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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(Mark One)

|þ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2009

or



| ̈ | Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 000-22673





Sirona Dental Systems, Inc.

(Exact name of registrant as specified in
charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 11-3374812                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|30-30 47thAvenue,
Suite 500, Long Island City, New York        |  | 11101                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (718) 482-2011





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                             |  |                      |  |                         
|---------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer   ̈   |  | Accelerated filer  þ |  | Non-accelerated filer   ̈
|                             |  |                     
|Smaller reporting company   ̈ |  |                      |  |                         

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes   ̈    No  þ

As of May 1, 2009, the number of shares outstanding of the Registrants Common Stock,
par value $.01 per share, was 54,856,265.









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SIRONA DENTAL SYSTEMS, INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED
MARCH 31, 2009

Index



|               |  |                                                                                                            |  |     
|-------------- |  | ---------------------------------------------------------------------------------------------------------- |  | ----
|               |  |                                                                                                            |  | Page
|               |  |                                                                                                           
|Part I.        |  | Financial Information (Unaudited)                                                                          |  | 3   
|               |  |                                                                                                           
|Item 1.        |  | Financial Statements                                                                                       |  | 3   
|               |  |                                                                                                           
|               |  | Condensed Consolidated Balance Sheets as of March 31, 2009 and September 30, 2008                          |  | 3   
|               |  |                                                                                                           
|               |  | Condensed Consolidated Income Statements for the three months and six months ended March 31, 2009 and 2008 |  | 4   
|               |  |                                                                                                           
|               |  | Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2009 and 2008           |  | 5   
|               |  |                                                                                                           
|               |  | Notes to the Condensed Consolidated Financial Statements                                                   |  | 7   
|               |  |                                                                                                           
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                      |  | 19  
|               |  |                                                                                                           
|Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk                                                 |  | 31  
|               |  |                                                                                                           
|Item 4.        |  | Controls and Procedures                                                                                    |  | 31  
|               |  |                                                                                                           
|Part II.       |  | Other Information                                                                                          |  | 32  
|               |  |                                                                                                           
|Item 1.        |  | Legal Proceedings                                                                                          |  | 32  
|               |  |                                                                                                           
|Item 1A.       |  | Risk Factors                                                                                               |  | 32  
|               |  |                                                                                                           
|Item 2.        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                |  | 32  
|               |  |                                                                                                           
|Item 3.        |  | Defaults upon Senior Securities                                                                            |  | 32  
|               |  |                                                                                                           
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                                        |  | 32  
|               |  |                                                                                                           
|Item 5.        |  | Other Information                                                                                          |  | 33  
|               |  |                                                                                                           
|Item 6.        |  | Exhibits                                                                                                   |  | 34  
|               | 
|Certifications |  | 34                                                                                                        
|               | 
|Signatures     |  | 35                                                                                                        



2



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|PART I | FINANCIAL INFORMATION (UNAUDITED)
|------ | ---------------------------------



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS



|                                                                                                     |  |                                   |           |   |                   |   |           |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                     |  | March 31,2009                     |           |   | September 30,2008 |  
|                                                                                                     |  | (unaudited)                       |           |   |                   |  
|                                                                                                     |  | $000s (except per share amounts) |          
|ASSETS                                                                                               |  |                                   |           |   |                   |   |           |  
|                                                                                                     |  |                                  
|Current assets                                                                                       |  |                                   |           |   |                   |   |           |  
|Cash and cash equivalents                                                                            |  | $                                 | 157,504   |   |                   | $ | 149,663   |  
|Restricted cash                                                                                      |  |                                   | 888       |   |                   |   | 934       |  
|Accounts receivable, net of allowance for doubtful accounts of and, respectively                     |  |                                   | 97,143    |   |                   |   | 80,319    |  
|Inventories, net                                                                                     |  |                                   | 74,245    |   |                   |   | 77,733    |  
|Deferred tax assets                                                                                  |  |                                   | 15,035    |   |                   |   | 12,199    |  
|Prepaid expenses and other current assets                                                            |  |                                   | 16,523    |   |                   |   | 21,407    |  
|Income tax receivable                                                                                |  |                                   | 9,681     |   |                   |   | 12,505    |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|                                                                                                     |  |                                  
|Total current assets                                                                                 |  |                                   | 371,019   |   |                   |   | 354,760   |  
|Property, plant and equipment, net of accumulated depreciation and amortization of and, respectively |  |                                   | 93,634    |   |                   |   | 100,134   |  
|Goodwill                                                                                             |  |                                   | 643,738   |   |                   |   | 683,075   |  
|Investments                                                                                          |  |                                   | 1,647     |   |                   |   | 1,584     |  
|Intangible assets, net of accumulated amortization of and, respectively                              |  |                                   | 451,182   |   |                   |   | 514,601   |  
|Other non-current assets                                                                             |  |                                   | 3,019     |   |                   |   | 3,661     |  
|Deferred tax assets                                                                                  |  |                                   | 870       |   |                   |   | 1,190     |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|Total assets                                                                                         |  | $                                 | 1,565,109 |   |                   | $ | 1,659,005 |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITY                                              |  |                                   |           |   |                   |   |           |  
|                                                                                                     |  |                                  
|Current liabilities                                                                                  |  |                                   |           |   |                   |   |           |  
|Trade accounts payable                                                                               |  | $                                 | 33,454    |   |                   | $ | 39,803    |  
|Short-term debt and current portion of long-term debt                                                |  |                                   | 81,002    |   |                   |   | 9,093     |  
|Income taxes payable                                                                                 |  |                                   | 6,110     |   |                   |   | 4,544     |  
|Deferred tax liabilities                                                                             |  |                                   | 244       |   |                   |   | 1,650     |  
|Accrued liabilities and deferred income                                                              |  |                                   | 84,839    |   |                   |   | 85,309    |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|                                                                                                     |  |                                  
|Total current liabilities                                                                            |  |                                   | 205,649   |   |                   |   | 140,399   |  
|Long-term debt                                                                                       |  |                                   | 439,042   |   |                   |   | 544,350   |  
|Deferred tax liabilities                                                                             |  |                                   | 155,175   |   |                   |   | 174,420   |  
|Other non-current liabilities                                                                        |  |                                   | 8,024     |   |                   |   | 11,489    |  
|Pension related provisions                                                                           |  |                                   | 44,125    |   |                   |   | 47,378    |  
|Deferred income                                                                                      |  |                                   | 75,000    |   |                   |   | 80,000    |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|Total liabilities                                                                                    |  |                                   | 927,015   |   |                   |   | 998,036   |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|Minority interest                                                                                    |  |                                   | 505       |   |                   |   | 626       |  
|                                                                                                     |  |                                  
|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;                                         |  |                                   |           |   |                   |   |           |  
|54,883,988 shares issued and 54,856,265 and 54,865,995 shares outstanding)                           |  |                                   | 549       |   |                   |   | 549       |  
|Additional paid-in capital                                                                           |  |                                   | 628,694   |   |                   |   | 620,732   |  
|Treasury stock (27,723 at cost)                                                                      |  |                                   | (284      | ) |                   |   |          |  
|Excess of purchase price over predecessor basis                                                      |  |                                   | (49,103   | ) |                   |   | (49,103   | )
|Retained earnings                                                                                    |  |                                   | 44,656    |   |                   |   | 38,502    |  
|Accumulated other comprehensive income                                                               |  |                                   | 13,077    |   |                   |   | 49,663    |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|Total shareholders equity                                                                           |  |                                   | 637,589   |   |                   |   | 660,343   |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  
|Total liabilities, minority interest and shareholders equity                                        |  | $                                 | 1,565,109 |   |                   | $ | 1,659,005 |  
|                                                                                                     |  |                                   |           |   |                   |   |           |  

The accompanying notes are an integral part of these financial statements.



3



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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS

(UNAUDITED)



|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|--------------------------------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                          |  | Three monthsendedMarch 31,        |            |   | Six monthsendedMarch 31,          |  
|                                                          |  | 2009                              |            |   | 2008                              |   |            | 2009 |  |   | 2008       |  
|                                                          |  | $000s (except per share amounts) |            |   | $000s (except per share amounts) |  
|Revenue                                                   |  | $                                 | 164,822    |   |                                   | $ | 189,461    |      |  | $ | 344,543    |   |  | $ | 389,567    |  
|Cost of sales                                             |  |                                   | 84,507     |   |                                   |   | 103,086    |      |  |   | 177,227    |   |  |   | 208,823    |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                              |  |                                   | 80,315     |   |                                   |   | 86,375     |      |  |   | 167,316    |   |  |   | 180,744    |  
|                                                          |  |                                   |            |  
|Selling, general and administrative expense               |  |                                   | 56,048     |   |                                   |   | 60,590     |      |  |   | 113,470    |   |  |   | 116,476    |  
|Research and development                                  |  |                                   | 10,043     |   |                                   |   | 11,967     |      |  |   | 21,101     |   |  |   | 25,675     |  
|Provision for doubtful accounts and notes receivable      |  |                                   | 221        |   |                                   |   | 140        |      |  |   | 446        |   |  |   | 197        |  
|Net other operating loss/(income) and restructuring costs |  |                                   | 270        |   |                                   |   | (2,500     | )    |  |   | (3,191     | ) |  |   | (5,000     | )
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Operating income                                          |  |                                   | 13,733     |   |                                   |   | 16,178     |      |  |   | 35,490     |   |  |   | 43,396     |  
|                                                          |  |                                   |            |  
|Foreign currency transactions loss/(gain), net            |  |                                   | 7,077      |   |                                   |   | (9,039     | )    |  |   | 10,669     |   |  |   | (14,925    | )
|(Gain)/loss on derivative instruments                     |  |                                   | (240       | ) |                                   |   | 2,995      |      |  |   | 4,727      |   |  |   | 5,213      |  
|Interest expense, net                                     |  |                                   | 5,593      |   |                                   |   | 6,655      |      |  |   | 11,657     |   |  |   | 13,401     |  
|Other Expense                                             |  |                                   |           |   |                                   |   | 305        |      |  |   |           |   |  |   | 305        |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Income before taxes and minority interest                 |  |                                   | 1,303      |   |                                   |   | 15,262     |      |  |   | 8,437      |   |  |   | 39,402     |  
|Income tax provision                                      |  |                                   | 364        |   |                                   |   | 4,579      |      |  |   | 2,362      |   |  |   | 11,821     |  
|Minority interest                                         |  |                                   | 344        |   |                                   |   | (246       | )    |  |   | (79        | ) |  |   | (333       | )
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Net income                                                |  | $                                 | 595        |   |                                   | $ | 10,929     |      |  | $ | 6,154      |   |  | $ | 27,914     |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|                                                          |  |                                   |            |  
|Income per share                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|- Basic                                                   |  | $                                 | 0.01       |   |                                   | $ | 0.20       |      |  | $ | 0.11       |   |  | $ | 0.51       |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|- Diluted                                                 |  | $                                 | 0.01       |   |                                   | $ | 0.20       |      |  | $ | 0.11       |   |  | $ | 0.50       |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Weighted average sharesbasic                             |  |                                   | 54,818,604 |   |                                   |   | 54,786,224 |      |  |   | 54,856,537 |   |  |   | 54,784,801 |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  
|Weighted average sharesdiluted                           |  |                                   | 55,044,094 |   |                                   |   | 55,189,583 |      |  |   | 55,103,133 |   |  |   | 55,357,044 |  
|                                                          |  |                                   |            |   |                                   |   |            |      |  |   |            |   |  |   |            |  

The accompanying notes are an integral part of these financial statements.



