Annual Report 2003 - Nobel Biocare Corporate

NOBEL BIOCARE ANNUAL REPORT 20035CEO STATEMENTA winning new strategySustained profitability, acceleratedrevenue growth, increasedmarketing and sales activities, over110 000 dentists trained, reducedproduct assortment, global supplychain processes and ISO 14001 certification.These are just some of themilestones achieved by this companyin 12 months. But, although proud ofall we have done, I expect more of theyear ahead. 2004 will be even better.2003 was a year of accelerated growthand further improved profitability, atrend we successfully got underwaythe previous year. We achieved 19 percentrevenue growth in local currencies.In the fourth quarter, revenue roseby 24.8 percent, gaining momentumin both the US and Germany. Thiswas all pure volume growth, withoutany price increases.Revenue growth in localcurrencies* (%)2015105014.412.019.02001 2002 2003EBIT Margin (%)252015105016.022.626.12001 2002 2003The net profit increased by 90.5 percentto EUR 72.0 million, an increasefrom 12.1 to 21.6 percent of revenue.A strategy for the futureBoth the revenue growth and acceleratedprofitability are the result ofour new strategy aimed at makingNobel Biocare an esthetic dentalsolution company. Starting with theacquisition of Procera at the end of2001, we have moved step-by-steptowards this vision.Procera is a vital part of our C&B&Iconcept making Nobel Biocare theonly company in the dental businesswith a complete offer of crowns,bridges and implants, covering allaspects of advanced and estheticaltooth reconstruction.Simultaneously, the market trendtowards higher esthetical demands isclear. As those born in the 1940’sgrow older, the need for estheticaltooth replacement will explode. Thisis a patient group that is financiallysolid and that will put high demandon the esthetical outcome. For them,function and chewing capacity arenot enough; they pay dentists toprovide new and beautiful teeth.This is where our C&B&I strategyfits. By combining the advantages ofimplant treatment with the opportunitiesfor individualized prostheticsof Procera, we give dentists the abilityto meet all patient demands. At thesame time, dentists are given freedomof choice. The goal is not for everydentist to place implants. It is thatboth dentists and patients shouldknow about the treatment. Whethera dentist carries out both the surgicaland the prosthetic part of the therapy,or refers the patient to a specialistwho places the implant, we leave thefinal choice to the individual dentist.They decide, we provide.We grew in all major markets,maintaining our position as marketleader in all regional markets as wellas being the overall market leader inthe US. And we grew both amongnew and experienced implant users.Of the 19 percent revenue growth,15 percentage units came from newcustomers.Furthermore, for the eigth consecutivequarter we were able to furtherimprove our profitability, reaching anEBITA margin of 28.9 percent andan EBIT margin of 26.1 percent for2003, well in excess of our targets.“2003 was a yearof acceleratedgrowth andfurther improvedprofitability”*excl. sales of Gore products

6NOBEL BIOCARE ANNUAL REPORT 2003”Nobel Biocare is incrediblywell positioned to becomea leading actor in the entiredental industry”Added salespersonnel (%)1612840-4+6+16-2 -2Sales2002 2003OthersNew marketing and brandstrategiesThe C&B&I concept targets bothgeneral practitioners and specialists.Coming from a position where wefocused on a limited number ofexperienced users, this has put newdemands on the way we market ourselves.Thus, already in 2002 weintegrated our global sales force andsegmented our efforts towards ourthree main customer groups –specialists, general practitioners anddental laboratories.There is also a clear brand strategywhereby our individual brands targetdifferent customer segments. Replaceis aimed at new users and generalpractitioners, while Brånemark Systemis the main alternative for experiencedusers. Procera targets dental laboratoriesat the same time as being avital part of our common prostheticoffer, Nobel Esthetics, for bothReplace and Brånemark System.Increased marketing activitiesIn 2003, we doubled our marketingefforts. We did more of everything –advertising, on-line marketing,exhibitions and so on. At the sametime, the sales force grew by 16 percent.This was made possible byredirecting internal resources. Forexample, our customer service staffwere retrained as internal sales people.To widen knowledge of implanttreatment, we also doubled ouractivities in training and education,training more than 110 000 dentistsworldwide. We now have trainingcenters with integrated surgicalclinics in Yorba Linda, Toronto andGothenburg. In 2004, we will establishnew centers with live surgery and handson capabilities in Fair Lawn, NewJersey and Stockholm. The coursesare aimed at customers from alldental disciplines covering crownsand bridges as well as implants.Focus on training andeducation (participants)120,00090,00060,00030,000050,00070,000110,0002001 2002 2003To make it easy for dentists toparticipate in the training activities,we utilize web-cast training programs,so that the dentists do not need toleave the office. In 2004, we will offerworkshops led by women, targetingfemale participants and lecturers.Although 50 percent of all dentistsare women, a strong male majoritycurrently dominates those participatingand lecturing.The first world conferenceThe main manifestation of the C&B&Iconcept was our world conference inLas Vegas last April, gathering 2 300customers from different dentaldisciplines, among them 700 generalpractitioners. In addition to hundredsof seminars, lectures, exhibitions andother activities, the visitors witnessedtwo broadcast live operations – onein Yorba Linda in California andone midnight case performed inGothenburg, Sweden.Both live cases were based on ourunique “Teeth-in-an-Hour” conceptmaking it possible for a fully edentulouspatient to have new teeth thatboth work and look good in less thanan hour. The participants at the WorldCongress could follow the entireoperation as the dentists explainedthe procedure. Afterwards, the audiencewas able to speak with thepatients to get his impressions of thetreatment.Globalization and rationalizationThe powerful manifestation of revenuegrowth was achieved apace withour internal transformation into atruly global company, including productionas well as all other parts ofthe supply chain.Within the production of standardproducts, such as dental implants,this process encompassed the implementationof a new packaging systemand the upgrading of machineryequipment. We also finalized ourassortment rationalization program,resulting in a reduction of units from3 400 in 2001 to 760 in the end of2003. The program included thephase out of two product lines, Steri-Oss and Replace Hex, representingsome 30 000 sold articles per annum,putting high pressure on theorganization as we met unexpectedamounts of returned goods. However,once again we showed thestrength of our company by maintainingcustomer service and deliveryprecision at high levels.We also invested heavily in our

NOBEL BIOCARE ANNUAL REPORT 20037Procera facilities for production ofindividualized designed prosthetics.Today, we have two world-class productionfacilities with almost zerofaultproduction and constantlyfalling internal scrap rates.As if all this wasn’t enough, we alsocompleted our global ISO 14001environmental certification, settingnew standards for the dental industry.Furthermore, we started to roll outthe SAP R/3 IT system to remainingsubsidiaries in Latin America andPoland, providing us with unrivalledinternal transparency.We stayed innovativeBeside revenue growth, acceleratedprofitability and the development ofinternal processes, we stayed innovative.This is where we come from,and it is how we will stay number one.We will never stop being innovative.The success for our surfaceTiUnite continued during 2003.Numerous independent clinical studieshave proved that TiUnite not onlyintegrates with human bone, TiUniteis also osseoconductive, which meansthat the TiUnite surface makes bonegrow directly onto the pores of thesurface. This strengthens our beliefthat TiUnite in the future will beused as carrier of bioactive agents.TiUnite was a prerequisite for us inbecoming the first company to evergain FDA clearance for ImmediateLoading in 2002. It is also a vital partof our “Teeth-in-an-Hour” conceptpresented at the World Conference.Launches in 2003 also includedNobelPerfect, the world’s first scallopedimplant with a unique designthat prevents the degeneration of bonebetween teeth and therefore secureslong-term esthetics. In early 2004,we also launched NobelDirect, theone-piece implant concept, based onImmediate Function and flaplesssurgery. NobelDirect provides bothdentists and patients with the ultimateform of simplicity resulting in shortertreatment times and a minimum ofpain.In 2003, we launched ProceraPiccolo – a small scanner aimed atsmall and medium sized laboratories.Procera Piccolo limit’s the investmentsneeded by the lab to startworking with Procera. This has beena big hit and we have had to revisethe sales forecast for Procera Piccoloseveral times during the year. In 2004,we will see the results of all newlaboratories in the sales of Proceracrowns, bridges and abutments.From products to conceptsEach major launch in 2003 demonstrateshow we use our leadership inR&D to develop treatment conceptsthat encompass more than just products.We provide our customers witha whole package of documentation;products, educations, manuals andideas that help them expand theirbusinesses.All concepts are based on existingneeds and are positioned in specificmarket segments. As market leaders,it is up to us to grow the market. Wedo that by continuously developingnew concepts that make implanttreatment available to more people,concepts that meet patient needs fornew esthetical teeth.The future is even betterOur achievements in 2003 have madeNobel Biocare very well positioned tobecome a leading actor in the entiredental industry. We have gainedmomentum when it comes to revenuegrowth and sustainable profitability.Our product assortment is lean andaimed at clearly identified targetgroups. And we have the market’sstrongest sales organization driven bystrong commitment and a provenstrategy.We also have the infrastructure tomeet the expected growth. Our productionorganization has both thecapacity for increased volumes andthe flexibility needed to gain maximalefficiency. And our R&D departmentconsists of people with ideas that willfurther boost market growth.Business concept, vision, targets and strategyBusiness conceptNobel Biocare aims to enhance patient quality of life byoffering the best permanent and esthetic replacements forlost teeth.VisionNobel Biocare will be the world leader in innovative estheticdental solutions.Targets for 2004• Accelerated annual revenue growth• Improved profitabilityStrategyIn order to reach its goals, Nobel Biocare will continue itsmarketing and sales efforts towards dental specialists,general practitioners and dental technicians in order toincrease the penetration for bothdental implants and individuallydesigned prosthetics.2003 was a great year and weachieved a lot. In 2004, we will takefurther steps on our journey to becomethe world’s leading and mostinnovative dental solution company.We will reach our goal through increasedmarketing and sales activities.We will launch a series of newproducts and there will be furtherstudies confirming our clinical leadership.We will also place the last piecein our C&B&I puzzle by furtherstrengthening our prosthetics offer.I want to conclude by thanking allemployees for contributing to thecreation of our strong foundation forthe future. In 2004, we will sustainour efforts to keep the world in aconstant state of positive amazement– customers, partners and shareholdersalike.HELIANE CANEPAPRESIDENT & CEO

8NOBEL BIOCARE ANNUAL REPORT 2003THE DENTAL MARKETPeople want teethAround the world there are billionsof people who have lost theirteeth. In the industrial world alone, over240 million people lack one or moreteeth. These men and women wantmore than their chewing capacity back.They want an esthetical replacement.They want their smile back. Theywant teeth.In Europe almost 10 percent of thepopulation is fully edentulous (missingPopulationaged 65+ (%)252015105013USA181722EuropeanUnion1827Japanall teeth) and 35–40 percent partlyedentulous. In the US, the correspondingnumbers are 11 and 40 percent,respectively. In total, 40 percentof the Western population is missingone tooth or more. Among peopleover 65 years of age, 50–60 percentof all men and women are fully orpartly edentulous.Indications and methodsThe loss of one or more teeth can becategorized into two main indications:• Dental tissue damage when a partof the tooth is replaced by a crownthat is produced in a dental laboratoryand placed by a dentist to givethe tooth an esthetic finish.• Dental root damage, which meansthat both the tooth and the root arelost or a severely damaged tooth isextracted by the dentist and replacedby either a dental bridge ora dental implant.Market penetration – Dental implants (implants per 10,000 citizens)100806040200SwitzerlandItalySwedenGermanyBelgiumSpain/Port.TodayIn 20 yearsSource: Gabelli & Co, Inc/World BankNetherlandsAustriaMarket value 2003: EUR 1 billionUSAFranceFinlandNorwayDenmarkKoreaJapanAustraliaBrazilHong KongTaiwanCanadaSingaporeUKPolandSource: Nobel Biocare estimatesAll those treatment methods havefocused on partially edentulouspatients. For totally edentulous jaws,there have been no permanent replacementsavailable, making this a severesocial handicap for the patient.The traditional method of replacinga tooth and its root is to place a bridgebetween two neighboring teeth thatare being grinded to anchor the new“tooth”. Historically, this treatmenthas been carried out in a way similarto crown therapy, whereby the dentisttakes a print of the adjacent teeth andsends it to a laboratory where thebridge has been produced.However, since the 1960’s thismethod has been challenged bydental implant treatment. Dentalimplants are permanent replacementsfor dental roots. This treatment isbased on a medical phenomenonknown as osseointegration, whichmeans that the implant integrateswith the patient’s jawbone. ProfessorPer-Ingvar Brånemark discovered thisphenomenon in 1952 and the firstimplant operation was performed in1965.Compared to the traditionalmethod, implants offer a number ofadvantages:• No need to grind healthy teeth• Better esthetic outcome•Prevention of bone loss• No loose parts and no adjustmentsneeded after placement•Life-long duration• High success rate

NOBEL BIOCARE ANNUAL REPORT 20039Historically, the disadvantage ofimplant treatment has been that ithas been considered complex andtime consuming by both dentists andpatients. Initially, the treatment wasperformed in two stages. The dentistbegan by installing the implant, whichwas left for three-six months to healand integrate with the jawbone. Duringthis healing period, the patient wasgiven a temporary prosthesis beforethe abutment that joins the implantand the crown could be fitted.The disadvantages of the traditionalmethod and the former complexity ofimplant treatment may well be themain reason why only around 20 percentof the edentulous people in theindustrialized world are still treatedby a fixed solution and only 2 percentof the edentulous population aretreated with implants.However, by reducing the secondstep of the therapy in combinationwith other innovations in implantdesign and new surfaces, implanttreatment has been simplified andthe procedure has moved closer tothe traditional method.The cost for a single tooth implantis in most markets similar to costs fora traditional bridge treatment. Theimplant components account for only10–15 percent of the treatment, whilethe remainder is the fee to the surgeon/dentist. Apart from Sweden and TheNetherlands, implant treatment is notcovered by any national health reimbursements.Coverage through privateinsurance is still very limited.Dentists and laboratoriesThere are an estimated 810 000dentists around the world. Of those,almost 170 000 are located in NorthAmerica, 275 000 in Europe and85 000 in Japan. In general, there aretwo groups of dentists – generalpractitioners and various specialists,including oral surgeons, prosthodotistsand periodontists.General practitioners usually havethe prime relationship with thepatients. Their main business isrestorative and preventive dentistrythat is mainly carried out during apatients’ yearly dental check-up. Allgeneral practitioners also carry outcrown and bridge therapy.However, just a small percentage ofgeneral practitioners place implants.In the US, only five percent of allgeneral practitioners carry out thetreatment, while in Italy, around 50Market Potential - North America,Europe & Japan (million people)General Practitioners placing implants (%)Total market: 240 million people■5 Treatedwith dentalimplants76Europe24North America95581Japan19■ Placingimplants■ 50 Treatedconventionally■ Not placingimplantsSource: Nobel Biocare estimatesSource: Nobel Biocare estimates

