   
      

 

 

   

 

 

 

 

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


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

         $ 175      $ 3.11  

Adjustments

           

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

   $ 36      $ 9      $ 27     

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

     —          —           —       

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

     —          —           —       
        

 

 

    

 

 

 

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

         $ 202      $ 3.60  
        

 

 

    

 

 

 
     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

         $ 180      $ 3.21  

Adjustments

           

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

     36        9        27     

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

     —          —           —       

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

     —          —           —       
        

 

 

    

 

 

 

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

         $ 207      $ 3.70   
        

 

 

    

 

 

 

 

** We are unable to provide estimates for these items because we are unable to predict the 2014 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 ongoing 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.

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 ongoing 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 months ended September 30, 2013, was $1.35. The average exchange rate for the fiscal year ended September 30, 2013 was $1.31 and varied from $1.28 to $1.34. For the three months and full year ended September 30, 2012, an average exchange rate converting Euro denominated revenues into U.S. Dollars of $1.25 and $1.30, respectively, was applied.

Our forecasted 2014 constant currency net revenue guidance excludes the impact of foreign exchange. We are unable to reconcile our projected 2014 constant currency net revenue growth to our full-year projected 2014 net revenue growth because we are unable to predict the 2014 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.