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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                             |  |                          |         |   |      |   |         |  
|---------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------- | -
|                                                                             |  | Six monthsendedMarch 31, |        
|                                                                             |  | 2009                     |         |   | 2008 |  
|                                                                             |  | $000s                   |        
|Cash flows from operating activities                                         |  |                          |         |   |      |   |         |  
|Net income                                                                   |  | $                        | 6,154   |   |      | $ | 27,914  |  
|                                                                             |  |                         
|Adjustments to reconcile net income to net cash used in operating activities |  |                          |         |   |      |   |         |  
|Minority interest                                                            |  |                          | (76     | ) |      |   | (329    | )
|Depreciation and amortization                                                |  |                          | 44,572  |   |      |   | 53,036  |  
|Loss on disposal of property, plant and equipment                            |  |                          | 80      |   |      |   | 46      |  
|Loss on derivative instruments                                               |  |                          | 4,727   |   |      |   | 5,213   |  
|Loss/(gain) on foreign currency transactions                                 |  |                          | 10,669  |   |      |   | (14,925 | )
|Deferred income taxes                                                        |  |                          | (14,010 | ) |      |   | (9,901  | )
|Amortization of debt issuance cost                                           |  |                          | 597     |   |      |   | 641     |  
|Compensation expense from stock options                                      |  |                          | 7,794   |   |      |   | 7,498   |  
|                                                                             |  |                         
|Changes in assets and liabilities                                            |  |                          |         |   |      |   |         |  
|Accounts receivable                                                          |  |                          | (24,724 | ) |      |   | (5,356  | )
|Inventories                                                                  |  |                          | (1,776  | ) |      |   | (3,156  | )
|Prepaid expenses and other current assets                                    |  |                          | (11,837 | ) |      |   | (2,761  | )
|Restricted cash                                                              |  |                          | (16     | ) |      |   | 55      |  
|Other non-current assets                                                     |  |                          | (664    | ) |      |   | 626     |  
|Trade accounts payable                                                       |  |                          | (3,177  | ) |      |   | (15,242 | )
|Accrued interest on long-term debt                                           |  |                          | (4,043  | ) |      |   | (7,607  | )
|Accrued liabilities and deferred income                                      |  |                          | 6,371   |   |      |   | (11,099 | )
|Other non-current liabilities                                                |  |                          | (2,702  | ) |      |   | 1,668   |  
|Income taxes receivable                                                      |  |                          | 2,066   |   |      |   | 257     |  
|Income taxes payable                                                         |  |                          | 1,867   |   |      |   | 2,981   |  
|                                                                             |  |                          |         |   |      |   |         |  
|Net cash provided by operating activities                                    |  |                          | 21,872  |   |      |   | 29,559  |  
|                                                                             |  |                         
|Cash flows from investing activities                                         |  |                          |         |   |      |   |         |  
|Investment in property, plant and equipment                                  |  |                          | (10,137 | ) |      |   | (16,584 | )
|Proceeds from sale of property, plant and equipment                          |  |                          | 283     |   |      |   | 6       |  
|Purchase of intangible assets                                                |  |                          | (64     | ) |      |   | (273    | )
|Purchase of long-term investments                                            |  |                          | (63     | ) |      |   | (63     | )
|Sale of businesses, net of cash sold                                         |  |                          | 4,985   |   |      |   |        |  
|                                                                             |  |                          |         |   |      |   |         |  
|Net cash used in investing activities                                        |  |                          | (4,996  | ) |      |   | (16,914 | )
|                                                                             |  |                         
|Cash flows from financing activities                                         |  |                          |         |   |      |   |         |  
|Repayments of long-term debt                                                 |  |                          | (1,153  | ) |      |   | (10,121 | )
|Purchase of treasury stock                                                   |  |                          | (285    | ) |      |   |        |  
|Common shares issued under share based compensation plans                    |  |                          | 134     |   |      |   | 489     |  
|Tax effect of common shares exercised under share based compensation plans   |  |                          | 34      |   |      |   | 205     |  
|                                                                             |  |                          |         |   |      |   |         |  
|Net cash used in financing activities                                        |  |                          | (1,270  | ) |      |   | (9,427  | )

The accompanying notes are an integral part of these financial statements.



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|                                                            |  |   |         |   |  |   |        
|----------------------------------------------------------- |  | - | ------- | - |  | - | -------
|Change in cash and cash equivalents                         |  |   | 15,606  |   |  |   | 3,218  
|Effect of exchange rate change on cash and cash equivalents |  |   | (7,765  | ) |  |   | 7,894  
|Cash and cash equivalents at beginning of period            |  |   | 149,663 |   |  |   | 99,842 
|                                                            |  |   |         |   |  |   |        
|Cash and cash equivalents at end of period                  |  | $ | 157,504 |   |  | $ | 110,954
|                                                            |  |   |         |   |  |   |        
|Supplemental information                                    |  |   |         |   |  |   |        
|Interest paid                                               |  | $ | 13,468  |   |  | $ | 20,329 
|Interest capitalized                                        |  |   | 265     |   |  |   | 244    
|Income taxes paid                                           |  |   | 12,064  |   |  |   | 17,945 
|Sale of businesses, net of cash sold                        |  |   |         |   |  |   |        
|Current assets                                              |  | $ | 5,899   |   |  | $ |       
|Non-current assets                                          |  |   | 291     |   |  |   |       
|Current liabilities                                         |  |   | (1,205  | ) |  |   |       
|                                                            |  |   |         |   |  |   |        
|                                                            |  | $ | 4,985   |   |  | $ |       
|                                                            |  |   |         |   |  |   |        

The accompanying notes are an integral part of these financial statements.



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SIRONA DENTAL SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. General

The Company and its Operations

Sirona Dental Systems, Inc. (Sirona, Company, we,
us, or our) and its subsidiaries manufacture high quality, technologically advanced dental equipment and systems solutions for the global dental equipment market. We offer a broad range of products across all major segments
of the dental equipment market including CAD/CAM systems, digital and film based intra oral and panoramic imaging systems, treatment centers and instruments. We acquired Schick Technologies, Inc. in 2006, which further expanded our global presence
and product offerings and strengthened our research and development capabilities. Sirona has served equipment dealers and dentists worldwide for more than 125 years. Sironas headquarters are located in Long Island City, New York with its
primary facility located in Bensheim, Germany, as well as other support, manufacturing, assembling and sales & service facilities located elsewhere throughout the world.

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP). Preparation of the interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions related to the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the reporting date and the reported amounts of revenues and expenses for the interim period. Actual results could differ from those estimates.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures
are adequate to make the information not misleading. The year-end condensed consolidated balance sheet data was derived from the audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. These
consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

In the opinion of management, all adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the
Companys financial position as of March 31, 2009 and September 30, 2008 and the results of operations and cash flows for the three months and six months ended March 31, 2009 and March 31, 2008, as applicable to interim
periods have been made. The results of operations for the three months and six months ended March 31, 2009 are not necessarily indicative of the operating results for the full fiscal year or future periods.

All amounts are reported in thousands of U.S. Dollars ($), except per share amounts or as otherwise disclosed.

Fiscal year

The Companys fiscal year is
October 1 to September 30.

Principles of consolidation

The consolidated financial statements include, after eliminating inter-company transactions and balances, the accounts of Sirona Dental Systems, Inc. and
its subsidiaries.



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2. Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (Revised), Business Combinations (SFAS 141R), which establishes principles and
requirements for the reporting entity in a business combination, including recognition and measurement in the financial statements of the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. This
statement also establishes disclosure requirements to enable financial statement users to evaluate the nature and financial effects of the business combination. SFAS 141R applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. SFAS 141R will become effective for our fiscal year beginning October 1, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB
No. 51,(SFAS 160), which amends Accounting Research Bulletin No. 51, Consolidated Financial Statements (ARB No. 51), to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard defines a noncontrolling interest, previously referred to as minority interest, as the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. SFAS 160 requires, among other items, that a noncontrolling interest be included in the consolidated balance sheet within equity separate from the parents equity; consolidated net income to be reported at amounts
inclusive of both the parents and noncontrolling interests shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of income; and if a
subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. SFAS 160 is effective for fiscal years
beginning after December 15, 2008, which corresponds to the Companys fiscal year beginning October 1, 2009. The Company is currently evaluating the potential impact of adopting SFAS 160 on its consolidated financial statements.

3. Employee Share-Based Compensation

Stock compensation expense under the Companys stock option plans (the Plans) amounted to $3,959 and $7,794 for the three and six months ended March 31, 2009, respectively, and $3,838 and $7,498 for the three and six
months ended March 31, 2008, respectively. The fiscal 2009 expenses include the impact of the stock option and restricted stock grants discussed below.

On October 1, 2008, December 8, 2008, and January 2, 2009, the Company granted 20,000, 1,106,700, and 1,000 stock options under the Equity Incentive Plan (the 2006 Plan), respectively. The stock
options vest over a period of four years and expire ten years after the date of the grant. The 2006 Plan, as amended, provides for awards aggregating 4,550,000 stock options or restricted stock to employees, directors and consultants.

The fair values of the stock options granted under the 2006 Plan were estimated using the Black-Scholes option pricing model and the assumptions set
forth in the following table. The exercise price is equal to the fair market value of Sironas stock at the grant date. The expected volatility is determined based on the Companys historical stock volatility. The risk-free rate is based
on the U.S. Treasury yield curve in effect at the time of the grant and has a term equal to the expected life of the options. The expected life represents the period of time the options are expected to be outstanding based on anticipated grantee
behavior. The expected dividend yield is based on the Companys history of not paying regular dividends in the past and the Companys current intention not to pay dividends in the foreseeable future.



|                      |  |                    |         |   |                     |   |         |                    |  |   |         |  
|--------------------- |  | ------------------ | ------- | - | ------------------- | - | ------- | ------------------ |  | - | ------- | -
|                      |  | January 2009-Grant |         |   | December 2008-Grant |   |         | October 2008-Grant | 
|Exercise price        |  | $                  | 10.36   |   |                     | $ | 11.90   |                    |  | $ | 21.32   |  
|Expected volatility   |  |                    | 51      | % |                     |   | 51      | %                  |  |   | 51      | %
|Risk-free rate        |  |                    | 1.72    | % |                     |   | 1.76    | %                  |  |   | 2.87    | %
|Expected life         |  |                    | 5 years |   |                     |   | 5 years |                    |  |   | 5 years |  
|Expected dividends    |  |                    |        |   |                     |   |        |                    |  |   |        |  
|Grant date fair value |  | $                  | 4.17    |   |                     | $ | 5.51    |                    |  | $ | 10.45   |  

In January and March 2009, the Company completed two value-for-value stock option exchange
programs for holders of eligible options granted under the 1996 Incentive Stock Option Plan (1996 Plan) and the 2006 Plan with exercise prices of $21.32 or higher. Excluded from participating in the option exchange programs were the
Companys independent directors. Under the value-for-value option exchange programs, the option holders were allowed to surrender their eligible options in exchange for a lower number of replacement options requiring an additional year of
service for vesting and having an exercise price equal to the closing price of Sironas stock on January 21, 2009 or March 30, 2009, the date the respective offers expired. The fair value of the replacement options approximates the fair value
of the surrendered options in the aggregate, as determined using the Black-Scholes option pricing model as of the respective exchange date. Aggregate future non-cash stock option compensation expense is unchanged by the exchange programs in terms of
both amount and timing of recognition.



8



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##### Table of Contents

Under the January 21, 2009 option exchange program, holders of 1,000,500 eligible options issued
under the 2006 Plan surrendered those options in exchange for 421,428 replacement options with an exercise price of $11.73. Accordingly, 579,072 options were added back to the plan and became available for future grant.

Under the March 30, 2009 option exchange program, holders of 1,619,750 eligible options issued under the 1996 Plan at an exercise price of $25.10
surrendered those options in exchange for 988,325 replacement options under the 2006 Plan with an exercise price of $14.09. Because the 1996 Plan has expired, the cancelled options did not become available for future grant.