10NOBEL BIOCARE ANNUAL REPORT 2003percent place implants. Historically,the main reasons for not doingimplants have been:• Lack of knowledge about implanttreatment, which has not been partof basic dentist education• Implant treatment has beenregarded as time consuming,complex and expensive comparedto crown and bridge therapy• Limited demand due to lack ofpublic awareness of the method.The Dental Market (%)■ 24 Equipment■ 63 Consumables■ 7 Implants■ 6 PharmaceuticsSource: UBS Warburg and Nobel Biocare estimatesMarket for fixed prosthetics (%)■ 35 PFM Units in Bridges■ 50 PFM Single Crowns■ 15 All-ceramicCrowns & BridgesSource: Official sources and Nobel Biocare estimatesCompetition – Dental Implants (%)■ 32 Nobel Biocare■ 21 Straumann/ITI■ 15 Biomet/3i■ 9 Zimmer Dental■ 8 Dentsply/Friadent■ 3 AstraTech■ 3 Lifecore■ 9 OthersSource: Nobel Biocare estimatesSpecialists account for some 5–10percent of all dentists. In Europe,more than 95 percent of specialistscarry out dental implants. In the US,75 percent place implants, comparedto around 90 percent of Japanesedental specialists.To reach his or her patients, a specialistneeds a network of referringgeneral practitioners. To expand theirreferral market, specialists thereforehave an interest in spreading theknowledge of dental implants amonggeneral practitioners.Crown and bridge therapy alsoinvolve dental laboratories, which arethe producers of the prosthetic solutions.Dental laboratories account for10–15 percent of the total dentalmarket, corresponding to total grossrevenues of some USD 1.5 to 2.0 billion.The dental laboratory businessis widely segmented with an estimated12 000 labs in North America and43 000 in Europe. The laboratoriesare dependent upon the generalpractitioners to reach the patient arejudged on their ability to deliverquality on time with a high estheticoutcome.The driving forcesThere is a clear trend within bothdental implants and prosthetics towardsshorter treatment times, aminimum of pain and high estheticoutcome. In the early days of dentistry,patients had no choice. A lost toothwas replaced by a solution that, inbest case, restored chewing capacity.Today’s patients are better informedand they know what they want. Theywant new teeth.The increased demand for estheticsis in line with general trends in society.In a world where plastic surgery is afast growing business, it is naturalthat people also want to be able tosmile showing all their teeth. Besidesesthetical trends this is even a questionof quality of life and social confidence.The demand for esthetical solutionsfor replacing lost teeth is alsopredicted to grow as a result ofdemographical changes. An ageingpopulation with high social and economicalstandards will be the majormarket driving force. As oral healthimproves, there will also be a switch indemand from full jaw replacements topartial and single tooth restorations.This will also increase the number ofdentist visits.Market growth will also be boostedby technological improvements andthe introduction of new treatmentconcepts and products, such as NobelBiocare’s Immediate Function,Teeth-in-an-Hour, NobelPerfect andNobelDirect.The dental implant marketThe total dental market has an estimatedvalue of USD 13–14 billionwith restorative and preventivedentistry standing for the largest segment.Other large segments are Dentallaboratories and Cosmetic dentistry.Dental implants account for 7percent (USD 1 billion) of the globaldental market. It is the fastest growingsegment with a forecasted growthrate of around 18 percent followedby Cosmetic dentistry.Europe is the largest regional

NOBEL BIOCARE ANNUAL REPORT 200311market, followed by the US and Asia.The highest growth rate is beingseen in the US, which is a youngerand less penetrated market with aslightly larger number of edentulousor partly edentulous patients.Implants represent 50 percent ofsales, abutments 35–40 percent andinstruments 10–15 percent.In addition to demography, themarket may be driven by an improvedglobal economy in the coming years.Crown and bridge marketThe crown and bridge market isestimated to about EUR 2.4 billioncovering around 110 million units.Globally, single units stand for 65percent of the total volume, whilebridges account for 35 percent.Bridges are most common inGermany and the rest of Europe,while in the US, approximately 85percent of the volume comes fromsingle units.The governing market trends arethe development of new all-ceramicmaterials for improved esthetics andthe outsourcing of parts of the productionfrom the laboratories toindustrial actors.All-ceramic materials account for15 percent of the volume, comparedto PFM (porcelain fused to metal)materials totalling up to 85 percent.The highest penetration for allceramicmaterials (20%) has beenrecorded in the US.The outsourcing trend resultsfrom the use of CAD/CAM systemsallowing the industrialized productionof the inner part, or coping, of thecrown. Of the all-ceramic units, eightpercent is produced by differentCAD/CAM systems.Players on the dental marketThe total dental market is somewhatfragmented. Nobel Biocare is theclear market leader with a marketshare of 32 percent. Nobel Biocareholds the leading position on theregional markets in North America,Europe and Asia as well as in mostindividual countries such as the USand Japan.The main competitors on theimplant market include the Swiss companyStraumann, and the US companiesBiomet, Centerpulse Dental(acquired by US Zimmer in 2003)and Dentsply. In total, the five companiescontrol almost 85 percent ofthe market.Nobel Biocare not only ranks themarket leader in size. The companyalso has an innovative approach and afully integrated offer, covering bothcrowns and bridges and implants. Thisgives Nobel Biocare a unique positionwithin the entire dental industryaddressing dentists, specialists anddental laboratories with one commonoffer.Within the All-Ceramic prostheticssegment, Nobel Biocare holds amarket share of 6 percent. In Europe,Nobel Biocare’s market share is14 percent, while in North Americait is 7 percent. In the CAD/CAMsector, Nobel Biocare is the marketleader with more than 4 million individualizedunits produced.

12 NOBEL BIOCARE ANNUAL REPORT 2003PRODUCT OFFERC&B&I – an integrated offer ofcrowns, bridges and implantsNOBELDIRECT NobelDirect is a new concept based on flapless surgery and soft-tissue healing with TiUnite.Nobel Biocare is the only companyon the market with an integratedoffer of crowns, bridges and implants– C&B&I – providing the dentist withthe unlimited freedom of choice.Nobel Biocare enables every dentist tosatisfy a patient’s need for new teeth.Over the last few years, Nobel Biocarehas taken several important steps tomove from its position as marketleader in dental implants towardsbecoming a world leader in innovativeesthetic dental solutions. Today,Nobel Biocare is the only companyon the market with an integratedoffer of crowns, bridges and implants– C&B&I – covering all aspects ofadvanced and esthetical tooth reconstruction.The main goal of the C&B&Iconcept is that no dentist should beobliged to use a specific method ortreatment therapy. He or she shouldbe free to choose. And their availablechoice should encompass a wide rangeof concepts providing the utmostsimplicity and highest estheticalresults. As a Nobel Biocare customer,every dentist should feel convincedthat he or she is able to provide thepatient with the most suitable andesthetical solution for lost teeth.Crowns and bridgesNobel Biocare’s crown and bridgeoffer includes industrially producedindividual products in a number ofdifferent materials. The main productis Procera Crown that is available invarious ceramic materials. For highestheticrestorations in the frontalregion, an aluminum oxide crown isused, while for areas demandingstrength, zirconium oxide crowns arepreferred.The bridge offer encompassesProcera Implant Bridge, a customizeddental implant bridge for full jawreplacements. Procera ImplantBridge provides the patient with outstandingesthetics, precision and fit.ProceraNobel Biocare’s crown and bridgeoffer is based on the unique Procera

NOBEL BIOCARE ANNUAL REPORT 200313“NobelPerfect isthe first implantdesigned toreplicate naturalanatomy.”NOBELPERFECT The launch of a new scanner,Procera Piccolo, proved such asuccess that sales forecasts neededto be revised several times.technology. With Procera, firstintroduced in 1988, Nobel Biocarerevolutionized the processes for producingdental applications. Proceraremains the world’s only commerciallyavailable process for industrialproduction of individually designedcrowns, bridges and abutments.The traditional method of replacingthe natural tooth crown with a fixedprosthetic crown has been availablefor about 100 years. The dentistprepares the tooth and takes animpression, which is sent to a dentallaboratory where a new crown isproduced in a lengthy, handicraftprocedure. The work at the dentallaboratory is split in two parts. First, asupporting inner construction, the socalledcoping, is made. Afterwards, thecoping is coated with an outer layerof porcelain.Procera is aimed at the productionof the coping – the part of the processto be industrialized. The dentist sendsan impression to a laboratory where amodel of the tooth is read by a ProceraScanner connected to a PC, whichdesigns the coping digitally. Thedigital information is then transferredto a central production facility, wherethe individually adapted coping ismanufactured. Within 1–3 days thelaboratory receives the coping andadds an outer layer of porcelain toobtain the desired shape and color.A vital part of the new strategyProcera is a vital part of NobelBiocare’s new strategy. By providingindividually designed dental crownsand bridges for conventional dentistry,the system functions as a door-openerto general practitioners.To date four million Procera copingshave been produced and NobelBiocare is the world market leader inCAD/CAM based dentistry. To furtherpenetrate the market, Nobel Biocarein 2003 launched a new scanner,Procera Piccolo, aimed at small andmedium sized laboratories. The launchhas been a success and the sales forecastshad to be revised several times.In 2004, Nobel Biocare will furtherstrengthen its crown and bridge offernamed Nobel Esthetics.Dental ImplantsNobel Biocare is the world leaderand pioneer of dental implants. Theimplant offer covers all indicationsand encompasses a wide range ofdifferent implants, abutments andtreatment tools. Thanks to strongR&D resources, Nobel Biocare meets

14 NOBEL BIOCARE ANNUAL REPORT 2003C&B&I BRAND STRUCTUREdemands from dentists and patientsfor ultimate simplicity and esthetics.Two customer groups– two brandsThe segmentation of the implantoffering is based on target groups.Brånemark System reaches out toexperienced implant users, whileReplace is the prime alternative fornew users.Brånemark System has the widestclinical documentation in the market.It is also the world’s most versatileimplant offering, covering all customerneeds for advanced reconstruction.Replace has for many years beenthe fastest growing brand on themarket. As it is easy to use, Replaceisthe obvious choice for easy, efficientand esthetic treatment. Thesecharacteristics make Replace thefirst-choice alternative for generalpractitioners.The main product for new users isReplace Select Tapered. The implantwas the first tapered implant on themarket and to date over one millionimplants have been installed. ReplaceSelect Straight addresses generalpractitioners with some experience ofimplant treatment. It combines thebest-documented features of BrånemarkSystem implant design andReplace internal connection.A common esthetic offerNobel Esthetics is a common prostheticoffer for Brånemark System andReplace, characterized by excellentesthetical results and simplicity. Theconcept means that the dentist doesnot need to know whether thespecialist has installed BrånemarkSystem or Replace. What is visiblelooks exactly the same.Thanks to its unique Procera technology,Nobel Biocare is the onlycompany in the implant businessoffering both standard abutmentsand individually produced solutions.BrånemarkSystem ®High-end users/SpecialistsMajor product launchesIn 2003 and early 2004, Nobel Biocarelaunched two dental implant conceptsthat pushed the borders for estheticsand simplification several steps forward,taking implant treatment as closeto traditional dentistry as it can get.NobelPerfect is the first implantdesigned to replicate natural anatomy.The revolutionary scalloped profilesupports the interproximal boneridge and preserves natural soft tissuecontours between the implant andthe surrounding teeth, avoiding“black triangles” between the teeth.Through the development of a newconcept, including the one-pieceimplant, NobelDirect, launched inearly 2004, Nobel Biocare is takingdental implants to the point ofultimate simplicity and tissue friendliness.NobelDirect is a new conceptbased on flapless surgery and softtissuehealing with TiUnite. It is aone-stage implant using flapless,minimal-invasive surgery that facilitateshandling and make procedureseasier. Apart from bringing implantseven closer to traditional crown andbridge therapy, NobelDirect and theopportunity of flapless surgery bringsmany advantages to the patient,including minimized discomfort andreduced treatment time.Nobel Biocare has received clearancefrom the FDA for NobelDirect withseveral different diameters, includingNobel Replace ®Procera ®Nobel Esthetics Nobel Biocare New users/General dentistsC&B&I BRAND PROMISESNobel Biocare BrånemarkSystem ®Replace ®Procera ®NobelPerfect NobelDirect The world leader in innovativeesthetic dental solutionsThe most versatile and mostclinically proven original so youcan treat virtually every caseThe obvious choice for easy,efficient and esthetic treatmentThe ultimate in personalizedesthetics and efficiencyOptimal esthetics in implanttreatmentPatient friendly, flaplessprocedure, Immediate Functionand Soft Tissue attachmentthe 3 mm implant, which is thethinnest implant for permanentplacement ever approved by the FDA.The 3 mm implant is suitable wherelack of space is a clinical problem.The primary customer target groupsfor NobelDirect are general dentistsand implantologists.The continuous integration of theProcera technology also resulted in thelaunch of a new customized abutment,Procera Abutments Zirconia, for areasdemanding particular strength. As aresult of the launch, Nobel Biocare’sprosthetic offering for implant treatmentis complete, encompassing bothstandard products and customizedprosthetics in a range of materials fordifferent areas of the mouth.Laboratories

IPMIntellectual PropertyManagementNobel Biocare's product portfoliois state of the art. The increasedcomplexity is a constant challenge forIP management and IP protection.Thus Nobel Biocare works in this areaworldwide in order to optimize anycombination of the legal and businessaspects of Intellectual PropertyManagement.To obtain optimal protection for itsproducts and services and to reinforcethe company’s brands and marketposition, Nobel Biocare takes a globaland structured approach to the development,use and protection of IntellectualProperty Management (IPM).The knowledge-intense nature ofthe business and the continued focuson providing complete estheticaldental solutions for its customers meanthat IPM is an important issue forNobel Biocare.◗ TrademarksNobel Biocare uses the “core brands”Nobel Biocare, Brånemark System,Replace and Procera to develop andenhance its branding and positioningstrategy.In addition, Nobel Biocare furtherstrengthens these “core brands” byusing “product brands”, such as therecently launched products Nobel-Perfect, NobelDirect and ProceraPiccolo.Nobel Biocare also uses differenttrademarks in launches and to introduceconcepts, such as C&B&I andImmediate Function.◗ Trade dress or designsSeveral of Nobel Biocare's productsare unique, not only from the angleof technical use but also in designaspects. This legal means of protectionhas been enhanced in the US and EUand is used by Nobel Biocare for theprotection of designs.◗ PatentsNobel Biocare carefully monitorshow to make the optimal use of patentapplicationsand patent protection.Nobel Biocare is always at theforefront when it comes to developingnew products and concepts. In 2003,Nobel Biocare applied for 17 newpatents.◗ CopyrightMany of Nobel Biocare’s printedmaterials are protected by copyrightlegislation, as is Nobel BiocareProcera software.◗ Trade secretsNobel Biocare acknowledges that iton a daily basis handles confidentialinformation and know-how that issensitive and proprietary. Nobel Biocarefocuses on informing employees,suppliers and others of the sensitivenature of much of the daily work andprocesses at Nobel Biocare. We alsoput in place rules and guidelines, aswell as mandatory processes, tomake sure information only reachesthose who should have this specificinformation.NOBEL BIOCARE ANNUAL REPORT 2003Our trademarks15CORE BRANDSNobel Biocare Brånemark System ®Replace ®Procera ®PRODUCT BRANDSNOBELPERFECT NOBELDIRECT Procera ® PiccoloCONCEPTSC&B&I Immediate Function Soft Tissue Integration Dental Implant PatentsGranted US Patents 2001-2003* (Number)35302520151050NobelBiocareBiomet/3iDentsply/FriadentAstraStraumann/ITI* Dental Implant Class A61C 8/00 Espacenet Patent Data baseZimmerDental

16NOBEL BIOCARE ANNUAL REPORT 2003SALES AND MARKETINGIncreasedmarketing activitiesThe new C&B&I strategy of enablingdentists around the world to offerpatients high esthetic new teeth hasbeen a winning concept. A tremendousmarketing effort and the launchof new advertising and profilingapproaches not only supported salesgrowth, but also reinvented the imageof Nobel Biocare.Nobel Biocare’s new strategy ofaddressing general practitioners hasproven a major success. Never beforehave so many new dentists beenplacing implants, or carrying out theprosthetic part of the treatment.In the early stages, concerns wereexpressed about the risk of the strategyhaving a negative effect on the company’srelationship with its traditionalcustomers, who could possibly fearincreased competition from generalpractitioners. Instead, the strategyhas created new business opportunitiesfor specialists as their network ofreferring dentists grow. Also, thedental laboratories have found newbusiness opportunities.Integrated sales forceIn line with the strategy and targetedsales growth, Nobel Biocare substantiallyincreased its activities insales and marketing in 2003. A keyissue was the integration of the salesforce that was carried out in 2002forging one organization out of previouslythree. By having a commonsales force segmented according tocustomer groups, Nobel Biocarefreed resources to boost its efforts toreach out to general practitioners.By globalizing its marketing andsales activities, Nobel Biocare alsogained the full benefit of its unrivalledglobal presence with subsidiaries andbranches in 28 countries and distributorsin a further 15 countries.Altogether, this made it possible todouble advertising, presence atexhibitions and other activities. Thenumber of sales visits and visitors tothe company’s professional websitealso increased dramatically.To reach new customer groups,Nobel Biocare also came up with newsales and marketing approaches as wellas refreshingly different advertisingand profiling styles. For example,NobelPerfect was presented using anew graphical language that underlinedthe exclusivity of this productfor patients with higher estheticexpectations. NobelPerfect was veryfavorably received by the target groupof experienced implant users performingmore than 200 implants per year.World CongressNobel Biocare held its first WorldCongress in Las Vegas 2–5 April.The conference was a manifestationof the C&B&I concept, gatheringrepresentatives for the first time fromall dental disciplines, including bothexisting and new customers.

