Acquisition of Astra Tech June 22, 2011 1
Forward Looking Statements This presentation, in addition to historical information, contains forward-looking statements (as defined in the Securities Litigation Reform Act of 1995) regarding, among other things, future events or the future financial performance of the Company. Words such as anticipate, expect, project, intend, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Forward-looking statements relating to the proposed acquisition include, but are not limited to: statements about the benefits of the proposed acquisition involving the Company and Astra Tech, including future financial and operating results; the Company s and Astra Tech s plans, objectives, expectations and intentions; the expected timing of completion of the transaction; and other statements relating to the acquisition that are not historical facts. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. Important factors could cause actual events or results may differ materially from those indicated by such forward-looking statements. With respect to the Company s proposed acquisition of Astra Tech, these factors include, but are not limited to: the risk that the Company or Astra Tech may be unable to obtain governmental and regulatory approvals required for the transaction, or required governmental and regulatory approvals may delay the transaction or result in the imposition of conditions that could reduce the anticipated benefits from the acquisition or cause the parties to abandon the transaction; the risk that a condition to closing of the transaction may not be satisfied; the length of time necessary to consummate the proposed acquisition; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; the diversion of management time on transaction-related issues; the effect of future regulatory or legislative actions on the companies; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; economic and foreign exchange rate volatility; the continued strength of the dental and medical device markets; the timing, success and market reception for the Company s and Astra Tech s new and existing products; the possibility of new technologies outdating the Company s or Astra Tech s products; uncertainty with respect to governmental actions with respect to dental and medical devices; outcomes of litigation; continued support of the Company s and Astra Tech s products by influential dental and medical professionals; changes in the general economic environment that could affect the businesses; and disruption from the transaction making it more difficult to maintain relationships with the customers, key suppliers, management and executive employees. For a more detailed description of these risk factors and additional risks and uncertainties, please refer to the Company s Annual Report, Form 10-K and subsequent periodic reports on Forms 10-Q and other filings with the Securities and Exchange Commission. Copies of all recent SEC filings, and additional information about DENTSPLY, are available through our web site: www.dentsply.com. Forward-looking statements included in this release speak only as of the date of this presentation. Neither the Company nor Astra Tech undertakes any obligation to update its forward-looking statements to reflect events or circumstances after the date of this release. 2
Non-GAAP Financial Information In addition to the financial measures prepared in accordance with accounting principles generally accepted in the United States ( GAAP ), the Company provided the non-gaap financial measure adjusted earnings per diluted share. Adjusted earnings per diluted share excludes (1) acquisition-related charges and deal-related amortization, (2) income tax-related adjustments, (3) restructuring and other costs, and (4) other specific items. The Company excluded the above items because they are outside of normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. The Company believes that the presentation of adjusted earnings per diluted share provides important supplemental information to management and investors seeking to understand the Company s financial condition and results of operations. The non-gaap financial information should not be considered in isolation from, or as a substitute for, measures of financial performance prepared in accordance with GAAP. 3
Significantly enhances scale Strategic Rationale Increases revenue base by approximately 25% Builds momentum and doubles the Company s position within the high growth dental implant segment Creates a leading digital dentistry platform for customized abutments Leverages core competencies and expands addressable markets with a leading platform in related consumable medical devices Accretive to adjusted earnings per share; accelerates sales and earnings growth Powerful cash flow generator 4
Key Deal Terms Purchase price Approximately $1.8 billion Funded through cash on hand and committed debt financing Roadmap to Completion Expected to be completed in the next 4-6 months Customary regulatory approvals 5
Attractive Market Opportunity Dental Dental Market Segmentation Revenue Endodontics Orthodontics 5% 6% Preventive 22% Prosthetics 14% Implants 14% 17% 22% Restoratives Global Catheter Market Segmentation Revenue Hydrophilic Large Equp 53% 32% 15% With Lubricant Without Lubricant Total Market: $18Bn Dental Implant Market: $3Bn Growth: 10% Healthcare Intermittent Catheter Global Hydrophilic Catheter Market: $480MM Growth: 7% Market Drivers Dental implant market growth expected to accelerate and outgrow the overall dental market Significantly underpenetrated market (<10%) CAD/CAM abutment market expected to continue 20%+ growth Attractive private pay model Highly profitable procedure for dentists to undertake versus other prosthetic procedures Increasing familiarity with implants among newly qualified dentists Market Drivers Strong underlying demographics expected to continue to drive growth Increasing usage of intermittent catheters for bladder related issues Widening range of underlying conditions, including SCI, MS, spina bifida, stroke and diabetes leads to increase in patient base Growing trend towards single use devices Increase in shift to hydrophilic catheters given better reduction in urethral friction Greater focus on reduction in infections, lowering overall healthcare costs Hydrophilic catheters carries low risk of infection 6
Revenue by Product 2010 Revenue A leading developer, manufacturer and marketer of dental implants, customized abutments and consumable medical products Healthcare Dental Operates through two divisions: Dental and Healthcare Total 2010 Revenue: $535 million Headquartered in Mölndal, Sweden Revenue by Geography 2010 Revenue 11% RoW Over 2,000 employees globally 18% NA Europe 71% 7
Astra Tech Dental #3 dental implant player worldwide Portfolio includes implants and customized and stock abutments Leader in CAD/CAM abutment market Among the fastest growing dental implant players over last 5 years Strong reputation of quality, research and comprehensive service offering Products supported by extensive clinical data Strong product portfolio to support growth Astra Tech Healthcare Urology products account for ~85% of Healthcare revenue LoFric brand name holds #2 position worldwide in the hydrophilic catheter market Primarily a European business today, with global growth opportunities Solid pipeline to support continued growth Product portfolio also includes devices for wound drainage, surgical suction and other similar functions High margin business with leverageable infrastructure 8
Key Financial Highlights DENTSPLY combined with Astra Tech is expected to significantly enhance our operating profile over the next several years Accretive to revenue and EPS growth Attractive combined product portfolio and pipeline to drive future growth Revenue and operational synergies provide additional confidence for earnings accretion Expected financial impact Accretive to adjusted EPS (1) by $0.12-$0.17 in the first year; $0.30-$0.40 by third year Including transaction-related amortization, the transaction is expected to be modestly dilutive to EPS in the first year and accretive thereafter Strong cash flow generation and rapid deleveraging (1) Adjusted EPS excludes one-time costs and deal-related amortization 9
Financing and Capital Structure Overview Purchase price funded with: ~35% in cash from balance sheet ~65% in committed Bridge facility Take-out financing to be comprised of 2-10 year bonds and an upgraded revolving credit facility Efficient use of capital Utilizes significant OUS cash balance Takes advantage of low cost of debt environment Committed to maintaining financial flexibility and investment grade rating 10
Conclusion Significantly enhances scale Increases revenue base by approximately 25% Builds momentum and doubles the Company s position within the high growth dental implant segment Creates a leading digital dentistry platform for customized abutments Leverages core competencies and expands addressable markets with a leading platform in related consumable medical devices Accretive to adjusted earnings per share; accelerates sales and earnings growth Powerful cash flow generator 11