4. Comprehensive Income



|                                                                                                                                             |  |                            |         |                          |      |   |        |  |   |         |   |  |   |       
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------- | ------------------------ | ---- | - | ------ |  | - | ------- | - |  | - | ------
|                                                                                                                                             |  | Three monthsendedMarch 31, |         | Six monthsendedMarch 31,
|                                                                                                                                             |  | 2009                       |         |                          | 2008 |   | 2009   |  |   | 2008   
|                                                                                                                                             |  | $000s                     |         | $000s                  
|Net Income                                                                                                                                   |  | $                          | 595     |                          |      | $ | 10,929 |  | $ | 6,154   |   |  | $ | 27,914
|Other Comprehensive Income                                                                                                                   |  |                            |         |                          |      |   |        |  |   |         |   |  |   |       
|Cumulative translation adjustment from unrealized non-cash (loss)/gain on intra-group foreign currency transactions of long-term investments |  |                            | (15,284 | )                        |      |   | 24,374 |  |   | (23,415 | ) |  |   | 35,918
|Cumulative translation adjustment from the translation of financial statements of subsidiaries                                               |  |                            | (8,003  | )                        |      |   | 12,677 |  |   | (13,406 | ) |  |   | 17,765
|Amortization of actuarial gains                                                                                                              |  |                            | 117     |                          |      |   | 40     |  |   | 235     |   |  |   | 78    
|                                                                                                                                             |  |                            |         |                          |      |   |        |  |   |         |   |  |   |       
|Total Other Comprehensive Income                                                                                                             |  |                            | (23,170 | )                        |      |   | 37,091 |  |   | (36,586 | ) |  |   | 53,761
|                                                                                                                                             |  |                            |         |                          |      |   |        |  |   |         |   |  |   |       
|Total Comprehensive Income                                                                                                                   |  | $                          | (22,575 | )                        |      | $ | 48,020 |  | $ | (30,432 | ) |  | $ | 81,675
|                                                                                                                                             |  |                            |         |                          |      |   |        |  |   |         |   |  |   |       



9



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##### Table of Contents

5. Inventories, Net



|                  |  |               |         |   |                   |   |         |  
|----------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                  |  | March 31,2009 |         |   | September 30,2008 |  
|                  |  | $000s        |        
|Finished goods    |  | $             | 40,354  |   |                   | $ | 39,591  |  
|Work in progress  |  |               | 14,984  |   |                   |   | 15,028  |  
|Raw materials     |  |               | 31,489  |   |                   |   | 34,867  |  
|                  |  |               |         |   |                   |   |         |  
|                  |  |               | 86,827  |   |                   |   | 89,486  |  
|Inventory reserve |  |               | (12,582 | ) |                   |   | (11,753 | )
|                  |  |               |         |   |                   |   |         |  
|                  |  | $             | 74,245  |   |                   | $ | 77,733  |  
|                  |  |               |         |   |                   |   |         |  

6. Intangible Assets and Goodwill



|                                      |  |       |           |                         |   |         |  |   |          
|------------------------------------- |  | ----- | --------- | ----------------------- | - | ------- |  | - | ---------
|                                      |  | Gross |           | Accumulatedamortization |   | Net    
|                                      |  |       |           | $000s                  |   |        
|As of March 31, 2009                  |  |       |           |                         |   |         |  |   |          
|Patents & licenses                    |  | $     | 139,785   |                         | $ | 48,313  |  | $ | 91,472   
|Trademarks                            |  |       | 129,395   |                         |   | 278     |  |   | 129,117  
|Technologies and dealer relationships |  |       | 449,388   |                         |   | 219,042 |  |   | 230,346  
|Prepayments for intangible assets     |  |       | 247       |                         |   |        |  |   | 247      
|                                      |  |       |           |                         |   |         |  |   |          
|                                      |  |       | 718,815   |                         |   | 267,633 |  |   | 451,182  
|Goodwill                              |  |       | 643,738   |                         |   |        |  |   | 643,738  
|                                      |  |       |           |                         |   |         |  |   |          
|Total intangible assets               |  | $     | 1,362,553 |                         | $ | 267,633 |  | $ | 1,094,920
|                                      |  |       |           |                         |   |         |  |   |          
|                                      |  |       |          
|                                      |  | Gross |           | Accumulatedamortization |   | Net    
|                                      |  |       |           | $000s                  |   |        
|As of September 30, 2008              |  |       |           |                         |   |         |  |   |          
|Patents & licenses                    |  | $     | 150,129   |                         | $ | 45,607  |  | $ | 104,522  
|Trademarks                            |  |       | 137,245   |                         |   | 228     |  |   | 137,017  
|Technologies and dealer relationships |  |       | 473,519   |                         |   | 200,704 |  |   | 272,815  
|Prepayments for intangible assets     |  |       | 247       |                         |   |        |  |   | 247      
|                                      |  |       |           |                         |   |         |  |   |          
|                                      |  |       | 761,140   |                         |   | 246,539 |  |   | 514,601  
|Goodwill                              |  |       | 683,075   |                         |   |        |  |   | 683,075  
|                                      |  |       |           |                         |   |         |  |   |          
|Total intangible assets               |  | $     | 1,444,215 |                         | $ | 246,539 |  | $ | 1,197,676
|                                      |  |       |           |                         |   |         |  |   |          



10



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##### Table of Contents

The change in the value of goodwill from September 30, 2008 to March 31, 2009 relates to
changes in exchange rates of $39,961, a subsequent purchase price adjustment of $652 (EUR 500) related to an earn-out provision from a prior year acquisition, and decreases of $28 relating to the accounting for income tax benefits from the exercise
of employee stock options.

7. Short-Term Debt and Current Portion of Long-Term Debt

Short-term debt and current portion of long-term debt also includes accrued interest on long-term debt that is payable within the next twelve months. The
balance at March 31, 2009 also includes the November scheduled debt repayment of $77.5 million (15% of Senior term loans).

8. Long-Term Debt



|                                                                                                                          |  |               |         |                   |   |        
|------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | -------
|                                                                                                                          |  | March 31,2009 |         | September 30,2008
|                                                                                                                          |  | $000s       
|Senior term loan, Tranche A1, variable rate repayable in annual installments starting November 2009 through November 2011 |  |               | 150,631 |                   |   | 151,317
|Senior term loan, Tranche A2, variable rate repayable in annual installments starting November 2009 through November 2011 |  |               | 368,329 |                   |   | 398,156
|Other debt                                                                                                                |  |               | 1,045   |                   |   | 2,140  
|                                                                                                                          |  |               |         |                   |   |        
|                                                                                                                          |  |               | 520,005 |                   |   | 551,613
|Less current portion                                                                                                      |  |               | 80,963  |                   |   | 7,263  
|                                                                                                                          |  |               |         |                   |   |        
|                                                                                                                          |  | $             | 439,042 |                   | $ | 544,350
|                                                                                                                          |  |               |         |                   |   |        

Senior Term Loans

On November 22, 2006, Sirona Dental Systems, Inc. entered into a senior credit facility (the Senior Facilities Agreement) as original guarantor, with Schick Technologies, Inc., a New York
company and wholly owned subsidiary of Sirona (Schick NY), as original borrower and original guarantor, with Sirona Dental Systems GmbH, as original borrower and original guarantor, with Sirona Dental Services GmbH, as original borrower
and original guarantor and with Sirona Dental Systems LLC, Sirona Holding GmbH (subsequently merged with Sirona Dental Services GmbH) and with Sirona Immobilien GmbH as original guarantors. Initial borrowings under the Senior Facilities Agreement
plus excess cash were used to retire the outstanding borrowings under the Companys previous credit facilities.

The Senior Facilities
Agreement includes: (1) a term loan A1 in an aggregate principal amount of $150 million (the tranche A1 term loan) available to Sironas subsidiary, Schick NY, as borrower; (2) a term loan A2 in an aggregate principal
amount of Euro 275 million (the tranche A2 term loan) available to Sironas subsidiary, Sirona Dental Services GmbH, as borrower; and (3) a $150 million revolving credit facility available to Sirona Dental Systems
GmbH, Schick NY and Sirona Dental Services GmbH, as initial borrowers. The revolving credit facility is available for borrowing in Euro, U.S. Dollar, Yen or any other freely available currency agreed to by the facility agent. The facilities are
made available on an unsecured basis. Subject to certain limitations, each European guarantor guarantees the performance of each European borrower, except itself, and each U.S. guarantor guarantees the performance of each U.S. borrower, except
itself. There are no cross-border guarantees since all guarantees are by entities that have the same functional currency as the currency in which the respective guaranteed borrowing is denominated.



11



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##### Table of Contents

Each of the senior term loans are to be repaid in three annual installments beginning on
November 24, 2009 and ending on November 24, 2011. Of the amounts borrowed under the term loan facilities, 15% is due on November 24, 2009, 15% is due on November 24, 2010 and 70% is due on November 24, 2011. At the
Companys current leverage multiples, the facilities bear interest at a margin of 55 basis points plus, in the case of Euro-denominated loans, EURIBOR and, in the case of other loans, LIBOR.

The Senior Facilities Agreement contains a margin ratchet. Pursuant to this provision, which applies from November 24, 2007 onwards, the applicable
margin will vary between 90 basis points and 45 basis points per annum according to our leverage multiple (i.e. the ratio of consolidated total net debt to consolidated adjusted EBITDA as defined in the Senior Facilities Agreement). Interest rate
swaps have been established for 66.6% of the interest until March 2010. The interest rate swaps fix the LIBOR or EURIBOR element of interest payable on 66.6% of the principal amount of the loans for defined twelve and thirteen month interest
periods over the lifetime of the swaps, respectively. The defined interest rates fixed for each twelve or thirteen month interest period range from 3.50% to 5.24%. Settlement of the swaps is required on a quarterly basis.

The Senior Facilities Agreement contains restrictive covenants that limit Sironas ability to make loans, make investments (including in joint
ventures), incur additional indebtedness, make acquisitions or pay dividends, subject to agreed-upon exceptions. The Company has agreed to certain financial debt covenants in relation to the financing. The covenants stipulate that the Company must
maintain certain ratios in respect of interest payments and defined earnings measures. If the Company breaches any of the covenants, the loans will be become repayable on demand.

Debt issuance costs of $5.6 million were incurred in relation to the financing in November 2006 and were capitalized as deferred charges and are
amortized using the effective interest method over the term of the loan.

9. Income Taxes

For fiscal year 2009, an estimated effective tax rate of 28% has been applied compared to an effective tax rate of 24% for fiscal year 2008. The 2009
estimated effective tax rate has been impacted by the expected distribution of profits across different countries. Variances between the expected and actual distribution of profits could result in a deviation of the actual from the estimated tax
rate.

With limited exception, the Company and its subsidiaries are no longer subject to income tax examinations by any major tax
jurisdiction for the years prior to 2005.

10. Income per Share

The computation of basic and diluted income per share is as follows:



|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|------------------------------------------- |  | ----------------------------------------------- | ---------- | ----------------------------------------------- | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                            |  | Three monthsendedMarch 31,                      |            | Six monthsendedMarch 31,                       
|                                            |  | 2009                                            |            | 2008                                            |   | 2009       |  | 2008
|                                            |  | $000s (except for share and per share amounts) |            | $000s (except for share and per share amounts)
|Net income                                  |  | $                                               | 595        |                                                 | $ | 10,929     |  | $    | 6,154      |  | $ | 27,914    
|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|Weighted average shares outstandingbasic   |  |                                                 | 54,818,604 |                                                 |   | 54,786,224 |  |      | 54,856,537 |  |   | 54,784,801
|Dilutive effect of stock options            |  |                                                 | 225,490    |                                                 |   | 403,359    |  |      | 246,596    |  |   | 572,243   
|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|Weighted average shares outstandingdiluted |  |                                                 | 55,044,094 |                                                 |   | 55,189,583 |  |      | 55,103,133 |  |   | 55,357,044
|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|Income per share                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|Basic                                       |  | $                                               | 0.01       |                                                 | $ | 0.20       |  | $    | 0.11       |  | $ | 0.51      
|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           
|Diluted                                     |  | $                                               | 0.01       |                                                 | $ | 0.20       |  | $    | 0.11       |  | $ | 0.50      
|                                            |  |                                                 |            |                                                 |   |            |  |      |            |  |   |           

Stock options to acquire 1,231,950 shares common stock that were granted in connection with the
Plans were not included in the computation of diluted earnings per share for the three and six months ended March 31, 2009 because the options underlying exercise price was greater than the average price of Sironas common stock for the
period.



12



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##### Table of Contents

Stock options to acquire 1,186,375 and 1,146,375 shares, respectively of Sironas common stock that
were granted in connections with the 2006 Plan were not included in the computation of diluted earnings per share for the three and six months ended March 31, 2008 because the options underlying exercise price was greater than the average price
of Sironas common stock for the period.