NOBEL BIOCARE ANNUAL REPORT 200317The 2 300 international participants,encompassing 700 general practitioners,were given the opportunityto participate in a world class scientificprogram, including two live surgerieswith the Teeth-in-an-Hour conceptdemonstrating dental implantrestorations with immediate functioningteeth. There was also a widerange of lectures, exhibits and workshopstargeting different customergroups.Training and educationThe intensified efforts in training andeducation have resulted in a dramaticgrowth in the number of dentistsparticipating in the courses. In 2003,Nobel Biocare trained 110 000 dentistscompared to 70 000 the previous year.Training and education activities arebased on the customer’s need to offerpatients high esthetic solutions forlost teeth and Nobel Biocare’s C&B&Iconcept where both implants andcrowns and bridges are integrated.The programs are segmented towardsgeneral practitioners and specialistsand include hands-on activities with afocus on both surgery and prosthetics.Training days are combined withinteractive material on CD’s, webbasedlearning programs and manualsand other written communication.Not all participants will start placingimplants. Some will do the prostheticpart of the treatment; others will continueas before. However, all of themwill be better informed on the therapyand able to present the solution totheir patients.In order to give easy access to continuoustraining, Nobel Biocare hasintroduced NobelOnline, which is aninternet training program for dentistsaround the globe. Internet trainingmakes it possible for hundreds ofdentists to participate in the samelecture and learn about the latestfindings without having to leave theiroffices.Sales growthThe increased focus on sales growthresulted in revenue increasing by19.0 percent in local currencies tototal EUR 334.0 million (311.2),excluding sales of the discontinuedGore regenerative products. For thenew core products, the revenuegrowth was well above 20 percent.All core markets, and in particular theUS, Germany and Japan, experiencedstrong sales acceleration towards theend of 2003. The strongest trends forthe full year were noted in the Nordiccountries, Spain, France and Japan.Sales of the Replace system continuedto run at exceptionally highlevels as a result of its user-friendlyapproach. The major part of thegrowth in the general practitionersegment came from Replace.A larger number of general practitionersoffering implant treatmenthas clearly led to more cases beingreferred to specialists carrying outdifficult cases, resulting in a positivegrowth trend for Brånemark Systemas well.The launch of the Procera Piccoloscanner resulted in extremely strongsales, confirming the interest in highendceramic prosthetics from smalland medium-sized dental laboratories.This will be a sound platform forfuture sales increase.Distribution of sales (%)504030201004737115Added salespersonnel (%)1612840+6+16-2 -2SalesOthersFocus on training andeducation (participants)120,00090,00060,00030,00050,00070,000110,000Revenue growth in localcurrencies* (%)25201510511.619.510.916.319.724.12002200316.424.0EuropeNorthAmericaAsia/PacificRest ofthe World-42002 200302001 2002 20030EuropeNorthAmericaAsia/PacificRest ofthe World*excl. sales of Gore products

18NOBEL BIOCARE ANNUAL REPORT 2003R&DContinuousinnovationsTiUnite – a uniqueporous surfaceThe small-pore topographyand physical properties of theTiUnitesurface make bonegrow directly onto the pores ofthe surface.In 2003 Nobel Biocare challenged theindustrial standards by presentingthe Teeth-in-an-Hour implant concept.By combining the unique Procera technologywith the osseoconductivity ofNobel Biocare’s implant surface,TiUnite, this concept enables dentiststo provide patients with new, fully functioningteeth in less than one hour.In 2003 Nobel Biocare brought severalinnovative products to the market.4.1 percent of net revenue, EUR 13.6million, was spent on R&D and 17new patents were filed. In all, around80 employees at Göteborg, YorbaLinda and Stockholm work with developmentactivities.The ultimate goal for the R&Ddepartment is to make dental implantsavailable to patients as a standardmethod of tooth replacement. Untilnow, only a limited number of dentistshave been offering dental implants.To make dental implants available formore general practitioners, NobelBiocare’s R&D focuses on developingeasy-handled, patient friendly andesthetic treatment concepts.Since the new strategy being implementedin 2001, Nobel Biocare hasintroduced a re-engineered productoffer of 760 articles providing a moreuser-friendly system to the customerand improving internal efficiency.In 2003 and early 2004, the R&D workresulted in the launch of NobelPerfect(the world’s first scalloped implant),NobelDirect(a biology friendly onepieceimplant) and Procera Piccolo(a new scanner for small and mediumsizedlaboratories). Nobel Biocare hasalso intensified the development ofconcepts such as Immediate Function,Soft Tissue Integration, Teeth-in-an-Hour and further integrated theunique Procera technology with theimplant business.TiUnite– the continuous successNobel Biocare has pioneered dentalimplants since Professor Per-IngvarBrånemark discovered that titaniumintegrates with human bone. Withthe TiUnite surface, introduced in2001, Nobel Biocare has furtherverified true osseointegration.Numerous independent studiesproved TiUnite to be osseoconductive,which means that it stimulates bonegrowth along the surface. It was alsoshown that bone actually grows intothe pores of the TiUnite surface,which results in shorter healing time.The clinical results secure NobelBiocare’s position as the innovativeleader in the dental business, bringingnumerous opportunities in the developmentof dental implants narrowingthe gap to natural human teeth.Long term estheticsThe successful launch of Nobel-Perfect, the world’s first scallopedimplant, confirmed Nobel Biocare’sleadership in esthetics. NobelPerfectis aimed at enhancing esthetics in thefrontal region. This is made possibledue to the unique construction of theimplant that supports both bone andsoft tissue between the teeth.In meeting patients’ increasingdemand for esthetic solutions, the

NOBEL BIOCARE ANNUAL REPORT 200319Launches of innovative products and concepts2001 2002 2003 2004 – Q1In 2003 NobelBiocare spent EUR13.6 million onR&D and 17 newpatents were filed.R&D ofrevenueSurgicalProsthetic4.5% 4.2% 4.1%◗ Replace SelectTiUnite◗ Brånemark Novum◗ Esthetic abutmentBrånemark System◗ Easy Abutment◗ Procera CrownZirconia◗ Multi-unit angledAbutment◗ Procera ImplantBridge◗ Procera Crown0.4 mm◗ New ProductAssortment (800)• 380 new products• Replace SelectStraight◗ Immediate function◗ Common prostheticoffer◗ Esthetic AbutmentCeram◗ New packaging◗ New surgical kitBrånemark System◗ Stargrip Replace◗ Manual TorqueWrench◗ NobelPerfect◗ Procera PiccoloScanner◗ Procera AbutmentZirconia◗ Soft TissueIntegration◗ NobelDirect◗ 3.0 mm implant◗ NobelPerfectOne-Piece◗ New Temporariesfurther development of compatibleceramic components is of vitalimportance. That is why Nobel Biocarehas a competitive advantage inthe unique Procera technology andits know-how in ceramic materialdevelopment.Immediate FunctionAllowing a patient to leave a clinicwith esthetically and functionallyworking teeth after implant treatmenthas long been the vision of thedental community. Nobel Biocare’sR&D has made that possible.Nobel Biocare is the first companyto receive FDA clearance for immediateloading for all indications inpatients with normal bone quality.Immediate loading is an importantfactor in Nobel Biocare’s strategyaimed at general practitioners. Asdental implants are becoming almostas easy as traditional crown & bridgetherapy, this treatment option willbecome more attractive for bothdentists and patients.As a consequence of the immediateloading concept, Nobel Biocare hasdeveloped the one-piece implantconcept, NobelDirect, launched inearly 2004. NobelDirect is a biologyfriendly one-piece implant specificallydesigned to simplify the use of implantsand ensure long-term estheticsthrough a minimally invasive, flaplessprocedure.Based on NobelDirect, NobelBiocare has additionally developed a3 mm implant that enables singletooth implants for the lower incisorsin the frontal region. This opens up anew indication for implant treatment.Once again, Nobel Biocare is breakingnew territory by becoming thefirst company to get FDA clearancefor an implant that is less than 3.25millimeters.Teeth-in-an-HourThe unique Teeth-in-an-Hourconcept was presented in 2003. Thedentist plans the surgery in advanceusing a computer based planningsystem with the Procera technologyallowing the manufacture and supplyof all the individualized components.Soon after sending the digital imageof the patients jaw to Nobel Biocare,the dentist receives all the componentsand tools for the implant proceduresent directly to his office. With thehelp of drilling templates and theindividually designed components,the dentist can perform both surgeryand prosthetics in one hour and thepatient gets permanent functioningteeth in one visit.During 2003, 100 patients weresuccessfully treated with the method.A global launch will start in 2005.The combination of the planningsystem and Procera technologyprovides extremely high precisionand consequently minimal invasive,flapless surgery can be performed.The process minimizes both pain andswelling for the patient, which incombination with the short treatmenttime, greatly benefits both the dentistand the patient.Future focusR&D and clinical studies will continueto play a vital part of Nobel Biocare’sstrategy to offer patients new teeth.The future focus will be on extendingthe immediate function concept,long-term esthetics and the simplificationof treatment concepts.Clinical publications onimmediate/early loading(Number)50403020100Nobel BiocareStraumann/ITIAstraBiomet/3iSource: Medline database, April 2003

20NOBEL BIOCARE ANNUAL REPORT 2003QUALITY, ENVIRONMENT AND REGULATORY AFFAIRSSetting the pace inthe dental businessNobel Biocare is setting the pacein the dental business when itcomes to quality, environmental andregulatory matters. Patient and productsafety is the ultimate goal of thecompany’s quality work.The governing principle behind allNobel Biocare’s general guidelines,procedures and documents is thatthey should be global with quality,environmental and regulatory issuesfully integrated in the day-to-daywork of all employees.Quality and regulatory issuesNobel Biocare’s quality work encompassesall activities and processes,from product idea and developmentto delivery reliability and follow-up.At every stage, documentation is vital.Product development and productiondocumentation provide evidence indicatingsafe and reliable products forthe end users.The R&D process is based onclinical validation and product verification.All products are clinically andtechnologically well documented priorto being launched. The productionprocess is rigorously controlled. NobelBiocare also operates a comprehensivepost market surveillance systemhandling complaints, warranty issuesand clinical follow ups, for example.Nobel Biocare is a member of theSwedish Institute for Quality and theEuropean Foundation for QualityManagement. In 2003, Nobel Biocarecontinued the implementation of theEFQM Excellence Model (TheEuropean Foundation for QualityManagement), with special focus andintensifying of the process approach.By using The Excellence Model,Nobel Biocare expands its view onquality from a product-orientedapproach to one establishing a managementsystem encompassing the entireoperation with a strong customer andbusiness focus.During the year, the companypassed a number of external inspectionsregarding quality, environmentaland regulatory issues. Nobel Biocarehas also finalized its change to a commonnotified body (British StandardsInstitute – BSi) for monitoring of thecompliance with the Medical DeviceDirective and quality managementstandards for its global operations.All production sites are certifiedaccording to ISO 13485.The regulatory concept and productapproval process is a prerequisite formarketing and distribution of the products.Among several internationallyobtained product approvals, a numberof FDA clearances were received

NOBEL BIOCARE ANNUAL REPORT 200321“Nobel Biocare’s major environmental goals are to reducewaste, minimize carbon oxide emissions and increaseawareness on environmental issues among employees.”during the period:•NobelPerfect• NobelDirect•Teeth-in-an-Hour• Esthetic Zirconia AbutmentFuture challenges include theimplementation of new regulatorystandards in Asia where manycountries are set to establish theirown standards.EnvironmentNobel Biocare does not carry outactivities that pose any threat to theenvironment. Nobel Biocare’s localoperation sites comply with locallaws and regulations.The general guidelines for NobelBiocare’s environmental work arestated in the company’s EnvironmentalPolicy that encompasses everythingfrom supply management to productionand choice of transportation.In 2003, Nobel Biocare gainedglobal certification in accordance withISO 14001. The certification meansNobel Biocare has the operationalsystems and procedures required tomonitor, set objectives and evaluatethe environmental performance of itsactivities. The major objectives are toreduce waste, minimize carbon oxideemissions and increase awareness onenvironmental issues among employees.The major source of waste is thepackaging of Nobel Biocare’s products.Thus, the company strives to increasethe use of recyclable materials. In 2003,Nobel Biocare started to mark allpackaging with the recycling symbol.Internally, the waste target is closelylinked to the aim of reduced internalproduction scrap rates. In 2003, NobelBiocare succeeded in significantlylowering those rates.To reduce carbon oxide emissions,Nobel Biocare seeks to limit theamount of traveling by striving to usealternative means of communication.When traveling is necessary, themost environmentally friendlyalternative is chosen. The companyconstantly endeavors to implementand monitor its traveling objectivesand targets. Nobel Biocare is alsocommitted to reduce energy consumptionand selecting sources ofenergy with minimal environmentalimpact.Nobel Biocare strives to keepwater consumption at very low levels.Water is mainly used in the cleaningprocess where it has replaced theearlier use of chemicals.To increase internal awareness onenvironmental as well as quality andregulatory issues, all employeesundergo continuous training.Global ISOCertification atNobel BiocareGroup:Ω ISO 13485Ω ISO 14001Ω CMDCAS

22NOBEL BIOCARE ANNUAL REPORT 2003SUPPLY CHAIN MANAGEMENTOptimization and globalization“In 2003, Nobel Biocarealso continued a comprehensiveoptimizationand globalization projectencompassing all itsproduction processes.”Nobel Biocare’s supply chainorganization enables dentistsand dental laboratories worldwide toprovide patients with high estheticsolutions for lost teeth. To meet customerneeds for short delivery timesand patient demands upon estheticresults, efficient purchase, productionand distribution processes are vital tothe success of the company.Nobel Biocare manufactures andmarkets standardized products, mainlydental implants and individuallydesigned prosthetics such as crowns,bridges and abutments. Parts of theassortment are sourced from carefullyselected external suppliers, encompassingmachines and componentsrequired to be the total dental solutionprovider. The largest purchasedraw materials are titanium used in theproduction of implants and ceramicpowder for dental copings.Standard productsProduction of standardized products,such as dental implants and abutments,takes place at Karlskoga, Sweden, andYorba Linda, California, USA. Formost markets, products are distributeddirectly to the end customer fromtwo central warehouses, one in YorbaLinda for the American continentsand one in Almere, Holland, for therest of the world. The globalizationof the production structure meansthat all products can now be manufacturedin both Karlskoga and YorbaLinda, which creates a high degree ofefficiency, flexibility and security.During 2003 a series of processdevelopment projects have beenimplemented. The projects haveencompassed new packaging andmachine processes as well as upgradingand changing parts of themachinery equipment.Individualized productsThe manufacturing of individualizedproducts takes place in Stockholm,Sweden, Fair Lawn, New Jersey, USA,and to some extent in Karlskoga,Sweden.The production is based on CAD-CAM data sent electronically directlyfrom the dental laboratories to theProcera manufacturing units. Theindividualized products are producedaccording to individual specificationsfor each unit. Most units are producedand distributed to the customer thevery same day the product data file isreceived at the manufacturing unit.As a result, inventory of these productsis zero, making Procera a truee-business solution.Today Nobel Biocare has two worldclassproduction facilities for industrializedproduction of individualizedproducts, a fact firmly proven by thepractically zero-fault production.To meet future growth, a number ofactivities were implemented in 2003to increase production capacity inboth Stockholm and Fair Lawn.The aim is to turn Stockholm andFair Lawn into complete ceramiccenters for both production as well astraining and education activities.Optimization and globalizationIn 2003, Nobel Biocare also continueda comprehensive optimizationand globalization project encompassingall other functions within thesupply chain, such as logistics, purchasingand IT.Those efforts have resulted in apositive chain of improvements relatingto quality, efficiency and flexibility.The tangible benefits have included

Nobel Biocare supply chainsNOBEL BIOCARE ANNUAL REPORT 200323ProductionStockholmProstheticsIndividualized productionCustomerProductionFair LawnProstheticsCustomerStandardized productionProductionKarlskogaDentalimplantsDistributioncenterAlmereCustomerProductionExternalTools &EquipmentSales unitstockCustomerProductionYorba LindaDentalimplantsDistributioncenterYorba LindaCustomerenhanced productivity, shortenedlead times, reduced inventory andimproved service levels.Assortment reduction programIn the fourth quarter 2003, NobelBiocare also finalized its assortmentreduction program resulting in thereduction of the number of unitsfrom 3,400 in 2001 to 760 at the endof 2003. The main benefits of theprogram include more efficient productionand purchasing processesand consequently reduced costs.Due to the phase out of old products,Nobel Biocare met an unexpectedamount of returned goods. However,the company was able to handle theinflow without major negative effectson customer services and deliveryprecision. The degree of order fulfillmentaccording to the customerexpectations increased in 2003 toover 97 percent.Internal production scrap rate – Individualized production (%)35302520151050Q12002Q2 Q3 Q4 Q12003Scrap rate Target 2003Q2 Q3 Q4Information TechnologyNobel Biocare’s Information Technology organizationsupports the business processes of the company globallyin all areas. Information Technology has becomean important part of the marketing and sales processesand web based communication is widely used inthe customer dialogue.The IT platform of Nobel Biocare is very tightly integratedand the strategy is to keep a global commonplatform to support the company users. The advantageis that it gives a full transparency in real-time andsupport common processes in the organization. Themain application platforms are based on SAP productsand the in-house developed Procera system.During 2003 it was decided to roll out the SAP R/3to the remaining subsidiaries in Latin America andPoland, to be finalized in 2005. Integration ofCustomers and Suppliers to the global transactionsystem will also be a focus during 2004.Nobel Biocare has chosen to outsource the operationfor all business critical systems and the globalnetwork, which has been very successful and havegiven high service and availability.

24 NOBEL BIOCARE ANNUAL REPORT 2003EMPLOYEESShared values andcustomer focusshowing respect for national cultures,regulations and legislation.The success of Nobel Biocare is thedirect result of the commitment ofits 1 363 employees of bringing newbusiness opportunities to dentists andlaboratories around the world.Regardless of where they work – inthe R&D department in Gothenburgor the sales office in Sao Paolo –everyone working for Nobel Biocareshares the same vision and values.The worldwide Nobel Biocare teambrings together people with a host ofdifferent backgrounds and skills. At theproduction sites in Karlskoga andYorba Linda, the average employeeboasts advanced technological skills.The R&D departments comprisespecialists with PhD’s and Doctorates.In Nobel Biocare’s sales offices aroundthe world, customers can count onthe skill of sales specialists, manywith backgrounds as dentists orlaboratory staff.Shared values and common policiesare as vital as the need for flexibilityand adaptation to local prerequisites.Therefore, Nobel Biocare placeshuge emphasis upon globe-spanningpolicies, such as a common antiharassmentpolicy that complies withthe strong Californian legislation,Shared vision of leadershipOne major challenge for Nobel Biocareis to secure the availability of committedmanagers who are prepared totake swift decisions and are flexible andreceptive to change. Every managermust be strongly committed todeveloping the potential of his or herstaff, together with being able toshow respect for and commitment toindividuals.Nobel Biocare has a policy ofidentifying potential talent within thecompany able to step into leadingpositions when required. NobelBiocare’s corporate policy is to havereplacement plans for all key positionsfor corporate staff and subsidiaries.Dedicated of providing developmentopportunities for employees withspecial expertise, Nobel Biocareutilizes a system of alternative careerpaths as part of the company’s developmentactivities. This enables NobelBiocare to maximize the potential indepthand unique knowledge of eachof the company’s specialists.Global recruiting processIn 2003, Nobel Biocare commenceda comprehensive evaluation ofrecruiting processes on a global basis.The aim is to implement commonguidelines for recruiting, as well asinstructions for the recruiting process,including milestones to ensure thatthe company gets the best people forthe right positions.For Nobel Biocare to recruit, keepand develop the right competence, itis a prerequisite that all employees aregiven the same opportunities within

NOBEL BIOCARE ANNUAL REPORT 200325the company. Thus, gender equalityand respect for people, regardless ofage, cultural and ethnical backgroundis of core importance to Nobel Biocare.Personal development andtrainingIn an organization such as NobelBiocare’s, with a large proportion ofyoung and well-educated employeesstarting their professional careers, itis vitally important to make full useof the enthusiasm of employees’ selffulfilmentand career planning. Thecompany’s skills development programis based on structured performancereviews, which results in an individualtraining scheme for each employee.Nobel Biocare also operates a globalweb-based introduction programfrom which managers set up activitiesfor newly hired employees. Furthermore,there is a common programfor new ‘leaders’ that is divided into ageneral leadership training moduleand one specific to Nobel Biocare.Setting salaries and incentiveschemesWorking at Nobel Biocare bringsboth demands and exciting opportunitiesfor professional and personaldevelopment. This is also reflected inthe company’s salary policy, aimed atencouraging self-esteem and goodperformance. The factors governingremuneration encompass nature of thework, the competence and personalability of the employee, as well asmarket factors.Most employees at Nobel Biocareare covered by different kinds ofbonus schemes. For employeesinvolved in marketing and sales activities,the variable part of the salary isconsiderable. The company also hasa staff option scheme for 125 keypersonnel, which has been runningsince 2001.Health and safety issuesLegislation on health and safety issuesdiffers from one country to another.In Sweden, for example, there arelaws and regulations governing howto act when confronted with repetitivehealth absence, how to follow upaccidents and injuries and alike. Inthe US, every company is obliged tohave an Injury and Illness PreventionPlan with targets for such issues.Nobel Biocare always views nationallegislation as a platform for furtheractivities.Employees in figures Employees per region (%)2001 2002 2003No. of employees on 31 December 1 228 1 330 1 363Average No. of employees 1 247 1 326 1 338Percentage women 50 46 47Average age of employees 38.7 39.0 39.3Sales per average No. of employee (EUR) 231 100 234 683 249 610EBIT per average No. of employee (EUR) 31 300 47 535 65 192Personnel cost per averageNo. of employee (EUR) 66 693 65 709 63 657Net profit per average No. of employee (EUR) 16 207 28 509 53 802Value added per employee (EUR) 97 803 112 387 138 8496005004003002001000Youngerthan 2425–34■ 31 Sweden■ 33 North America■ 25 Europe (excl. Sweden)■ 6 Asia/Pacific■ 5 OthersAge Structure Nobel Biocare Group(headcount)2744454826810735–44 45–54 Olderthan 54Nobel Biocare has employees working in 28 countries (27). The majority are in the US, Sweden, and Germany. In 2003, the company opened a subsidiary inSouth Africa. The company’s largest sites in terms of employees are Yorba Linda, California, USA , Göteborg, Sweden and Karlskoga, Sweden.

26 NOBEL BIOCARE ANNUAL REPORT 2003Key figures [1]Income statement (EUR M) 2003 2002 2001 [2] 2000 1999Revenue 334.0 311.2 288.2 249.8 197.2Profit from operations excludingrestructuring expenses [3] 87.2 70.2 46.2 34.3 24.9Restructuring expenses and inventoryrevaluation (2001) - 7.2 7.2 - -Profit from operations 87.2 63.0 39.0 34.3 24.9Profit before tax 91.3 61.1 36.4 29.3 20.9Net profit 72.0 37.8 20.2 15.9 16.0Balance sheet (EUR M)Non-current assets 166.1 182.3 214.8 160.8 147.6Current assets 212.4 142.0 108.4 130.9 105.0Total assets 378.5 324.3 323.2 291.7 252.6Shareholders’ equity 283.5 212.7 204.4 196.2 152.9Minority interest 2.5 2.2 - - -Provisions 22.4 23.0 21.6 1.9 3.8Non-current liabilities 8.1 32.5 47.8 57.0 53.2Current liabilities 62.0 53.9 49.4 36.5 42.7Total shareholders’ equity and liabilities 378.5 324.3 323.2 291.7 252.6Net cash position 108.7 21.4 -28.9 -43.1 -51.1MiscellaneousNet cash from operating activities (EUR M) 83.4 70.3 76.6 29.6 2.5Investments in tangible fixed assets (EUR M) 12.8 11.1 10.6 10.4 9.6Number of employees 1 363 1 330 1 328 1 164 1 111Key ratiosGrowth in revenue (%) 7 8 15 27 33EBITA (%) 28.9 23.6 16.0 16.5 15.8EBIT (%) 26.1 20.3 13.5 13.7 12.6Net profit margin (%) 21.6 12.1 7.0 6.4 8.1Return on equity (%) 30.2 18.4 10.1 8.1 11.3Return on capital employed (%) 36.0 25.8 14.1 13.0 12.4Equity/assets ratio (%) 75 66 63 67 61Net debt/equity ratio (%) -38.3 -10.1 14.1 22.8 33.4Net debt/EBITA -1.12 -0.29 0.54 1.04 1.64Interest coverage ratio (times) 26.3 17.4 10.1 6.0 5.9Key ratios, excluding restructuringexpensesEBITA (%) [3] 28.9 26.0 18.5 16.5 15.8EBIT (%) [3] 26.1 22.6 16.0 13.7 12.6Return on equity (%) [3] 30.2 20.6 12.3 8.1 11.3Return on capital employed (%) [3] 36.0 28.6 16.6 13.0 12.4

NOBEL BIOCARE ANNUAL REPORT 200327Data per share [1] 2003 2002 2001 [2] 2000 1999Number of shares on 31 December 25 499 827 25 115 187 25 354 900 25 155 086 24 922 934Average number of shares 25 265 908 25 124 239 25 346 215 25 069 782 24 886 325Number of shares after full conversion 26 617 318 26 357 605 26 617 318 25 421 318 25 421 318Share price 31 December (CHF) 125.25 87.84 68.76 49.88 22.49Market value 31 December (EUR M) 2 103 1 518 1 177 824 350Dividend per share (EUR) [4] 0.85 0.54 0.32 0.27 0.23Yield (%) [4] 1.03 0.89 0.70 0.80 1.70Dividend percentage (%) [4] 30 36 40 45 35Earnings per share (EUR) 2.85 1.50 0.80 0.60 0.66Earnings per share after dilution (EUR) 2.73 1.43 0.76 0.60 0.65Equity per share (EUR) 11.22 8.47 8.06 7.83 6.13Equity per share after fullconversion (EUR) 10.65 8.07 7.68 7.72 6.01Cash flow per share (EUR) 2.36 1.18 0.29 0.16 -0.02P/E ratio after tax 29 40 59 54 21[1] The figures for 1999 –2001 refer to Nobel Biocare AB. The figures for 2002 refer to Nobel Biocare Holding AG and Nobel Biocare AB[2] Recalculated due to IFRS[3] Excluding inventory revaluation in 2001[4] Proposed dividend for 2003DefinitionsEBIT (%)Profit from operations for the year dividedby revenue.Profit marginNet profit for the year divided by revenue.Return on equityNet profit for the year divided by averageequity.Return on capital employedProfit before tax plus financial expensedivided by average capital employed.Equity/assets ratioShareholders’ equity divided by total assets.Net debt/equity ratioInterest-bearing liabilities less interestbearingassets divided by shareholders’equity.Net debt/EBITA ratioInterest-bearing liabilities less interestbearingassets divided by profit beforegoodwill amortization.Interest coverage ratioProfit before tax plus financial expensedivided by financial expense.Direct yieldThe dividend per share as a percentageof purchase price as per December 31.Dividend percentageThe dividend per share divided by thenet profit per share.Earnings per shareNet profit divided by the averagenumber of outstanding shares.Earnings per share after dilutionNet profit divided by the averagenumber of outstanding shares adjustedfor the dilution effect.Equity per shareShareholders’ equity divided by thenumber of outstanding shares.Equity per share after fullconversionShareholders’ equity divided by thenumber of outstanding shares after fullconversion.P/E ratio after taxThe share price at year-end divided bythe net profit per share.

28NOBEL BIOCARE ANNUAL REPORT 2003Financial reviewRevenue (EUR M)340330320310300290280270260288.2311.2334.02001 2002 2003Revenue growth in localcurrencies* (%)2002 2003252015105011.619.5Europe10.916.3NorthAmerica19.7*excl. sales of Gore products24.1Asia/Pacific16.424.0Restof WorldThis section of the annual reportincludes facts and figures relatingto Nobel Biocare's performance.Nobel Biocare is a medical devicesgroup and the world leader in innovativeesthetic dental solutions with itscore brands Brånemark System,Replace, (dental implants) and Procera(individualized dental prosthetics).Nobel Biocare is a one-stop shop forrestorative esthetic dentistry, offeringa wide range of innovative Crown &Bridge & Implant products, as well astraining & education and clinicallydocumented treatment concepts.The distribution agreement withW.L. Gore & Associates, Inc. wasterminated on 31 May 2003. Sales ofGore regenerative products accountedfor approximately two percent ofNobel Biocare’s total revenue.RevenueRevenue increased in 2003 by EUR22.8 million, or 7.3 percent, to EUR334.0 million, from EUR 311.2million in 2002. The revenue growthin EUR was impacted by significantnegative currency effects, primarilyrelated to the weakening US dollar.In local currencies and excluding thesales of Gore products, revenueincreased by 19.0 percent.Revenue in Europe increased byEUR 22.7 million, or 16.9 percent,to EUR 157.7 million, from EUR135.0 million the year before. Inlocal currencies and excluding thesales of Gore products, revenueincreased by 19.5 percent. In Europe,the Nordic countries, Spain andFrance reported strong salesthroughout the year. Revenue inGermany improved continuously in2003 and, in the fourth quarter, salesincreased by 18 percent, excludingsales of Gore products.In North America, revenue in 2003amounted to EUR 121.8 million,compared with EUR 126.6 million in2002. In local currencies and excludingsales of Gore products, growth was16.3 percent. Sales in the US werestrong with the exception of the thirdquarter in which revenue was negativelyaffected by the phase-out of theSteri-Oss and Replace Hex productlines.Revenue in the Asia/Pacific regionincreased by EUR 3.8 million, or11.3 percent, to EUR 37.1 million,from EUR 33.3 million in 2002. Inlocal currencies and excluding salesof Gore products, revenue increasedby 24.1 percent. The main contributor

NOBEL BIOCARE ANNUAL REPORT 200329in this region was Japan, with stronggrowth, in particular after the launchof Replace Select.The remaining countries increasedrevenue by EUR 1.1 million, or 6.2percent, to EUR 17.4 million, fromEUR 16.3 million the year before. Inlocal currencies and excluding salesof Gore products, revenue increasedby 24.0 percent.Key eventsIn 2003, Nobel Biocare approachedthe entire dental industry with thenew product offer as part of the newCrown & Bridge & Implant (C&B&I)concept, which incorporates implantsand CAD/CAM Procera technologyin regular dentistry for both teethand implants.In the first quarter, the companylaunched the Procera Piccolo scannerfor high-end ceramic prosthetics forsmall and medium-sized dentallaboratories. Deliveries started in May2003 and by year-end had contributedabout 2 percent of the company'sgrowth in local currencies.In the third quarter, NobelPerfect,the scalloped implant that providesimproved esthetics by preserving bonestructure and soft tissue between theteeth, was introduced. The receptionof this high-priced, niche product hasbeen favorable among the target groupof experienced implant users placingmore than 200 implants per year.NobelPerfect contributed with about1 percent of the company’s revenuegrowth in local currencies for 2003.Revenue growth for the Replacesystem was at exceptionally highlevels in 2003.Gross profitThe gross profit increased in 2003 byEUR 19.9 million, or 8.5 percent, toEUR 255.1 million, from EUR 235.2million in 2002. The product assortmentphase-out was completed by theend of the fourth quarter as planned,resulting in an assortment of about760 articles (down from over 3 400 in2001). The obsolescence cost related toinventory rationalization, expensedunder Cost of sales, was EUR 4.4million in 2003, compared with EUR3.3 million the year before.The gross margin for 2003 was 76.4percent, compared with 75.6 percentin 2002.Profit from operationsFor the full year, profit from operationsbefore goodwill amortization(and restructuring expenses in 2002),EBITA, increased by 33.1 percent inlocal currencies to EUR 96.5 million,from EUR 80.8 million in 2002; 19.4percent in EUR due to the significantnegative currency effects. TheEBITA margin (before restructuringexpenses in 2002) increased to 28.9percent (2002: 26.0 percent). In localcurrencies, the EBITA margin was29.5 percent.In 2003, profit from operations(before restructuring expenses in2002), EBIT, increased by 39.0percent in local currencies to EUR87.2 million (2002: EUR 70.2 million);24.2 percent in EUR. The EBITmargin increased to 26.1 percent from22.6 percent the year before. Thetotal year-on-year currency impact onprofit from operations was a negativeEUR 10.4 million. In local currencies,Gross Margin (%)7674727068666469.075.6 76.42001 2002 2003Operating Expenses in percentof Revenue5040302010053.053.050.52001 2002 2003EBITA Margin (%)252015105018.526.028.92001 2002 2003