11. Product Warranty

The following table provides the changes in the product warranty accrual for the three months and the six months ended March 31, 2009 and March 31, 2008:



|                                                 |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |         |  
|------------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------- | -
|                                                 |  | Three monthsendedMarch 31, |        |   | Six monthsendedMarch 31, |  
|                                                 |  | 2009                       |        |   | 2008                     |   |        | 2009 |  |   | 2008   |  
|                                                 |  | $000s                     |        |   | $000s                   |  
|Balance at beginning of the period               |  | $                          | 12,381 |   |                          | $ | 13,519 |      |  | $ | 12,176 |   |  | $ | 12,547  |  
|Accruals for warranties issued during the period |  |                            | 4,934  |   |                          |   | 5,218  |      |  |   | 10,276 |   |  |   | 10,670  |  
|Warranty settlements made during the period      |  |                            | (4,986 | ) |                          |   | (5,492 | )    |  |   | (9,832 | ) |  |   | (10,413 | )
|Translation adjustment                           |  |                            | (523   | ) |                          |   | 912    |      |  |   | (814   | ) |  |   | 1,353   |  
|                                                 |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |         |  
|Balance at the end of the period                 |  | $                          | 11,806 |   |                          | $ | 14,157 |      |  | $ | 11,806 |   |  | $ | 14,157  |  
|                                                 |  |                            |        |   |                          |   |        |      |  |   |        |   |  |   |         |  

12. Pension Plans

Components of net periodic benefit costs are as follows:



|                                |        |                            |      |        |                          |   |      |   |  |      |       |   |  |   |       |  
|------------------------------- | ------ | -------------------------- | ---- | ------ | ------------------------ | - | ---- | - |  | ---- | ----- | - |  | - | ----- | -
|                                |        | Three monthsendedMarch 31, |      |        | Six monthsendedMarch 31, |  
|                                | 2009   |                            |      | 2008   |                          |   | 2009 |   |  | 2008 |      
|                                | $000s |                            |      | $000s |                         
|Service cost                    |        | $                          | 70   |        |                          | $ | 90   |   |  | $    | 140   |   |  | $ | 177   |  
|Interest cost                   |        |                            | 634  |        |                          |   | 677  |   |  |      | 1,273 |   |  |   | 1,331 |  
|Amortization of actuarial gains |        |                            | (117 | )      |                          |   | (40  | ) |  |      | (235  | ) |  |   | (78   | )
|                                |        |                            |      |        |                          |   |      |   |  |      |       |   |  |   |       |  
|Net periodic benefit cost       |        | $                          | 587  |        |                          | $ | 727  |   |  | $    | 1,178 |   |  | $ | 1,430 |  
|                                |        |                            |      |        |                          |   |      |   |  |      |       |   |  |   |       |  



13



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##### Table of Contents

13. Net Other Operating (Income)/Loss and Restructuring Costs

In December 2008 we announced certain actions to reduce operating costs and thereby to improve the efficiency of our organization. These actions
predominantly relate to overhead functions in Germany including increased automation of our processes, the optimization of the supply chain as well as increased efficiency in our administrative functions.

For the three months period ended March 31, 2009, we incurred restructuring costs of $2.8 million ($2.0 million after taxes), consisting of employee
severance pay and benefits as well as outside consulting fees directly related to the restructuring plan. The consulting fees were incurred to analyze processes in order to identify restructuring potential with the objective to reduce headcount. The
costs associated with the restructuring are included in net other operating (income)/loss and restructuring costs within our consolidated statement of income.

The following table shows the amounts expensed and paid for restructuring costs that were incurred during the quarter ended March 31, 2009 and the remaining accrued balance of restructuring costs as of
March 31, 2009, which is included in accrued liabilities within our condensed consolidated balance sheet:



|                 |  |                             |   |                    |   |          |  |                                |     |                            |   |    |  |   |      
|---------------- |  | --------------------------- | - | ------------------ | - | -------- |  | ------------------------------ | --- | -------------------------- | - | -- |  | - | -----
|                 |  | Provision atOctober 1, 2008 |   | RestructuringCosts |   | Payments |  | Currency translationadjustment |     | Provision atMarch 31, 2009
|                 |  |                             |   |                    |   | $000s   |  |                                |     |                           
|Severance costs  |  | $                           |  |                    | $ | 2,043    |  | $                              |    |                            | $ | 39 |  | $ | 2,082
|Consulting costs |  |                             |  |                    |   | 727      |  |                                | 334 |                            |   | 7  |  |   | 400  
|                 |  |                             |   |                    |   |          |  |                                |     |                            |   |    |  |   |      
|Total            |  | $                           |  |                    | $ | 2,770    |  | $                              | 334 |                            | $ | 46 |  | $ | 2,482
|                 |  |                             |   |                    |   |          |  |                                |     |                            |   |    |  |   |      

We expect to record remaining costs of approximately $7.5 million in the second half of fiscal
2009. We expect that the majority of the total costs of approximately $10 million will be paid in fiscal 2009.

14. Derivative Instruments and Hedging
Strategies

Our operations are exposed to market risks from changes in foreign currency exchange rates and interest rates. In the normal
course of business, these risks are managed through a variety of strategies, including the use of derivatives.

Interest Rate Risk

The Company is exposed to interest rate risk associated with fluctuations in the interest rates on its variable interest rate debt.
In order to manage this risk, the Company has entered into interest rate swap agreements that convert the debts variable interest rate to a fixed interest rate. These swap agreements are considered to be economic hedges which are not
considered hedging instruments under SFAS 133.

Interest rate swaps have been established for 66.6% of the interest on the Senior Term
loans until March 2010. The interest rate swaps fix the LIBOR or EURIBOR element of interest payable on 66.6% of the principal amount of the loans for defined twelve and thirteen month interest periods over the lifetime of the swaps,
respectively. The defined interest rates fixed for each twelve or thirteen month interest period range from 3.50% to 5.24%. Settlement of the swaps is required on a quarterly basis.

Foreign Currency Exposure

Although the U.S. Dollar is Sironas reporting currency,
its functional currency varies depending on the country of operation. During the periods under review, the U.S. Dollar/Euro exchange rate fluctuated significantly, thereby impacting Sironas financial results. In order to manage foreign
currency exposures, the Company enters into foreign exchange forward contracts. As with its interest rate swap instruments, the Company enters into forward contracts that are considered to be economic hedges which are not considered hedging
instruments under SFAS 133.

As of March 31, 2009, these contracts had notional amounts totaling $46.8 million. These agreements are
relatively short-term (generally six months).

The fair value carrying amount of the Companys derivative instruments at
March 31, 2009 is described in Note 15 Fair Value Measurements.



14



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##### Table of Contents

The location and amount of gains and losses from the fair value changes of derivative instruments
reported in our condensed consolidated income statement were as follows:



|                                                                 |  |                                                            |  |                                                        |      |   |                                                        |   |        |  
|---------------------------------------------------------------- |  | ---------------------------------------------------------- |  | ------------------------------------------------------ | ---- | - | ------------------------------------------------------ | - | ------ | -
|                                                                 |  |                                                            |  | For the three monthsended March 31, 2009               |      |   | For the six months endedMarch 31, 2009                 |  
|Derivatives Not Designated as Hedging Instruments
under SFAS 133 |  | Location of (Gain)/Loss Recognized in Income on Derivative |  | Amount of (Gain)/LossRecognized in Income onDerivative |      |   | Amount of (Gain)/LossRecognized in Income onDerivative |  
|Interest rate swap contracts                                     |  | (Gain)/loss on derivative instruments                      |  | $                                                      | 506  |   |                                                        | $ | 8,566  |  
|Foreign exchange contracts                                       |  | (Gain)/loss on derivative instruments                      |  |                                                        | (746 | ) |                                                        |   | (3,839 | )
|                                                                 |  |                                                            |  |                                                        |      |   |                                                        |   |        |  
|Total                                                            |  |                                                            |  | $                                                      | (240 | ) |                                                        | $ | 4,727  |  
|                                                                 |  |                                                            |  |                                                        |      |   |                                                        |   |        |  

15. Fair Value Measurements

On October 1, 2008, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 157 Fair Value Measurements for assets and liabilities that are recognized
or disclosed at fair value in the financial statements on a recurring basis. SFAS No. 157 does not establish requirements for any new fair value measurements but it does apply to existing pronouncements in which fair value measurements are
already required. SFAS No. 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair
value measurements for assets and liabilities that are required to be recorded or disclosed at fair value, the Company considers the principal or most advantageous market in which it would transact and the market-based risk measurements or
assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions, and the credit risk of the Company and counterparties to the arrangement.

SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. A
financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is available and significant to the fair value measurement. SFAS No. 157 establishes and prioritizes the following three
levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities
in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect managements estimates of assumptions that market participants would use in pricing the asset or liability.



15



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##### Table of Contents

Assets/Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the Companys assets and liabilities measured at fair value on a recurring basis as of March 31, 2009:



|                       |  |                                                                |   |                                           |   |                                        |  |       |   |  |   |       
|---------------------- |  | -------------------------------------------------------------- | - | ----------------------------------------- | - | -------------------------------------- |  | ----- | - |  | - | ------
|                       |  | Quoted Pricesin ActiveMarkets forIdenticalInstruments(Level 1) |   | SignificantOtherObservableInputs(Level 2) |   | SignificantUnobservableInputs(Level 3) |  | Total
|                       |  | $000s                                                        
|Assets                 |  |                                                                |   |                                           |   |                                        |  |       |   |  |   |       
|Derivative Assets      |  | $                                                              |  |                                           | $ | 1,314                                  |  | $     |  |  | $ | 1,314 
|Liabilities            |  |                                                                |   |                                           |   |                                        |  |       |   |  |   |       
|Derivative Liabilities |  | $                                                              |  |                                           | $ | 10,672                                 |  | $     |  |  | $ | 10,672

In the Companys March 31, 2009 Condensed Consolidated Balance Sheet derivative assets
and derivative liabilities are classified as Prepaid expenses and other current assets and Accrued liabilities and deferred income, respectively.

As allowed by FASB Staff Position (FSP) FAS 157-2, Effective Date of FABS Statement No. 157, the Company has elected to defer until October 1, 2009 the adoption of SFAS No. 157 for nonfinancial assets and liabilities that are
recognized or disclosed at fair value on a nonrecurring basis. Accordingly, the Company has not applied SFAS No. 157 to inventories, property, plant and equipment, or intangible assets with definite useful lives.

As allowed by SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which was adopted effective October 1,
2008, the Company did not elect the fair value option for any eligible financial instruments as of December 31, 2008 or March 31, 2009.