30NOBEL BIOCARE ANNUAL REPORT 2003the EBIT margin was 26.8 percent.The profitability improvement wasdriven by the increase in revenue, theimprovement in gross margins andthe cost savings achieved throughthe globalization of manufacturing,logistics and marketing processesrepresenting about 1.4 percent of theEBIT margin improvement in 2003.Operating expenses were impactedby two issues in December 2003: thelegal settlement of the VPIP litigationand the final resolution of a FrenchVAT litigation relating to the period1988–2000. These two factors resultedin an income of EUR 1.1 million,which was recorded under administrativeexpenses.Net Profit Margin (%)25201510507.012.121.62001 2002 2003Inventory in percent of Assets10864207.28.75.92001 2002 2003Financial income and net profitFinancial income for the year rose toEUR 7.7 million from EUR 1.8 millionin 2002. This improvement wasprimarily due to income of EUR 4.7million relating to proceeds from themutual call options in Entific MedicalSystems AB. In 1999, Entific was spunoff from Nobel Biocare to a newlyformed company, owned by NobelBiocare and two new investors. Optionswere issued between the owners. InDecember 2003, these options werecalled, resulting in a net income ofEUR 4.7 million and a reduction inownership from 39.8 percent to 38.4percent for Nobel Biocare. In accordancewith IFRS regulations governingequity accounting, Nobel Biocare’s38.4 percent ownership is valued atEUR 2.3 million in the balance sheet.For the full year, goodwill amortizationdecreased and totaled EUR9.3 million, compared with EUR 10.5million in 2002, as a result of theweaker USD currency rate. Depreciationamounted to EUR 10.7 million,compared with EUR 11.1 million theyear before.As a result of the new holding structure,the tax rate was 20.4 percent ofprofit before tax for the full year 2003,compared with 37.5 percent in 2002.In 2003, net profit increased by90.5 percent or EUR 34.2 million toEUR 72.0 million, from EUR 37.8million in 2002.InvestmentsTotal capital expenditures amountedto EUR 13.9 million, (2002: EUR 13.6million), whereof EUR 8.9 millionrelates to investments in productionfacilities.Liquidity and financial positionAs a result of increased profitability,cash flow from operating activitiesamounted to EUR 83.4 million forthe full year 2003, compared withEUR 70.3 million in 2002.Inventory amounted to EUR 22.4million, compared with EUR 28.1million at the end of December 2002.The decrease is primarily due to theprocess of phasing out the old assortmentof articles.Current receivables at the end of2003 were EUR 80.5 million, up fromEUR 61.4 million the year before.The increase is primarily due to anincrease in VAT receivables in Swedishentities and global tax receivablestotaling EUR 11.3 million.Trade receivables totaled EUR 59.2million, up from EUR 53.1 million atthe end of 2002. The Days of SalesOutstanding (DSO) were on the samelevel in local currencies as in 2002.Other non-current liabilities werereduced from EUR 32.5 million toEUR 8.1 million, due to the amortizationof interest-bearing loans.Cash and cash equivalents totaledEUR 109.5 million (31/12/2002: EUR52.5 million), while the net cash positionamounted to EUR 108.7 million(31/12/2002: EUR 21.4 million).

NOBEL BIOCARE ANNUAL REPORT 200331The sale of shares issued, in orderto purchase minority shares in NobelBiocare AB during the compulsoryredemption process, contributed EUR20.2 million to the net cash position.This cash balance is restricted until abank guarantee is issued following aruling in the first quarter of 2004.Shareholders’ equity per averageshare increased to EUR 11.22(31/12/2002: EUR 8.47*).* Average number of Nobel Biocare HoldingAG/Nobel Biocare AB sharesMiscellaneousIn December 2003, Nobel Biocaresettled its patent litigation against VPIntellectual Properties with a onetimeworldwide settlement amounton satisfactory terms. In the Sulzer/Centerpulse/Zimmer patent arbitration,the final infringement hearingwas held on 12–13 January 2004.On 3 March 2004, Nobel Biocarereceived a positive ruling on thearbitration in the US of a patent concerninginternal connections. Thearbiters ruled that none of NobelBiocare’s products with an internalconnection infringes the patent ownedby Zimmer, Inc. (formerly CenterpulseDental).In previous decisions the arbitersruled that Nobel Biocare may not,for contractual reasons, challenge thevalidity of the patent, however, haddecided that the Brånemark SystemStargrip implant does not infringethe patent. The final hearing of thearbitration was limited to determineif the Replace Select implant infringesthe patent, which the panelnow has ruled it does not. The rulingof the arbiters is final and binding.The only remaining decision fromthe panel will be relating to the legalfees to be awarded to Nobel Biocare.The minority interest representsthe outstanding shares (1.1 percent)on 31 December 2003 in NobelBiocare AB (publ.), which had notbeen exchanged for Nobel BiocareHolding AG shares. Minority interesthas been recorded in the incomestatement and on the balance sheet.In order to initiate a compulsoryredemption process for the remainingshares in Nobel Biocare AB, NobelBiocare Holding AG transferred allits shares in Nobel Biocare AB inJanuary 2003 to a wholly-ownedSwedish subsidiary; Nobel BiocareSverige AB. The compulsory purchaseprocess was initiated on 16 January2003. In accordance with the SwedishCompanies Act, Nobel BiocareSverige AB has requested that thequestion of redemption and the pricethat is to be paid for the minorityshares shall be referred to arbitration.The arbitration proceedings relatingto the compulsory purchase of sharesin Nobel Biocare AB began in August2003. The parent company submittedits first offer and a request for immediatepossession against security. Thetrustee representing the minorityshareholders submitted his responseat the beginning of October. Theresponse did not contain a specifiedmonetary claim. Further briefs werefiled during the fourth quarter of2003.On 27 January 2004, the arbitrationpanel issued a ruling in favor ofNobel Biocare to have immediateownership of the minority sharesagainst a bank guarantee amountingto EUR 20.2 million, which will beissued in the first quarter of 2004.Arbitration will continue and, unlessthe parties can agree on an amicablesolution, it is expected to take anadditional 1–2 years before the finalpurchase price is decided upon by thearbitration panel.Cash in percent of Assets25201510507.716.228.92001 2002 2003Shareholders’ Equity in percentof Assets10080604020063.265.674.92001 2002 2003

32NOBEL BIOCARE ANNUAL REPORT 2003Risk management andsensitivity analysesAs a growth company with alarge percentage of innovativeResearch & Development, NobelBiocare is exposed to a number offinancial risks as well as risks related toits operations.Financial risksManagement of the Group’s financialrisks takes place within Nobel BiocareAB. The Treasury Department actsas an in-house bank for the Groupand complies with all needs relating tofinancing and investment. The policyfor handling financial risks has beenset by Nobel Biocare’s Board and isreviewed yearly.In principle, financial risks are tobe limited within Nobel Biocare.Currency riskCurrency risk is defined as the risk ofa loss when exchange rates change.By invoicing the subsidiaries inlocal currencies, the major part of thecurrency risk within the Group isconcentrated to Nobel Biocare AB.Of the Group’s total sales, approximately95 percent take place inmarkets outside Sweden. As most ofthe Group’s sales are made in foreigncurrencies, Nobel Biocare is exposedto fluctuations in the exchange rates ofa large number of currencies.The forecast for expected netpayments in foreign currencies arehedged in accordance with theapproved currency policy. Derivativehedging contracts are continuouslymade for 50–90 percent of these flowsfor the upcoming 6 months andbetween 25–50 percent for the upcoming7–12 months.At the end of 2003, around 60percent of the anticipated cash flowin 2004 was hedged. Outstandinghedge contracts corresponded toEUR 79.3 million (66.2).The table “Hedged anticipatedcurrency flows” shows the hedging thattook place for the most importantcurrencies on 31 December 2003.The table “Transaction effect” showshow the value of the anticipated flowsto Sweden of the most importantcurrencies is affected by a general 10percent weakening or strengtheningof the currency.The table “Translation effect” showsthe impact in EUR on the Grouprevenue, EBITA and EBIT at a onepercent decrease in value of eachcurrency. The most significant effectsare concentrated to USD and SEK,where both production facilities andglobal functions are situated besidesthe local sales functions.Interest riskInterest risk is defined as the risk thatthe value of interest-bearing assetsand liabilities will change when theinterest market rate changes.The handling of the Group’s liquidfunds and loans is co-ordinated atcentral level. According to the internalpolicy for handling financial risks,the average fixed interest periodmust not exceed 360 days. As of 31December 2003, the average fixedinterest period of fixed term depositswas 59 days with an average interestrate of 2.78 percent.A change of one percentage pointin the interest rate will have anNet Cash/Net Interest Paid (EUR K)Net Cash120 000100 00080 00060 00040 00020 0000-20 000-40 000Interest Paid140 000 3 5002001 2002 20033 0002 5002 0001 5001 0005000-500-1 000

NOBEL BIOCARE ANNUAL REPORT 200333earnings impact of estimated EUR0.9 million on an annual basis.Credit riskCredit risk is defined as the risk thatthe Group will make a loss whencounterparties are unable to performtheir undertakings. A credit risk arisesboth when liquid funds are investedand in the form of counterparty riskswhen derivatives are entered into.Credit risk is handled and assessedcentrally. To reduce the credit risk,Nobel Biocare only deals with counterpartieswith high credit ratings. Excesscash in local companies is placed intragroup,either through the usage ofcash pools or by implementing aninvestment with the Treasury Department.No external investments longerthan 12 months are permitted. Regardingthe commercial credit risk, noindividual customers represent a significantportion of the Group’s revenue.Liquidity riskLiquidity risk is defined as the risk thatthe Group will not have liquid fundsavailable to complete its undertakings.CurrencySEKIn order to have liquid funds onhand at all times, the Group shouldalways have funds corresponding toone month of total expenses available.The funding policy limits therefinancing risk by not permittingrefinancing of more than 50 percentof the debt portfolio during thefollowing 12 months.Risks related tooperationsThe risks related to operations in amedical technology company such asNobel Biocare include those associatedwith quality assurance, regulatoryaffairs, patient safety, employees,supply chain, legal issues and intellectualproperty rights.The development cycle for NobelBiocare’s operations is normally farshorter than that in the pharmaceuticalindustry. It often takes between oneand two years from concept to launch.This means that uncertainty relatingto clinical trials, for example, doesnot represent a decisive risk for thecompany.Hedged anticipated currency flowsSecuredaverage rateSecured (%) (to SEK) 31 Dec 03EUR 62% 9.14 9.09USD 64% 7.87 7.28JPY 56% 0.0692 0.0680CAD 52% 5.82 5.56CHF 49% 5.94 5.83GBP 59% 13.03 12.91AUD 66% 5.36 5.43HKD 60% 1.00 0.94DKK 66% 1.23 1.22NOK 63% 1.11 1.08Transaction effect (EUR K)Unsecured (%) 31 Dec 03 +/–10%EUR 38% 9.09 2 480USD 36% 7.28 536JPY 44% 0.0680 587CAD 48% 5.56 452CHF 51% 5.83 494GBP 41% 12.91 241AUD 34% 5.43 185HKD 40% 0.94 44DKK 34% 1.22 75NOK 37% 1.08 7210Translation effect (EUR M)86EUR/SEKUSD/SEK1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Source: SIX/Hallvarsson & HalvarssonThe table shows the effect on consolidated revenue,EBITA and EBIT as a result of one percent decrease inthe value of the respective currency.USD SEK OtherRevenue -1.1 -0.3 -0.8EBITA -0.4 0.4 -0.4EBIT -0.4 0.4 -0.4

34NOBEL BIOCARE ANNUAL REPORT 2003Risks related to regulatory affairsand patient safetyApproval of the authorities and productliability are regarded as significant risksin any medical technology businesssuch as Nobel Biocare’s. However,during the previous ten years, thecompany has not been involved inany problems regarding such issues.To reduce its exposure to the risks,Nobel Biocare is working in compliancewith GMP (Food and DrugAdministration), Medical DeviceDirective and ISO 13485.Risks related to employeesThe main risk related to employeesincludes the risk of losing key personnel,resulting in losses of competenceand momentum. Historically,this has not been a major problem forNobel Biocare.To reduce this risk, Nobel Biocareoperates leadership development programsas well as a system for creatingalternative pathways for employeeswithin the R&D operations. For severalyears now, the company has alsooffered various incentive programsfor a number of key individuals.Salaries, other remuneration andpayroll overheads constitute NobelBiocare’s largest item of expenditureand correspond to around 25 percentof revenue. All things being equal, aone percent increase in average payrollexpenses per employee affectsNobel Biocare’s operating income,EBIT, by 1.0 percent and the EBITmargin by 0.25 percentage unit,based on payroll expenses for 2003.Risks related to supply chainIn general, the main risks in thiscategory are production disturbances,dependency on specific suppliers andprice fluctuations for purchasedproducts. For a fast-growing companylike Nobel Biocare, there is also arisk related to production capacity.Production disturbances can occurfor any number of reasons, such astechnological problems, strikes andfire. Therefore, all factories havedeveloped contingency plans and thegroup is fully insured for any lossesresulting from damage. Furthermore,the company minimizes this risk byhaving multiple production facilitiesfor the complete assortment.Regarding Nobel Biocare’s implantproducts, the two facilities inKarlskoga and Yorba Linda aremanaged using global standardizedprocesses with generic technologysolutions. The factories mainly workwith specialized assortments, butwith full compatibility between thetwo and with the possibility of transferringproduction on short notice.The Procera factories in Stockholmand Fair Lawn utilize a commonsystem sharing technologies, whichnot only ensures there are no differencesbetween the factories, but alsothat orders can immediately be transferredfrom one of the two productionfacilities to the other.The capacity for implant productionis secured through long-termleased or owned facilities with infrastructuressupporting strong volumeincreases. Space in these facilitiesalso allows for further expansion forthe coming years.The capacity for Procera productionis supported by on-going expansionsin both the Fair Lawn andStockholm facilities.Purchased products are procuredfrom suppliers with generic technology,thus providing possibilities of movingpurchases from one supplier to another.This means that Nobel Biocare is notdependent on any specific supplier.An additional benefit is a minimizedrisk of increased prices of purchasedproducts (Cost of Sales), representinga significant expense item on NobelBiocare’s income statement. Thisitem is largely made up of the cost ofproducing and purchasing finishedand semi-finished products, plus thepurchase of input goods such astitanium, ceramic powder and packagingmaterial. However, none ofthese individual items is so large as torepresent a significant risk in termsof changes in price and cost.Legal risks and risks related tointellectual property (IP) rightsNobel Biocare’s success is partlydependent on patent and other IPprotection for its products. The IPprotection is most important when itcomes to Procera, which is surroundedby comprehensive system patents aswell as other IP protective andcontractual rights. Within DentalImplants, the company’s success, thehigh rate of development and introductionis of similar importance as IPprotection.As of 31 December 2003, there wasa limited number of lawsuits and claimsarising from the ordinary business ofthe Group pending against companiesof the Nobel Biocare HoldingGroup. In the opinion of management,and based on currently availableinformation, the handling and settlementof these lawsuits and claims willhave no adverse material effect uponthe consolidated financial position oroperation of the Group.

NOBEL BIOCARE ANNUAL REPORT 200335Consolidated income statementIN EUR'000 NOTE 2003 2002Revenue 1 333 978 311 190Cost of sales 4 -78 835 -76 006Gross profit 255 143 235 184Selling expenses 4 -119 163 -122 175Administrative expenses 4 -35 190 -29 697Research and development expenses 4 -13 563 -13 083Restructuring expenses 3 - -7 198Profit from operations 87 227 63 031Financial income 5 7 727 1 826Financial expenses 6 -3 613 -3 733Profit before tax 91 341 61 124Income tax expense 7 -18 666 -22 879Profit after tax 72 675 38 245Minority interest 16 -688 -442NET PROFIT 71 987 37 803Basic earnings per share (EUR) 17 2.85 1.50Diluted earnings per share (EUR) 17 2.73 1.43

36 NOBEL BIOCARE ANNUAL REPORT 2003Consolidated balance sheetIN EUR'00031 DECEMBER NOTE 2003 2002ASSETSLand and buildings 1 488 1 608Machinery 15 473 13 103Equipment 11 108 12 554Property, plant and equipment 8 28 069 27 265Goodwill 122 946 142 412Other intangible assets 2 327 2 508Intangible assets 9 125 273 144 920Investment in associate 10 2 286 2 259Receivables 11 1 302 1 956Deferred tax assets 21 9 154 5 852Financial assets 12 742 10 067Total non-current assets 166 084 182 252Inventories 12 22 399 28 055Trade receivables 13 59 187 53 120Income tax receivables 6 209 342Other receivables 9 451 2 505Prepaid expenses and accrued income 14 5 686 5 497Cash and cash equivalents 15 109 504 52 482Total current assets 212 436 142 001TOTAL ASSETS 378 520 324 253

NOBEL BIOCARE ANNUAL REPORT 200337Consolidated balance sheetIN EUR'00031 DECEMBER NOTE 2003 2002SHAREHOLDERS’ EQUITY AND LIABILITIESShare capital 32 687 34 551Share premium 79 611 58 690Treasury shares -359 -Retained earnings 171 517 119 494Shareholders’ equity 16 283 456 212 735Minority interest 16 2 507 2 202Interest-bearing loans 18 748 29 884Deferred tax liabilities 21 7 396 2 648Provisions 20 22 354 22 932Total non-current liabilities 30 498 55 464Interest-bearing loans 18 73 1 196Trade payables 22 9 057 13 761Income tax payables 15 481 9 330Other liabilities 14 599 7 212Accrued expenses and deferred income 23 22 849 22 353Total current liabilities 62 059 53 852Total liabilities 92 557 109 316TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 378 520 324 253

38 NOBEL BIOCARE ANNUAL REPORT 2003Consolidated statement of changesin shareholders’ equityIN EUR'000RETAINED EARNINGSTRANS- OTHER TOTALSHARE SHARE TREASURY LATION HEDGING RETAINED RETAINED TOTALNOTE CAPITAL PREMIUM SHARES RESERVE RESERVE EARNINGS EARNINGS EQUITYBalance at 1 January 2002 33 631 74 407 - 2 600 - 93 806 96 406 204 444Foreign exchange translationdifferences 898 -16 537 - -4 882 - - -4 882 -20 521Net gains and lossesrecognized directly in equity 898 -16 537 - -4 882 - - -4 882 -20 521Net profit for the year - - - - - 37 803 37 803 37 803Share options exercised 22 820 - - - - - 842Minority interest 16 - - - - - -1 762 -1 762 -1 762Dividends to shareholders - - - - - -8 071 -8 071 -8 071Balance at 31 December 2002 16 34 551 58 690 - -2 282 - 121 776 119 494 212 735Balance at 1 January 2003 34 551 58 690 - -2 282 - 121 776 119 494 212 735Foreign exchange translationdifferences -2 358 -4 005 - -4 586 - - -4 586 -10 949Loss/Gain on hedginginstruments 26 - - - - -426 - -426 -426Net gains and lossesrecognized directly in equity -2 358 -4 005 - -4 586 -426 - -5 012 -11 375Net profit for the year - - - - - 71 987 71 987 71 987New share issue/Treasury shares sold 16 333 20 179 - - - - - 20 512Share options exercised 161 4 747 - - - - - 4 908Acquired treasury shares - - -359 - - - - -359Minority interest 16 - - - - - -1 819 -1 819 -1 819Dividends to shareholders - - - - - -13 133 -13 133 -13 133Balance at 31 December 2003 16 32 687 79 611 -359 -6 868 -426 178 811 171 517 283 456

NOBEL BIOCARE ANNUAL REPORT 200339Consolidated cash flow statementIN EUR'000 NOTE 2003 2002Profit before tax 91 341 61 124Adjusted for:Depreciation and amortization 20 036 21 640Financial income and expenses 580 212Gain on disposal of options in associate -4 694 -Other non-cash income and expenses 2 948 2 787Changes in working capital and provisions:Increase in trade and other receivables -24 871 -7 214Decrease/increase in inventories 4 200 -6 276Increase in trade and other payables 10 842 5 873Increase/decrease in provisions 1 293 -442Income taxes paid -18 310 -7 405Net cash from operating activities 83 365 70 299Acquisitions of property, plant and equipment 8 -12 751 -11 067Acquisitions of intangible assets 9 -1 127 -1 936Gain on disposal of options in associate 5 4 694 -Investment in associate 2, 10 - -574Interest received 2 226 1 826Net cash from investing activities -6 958 -11 751Exercised warrants and options 4 904 852New share issue 333 -Disposal of treasury shares 20 179 -Increase in interest-bearing liabilities - 4 639Decrease in interest-bearing liabilities -27 481 -22 256Interest paid -1 605 -3 945Dividends paid -13 133 -8 071Net cash from financing activities -16 803 -28 781Increase in cash and cash equivalents 59 604 29 767Cash and cash equivalents as at 1 January 52 482 24 808Effect of exchange rate differences on cash held -2 582 -2 093Cash and cash equivalents at 31 December 15 109 504 52 482

40 NOBEL BIOCARE ANNUAL REPORT 2003Significant accounting policiesNobel Biocare Holding AG (the Company) is a company domiciledin Switzerland. The consolidated financial statements of theCompany for the year ended 31 December 2003 comprise theCompany and its subsidiaries and associate (the Group). TheNobel Biocare Holding Group is an innovative, medical devicesgroup and the world leader in innovative esthetic dental solutionswith its brands Brånemark System ® , Replace ® Select (dentalimplants) and Procera ® (individualized prosthetics).Formation of a new GroupIn April 2002, the Board of Directors of Nobel Biocare AB, theformer parent company of the Group, announced a decision toundergo a change of domicile from Sweden to Switzerland. Dueto legal and tax reasons, a direct change of domicile of NobelBiocare AB to Switzerland was not feasible. Therefore, a new Swisscompany named Nobel Biocare Holding AG was incorporated inSwitzerland.In May 2002, Nobel Biocare Holding AG launched a publicoffer to the shareholders of Nobel Biocare AB. 94.6 percent of allthe shares in Nobel Biocare AB were exchanged. Nobel BiocareHolding AG acquired an additional 4.3 percent of the shares inNobel Biocare AB during a prolonged offering period announcedin June 2002. The Nobel Biocare Holding Group intends toacquire the remaining 1.1 percent of the shares in a compulsorypurchase procedure. In June 2002, Nobel Biocare Holding AGwas listed on the SWX Swiss Exchange.Nobel Biocare Holding AG incorporated the majority of the netassets of the former Nobel Biocare AB at book value. A valuationof the net assets at book value was deemed to present a true andfair view of the transaction, as there was basically not a changein ownership or cash involved in the transaction. However, theshares that the Nobel Biocare Holding Group will acquire in thecompulsory purchase procedure will be settled in cash. Therefore,a 1.1 percent of the net assets, relating to the sharesacquired in the compulsory purchase procedure, will be recognizedat fair value.Statement of complianceThe consolidated financial statements are prepared in accordancewith International Financial Reporting Standards (IFRSs)and comply with Swiss law. IFRS was applied in full for the firsttime in the 2002 consolidated financial statements.Basis of preparationThe consolidated financial statements are presented in EUR,rounded to the nearest thousand. Although the parent companyis domiciled in Switzerland, the consolidated financial statementsare presented in EUR since the Group’s cash in-flow to a largeextent is in EUR. The subsidiaries prepare their individual financialstatements using the measurement currency in their respectivecountry. The consolidated financial statements are prepared onthe historical cost basis except that the derivative financialinstruments are stated at their fair value.Basis of consolidationSubsidiariesSubsidiaries are companies controlled by Nobel Biocare HoldingAG. Control exists when the Company has the power, directly orindirectly, to govern the financial and operating policies of acompany so as to obtain benefits from its activities. Subsidiaries areincluded in the consolidated financial statements from the date thecontrol effectively commences until the date control ceases.According to the full consolidation method, all assets andliabilities as well as income and expenses of the subsidiaries areincluded in the consolidated financial statements. The share ofminority shareholders in the net assets and results is presentedseparately as minority interests in the consolidated balancesheet and income statement, respectively.AssociatesAssociates are companies where the Group is able to exercisesignificant influence, but not control, over the financial andoperating policies.The consolidated financial statements include the Group'sshare of the total recognized gains and losses of associates on anequity accounting basis, from the date significant influencecommences until the date it ceases. When the Group’s share oflosses exceeds the carrying amount of the associate, the carryingamount is reduced to nil and recognition of further losses isdiscontinued except to the extent that the Group has incurredobligations in respect of the associate.Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealized gainsand losses arising from intra-group transactions, are eliminatedin preparing the consolidated financial statements.Foreign currencyForeign currency transactionsTransactions in foreign currencies are translated at the foreignexchange rate at the date of the transaction. Monetary assetsand liabilities in foreign currencies are translated at the foreignexchange rate at the balance sheet date. Non-monetary assetsand liabilities in foreign currencies that are stated at historicalcost are translated at the foreign exchange rate at the date ofthe transaction. Non-monetary assets and liabilities in foreigncurrencies that are stated at fair value are translated at theforeign exchange rate at the date the values were determined.Foreign exchange differences arising on translation arerecognized in the income statement. Foreign exchange ratedifferences relating to financial assets and liabilities are recognizedas financial income or expenses, while foreign exchange ratedifferences relating to assets and liabilities of an operating natureare recognized in profit from operations.Financial statements of foreign operationsThe Group’s foreign operations are considered as not beingintegral to Nobel Biocare Holding AG's operations. Assets andliabilities of the foreign operations, including goodwill, are translatedat the foreign exchange rates at the balance sheet date.The revenues and expenses of foreign operations, are translatedat rates approximating the foreign exchange rates at the dates ofthe transactions.Foreign exchange differences arising on translation of foreignoperations are recognized directly in equity in the translationreserve. If a loan is made to a foreign operation and the loan insubstance forms part of the Group's investment in the foreignoperation, foreign exchange differences arising on the loan are

NOBEL BIOCARE ANNUAL REPORT 200341SIGNIFICANT ACCOUNTING POLICIESalso recognized directly in equity. On disposal of a foreign operation,exchange differences recognized in equity are recognized inthe income statement as part of the gain or loss on disposal.Foreign exchange differences arising on a foreign currencyliability accounted for as a hedge of a net investment in a foreignentity are recognized directly in equity. On disposal of a netinvestment in a foreign entity, exchange differences recognized inequity are recognized in the income statement as part of the gainor loss on disposal.RevenueRevenue from the sale of goods is recognized in the incomestatement when the significant risks and rewards of ownershiphave been transferred to the buyer, which is usually on deliveryto third parties. Revenue is reported net of sales taxes, discounts,rebates and return of goods.Financial income and expensesFinancial income comprises interest receivable on funds invested,net foreign exchange gains, dividends, gains on disposal offinancial investments and gains on derivative financial instruments.Interest income is recognized in the income statement as itaccrues, taking into account the effective yield on the asset.Dividend is recognized in the income statement on the date thatthe dividend is declared.Financial expenses comprise interest payable on loans, interestexpenses derived from net present value calculations of deferredpurchase price related to the acquisition of Nobel Biocare ProceraAB, net foreign exchange losses, losses on disposal of financialinvestments and losses on derivative financial instruments.Income taxIncome tax on the profit or loss for the year comprises current anddeferred tax. Income tax is recognized in the income statementexcept to the extent that it relates to items recognized directlyin equity, in which case it is recognized in equity.Current tax is the expected tax payable on the taxable incomefor the year, using tax rates enacted or substantially enacted atthe balance sheet date, and any adjustment to tax payable inrespect of previous years.Deferred tax is recognized, based on the balance sheet liabilitymethod, on temporary differences between the carrying amountsof assets and liabilities for financial reporting purposes and theamounts used for taxation purposes. The temporary differencesrelating to investments in subsidiaries are not accounted for.The amount of deferred tax recognized is based on the expectedmanner of realization or settlement of the carrying amount ofassets and liabilities, using tax rates enacted or substantiallyenacted at the balance sheet date.A deferred tax asset is recognized only to the extent that it isprobable that future taxable profits will be available againstwhich the asset can be utilized. Deferred tax assets are reducedto the extent that it is no longer probable that the related taxbenefit will be realized.Additional income taxes that arise from the distribution ofdividends are recognized when the liability to pay the relateddividend is incurred.Property, plant and equipmentProperty, plant and equipment are stated at cost less accumulateddepreciation and impairment losses. Where an item of property,plant and equipment comprises major components havingdifferent useful lives, they are accounted for as separate items ofproperty, plant and equipment.Depreciation is charged to the income statement on a straightlinebasis over the estimated useful lives of property, plant andequipment. Land is not depreciated. The estimated useful livesare as follows:Land improvementsBuildingsMachineryEquipment25 years25 years5-8 years3-5 yearsIntangible assetsGoodwillGoodwill arising on an acquisition of a subsidiary or associaterepresents the excess of the cost of the acquisition over the fairvalue of the net identifiable assets acquired. In respect ofassociates, the carrying amount of goodwill is included in thecarrying amount of the investment in the associate.Amortization of goodwill is charged to the income statementon a straight-line basis over its estimated useful life not exceeding20 years.Research and developmentExpenditure on research and development activities includes thecost of materials, direct labor and an appropriate proportion ofoverheads relating to research and development.Expenditure on research activities is expensed as incurred.Expenditure on development activities is capitalized only if theproduct or process is technically and commercially feasible.Other development expenditure is expensed as incurred.Management does not believe that the development expenditureincurred fulfill the criteria for capitalization.Other intangible assetsOther intangible assets comprise patents and expenditures forcomputer programs acquired by the Group. Acquired intangibleassets are stated at cost less accumulated amortization andimpairment.Subsequent expenditure on capitalized intangible assets iscapitalized only when it increases the future economic benefitsembodied in the specific asset to which it relates. All otherexpenditure is expensed as incurred.Amortization of other intangible assets is charged to theincome statement on a straight-line basis over the estimateduseful lives not exceeding 5 years.LeasesLeases of property, plant and equipment and intangible assetswhere the Group has substantially all the risks and rewards ofownership of the leased asset are classified as finance leases.The Group has no material finance lease contracts.Leases where all the risks and rewards of ownership areeffectively retained by the lessor are classified as operating leases.Payments made under operating leases (net of any incentivesreceived from the lessor) are charged to the income statementon a straight-line basis over the period of the lease.