16



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##### Table of Contents

16. Segment Reporting

The following tables show the results of the Companys reportable segments under the Companys management reporting system. The segment performance measure used to monitor segment performance is gross profit
excluding the impact of the acquisition of control of the Sirona business by Sirona Holdings Luxco S.C.A. (Luxco), a Luxembourg-based holding entity owned by funds managed by Madison Dearborn Partners (MDP), Beecken Petty
OKeefe and management of Sirona, through a leveraged buyout transaction on June 30, 2005 (the MDP Transaction) and the acquisition of Schick Technologies, Inc. (the Exchange). This measure is considered by
management to better reflect the performance of each segment as it eliminates the need to allocate centrally incurred costs and significant purchase accounting effects that the Company does not believe to be representative of the performance of the
segments. Furthermore, the Company monitors performance geographically by region. As the Company manages its business on both a product and a geographical basis, U.S. GAAP requires segmental disclosure based on product information.



|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------- |  | -------------------------- | ------- | - | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                      |  | Three monthsendedMarch 31, |         |   | Six monthsendedMarch 31, |  
|                                      |  | 2009                       |         |   | 2008                     |   |         | 2009 |  |   | 2008    |  
|                                      |  | $000s                     |         |   | $000s                   |  
|Revenue external                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Dental CAD/CAM Systems                |  | $                          | 62,340  |   |                          | $ | 66,207  |      |  | $ | 116,023 |   |  | $ | 128,180 |  
|Imaging Systems                       |  |                            | 49,452  |   |                          |   | 60,256  |      |  |   | 114,435 |   |  |   | 128,304 |  
|Treatment Centers                     |  |                            | 33,050  |   |                          |   | 39,338  |      |  |   | 72,127  |   |  |   | 83,868  |  
|Instruments                           |  |                            | 19,823  |   |                          |   | 23,655  |      |  |   | 41,727  |   |  |   | 49,205  |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total                                 |  | $                          | 164,665 |   |                          |   | 189,456 |      |  |   | 344,312 |   |  |   | 389,557 |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Revenue internal                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Dental CAD/CAM Systems                |  | $                          |        |   |                          | $ |        |      |  | $ |        |   |  | $ |        |  
|Imaging Systems                       |  |                            | 5       |   |                          |   | 38      |      |  |   | 27      |   |  |   | 58      |  
|Treatment Centers                     |  |                            | 4       |   |                          |   | 5       |      |  |   | 15      |   |  |   | 9       |  
|Instruments                           |  |                            | 2,133   |   |                          |   | 2,628   |      |  |   | 4,367   |   |  |   | 5,458   |  
|Intercompany elimination              |  |                            | (2,142  | ) |                          |   | (2,671  | )    |  |   | (4,409  | ) |  |   | (5,525  | )
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total                                 |  | $                          |        |   |                          |   |        |      |  |   |        |   |  |   |        |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Revenue total                         |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Dental CAD/CAM Systems                |  | $                          | 62,340  |   |                          | $ | 66,207  |      |  | $ | 116,023 |   |  | $ | 128,180 |  
|Imaging Systems                       |  |                            | 49,457  |   |                          |   | 60,294  |      |  |   | 114,462 |   |  |   | 128,362 |  
|Treatment Centers                     |  |                            | 33,054  |   |                          |   | 39,343  |      |  |   | 72,142  |   |  |   | 83,877  |  
|Instruments                           |  |                            | 21,956  |   |                          |   | 26,283  |      |  |   | 46,094  |   |  |   | 54,663  |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total                                 |  | $                          | 166,807 |   |                          |   | 192,127 |      |  |   | 348,721 |   |  |   | 395,082 |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Segment performance measure           |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Dental CAD/CAM Systems                |  | $                          | 43,414  |   |                          | $ | 43,553  |      |  | $ | 80,961  |   |  | $ | 84,746  |  
|Imaging Systems                       |  |                            | 29,160  |   |                          |   | 35,961  |      |  |   | 68,012  |   |  |   | 76,900  |  
|Treatment Centers                     |  |                            | 12,311  |   |                          |   | 15,184  |      |  |   | 27,034  |   |  |   | 34,162  |  
|Instruments                           |  |                            | 8,947   |   |                          |   | 10,559  |      |  |   | 18,927  |   |  |   | 22,302  |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total                                 |  | $                          | 93,832  |   |                          |   | 105,257 |      |  |   | 194,934 |   |  |   | 218,110 |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Depreciation and amortization expense |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Dental CAD/CAM Systems                |  | $                          | 1,151   |   |                          | $ | 927     |      |  | $ | 2,128   |   |  | $ | 1,935   |  
|Imaging Systems                       |  |                            | 1,152   |   |                          |   | 1,361   |      |  |   | 2,324   |   |  |   | 2,561   |  
|Treatment Centers                     |  |                            | 1,386   |   |                          |   | 828     |      |  |   | 2,819   |   |  |   | 1,522   |  
|Instruments                           |  |                            | 503     |   |                          |   | 962     |      |  |   | 1,268   |   |  |   | 1,832   |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  
|Total                                 |  | $                          | 4,192   |   |                          |   | 4,078   |      |  |   | 8,539   |   |  |   | 7,850   |  
|                                      |  |                            |         |   |                          |   |         |      |  |   |         |   |  |   |         |  



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##### Table of Contents

Reconciliation of the results of the segment performance measure to the consolidated statements of operations

The following table and discussion provide a reconciliation of the total results of operations of the Companys business
segments under management reporting to the consolidated financial statements. The differences shown between management reporting and U.S. GAAP for the three month and six month periods ended March 31, 2009 and 2008 are due to the impact of
purchase accounting. Purchase accounting effects are not included in gross profit as the Company does not believe these to be representative of the performance of each segment.

Inter-segment transactions are based on amounts which management believes are approximate to the amounts of transactions with unrelated third parties.



|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|--------------------------------------------------------- | ------ | -------------------------- | ------- | ------ | ------------------------ | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                          |        | Three monthsendedMarch 31, |         |        | Six monthsendedMarch 31, |  
|                                                          | 2009   |                            |         | 2008   |                          |   | 2009    |   |  | 2008 |        
|                                                          | $000s |                            |         | $000s |                         
|Revenue                                                   |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Total segments (external)                                 |        | $                          | 164,665 |        |                          | $ | 189,456 |   |  | $    | 344,312 |   |  | $ | 389,557 |  
|Electronic center and corporate                           |        |                            | 157     |        |                          |   | 5       |   |  |      | 231     |   |  |   | 10      |  
|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Consolidated revenue                                      |        |                            | 164,822 |        |                          |   | 189,461 |   |  |      | 344,543 |   |  |   | 389,567 |  
|                                                          |        |                            |         |       
|Depreciation and amortization                             |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Total segments                                            |        |                            | 4,192   |        |                          |   | 4,078   |   |  |      | 8,539   |   |  |   | 7,850   |  
|Electronic center and corporate                           |        |                            | 600     |        |                          |   | 710     |   |  |      | 861     |   |  |   | 1,397   |  
|Differences management reporting vs. U.S. GAAP            |        |                            | 17,600  |        |                          |   | 22,237  |   |  |      | 35,213  |   |  |   | 43,899  |  
|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Consolidated depreciation and amortization                |        |                            | 22,392  |        |                          |   | 27,025  |   |  |      | 44,613  |   |  |   | 53,146  |  
|                                                          |        |                            |         |       
|Segment performance measure                               |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Total segments                                            |        |                            | 93,832  |        |                          |   | 105,257 |   |  |      | 194,934 |   |  |   | 218,110 |  
|Electronic center and corporate                           |        |                            | (959    | )      |                          |   | 2,300   |   |  |      | 1,136   |   |  |   | 4,438   |  
|Differences management reporting vs. U.S. GAAP            |        |                            | (12,558 | )      |                          |   | (21,182 | ) |  |      | (28,754 | ) |  |   | (41,804 | )
|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Consolidated gross profit                                 |        |                            | 80,315  |        |                          |   | 86,375  |   |  |      | 167,316 |   |  |   | 180,744 |  
|Selling, general and administrative expense               |        |                            | 56,048  |        |                          |   | 60,590  |   |  |      | 113,470 |   |  |   | 116,476 |  
|Research and development                                  |        |                            | 10,043  |        |                          |   | 11,967  |   |  |      | 21,101  |   |  |   | 25,675  |  
|Provision for doubtful accounts and notes receivable      |        |                            | 221     |        |                          |   | 140     |   |  |      | 446     |   |  |   | 197     |  
|Net other operating loss/(income) and restructuring costs |        |                            | 270     |        |                          |   | (2,500  | ) |  |      | (3,191  | ) |  |   | (5,000  | )
|Foreign currency transactions loss/(gain), net            |        |                            | 7,077   |        |                          |   | (9,039  | ) |  |      | 10,669  |   |  |   | (14,925 | )
|(Gain)/loss on derivative instruments                     |        |                            | (240    | )      |                          |   | 2,995   |   |  |      | 4,727   |   |  |   | 5,213   |  
|Interest expense, net                                     |        |                            | 5,593   |        |                          |   | 6,655   |   |  |      | 11,657  |   |  |   | 13,401  |  
|Other expense                                             |        |                            |        |        |                          |   | 305     |   |  |      |        |   |  |   | 305     |  
|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  
|Income before income taxes and minority interest          |        | $                          | 1,303   |        |                          | $ | 15,262  |   |  | $    | 8,437   |   |  | $ | 39,402  |  
|                                                          |        |                            |         |        |                          |   |         |   |  |      |         |   |  |   |         |  



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the Condensed
Consolidated Financial Statements included elsewhere in this report and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2008.

All amounts are reported in thousands of U.S. Dollars ($), except as otherwise disclosed.

This report contains forward-looking statements that involve risk and uncertainties. All statements, other than statements of historical facts, included
in this report regarding the Company, its financial position, products, business strategy and plans and objectives of management of the Company for future operations, are forward-looking statements. When used in this report, words such as
anticipate, believe, estimate, expect, intend, objectives, plans and similar expressions, or the negatives thereof or variations thereon or comparable terminology as
they relate to the Company, its products or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Companys management, as well as assumptions made by and information currently
available to the Companys management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of various factors, including, but not limited to, those contained in the Risk
Factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2008. All forward looking statements speak only as of the date of this report and are expressly qualified in their
entirety by the cautionary statements included in this report. We undertake no obligation to update or revise forward-looking statements which may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence
of unanticipated events other than required by law.

Overview

Sirona is a leading manufacturer of high-tech dental equipment. Sirona focuses on developing innovative systems and solutions for dentists globally. Sirona has served equipment dealers and dentists worldwide for more
than 125 years. The Company has its headquarters in Long Island City, New York and in addition the Company has its primary facility in Bensheim, Germany. Sirona manages its business on both a product and geographic basis and has four reporting
segments: Dental CAD/CAM Systems, Imaging Systems, Treatment Centers and Instruments. Products from each category are marketed in all geographical sales regions.

Significant Factors that Affect Sironas Results of Operations

Increased Focus on Sironas Position in the U.S. Market and
Further Global Expansion

The U.S. market is the largest individual market for Sirona. Over the last three fiscal years, Sirona
experienced strong revenue growth, with U.S. Dollar revenue, bolstered by the June 2006 acquisition of Schick Technologies, increasing on average by 21% annually. Several products have generated significant interest in the U.S. market,
including, but not limited to, CEREC, Schick imaging products, GALILEOS, the ORTHOPHOS XG line, inLab and inEos.

Sirona works together
with large distributors in the U.S. market, including Patterson Dental and Henry Schein, which accounted for 30% and 16%, respectively, of Sironas global revenues for the six month period ended March 31, 2009. The relationship with Henry
Schein was expanded beyond the European markets to the United States in January 2005. Patterson Dental made a payment of $100 million to Sirona in July 2005 in exchange for the exclusive distribution right for CEREC CAD/CAM products
in the United States and Canada until 2017 (the Patterson exclusivity payment). The amount Sirona received was recorded as deferred income and is being recognized on a straight-line basis commencing at the beginning of the extension of
the exclusivity period in fiscal 2008.



19



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##### Table of Contents

Focus on Further Global Expansion

In addition to increased U.S. market growth, Sirona has pursued expansion in the rest of the world. Over the last three fiscal years, sales in the rest of
the world grew on average by 17% annually. To support this growth, Sirona expanded its local presence and distribution channels by establishing new sales and service locations in Spain, France and the United Kingdom in 2004; in Japan and Australia
in 2005; in China in 2006 and in Italy in 2007. This expansion helped to increase sales and gross profit but also contributed to higher SG&A expense.

Fluctuations in U.S. Dollar/Euro Exchange Rate

Although the U.S. Dollar is Sironas reporting currency,
its functional currency varies depending on the country of operation. For the six months ended March 31, 2009, approximately 49% of Sironas revenue and approximately 71% of its expenses were denominated in Euros. During the periods under
review, the U.S. Dollar/Euro exchange rate has fluctuated significantly, thereby impacting Sironas financial results. Between October 1, 2007 and March 31, 2009, the U.S. Dollar/Euro exchange rate used to calculate items included in
Sironas financial statements varied from a low of 1.2439 to a high of 1.6017 and as of March 31, 2009 and September 30, 2008 were 1.3328 and 1.4340, respectively. Although Sirona does not apply hedge accounting, Sirona has entered
into foreign exchange forward contracts to manage foreign currency exposure. As of March 31, 2009, these contracts had notional amounts totaling $46.8 million. As these agreements are relatively short-term (generally six months), continued
fluctuation in the U.S. Dollar/Euro exchange rate could materially affect Sironas results of operations.