42 NOBEL BIOCARE ANNUAL REPORT 2003SIGNIFICANT ACCOUNTING POLICIESInventoriesInventories are stated at the lower of cost and net realizablevalue. Net realizable value is the estimated selling price in theordinary course of business, less estimated selling costs.The cost of inventories consisting of material, labor andproduction costs is calculated according to the first-in, first-outprinciple. The cost includes expenditure incurred in manufacturingor acquiring the inventories and bringing them to their existinglocation and condition. Production costs include an appropriateshare of overheads based on normal, or actual when higher,operating capacity.Loans, trade and other receivablesLoans, trade and other receivables are stated at their cost lessallowance for doubtful debts. Allowances are made for specificknown doubtful trade and other receivables and for portfolios oftrade receivables based on historical default rates.Derivative financial instrumentsThe Group uses derivative financial instruments to protect itselffrom fluctuations in currencies and variability in future cash flows.There are established policies and procedures for risk assessmentand approval, reporting and monitoring of such instruments.The derivative financial instruments are not used for tradingpurposes.Derivative financial instruments are initially recognized atcost. Subsequent to initial recognition, derivative financialinstruments are stated at fair value. Any resultant gain or loss onremeasurement of derivative financial instruments that do notqualify for hedge accounting is recognized in the income statementimmediately.Cash flow hedgesThe Group applies hedge accounting for future cash flows in USDand EUR. Where a derivative financial instrument is designatedas a hedge of the variability in cash flows of a firm commitmentor a highly probable forecasted transaction, the effective part ofany gain or loss on the derivative financial instrument is recognizeddirectly in equity.The cumulative gain or loss is removed from equity andrecognized in the income statement at the same time as the hedgedtransaction. The ineffective part of any gain or loss is recognizedin the income statement immediately. Any gain or loss arising fromchanges in the time value of the derivative financial instrumentis excluded from the measurement of hedge effectiveness and isrecognized in the income statement immediately.When a hedging instrument or hedge relationship is terminatedbut the hedged transaction still is expected to occur, the cumulativegain or loss at that point remains in equity and is recognizedin accordance with the above policy when the transactionoccurs. If the hedged transaction is no longer probable, thecumulative unrealized gain or loss recognized in equity is recognizedin the income statement immediately.Hedge of net investment in foreign entityWhere a foreign currency liability hedges a net investment in aforeign operation, foreign exchange differences arising on translationof the liability are recognized in equity until disposal ofthe net investment at which time they are recognized in theincome statement as part of the gain on loss on disposal.Cash and cash equivalentsCash includes cash on hand, on postal accounts and at banks.Cash equivalents comprise fixed term deposits or call depositswith an original term of less than 90 days.ImpairmentThe carrying amounts of the Group's assets, other than inventoriesand deferred tax assets, are reviewed at each balance sheet dateto determine whether there is any indication of impairment.If any such indication exists, the asset’s recoverable amount isestimated. The recoverable amount of assets is the greater oftheir net selling price and value in use.An impairment loss is recognized in the income statementwhenever the carrying amount of an asset or its cash-generatingunit exceeds its recoverable amount.An impairment loss is reversed if there has been a change inthe estimates used to determine the recoverable amount. Animpairment loss on goodwill is only reversed if specific eventshave occurred that reverse the effect of the event that originallycaused the impairment.Share capitalOrdinary shares with discretionary dividends are classified asequity. Dividends on ordinary shares are recognized in equity inthe period in which they are declared.When the Company or its subsidiaries purchase the Company’sown shares, the consideration paid, including any attributabletransaction cost, net of income tax, is presented as treasuryshares and deducted from shareholders’ equity. Where suchshares are subsequently sold or reissued, any considerationreceived is included in shareholders’ equity.Interest bearing loansInterest-bearing loans are recognized initially at cost, lessattributable transaction costs. Subsequent to initial recognition,interest bearing loans are stated at amortized cost with anydifference between cost and redemption value being recognizedin the income statement over the period of the loans on aneffective interest basis.Employee benefitsThe Group operates or participates in both defined contributionand defined benefit plans throughout the world according tonational laws and regulations of the countries in which it operates.Defined contribution plansThe greater part of the Group’s pension commitments areaccounted for as defined contribution plans in which regularpayments are made to independent authorities or bodies thatadminister pension plans.Obligations for contributions to defined contribution plans arerecognized as an expense in the income statement as incurred.Defined benefit plansWhere the Group has personnel pension funds with definedbenefit components, the net obligation is determined inaccordance with the projected unit credit method. The amountof future benefit that employees have earned in return for theirservice in the current and prior periods is estimated. This benefitis discounted to determine the present value, and the fair value

NOBEL BIOCARE ANNUAL REPORT 200343SIGNIFICANT ACCOUNTING POLICIESof any plan assets is deducted. The discount rate is the yield atbalance sheet date on AAA credit rated bonds that have maturitydates approximating the terms of the Group's obligations. Thecalculation is performed by a qualified actuary on an annual basis.The net obligation is calculated separately for each definedbenefit plan.When the benefits of a plan are improved, the portion of theincreased benefit relating to past service by employees is recognizedas an expense in the income statement on a straight-linebasis over the average period until the benefits become vested.To the extent that the benefits vest immediately, the expense isrecognized immediately in the income statement.Actuarial gains and losses arising from subsequent calculationsare recognized to the extent that they exceed 10% of the higherof the defined benefit obligation and the fair value of the planassets. The amount exceeding this corridor is amortized over theexpected average remaining working lives of the employeesparticipating in the plan. Otherwise, the actuarial gain or loss isnot recognized.Where the calculation results in a benefit to the Group, therecognized asset is limited to the total of any cumulative unrecognizednet actuarial losses and past service cost and the presentvalue of any future refunds from the plan or reductions in futurecontributions to the plan.The Swedish ITP plan primarily covers the following benefits:• Retirement pension• ITPK (complementary occupational pension)• Disability pension• Group family pensionVirtually every clerical employee in the private sector in Swedenis covered by the ITP plan. The plan is financed by employers,who determine whether the pension insurance is to be insuredwith Alecta (Alecta Pensionsförsäkring, Ömsesidigt) or, alternatively,as regards retirement pension and ITPK, whether provisionis to be made in-house by companies within the framework ofthe FPG/PRI system. The Group has elected to take out pensioninsurance with Alecta.Irrespective of how the plan is financed – via pension insurancewith Alecta or through in-house provisions by companies –the plan is a defined benefit scheme in respect of retirementpensions and group family pensions. Paid pensions are relatedto the employee’s final salary and the total employment periodcovered by the plan. This means that the company should reportits proportional share of the defined benefit commitments,the assets under management and the expenses associated withthe plan in the same manner as any other defined benefit planand provide the information required for such plans.Alecta is currently unable to provide sufficient information toreport the Group’s proportional share of the defined benefitcommitments, the assets under management and expensesassociated with the plan. Consequently, Alecta cannot provide theinformation regarding the Group’s proportional share of thesurplus or deficit in the plan. As a result, the scheme is traditionallyreported as if it were a defined contribution plan, although it isactually a defined benefit plan.The Nobel Biocare Holding Group also has defined benefitplans in the Netherlands, Japan and Italy and has carried outcalculations in accordance with the methods and assumptionsstipulated by IAS 19. The obligations for defined benefit plansare not material.Equity and equity-related compensation benefitsA staff option program allows senior executives and key persons toacquire shares of the Company. For the options issued, no personnelexpense has been taken into account. The Group has accruedthe expected cost for social charges in connection withthe exercise of the staff option plan. The dilution effect is consideredwhen disclosing earnings per share.ProvisionsA provision is recognized in the balance sheet when the Grouphas a legal or constructive obligation as a result of a past event,and it is probable that an outflow of economic benefits will berequired to settle the obligation.The amounts recognized as provisions represent management’sbest estimate of the expenditures that will be required tosettle the obligation as of the balance sheet date. If the effect ismaterial, provisions are determined by discounting the expectedfuture cash flows at a pre-tax rate that reflects current marketassessments of the time value of money and, where appropriate,the risks specific to the liability. Provisions are reviewed at eachbalance sheet date and adjusted to reflect the current bestestimate.WarrantiesA provision for warranties is recognized when the underlyingproducts are sold. The provision is based on historical warrantydata and a weighting of all possible outcomes against theirassociated probabilities.Disputes and litigationsProvisions for tax disputes and litigations regarding patents,trademarks and product responsibilities are only recognized whenlegal advisors believe that it is probable that the Group will haveto pay to settle the disputes. The costs provided for correspond tothe estimated amount required to settle the dispute or litigation.Trade and other payablesTrade and other payables are stated at cost.Contingent liabilitiesContingent liabilities are possible obligations arising from pastevents whose existence will be confirmed only by the occurrenceor non-occurrence of one or more uncertain future eventsnot wholly within the control of the company. There may alsobe present obligations that are unrecognized because the futureoutflow of resources is not probable or the amount cannot bereasonably determined. Contingent liabilities are not recognizedin the balance sheet but disclosed.Segment reportingA segment is a distinguishable component of the Group that isengaged either in providing products or services (businesssegments), or in providing products or services within a particulareconomic environment (geographical segment), which is subjectto risks and rewards that are different from those of other segments.The Group comprises of one business segment (primaryformat) and four geographical segments (secondary format).

44 NOBEL BIOCARE ANNUAL REPORT 2003NotesNOTE 1 Segment reportingEurope North America Asia/Pacific Rest of the World/Gore Total2003 2002 2003 2002 2003 2002 2003 2002 2003 2002Revenue from external customers 157 714 136 529 121 846 126 580 37 093 33 341 17 325 14 740 333 978 311 190Assets 256 498 201 693 97 650 102 162 13 927 9 248 10 445 11 150 378 520 324 253Capital expenditures 8 354 8 435 4 677 4 653 596 311 251 178 13 878 13 577Until 2002, the Group comprised of two primary business segments: Dental Implants and Procera. Secondary information was provided on a geographical basis.After the integration of Procera in 2002 forming a Dental solutions company, a decision was made to change segment reporting from 2003 onwards. From 2003,the business of Nobel Biocare is conducted in one business segment comprising two product groups, Dental Implants and Procera, with similar risks and rates ofreturn. Both units operate within the same industry, with similar group of customers, using global production and R&D processes as well as the same marketing andlogistic channels. The internal organizational and management structure and its system of internal financial reporting were also adjusted.The business is managed on a global basis and extends to four geographical areas. Nobel Biocare’s risks and returns are predominantly affected by differences in itsglobal product assortment, supported by the global marketing, quality, logistic and research and development functions. Therefore, the primary format for segmentreporting is based on the business while secondary information is reported geographically.NOTE 2 Acquisition of associateAcquisitionIn 2002, the acquisition relating to a new share issue in Entific MedicalSystems AB had the following affect on the Group’s assets and liabilities:in EUR'000 2003 2002Non-current financial assets - 574Net identifiable assets and liabilities - 574Consideration paid in cash - 574Net cash outflow - 574NOTE 3 Restructuring expensesin EUR'000 2003 2002Consultancy costs in relation to restructuringof the Group - 7 198Total restructuring expenses - 7 198NOTE 4 Personnel expensesin EUR'000 2003 2002Wages and salaries 61 321 65 330Social security costs 18 832 17 341Pension costs 5 020 4 459Total personnel expenses 85 173 87 130Included in social security costs are social charges related to the staffoption program in the amount of EUR 2 655 K (EUR 1 135 K). Thesecosts are reported under administrative expenses.The personnel expenses are recognized in the following line items inthe income statement:in EUR'000 2003 2002Cost of sales 18 457 19 874Selling expenses 50 616 52 061Administrative expenses 11 196 9 648Research and development expenses 4 904 5 547Total personnel expenses 85 173 87 130NOTE 5 Financial incomein EUR'000 2003 2002Interest income 2 928 1 741Other financial income 4 799 85Total financial income 7 727 1 826In 2003, EUR 4 694 K, included in other financial income, relates toproceeds from the mutual call options in Entific Medical Systems AB.At the time Entific was spun off from Nobel Biocare to a newly formedcompany in 1999, owned by Nobel Biocare and two new investors,options were issued between the owners. In December 2003, theseoptions were called resulting in a net income of EUR 4 694 K and areduced ownership from 39.8% to 38.4% for Nobel Biocare.NOTE 6 Financial expensesin EUR'000 2003 2002Interest expenses 3 033 2 576Foreign exchange losses 119 450Other financial expenses 461 707Total financial expenses 3 613 3 733Included in the cost of sales are net foreign exchange losses (gains)of EUR 160 K (EUR -213 K).

NOBEL BIOCARE ANNUAL REPORT 200345NOTESNOTE 7 Income tax expenseNOTE 9Intangible assetsRecognized in the income statement:in EUR'000 2003 2002Current tax expenseIncome taxes relating to the current period 16 404 13 944Income taxes relating to past periods, net 352 232Current income tax expense 16 756 14 176Deferred income tax expenseDue to temporary differences 2 351 3 008Creation/use of recognized tax loss carry-forwards -441 5 695Deferred income tax expense 1 910 8 703Total income tax expense in income statement 18 666 22 879Income tax expense can be analyzed as follows:in EUR'000 2003 2002Profit before tax 91 341 61 124Income tax expense at the averageapplicable rate of 21% (37%) 19 182 22 616Items that affect income tax expenseIncome taxes relating to past periods, net 352 232Tax losses not included in the basisfor deferred tax assets -840 640Other items -28 -609Effective income tax expense 18 666 22 879As a result of the new holding structure, the tax rate was 20.4 percentof profit before tax for the full year 2003, compared with 37.5 percentin 2002.NOTE 8 Property, plant and equipmentin EUR'000 Land and EquipbuildingsMachinery ment TotalCostBalance at 1 January 2003 3 444 29 559 38 494 71 497Investments for the year - 6 995 5 756 12 751Disposals - -1 173 -1 675 -2 848Effect of changes inexchange rates 41 2 236 -2 730 -453Balance at31 December 2003 3 485 37 617 39 845 80 947Accumulated depreciationand impairment lossesBalance at 1 January 2003 1 836 16 456 25 940 44 232Depreciation charge forthe year 139 3 860 5 417 9 416Disposals - -1 024 -1 078 -2 102Effect of changes inexchange rates 22 2 852 -1 542 1 332Balance at31 December 2003 1 997 22 144 28 737 52 878Carrying amountAt 31 December 2003 1 488 15 473 11 108 28 069At 31 December 2002 1 608 13 103 12 554 27 265The fire insurance value amounts to EUR 45.3 M (EUR 44.7 M) as per31 December 2003.in EUR'000Capitalizedexpendituresfor computerGoodwill Patents programs TotalCostBalance at 1 January 2003 176 789 2 397 9 615 188 801Investments for the year 23 1 104 1 127Effect of changes inexchange rates -8 510 -129 -53 -8 692Balance at31 December 2003 168 279 2 291 10 666 181 236Accumulated amortizationand impairment lossesBalance at 1 January 2003 34 377 2 115 7 389 43 881Amortization charge forthe year 9 315 115 1 190 10 620Effect of changes inexchange rates 1 641 -90 -89 1 462Balance at31 December 2003 45 333 2 140 8 490 55 963Carrying amountAt 31 December 2003 122 946 151 2 176 125 273At 31 December 2002 142 412 282 2 226 144 920NOTE 10 Investment in associatein EUR'000 2003 2002Balance at 1 January 2 259 1 648New share issue - 574Translation differences 27 37Balance at 31 December 2 286 2 259The associate is:2003 2002% of % ofCountry of interest interestincorporation held heldEntific Medical Systems AB Sweden 38.40 39.80NOTE 11 Receivablesin EUR'000 2003 2002Long-term trade receivable 575 1 010Rent deposits 726 944Other items 1 2Total non-current receivables 1 302 1 956NOTE 12 Inventoriesin EUR'000 2003 2002Raw materials and consumables 5 046 7 235Work in progress 2 249 3 700Finished products and goods for resale 15 104 17 120Total inventories 22 399 28 055Included in cost of sales are costs for obsolescence EUR 4 383 K(EUR 3 265 K).