Certain revenue information
under Results of Operations below is presented on a constant currency basis. This information is a non-GAAP financial measure. Sirona supplementally presents revenue on a constant currency basis because it believes this information
facilitates a comparison of Sironas 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 the current period. The exchange rates used in converting Euro denominated revenues into U.S. $ in the Companys financial statements
prepared in accordance with U.S. GAAP were: $1.30799 and $1.49777 for the three months ended March 31, 2009 and 2008, respectively, and $1.31347 and $1.4730 for the six months ended March 31, 2009 and 2008, respectively.

Loans made to Sirona under the senior credit facility entered into November 22, 2006 are denominated in the functional currency of the respective
borrowers. See Liquidity and Capital Resources for a discussion of our senior credit facility. However, inter-company loans are denominated in the functional currency of only one of the parties to the loan agreements. Where inter-company
loans are of a long-term investment nature, the potential non-cash fluctuations in exchange rates are reflected within other comprehensive income. These fluctuations may be significant in any period due to changes in the exchange rates between the
Euro and the U.S. Dollar.

Fluctuations in Quarterly Operating Results

Sironas quarterly operating results have varied in the past and are likely to vary in the future. These variations result from a number of factors,
many of which are substantially outside its control, including:



| |  |  | the timing of new product introductions by Sirona or its competitors;
| | - |  | ---------------------------------------------------------------------



| |  |  | the timing of industry trade shows;
| | - |  | -----------------------------------



| |  |  | developments in government reimbursement policies;
| | - |  | --------------------------------------------------



| |  |  | changes in product mix;
| | - |  | -----------------------



| |  |  | Sironas ability to supply products to meet customer demand;
| | - |  | ------------------------------------------------------------



| |  |  | fluctuations in manufacturing costs;
| | - |  | ------------------------------------



| |  |  | income tax incentives; and
| | - |  | --------------------------



| |  |  | currency fluctuation.
| | - |  | ---------------------

Due to the
variations which Sirona has experienced in its quarterly operating results, it does not believe that period-to-period comparisons of results of operations of Sirona are necessarily meaningful or reliable as indicators of current and future
performance.



20



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##### Table of Contents

Results of Operations

Three Months Ended March 31, 2009 Compared to Three Months Ended March 31, 2008

Revenue

Revenue for the three months ended March 31, 2009 was $164.8 million, a decrease of $24.7 million, or down 13.0%, compared with the three months
ended March 31, 2008. On a constant currency basis, adjusting for the fluctuations in the U.S. Dollar/Euro exchange rate, total revenue decreased by 4.5%. By segment, CAD/CAM declined 5.8% (flat on a constant currency basis), Treatment Centers
declined 16.0% (down 4.2% on a constant currency basis), Instruments declined 16.2% (down 4.3% on a constant currency basis), and Imaging Systems declined 17.9% (down 10.5% on a constant currency basis).

All segments were impacted by the weak global economy which resulted in a challenging environment for selling dental equipment. In the current slowdown,
we are seeing that some dentists are postponing investments in equipment. At the same time, they continue to demand innovative high tech products that improve their competitive position and increase their practice income; such products include
CAD/CAM systems, digital imaging and Galileos 3D imaging systems. In addition revenue in the second quarter was impacted by the bi-annual international trade show IDS in Cologne at the end of March, as some dentists wait with their
investment decisions until after the show.

The Dental CAD/CAM Systems segment faced a challenging year over year comparison due to the
trade-in program for the MC-XL milling unit, which had a major impact in the second quarter of fiscal 2008. The launch of the new Acquisition Unit and its acceptance in the market contributed positively.

Although the Imaging Systems segment was impacted by pricing pressure in a challenging economic environment, Sirona maintained its market share.

Revenue in the United States for the three months ended March 31, 2009 decreased by 1.1% compared to the same period of the prior
year. Revenue outside the United States decreased by 18.0%. On a constant currency basis, adjusting for the fluctuations in the U.S. Dollar/Euro exchange rate, revenue decreased by 6.1%, with mixed results among the countries. Positive revenue
growth in Germany, Japan and Australia was more than offset by declines, particularly in European countries.

Cost of Sales

Cost of sales for the three months ended March 31, 2009 was $84.5 million, a decrease of $18.6 million, or down 18.0%, as compared with the prior
year. Gross profit as a percentage of revenue was 48.7% compared to 45.6% in the prior year. Cost of sales included amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $16.1 million as
well as non-cash option expense of $0.1 million for the three months ended March 31, 2009, compared to amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $21.2 million and
non-cash option expense of $0.2 million for the three months ended March 31, 2008. Excluding these amounts, costs of sales as a percentage of revenue was 41.5% for the three months ended March 31, 2009 compared with 43.1% for the three
months ended March 31, 2008 and therefore gross profit as a percentage of revenue was 58.5% compared to 56.9%.

Selling, General and
Administrative

For the three months ended March 31, 2009, SG&A expense was $56.0 million, a decrease of $4.6 million, or
7.6%, as compared with the three months ended March 31, 2008. SG&A expense included amortization and depreciation resulting from the step-up to fair values of tangible and intangible assets of $1.0 million, as well as non-cash option
expense in the amount of $3.8 million for the three months ended March 31, 2009, compared with $1.1 million and $3.5 million, respectively, for the three months ended March 31, 2008. Excluding these amounts, as a percentage of revenue,
SG&A expense increased to 31.1% for the three months ended March 31, 2009 as compared



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with 29.6% for the three months ended March 31, 2008. The decrease in SG&A is mainly driven by variations in the U.S. Dollar/Euro exchange rate as
most of the expenses were denominated in Euro, whereas the increase as a percentage of sales is mainly due to our expanded presence in Japan and expenses for the bi-annual international trade show IDS.

Research and Development

R&D expense for
the three months ended March 31, 2009 was $10.0 million, a decrease of $2.0 million, or down 16.7%, as compared with the three months ended March 31, 2008. R&D expense included non-cash stock option expense in the amount of $0.1
million and $0.2 million, respectively, for the three months ended March 31, 2009 and March 31, 2008.

Excluding these amounts,
as a percentage of revenue, R&D expense was 6.0% for the three months ended March 31, 2009, compared with 6.2% for the three months ended March 31, 2008. The decrease was mainly due to variations in the U.S. Dollar/Euro exchange rate
and the introduction of our new products.

Net other operating (income)/loss and restructuring costs

Net other operating loss for the three months ended March 31, 2009 was $0.3 million, compared to a net operating income of $2.5 million for the three
months ended March 31, 2008. In both periods net other operating income/loss included $2.5 million income resulting from the amortization of the deferred income relating to the Patterson exclusivity payment.

In December 2008 we announced certain actions to reduce operating costs and thereby to improve the efficiency of our organization. These actions
predominantly relate to overhead functions in Germany including increased automation of our processes, the optimization of the supply chain as well as increased efficiency in our administrative functions.

For the three months ended March 31, 2009, we incurred restructuring costs of $ 2.8 million ($2.0 million after taxes), consisting of employee
severance pay and benefits and outside consulting fees directly related to the restructuring plan.

We expect to record remaining costs of
approximately $7.5 million in the second half of fiscal 2009. We expect that the majority of the total costs of approximately $10 million will be paid in fiscal 2009.

We expect annual pretax cost savings from these initiatives to be approximately $10 million starting in fiscal year 2010.



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Loss/Gain on Foreign Currency Transactions

Loss on foreign currency transactions for the three months ended March 31, 2009 amounted to $7.1 million compared to a gain of $9.0 million for the
three months ended March 31, 2008. For the three months ended March 31, 2009 the loss included an unrealized non-cash foreign currency loss of $4.0 million on the U.S. Dollar denominated deferred income, resulting from the currency
revaluation adjustment of Pattersons exclusivity payment and a $2.5 million loss due to the currency revaluation of U.S. Dollar denominated short-term intra-group loans. For the three months ended March 31, 2008 the gain included an
unrealized non-cash foreign currency gain of $6.7 million on the U.S. Dollar denominated deferred income, resulting from the currency revaluation adjustment of Pattersons exclusivity payment, as well as a non-cash foreign currency gain on
U.S. Dollar denominated short-term intra-group loans of $4.4 million.

Gain/loss on Derivative Instruments

Gain on derivative instruments for the three months ended March 31, 2009 amounted to $0.2 million compared to a loss of $3.0 million for the three
months ended March 31, 2008. For the three months ended March 31, 2009 the gain included an unrealized non-cash loss of $0.5 million on interest swaps, as well as a non-cash gain on foreign currency hedges of $0.7 million. The loss for the
three months ended March 31, 2008 included an unrealized non-cash loss of $4.7 million on interest swaps, as well as a non-cash gain on foreign currency hedges of $1.7 million.

Interest Expense

Net interest expense for the three months ended March 31, 2009 was $5.6
million, compared to $6.7 million for the three months ended March 31, 2008. This decrease mainly resulted from variations in the U.S. Dollar/Euro exchange rate and lower interest rates.

Income Tax Provision

The income tax provision
for the three months ended March 31, 2009 was $0.4 million, compared to $4.6 million for the three months ended March 31, 2008. For fiscal year 2009, an estimated effective tax rate of 28% has been applied compared to an effective tax rate
of 24% for fiscal year 2008. The 2009 effective tax rate is expected to be higher than 2008, due to a variety of factors including the estimated distribution of profits across the different countries.

Net Income

Sironas net income for the
three months ended March 31, 2009 was $0.6 million, a decrease of $10.3 million, as compared with the three months ended March 31, 2008. Second quarter 2009 net income included amortization and depreciation expense resulting from the
step-up to fair values of intangible and tangible assets related to the Exchange and the MDP Transaction (deal related amortization and depreciation) of $17.3 million ($12.5 million net of tax), unrealized, non-cash foreign currency losses on the
deferred income from the Patterson exclusivity payment of $4.0 million ($2.9 million net of tax) and losses on short-term intra-group loans of $2.5 million ($1.8 million net of tax). Sironas net income for the three month period ended
March 31, 2008 included deal related amortization and depreciation of $22.3 million ($15.6 million net of tax), currency revaluation gains on the Patterson exclusivity payment of $6.7 million ($4.7 million net of tax) and revaluation gains on
short-term intra-group loans of $4.4 million ($3.1 million net of tax).

The estimated effective tax rate for fiscal year 2009 is 28%
compared to an effective tax rate of 24% for fiscal year 2008. Option expense was $4.0 million ($2.9 million net of tax) in the second quarter of 2009, compared to $3.8 million ($2.7 million net of tax) in the prior year period.



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Six Months Ended March 31, 2009 Compared to Six Months Ended March 31, 2008

Revenue

Revenue for the six months ended
March 31, 2009 was $344.5 million, an decrease of $45.1 million, or 11.6%, as compared with the six months ended March 31, 2008. On a constant currency basis, adjusting for the fluctuations in the U.S. Dollar/Euro exchange rate, total
revenue decreased by 4.4%. By segment, CAD/CAM Systems declined 9.5% (down 4.1% on a constant currency basis), Imaging Systems declined 10.8% (down 5% on a constant currency basis), Treatment Centers declined 14.0% (down 3.9% on a constant currency
basis), and Instruments declined 15.2% (down 5.4% on a constant currency basis).

All segments were impacted by the weak global economy
which resulted in a challenging environment for selling dental equipment. In the current slowdown, we are seeing that some dentists are postponing investments in equipment. At the same time, they continue to demand innovative high tech products that
improve their competitive position and increase their practice income; such products include CAD/CAM systems, digital imaging and Galileos 3D imaging systems. In addition revenue in the second quarter was impacted by the bi-annual international
trade show IDS in Cologne at the end of March, as some dentists wait with their investment decisions until after the show.

The
Dental CAD/CAM Systems segment faced a challenging year over year comparison due to the trade-in program for the MC-XL milling unit, which had a major impact in the first half of fiscal 2008. The launch of the new Acquisition Unit and its acceptance
in the market contributed positively.

Although the Imaging Systems segment was impacted by pricing pressure in a challenging economic
environment, Sirona maintained its market share.

Revenue in the United States for the six months ended March 31, 2009 decreased by
3.6% compared to the same period of the prior year. Revenue outside the United States decreased by 15.1%. On a constant currency basis, adjusting for the fluctuations in the U.S. Dollar/Euro exchange rate, revenue decreased by 4.8%. Positive revenue
growth in non-U.S., non-European markets, driven by Sironas expanded presence in Japan and Australia, was more than off-set by declines in Europe.

Cost of Sales

Cost of sales for the six months ended March 31, 2009 was $177.2 million, a decrease of $31.6
million, or 15.1%, as compared with the six months ended March 31, 2008. Cost of sales included amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $32.3 million as well as
non-cash option expense of $0.2 million for the six months ended March 31, 2009, compared to amortization and depreciation expense resulting from the step-up to fair values of tangible and intangible assets of $41.8 million and non-cash option
expense of $0.4 million for the six months ended March 31, 2008. Excluding these amounts, costs of sales as a percentage of revenue decreased to 42.1% for the six months ended March 31, 2009 compared with 42.8% for the six months ended
March 31, 2008 and gross profit as a percentage of revenue increased by 0.7 percentage points to 57.9% from 57.2%. The positive development of the gross profit margin was mainly due to product mix.

Selling, General and Administrative

For the
six months ended March 31, 2009, SG&A expense was $113.5 million, a decrease of $3.0 million, or 2.6%, as compared with the six months ended March 31, 2008. SG&A expense included amortization and depreciation resulting from the
step-up to fair values of tangible and intangible assets of $2.0 million as well as non-cash option expense in the amount of $7.4 million for the six months ended March 31, 2009, compared with $2.1 million and $6.6 million, respectively, for
the six months ended March 31, 2008. Excluding these amounts, as a percentage of revenue, SG&A expense increased to 30.2% for the six months ended March 31, 2009 as compared with 27.7% for the six months ended March 31, 2008. The
decrease in SG&A is mainly driven by variations in the U.S. Dollar/Euro exchange rate as most of the expenses were denominated in Euro, whereas the increase as a percentage of sales is mainly due to our expanded presence in Japan and Italy as
well as expenses for the bi-annual international trade show IDS.



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Research and Development

R&D expense for the six months ended March 31, 2009 was $21.1 million, an decrease of $4.6 million, or 17.9%, as compared with the six months ended March 31, 2008. R&D expense included non-cash stock
option expense in the amount of $0.3 million and $0.5 million, respectively, for the six months ended March 31, 2009 and March 31, 2008.

Excluding these amounts, R&D expense was 6.0% of revenues for the six months ended March 31, 2009, compared with 6.5% for the six months ended March 31, 2008. The decrease was primarily due to variations in the U.S.
Dollar/Euro exchange rates as most of the expenses were denominated in Euro as well as the completion of projects and the launch of new products.

Net other operating (income)/loss and restructuring costs

Net other operating income for the six months ended
March 31, 2009 was $3.2 million, compared to $5.0 million for the six months ended March 31, 2008. In both periods net other operating income included $5.0 million resulting from the amortization of the deferred income relating to the
Patterson exclusivity payment. In the six months ended March 31, 2009 net other operating income also included a gain from the sale of a sales and service subsidiary in Spain of $1.0 million.

In December 2008 we announced certain actions to reduce operating costs and thereby to improve the efficiency of our organization. These actions
predominantly relate to overhead functions in Germany including increased automation of our processes, the optimization of the supply chain as well as increased efficiency in our administrative functions.

For the three months period ended March 31, 2009, we incurred restructuring costs of $ 2.8 million ($2.0 million after taxes), consisting of
employee severance pay and benefits and outside consulting fees directly related to the restructuring plan.

We expect to record remaining
costs of approximately $7.5 million in the second half of fiscal 2009. We expect that the majority of the total costs of approximately $10 million will be paid in fiscal 2009.

We expect annual pretax cost savings from these initiatives to be approximately $10 million starting in fiscal year 2010.

Loss/Gain on Foreign Currency Transactions

Loss on foreign currency transactions for the six months ended March 31, 2009 amounted to $10.7 million compared to a gain of $14.9 million for the six months ended March 31, 2008. For the six months ended March 31, 2009 the
loss included an unrealized non-cash foreign currency loss of $6.3 million on the U.S. Dollar denominated deferred income, resulting from the translation adjustment of Pattersons exclusivity payment, as well as a non-cash foreign currency
loss on U.S. Dollar denominated short-term intra-group loans to European entities of $3.9 million. For the six months ended March 31, 2008 the gain included an unrealized non-cash foreign currency gain of $10.4 million on the
U.S. Dollar denominated deferred income, resulting from the translation adjustment of Pattersons exclusivity payment, as well as a non-cash foreign currency gain on U.S. Dollar denominated short-term intra-group loans of $6.5
million.

Loss on Derivative Instruments

Loss on derivative instruments for the six months ended March 31, 2009 amounted to $4.7 million compared to a loss of $5.2 million for the six months ended March 31, 2008. For the six months ended March 31, 2009 the loss
included an unrealized non-cash loss of $8.5 million on interest swaps, as well as a non-cash gain on foreign currency hedges of $3.8 million. The loss for the six months ended March 31, 2008 included an unrealized non-cash loss of $6.3 million
on interest swaps, as well as a non-cash gain on foreign currency hedges of $1.1 million.

Interest Expense

Net interest expense for the six months ended March 31, 2009 was $11.7 million, compared to $13.4 million for the six months ended March 31,
2008. This decrease mainly resulted from variations in the U.S. Dollar/Euro exchange rate and lower interest rates.



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Income Tax Provision

The income tax provision for the six months ended March 31, 2009 was $2.4 million, compared to $11.8 million for the six months ended March 31, 2008. For fiscal year 2009, an estimated effective tax rate of
28% has been applied compared to an effective tax rate of 24% for fiscal year 2008. The 2009 effective tax rate is expected to be higher than 2008, due to a variety of factors including the estimated distribution of profits across the different
countries.

Net Income

Sironas net income for the six months ended March 31, 2009 was $6.2 million, a decrease of $21.7 million, as compared with the six months ended March 31, 2008. Net income included amortization and depreciation expense
resulting from the step-up to fair values of intangible and tangible assets related to the Exchange and the MDP Transaction (deal related amortization and depreciation) of $34.5 million ($24.8 million net of tax), unrealized, non-cash foreign
currency losses on the deferred income from the Patterson exclusivity payment of $6.3 million ($4.6 million net of tax) and losses on short-term intra-group loans of $3.9 million ($2.8 million net of tax). Sironas net income for the six month
period ended March 31, 2008 included deal related amortization and depreciation of $43.9 million ($30.7 million net of tax), currency revaluation gains on the Patterson exclusivity payment of $10.4 million ($7.3 million net of tax) and
revaluation gains on short-term intra-group loans of $6.5 million ($4.6 million net of tax).

The estimated effective tax rate for fiscal
year 2009 is 28% compared to an effective tax rate of 24% for fiscal year 2008. Option expense was $7.8 million ($5.6 million net of tax) in the first two quarters of 2009, compared to $7.5 million ($5.2 million net of tax) in the prior year period.

Liquidity and Capital Resources

Historically, Sironas principal uses of cash, apart from operating requirements, including research and development expenses, have been for interest payments, debt repayment and acquisitions. Periodic capital expenditures have
approximately equaled depreciation (excluding any effects from the increased amortization and depreciation expense resulting from the step-up to fair values of Sironas and Schicks assets and liabilities required under purchase
accounting). Sironas management believes that Sironas working capital is sufficient for its present requirements.



|                                          |               |                  |        |               |  |   |         |  
|----------------------------------------- | ------------- | ---------------- | ------ | ------------- |  | - | ------- | -
|                                          |               | Six months ended |       
|                                          | March 31,2009 |                  |        | March 31,2008 | 
|                                          | $000s        |                 
|Net cash provided by operating activities |               | $                | 21,872 |               |  | $ | 29,559  |  
|Net cash used in investing activities     |               |                  | (4,996 | )             |  |   | (16,914 | )
|Net cash used in financing activities     |               |                  | (1,270 | )             |  |   | (9,427  | )
|                                          |               |                  |        |               |  |   |         |  
|Increase in cash during the period        |               | $                | 15,606 |               |  | $ | 3,218   |  
|                                          |               |                  |        |               |  |   |         |  

Net Cash Provided by Operating Activities

Net cash provided by operating activities represents net cash from operations, returns on investments, and payments for interest and taxation.



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Net cash provided by operating activities was $21.9 million for the six months ended March 31, 2009
compared to $29.6 million for the six months ended March 31, 2008. The primary contributing factors to the decrease in cash provided by operating activities were a decrease in net income, partially offset by lower tax and interest payments.

Net Cash Used in Investing Activities

Net cash used in investing activities represents cash used in capital expenditures in the course of normal operating activities, partly offset by proceeds from the disposal of long-lived assets and the proceeds from the sale of an
investment in a subsidiary for the six months ended March 31, 2009. Effective November 28, 2008 the Company sold its sales and services subsidiary in Spain. The primary contributors to the investing cash outflow for the six months ended
March 31, 2008 were capital expenditures in the course of normal operating activities.

Net Cash Used in Financing Activities

Net cash used in financing activities was $1.3 million for the six months ended March 31, 2009, compared to $9.4 million for
the six months ended March 31, 2008. Net cash used in financing activities in the six months ended March 31, 2009 relates to the repayment of a bank loan in China and the purchase of treasury shares under the stock repurchase program. Net
cash used in financing activities in the six months ended March 31, 2008 relates to the repayment of the utilized portion of the Companys revolving credit facility.

Sironas management believes that Sironas operating cash flows and available cash (including restricted cash), together with its long-term
borrowings, will be sufficient to fund its working capital needs, research and development expenses (including but not limited to the acquired in-process research and development), anticipated capital expenditure and debt service requirements for
the foreseeable future.

Capital Resources

Senior Term Loans

On November 22, 2006, Sirona Dental Systems, Inc. entered into a senior credit facility
(the Senior Facilities Agreement) as original guarantor, with Schick Technologies, Inc., a New York company and wholly owned subsidiary of Sirona (Schick NY) as original borrower and original guarantor, with Sirona
Dental Systems GmbH, as original borrower and original guarantor, with Sirona Dental Services GmbH, as original borrower and original guarantor and with Sirona Dental Systems LLC, Sirona Holding GmbH (subsequently merged with Sirona Dental Services
GmbH) and Sirona Immobilien GmbH as original guarantors. Initial borrowings under the Senior Facilities Agreement plus excess cash were used to retire the outstanding borrowings under the Companys previous credit facilities.

The Senior Facilities Agreement includes: (1) a term loan A1 in an aggregate principal amount of $150 million (the tranche A1 term
loan) available to Sironas subsidiary, Schick NY, as borrower; (2) a term loan A2 in an aggregate principal amount of Euro 275 million (the tranche A2 term loan) available to Sironas subsidiary, Sirona Dental
Services GmbH, as borrower; and (3) a $150 million revolving credit facility available to Sirona Dental Systems GmbH, Schick NY and Sirona Dental Services GmbH, as initial borrowers. The revolving credit facility is available for borrowing
in Euro, U.S. Dollars, Yen or any other freely available currency agreed to by the facility agent. The facilities are made available on an unsecured basis. Subject to certain limitations, each European guarantor guarantees the performance of each
European borrower, except itself, and each U.S. guarantor guarantees the performance of each U.S. borrower, except itself. There are no cross-border guarantees since all guarantees are by entities that have the same functional currency as the
currency in which the respective guaranteed borrowing is denominated.

Each of the senior term loans has a five year maturity and is to be
repaid in three annual installments beginning on November 24, 2009 and ending on November 24, 2011. Of the amounts borrowed under the term loan facilities, 15% is due on November 24, 2009, 15% is due on November 24, 2010 and 70%
is due on November 24, 2011. At the Companys current leverage multiples, the facilities bear interest at a margin of 55 basis points plus, in the case of Euro-denominated loans, EURIBOR and, in the case of other loans, LIBOR.

The Senior Facilities Agreement contains a margin ratchet. Pursuant to this provision, which applies from November 24, 2007 onwards, the
applicable margin will vary between 90 basis points and 45 basis points per annum according to the Companys leverage multiple (i.e. the ratio of consolidated total net debt to consolidated adjusted



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EBITDA as defined in the Senior Facilities Agreement). Interest rate swaps have been established for 66.6% of the interest until March 2010. The
interest rate swaps fix the LIBOR or EURIBOR element of interest payable on 66.6% of the principal amount of the loans for defined twelve and thirteen month interest periods over the lifetime of the swaps, respectively. The defined interest rates
fixed for each twelve or thirteen month interest period range from 3.50% to 5.24%. Settlement of the swaps is required on a quarterly basis.

The Senior Facilities Agreement contains restrictive covenants that limit Sironas ability to make loans, make investments (including in joint ventures), incur additional indebtedness, make acquisitions or pay dividends, subject to
agreed exceptions. The Company has agreed to certain financial debt covenants in relation to the financing. The covenants stipulate that the Company must maintain certain ratios in respect of interest payments and defined earnings measures. If the
Company breaches any of the covenants, the loans will be become repayable on demand.

Debt issuance costs of $5.6 million were incurred in
relation to the financing and were capitalized as deferred charges and are amortized using the effective interest method over the term of the loan.



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Other Financial Data



|                           |        |                            |        |                          |      |        |      |   |        |  |   |        
|-------------------------- | ------ | -------------------------- | ------ | ------------------------ | ---- | ------ | ---- | - | ------ |  | - | -------
|                           |        | Three monthsendedMarch 31, |        | Six monthsendedMarch 31,
|                           | 2009   |                            | 2008   |                          | 2009 |        | 2008
|                           | $000s |                            | $000s
|Net income                 |        | $                          | 595    |                          | $    | 10,929 |      | $ | 6,154  |  | $ | 27,914 
|Net interest expense       |        |                            | 5,593  |                          |      | 6,655  |      |   | 11,657 |  |   | 13,401 
|Provision for income taxes |        |                            | 364    |                          |      | 4,579  |      |   | 2,362  |  |   | 11,821 
|Depreciation               |        |                            | 4,792  |                          |      | 4,236  |      |   | 9,400  |  |   | 8,029  
|Amortization               |        |                            | 17,600 |                          |      | 22,789 |      |   | 35,213 |  |   | 45,118 
|                           |        |                            |        |                          |      |        |      |   |        |  |   |        
|EBITDA                     |        | $                          | 28,944 |                          | $    | 49,188 |      | $ | 64,786 |  | $ | 106,283
|                           |        |                            |        |                          |      |        |      |   |        |  |   |        

EBITDA is a non-GAAP financial measure that is reconciled to net income, its most directly
comparable U.S. 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 U.S. GAAP measures, such as net income and gross margin calculated in conformity with U.S. GAAP. EBITDA should not be considered in isolation or as a substitute for net income prepared in accordance with U.S. GAAP. There are material
limitations associated with making the adjustments to Sironas earnings to calculate EBITDA and using this non-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 and intangible assets, depreciation and amortization expense is a necessary element of its
costs and ability to generate revenue; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 consolidated financial statements and footnotes.

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 gains/losses recorded in the
periods presented which relate to the early extinguishment of debt, share based compensation, revaluation of U.S. Dollar-denominated exclusivity payment and borrowings where the functional currency is Euro, and the Exchange. Sironas
management believes that these items are either nonrecurring or noncash in nature, and 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 its 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
| | ---- | -----------------------------------------------------------------------------------------------------------



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| | (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 disclosures of
Sironas operating results on the same basis as that used by Sironas management.

Supplemental Information



|                                                                                                           |  |                            |        |      |                          |        |      |  |      |        |  |   |         |  
|---------------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | ---- | ------------------------ | ------ | ---- |  | ---- | ------ |  | - | ------- | -
|                                                                                                           |  | Three monthsendedMarch 31, |        |      | Six monthsendedMarch 31, |       
|                                                                                                           |  | 2009                       |        | 2008 |                          |        | 2009 |  | 2008 |       
|                                                                                                           |  | $000s                     |        |      | $000s                   |       
|Share-based compensation                                                                                   |  | $                          | 3,959  |      | $                        | 3,838  |      |  | $    | 7,794  |  | $ | 7,498   |  
|Unrealized, non-cash loss/(gain) on revaluation of the carrying value of the $-denominated exclusivity fee |  |                            | 4,034  |      |                          | (6,734 | )    |  |      | 6,325  |  |   | (10,365 | )
|Unrealized, non-cash loss/(gain) on revaluation of the carrying value of short-term intra-group loans      |  |                            | 2,510  |      |                          | (4,419 | )    |  |      | 3,912  |  |   | (6,529  | )
|                                                                                                           |  |                            |        |      |                          |        |      |  |      |        |  |   |         |  
|                                                                                                           |  | $                          | 10,503 |      | $                        | (7,315 | )    |  | $    | 18,031 |  | $ | (9,396  | )
|                                                                                                           |  |                            |        |      |                          |        |      |  |      |        |  |   |         |  

Recently Issued Accounting Pronouncements-

See note 2 to the unaudited condensed consolidated financial statements for discussion of recently issued accounting pronouncements that have not yet been
adopted.



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|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

There have been no material changes to the Companys market risk since September 30, 2008.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and 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 Securities Exchange Act of 1934), as of March 31, 2009. Based upon this evaluation, our chief executive officer and
chief financial officer concluded that, as of March 31, 2009, the Companys disclosure controls and procedures were effective. Our disclosure controls and procedures are designed to ensure that information relating to the Company,
including our consolidated subsidiaries, that is required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in
Commissions rules and forms.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
occurred during the quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II.



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

There are currently no material
legal proceedings pending.



|ITEM 1A. | RISK FACTORS
|-------- | ------------

There are no material changes from
risk factors as previously disclosed by the Company in Part I, Item IA of its 2008 Annual Report on Form 10-K.



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

In December 2008, the Company authorized a stock repurchase program to purchase up to an aggregate of $50,000,000 of its common stock in open market transactions. The table below presents information pursuant to Item 703(a) of
Regulation S-K regarding the repurchase of the Companys common stock by the Company in the three-month period ended March 31, 2009. The Companys Board of Directors has decided to discontinue the repurchase program.

ISSUER PURCHASES OF EQUITY SECURITIES



|                 |  |                                             |  |                                        |       |                                                                                        |       |                                                                                                                   |   |           
|---------------- |  | ------------------------------------------- |  | -------------------------------------- | ----- | -------------------------------------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------------------------------- | - | ----------
|                
|Period           |  | (a) TotalNumber ofShares (orUnits)Purchased |  | (b) AveragePricePaid perShare(or Unit) |       | (c) TotalNumber ofShares (orUnits)Purchasedas Part ofPubliclyAnnouncedPlans
orPrograms |       | (d) MaximumNumber (orApproximateDollar Value)of Shares (orUnits) thatMay Yet
BePurchasedUnder thePlans orPrograms
|1/1/09  1/31/09 |  | 2,007                                       |  | $                                      | 10.03 |                                                                                        | 2,007 |                                                                                                                   | $ | 49,715,530
|2/1/09  2/28/09 |  |                                            |  |                                        |      |                                                                                        |      |                                                                                                                   |   |          
|3/1/09  3/31/09 |  |                                            |  |                                        |      |                                                                                        |      |                                                                                                                   |   |          
|Total            |  | 2,007                                       |  | $                                      | 10.03 |                                                                                        | 2,007 |                                                                                                                   | $ | 49,715,530



|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.



|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------



| | (a) | The Company held its 2008 Annual Meeting of Stockholders (the Annual Meeting) on February 25, 2009.
| | --- | -----------------------------------------------------------------------------------------------------



| | (b) | The following matter concerning the election of Directors was voted upon at the Annual Meeting with the accompanying results:
| | --- | -----------------------------------------------------------------------------------------------------------------------------

Election of Directors:



|                                             |  |                    |  |                        
|-------------------------------------------- |  | ------------------ |  | -----------------------
|                                             |  | Number of VotesFor |  | Number of VotesWithheld
|Nicholas W. Alexos(New term expires in 2011) |  | 47,222,573         |  | 4,958,922              
|David K. Beecken(New term expires in 2011)   |  | 47,857,411         |  | 4,324,084              
|Jost Fischer(New term expires in 2011)       |  | 47,522,604         |  | 4,658,891              
|Arthur D. Kowaloff(New term expires in 2011) |  | 47,855,154         |  | 4,326,341              



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##### Table of Contents

The terms of the other Directors of the Company continued after the meeting, as follows: William K. Hood,
Harry M. Jansen Kraemer, Jr. and Jeffrey T. Slovin serve in the class whose term expires at the Annual Meeting of Stockholders for the fiscal year ending in 2010 and Simone Blank, Timothy D. Sheehan and Timothy D. Sullivan serve in the class whose
term expires at the Annual Meeting of Stockholders for the fiscal year ending in 2009. Upon the expiration of the term of a class of Directors, the members of such class will be elected for three-year terms at the Annual Meeting of Stockholders at
which such expiration occurs.



| | (c) | The following additional matters were voted upon at the Annual Meeting held on February 25, 2009 with the following results:
| | --- | ----------------------------------------------------------------------------------------------------------------------------



| | 1. | Approval of an amendment of the 2006 Plan to raise the number of shares of common stock issuable under the 2006 Plan to 4,550,000:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

Number of votes for: 38,476,119

Number of
votes against: 11,288,404

Number of abstentions: 7,437



| | 2. | Approval of an amendment of the 1996 Plan to permit a stock option exchange offer program to exchange outstanding stock options under the 1996 Plan with a per-share exercise price
equal to $25.10 for stock options under the 2006 Plan on a value-for-value basis:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of votes for: 38,414,148

Number of votes against: 11,349,105

Number of abstentions: 8,707



| | 3. | Ratification of the selection of KPMG AG, Wirtschaftspruefungsgesellschaft, Germany (formerly KPMG Deutsche Treuhand-Gesellschaft, Aktiengesellschaft,
Wirtschaftspruefungsgesellschaft, Germany) as the Companys independent auditor for the fiscal year ending September 30, 2009:
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Number of votes for: 52,078,058

Number of votes against: 86,802

Number of abstentions: 16,634



| | (d) | Not Applicable.
| | --- | ---------------



|ITEM 5. | OTHER INFORMATION
|------- | -----------------

Item 1.01 Entry into a
Material Definitive Agreement

Sirona Dental Services GmbH and Luxco entered into a Renewal Letter Agreement dated May 4, 2009 pursuant
to which the parties renewed the Advisory Services Agreement dated October 1, 2005, with such renewal effective as of October 1, 2008. Concurrently with such renewal, Sirona Dental Services GmbH assigned its rights and obligations under
the Advisory Services Agreement to Sirona. As a result of the renewal, the Advisory Services Agreement will terminate on October 1, 2009, but will automatically be renewed for successive one year terms unless either party provides notice of
termination 60 days prior to the end of the term. Under the Advisory Services Agreement, Sirona pays an annual fee to Luxco of 325,000 (approximately $400,000), and Luxco provides to Sirona certain advisory services regarding the structure,
terms and condition of debt offerings by Sirona, financing sources and options, business development and other services. The foregoing description of the renewal of the Advisory Services Agreement is qualified in its entirety by reference to the
actual Renewal Letter Agreement, which is filed as an exhibit to this quarterly report on Form 10-Q and is incorporated herein by reference.



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|ITEM 6. | EXHIBITS
|------- | --------

The following Exhibits are included in
this report:



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Item Title                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1        |  | Renewal Letter Agreement, dated as of May 4, 2009, between Sirona Dental Services GmbH, a corporation organized under the laws of Germany (Sirona GmbH) and Sirona Holdings Luxco
S.C.A., a société en commandite par actions organized under the laws of the Grand Duchy of Luxembourg (Luxco), to the Advisory Services Agreement dated October 1, 2005 between Sirona GmbH and Luxco, together with the Assignment
and Assumption Agreement dated May 4, 2009 among Sirona GmbH, Sirona Dental Systems, Inc. and Luxco.
|            | 
|31.1        |  | Certification of Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|31.2        |  | Certification of Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                     
|            | 
|32.1        |  | Section 1350 Certification of Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|            | 
|32.2        |  | Section 1350 Certification of Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Date: May 5, 2009



Sirona Dental Systems, Inc.By:

/s/ Simone BlankSimone Blank, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) (Duly authorized signatory)




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