46 NOBEL BIOCARE ANNUAL REPORT 2003NOTESNOTE 13 Trade receivablesin EUR'000 2003 2002Trade receivables– due from associate 7 57– due from third parties 62 807 56 103Allowance for bad debts -3 627 -3 040Total trade receivables 59 187 53 120NOTE 14 Prepaid expenses andaccrued incomein EUR'000 2003 2002Derivative assets 1 862 1 725Prepaid selling expenses 1 658 1 237Prepaid rent 785 767Prepaid insurance 317 376Prepaid royalty 214 326Prepaid R&D expenses 61 467Accrued interest income 44 319Accrued income - 226Other items 745 54Total prepaid expenses and accrued income 5 686 5 497NOTE 15 Cash and cash equivalentsin EUR'000 2003 2002Cash 54 738 43 851Fixed term deposits < 3 months 54 766 8 631Total cash and cash equivalents 109 504 52 482Weighted average interest rate on fixed term deposits was 2.78%(3.77%) with a weighted average interest period of 59 days (58 days).Included in cash and cash equivalents is CHF 31 485 K which isrestricted in favor of the compulsory redemption process related tothe minority shares in Nobel Biocare AB.NOTE 16 Shareholders’ equityShare capitalin EUR'000 2003 2002On issue at 1 January (2002: Nobel Biocare AB) 34 551 33 631New share issue 333 -Exercised options 161 22Exchange translation difference -2 358 898On issue at 31 December – fully paid 32 687 34 551The share capital of Nobel Biocare Holding AG is held in CHF. Anexchange translation difference arises when the share capital is translatedat the year-end closing rate.The holders of ordinary shares are entitled to receive dividends asdeclared from time to time and are entitled to one vote per share atmeetings of the Company. All shares rank equally with regard to theCompany’s residual assets.The split up of retained earnings in a translation reserve and otherretained earnings was introduced from 2001 in connection with theadoption of IFRS as the primary basis of accounting. The cumulativebalance of exchange differences relating to previous years was notreasonably determinable. The translation reserve comprises allforeign exchange differences arising from the translation of thefinancial statements of foreign operations. The hedging reserve comprisesthe effective portion of the cumulative net change in the fairvalue of cash flow hedging instruments where the hedged transactionhas not yet occurred.On 27 May 2002, Nobel Biocare Holding AG made a public offerto the shareholders of Nobel Biocare AB to acquire all the outstandingshares in Nobel Biocare AB; 94.6% of the Nobel Biocare AB shareholdersaccepted the offer. The shareholders who accepted the offer,in return for Nobel Biocare AB shares, received shares in NobelBiocare Holding AG on a one-for-one share basis. The capital wasincreased by way of a capital contribution consisting of shares inNobel Biocare AB tendered by shareholders of Nobel Biocare AB duringthe offer. As a result of additional shares tendered by Nobel BiocareAB shareholders during the prolonged period of the public tenderoffer until 9 July 2002, a total of 98.9% of the Nobel Biocare ABshareholders had accepted the offer.The number of outstanding shares in Nobel Biocare Holding AGon 31/12/2003 totaled 25 499 827 (31/12/2002 totaled 25 115 187)due to the redemption of warrants and options and newly issuedshares. Following the redemption of all outstanding and not yetissued warrants and options, the total number of shares will be26 617 318.The share capital may be increased by issuing no more than1117 491 shares, each with a par value of CHF 2, to be fully paid up, anamount of no more than CHF 2 234 982 by virtue of the exercise ofoptions rights granted to employees, directors and officers of the Group.The minority interest in the amount of EUR 2 507 K (EUR 2 202 K)represents the outstanding shares (1.1%) on 31 December 2003 inNobel Biocare AB, which had not been exchanged to Nobel BiocareHolding AG shares. The increase in year 2003 is due to exchangerate deviations. A compulsory acquisition procedure to acquire theremaining approximately 1% of the shares in Nobel Biocare AB hasbeen initiated in January 2003.On 10 March 2003, the Nobel Biocare Board of Directors decidedthat the issued capital in Nobel Biocare Holding AG would be increasedby issuing 259 713 shares. In the fourth quarter of 2003,the 259 713 shares were issued at nominal value of CHF 2. In theend of the fourth quarter of 2003, the 259 713 shares were sold for aproceed of EUR 20.2 million. See the consolidated statements ofchanges in shareholders equity on page 38.On 23 April 2003, the Company acquired 10 000 bearer shares ofNobel Biocare Holding AG for a total purchase price of CHF 568 K.As of 31 December 2003 those shares are deducted from equity.DividendsAfter the balance sheet date dividends of a total amount ofEUR 21 246 K (2002: EUR 13 647 K), equalling EUR 0.85 (2002: EUR 0.54)per ordinary share, were proposed by the directors. Dividends willbe paid in CHF.

NOBEL BIOCARE ANNUAL REPORT 200347NOTESNOTE 17 Earnings per shareBasic earnings per shareThe calculation of basic earnings per share at 31 December 2003was based on the net profit attributable to ordinary shareholders ofEUR 71 987 K (2002: EUR 37 803 K) and a weighted average numberof ordinary shares outstanding during the year ended 31 December2003 of 25 265 908 (2002: 25 124 239), calculated as follows:Net profit attributable to ordinary shareholdersin EUR'000 2003 2002Net profit for the year 71 987 37 803Weighted average number of ordinary sharesIn thousands of shares 2003 2002Issued ordinary shares at 1 January 25 115 25 355Effect of shares issued/group restructuring 151 -231Weighted average number of ordinary sharesat 31 December 25 266 25 124Diluted earnings per shareThe calculation of diluted earnings per share at 31 December 2003was based on net profit attributable to ordinary shareholders of EUR71 987 K (2002: EUR 37 803 K) and a weighted average number ofordinary shares outstanding during the year ended 31 December 2003of 26 383 399 (2002: 26 366 657), calculated as follows:Net profit attributable to ordinary shareholders (diluted)in EUR'000 2003 2002Net profit attributable to ordinary shareholders 71 987 37 803Weighted average number of ordinary shares (diluted)In thousands of shares 2003 2002Weighted average number of ordinary sharesat 31 December 25 266 25 124Effect of share options on issue 1 117 1 243Weighted average number of ordinary shares(diluted) at 31 December 26 383 26 367NOTE 18 Interest-bearing loansin EUR'000 2003 2002Non-currentLoans– from third parties 748 29 884Total non-current interest-bearing loans 748 29 884CurrentBank overdrafts 73 1 196Total current interest-bearing loans 73 1 196During 2003, the principal part of existing credit lines was moved toNobel Biocare Holding AG. Existing credit lines include a negativeclause. Covenants covering key ratios such as interest coverage andnet debt/equity are included in these agreements. All covenantswere met at 31 December 2003.Per 31 December 2003, unused credit lines amounted to EUR98 893 K (EUR 53 400 K).NOTE 19 Staff option programAt Nobel Biocare AB’s Annual General Meeting in 2001 it was decidedto launch a staff option program, aimed at around 125 seniorexecutives and newly appointed key persons. The staff option program,which was transferred to Nobel Biocare Holding AG, comprises today atotal of 1 176 000 options, distributed over four years. The allottedoptions can be utilized to acquire shares in Nobel Biocare Holding AGafter two years.At present there are 364 858 staff options available for allotmentwithout consideration.Number of options 2003 2002Options outstanding at 1 January 421 976 165 639Options issued 305 473 267 337Options exercised -119 531 -Options expired -15 996 -11 000Options outstanding at 31 December 591 922 421 976Options outstanding at the end of the year have the following terms:StrikeGrant Expiry priceyear Date CHF 2003 20022001 30-Jun-2004 63.83 46 108 165 6392002 30-Jun-2005 71.33 241 341 256 3372003 30-Jun-2006 80.47 304 473Total 591 922 421 976In conjunction with the acquisition of Steri-Oss, Inc. in 1998, warrantsin Steri-Oss, Inc. were converted to warrants in Nobel Biocare AB.At the end of 2003, a total of 61 022 warrants remained unsubscribedfor. Of these, 26 190 were of Series I, 6 478 were of Series IIand 28 354 of Series III. Series I has a term ending on 8 January 2007,Series II ending on 16 May 2007 and finally Series III on 2 April 2008.The unsubscribed warrants have been converted into warrants inNobel Biocare Holding AG, with subscription price of CHF 2.04,CHF 2.09 and CHF 6.00, respectively.NOTE 20 ProvisionsDeferredRestructuring purchasemeasures in price relatedconnection to thewith acquisition acquisitionof group of groupin EUR’000 Warranties company company Pensions TotalBalance at1 January 2003 1 457 398 19 995 1 082 22 932Provisions made 252 - - 601 853Provisions used -376 -223 -957 -50 -1 606Provisions reversed - - - - -Effects of changesin exchange rates -50 2 238 -15 175Balance at 31December 2003 1 283 177 19 276 1 618 22 354The net present value of the deferred purchase price at the acquisitionof Nobel Biocare Procera AB (previously Procera Sandvik AB)amounts to EUR 23 047 K, whereof the short-term portion, EUR3 771, is booked as a short-term liability.The acquisition of the remaining 50 percent shares in ProceraSandvik AB is made up of a cash payment and deferred purchaseprice based on a defined segment of the annual sales value up toand including 2012.

48 NOBEL BIOCARE ANNUAL REPORT 2003NOTESContributions for pension insurance insured with Alecta (only theSwedish entities) amount to EUR 456 K, of which EUR 439 K pertainsto retirement pension and family pension, and is included among“Personnel expenses” in the income statement. The Group is of theopinion that current premiums should cover current commitmentsbut, however, there is a certain premium shortfall pertaining topremiums for past periods due to changes in salaries.The obligations for defined benefit plans in the Netherlands, Japanand Italy are not material, see Significant accounting policies page43, why the detailed disclosures required by IAS 19 are not given.NOTE 21 Deferred tax assets and liabilitiesDeferred tax assets and liabilities are attributable to the following items:in EUR'000 Assets Liabilities Net2003 2002 2003 2002 2003 2002Inventories 4 732 4 396 - - 4 732 4 396Tax losses carriedforward - 262 - - - 262Other temporarydifferences 4 422 1 194 7 396 2 648 -2 974 -1 454Tax assets/liabilities 9 154 5 852 7 396 2 648 1 758 3 204Net tax assets 1 758 3 204The Group has not recognized deferred tax assets in respect of thefollowing items:in EUR'000 2003 2002Tax losses carried forward 1 820 2 660Total unrecognized deferred tax assets 1 820 2 660The unrecognized deferred tax assets will expire during the years2004–2007.For 2003, current tax of EUR 166 K related to fair value changeson cash flow hedging instruments included in the hedging reserve isbooked directly in equity.NOTE 22 Trade payablesin EUR'000 2003 2002Trade payables– to third parties 9 057 13 761Total trade payables 9 057 13 761NOTE 23 Accrued expenses anddeferred incomein EUR'000 2003 2002Personnel-related costs 15 571 14 645Accrued selling expenses 3 072 2 365Accrued legal expenses 1 004 1 075Accrued royalties 828 752Derivative liabilities 425 230Accrued R&D expenses 177 226Accrued interest expenses 33 1 337Other items 1 739 1 723Total accrued expenses and deferred income 22 849 22 353NOTE 24 Operating leasesNon-cancellable operating lease rentals are payable as follows:in EUR'000 2003 2002Less than one year 5 443 4 454Between one and five years 8 630 7 437More than five years 1 429 899Total operating lease liabilities 15 502 12 790During the year ended 31 December 2003, EUR 6 388 K wasexpensed in the income statement in respect of operating leases(2002: EUR 5 790 K).NOTE 25 ContingenciesPledged assetsin EUR'000 2003 2002Cash and cash equivalents 20 238 1 618Total pledged assets 20 238 1 618Contingent liabilitiesin EUR'000 2003 2002Contingent liabilities 254 792Total contingent liabilities 254 792Ongoing disputesThere are a few minor ongoing lawsuits and claims arising from theordinary business of the Group pending against companies of theNobel Biocare Holding Group. In the opinion of the management,and based on current information, the handling, settlement or outcomeof these law suits and claims will have no adverse material effectupon the consolidated financial position or operation of the Group.During December 2003, Nobel Biocare settled its patent litigationagainst VP Intellectual Properties with a one-time worldwide settlementamount. During 2003, Nobel Biocare also settled the lawsuit inGermany with a one-time settlement amount.On 3 March 2004, Nobel Biocare received a positive ruling on thearbitration in the US of a patent concerning internal connections. Thearbiters ruled that none of the Nobel Biocare products with an internalconnection infringes the patent owned by Zimmer, Inc. (formerlyCenterpulse Dental).In previous decisions the arbiters ruled that Nobel Biocare may not,for contractual reasons, challenge the validity of the patent, however,had decided that the Brånemark System Stargrip implant does notinfringe the patent. The final hearing of the arbitration was limited todetermine if the Replace Select implant infringes the patent, which thepanel now has ruled it does not.The ruling of the arbiters is final and binding. The only remainingdecision from the panel relates to the legal fees to be awarded toNobel Biocare.In the matter of the compulsory redemption proceedings for the 1.1%minority in Nobel Biocare AB, the arbitration panel has recently issueda ruling for the immediate ownership of the minority shares againsta bank guarantee. The arbitration will continue and, unless the partiescan agree on an amicable solution, is expected to take anadditional 1–2 years before the final purchase price is decided uponby the panel.

NOBEL BIOCARE ANNUAL REPORT 200349NOTESNOTE 26 Risk management and hedging activitiesCredit riskNobel Biocare is very conservative regarding financial credit risk and involvestherefore only with counterparties with very high credit ratings.All excess cash in local companies is placed intra-group, either throughthe usage of cash pools or by doing an investment with the TreasuryDepartment.No external investments longer than 12 months are permitted.Regarding the commercial credit risk, no individual customers representa significant portion of the Group´s revenue.Interest riskThe policy of the Group is that the interest exposure, calculated as theremaining average fixed interest period, must not exceed 360 days.Liquidity riskIn order to have liquid funds on hand at all times, the Group should alwayshave funds corresponding to one month of total expenses available.The funding policy limits the refinancing risk by not permitting refinancingof more than 50 percent of the debt portfolio during the following 12 months.Currency riskThe transactional exposure is defined as the net result of all invoiced,confirmed and forecasted commercial and financial incoming and outgoingpayments in a currency other than the local currency. The transactionalexposure is summarized for all entities and managed at a central level at theTreasury Department at Nobel Biocare AB.According to the finance policy, forecasted net exposure in the upcoming6 months should be hedged on average to a minimum of 50 percent andmay be hedged up to 90 percent per currency.Forecasted net exposure in the following 7–12 months should behedged on average to a minimum of 25 percent and may be hedged up to50 percent per currency. The EUR exposure is the main currency exposurewithin the Group since the USD exposure to a large extent is internallyhedged by the production facilities in the US.Derivative instrumentsDerivative financial instruments are initially recognized at cost. Subsequentto initial recognition, derivative financial instruments are stated at fair valueand are recorded under prepaid expenses and accrued expenses, respectively.Fair value has been determined by reference to the market at the balancesheet date.As of 31 December, there were open currency hedging contracts with the following notional amounts:2003Notional amount with remaining life ofFair valuein EUR'000 Less than 3 months 3 months – 1 year More than 1 year Total Cash flow hedge Other TotalCurrency instrumentsCurrency hedging contracts 25 205 31 530 - 56 735 461 1 406 1 867Total derivative assets included inprepaid expenses and accrued income 25 205 31 530 - 56 735 461 1 406 1 8672002Notional amount with remaining life ofFair valuein EUR'000 Less than 3 months 3 months – 1 year More than 1 year Total Cash flow hedge Other TotalCurrency instrumentsCurrency hedging contracts 19 778 25 334 - 45 112 - 1 725 1 725Total derivative assets included inprepaid expenses and accrued income 19 778 25 334 - 45 112 - 1 725 1 7252003Notional amount with remaining life ofFair valuein EUR'000 Less than 3 months 3 months – 1 year More than 1 year Total Cash flow hedge Other TotalCurrency instrumentsCurrency hedging contracts 4 408 18 171 - 22 579 71 354 425Total derivative liabilities included inaccrued expenses and deferred income 4 408 18 171 - 22 579 71 354 4252002Notional amount with remaining life ofFair valuein EUR'000 Less than 3 months 3 months – 1 year More than 1 year Total Cash flow hedge Other TotalCurrency instrumentsCurrency hedging contracts 4 436 16 493 - 20 929 - 230 230Total derivative liabilities included inaccrued expenses and deferred income 4 436 16 493 - 20 929 - 230 230The carrying amounts of other financial assets and liabilities, other than derivative instruments, approximate fair value.

50 NOBEL BIOCARE ANNUAL REPORT 2003NOTESForeign exchange rates EUR:Income statements(average rates) 2003 2002USD 0.8877 1.0630CHF 0.6585 0.6817SEK 0.1096 0.1091JPY 0.0076 0.0085GBP 1.4473 1.5921CAD 0.6322 0.6766AUD 0.5750 0.5763HKD 0.1140 0.1363BRL 0.2903 0.3807Balance sheets(closing-day rates) 2003 2002USD 0.8000 0.9592CHF 0.6409 0.6879SEK 0.1100 0.1087JPY 0.0075 0.0080GBP 1.4199 1.5382CAD 0.6111 0.6122AUD 0.5974 0.5407HKD 0.1031 0.1231BRL 0.2777 0.2698NOTE 27 Related partiesRelated partiesThe Group has related party relationships withits associate, its directors and executive officers.Transactions with directors and executiveofficersIn 2003, the board of Directors or the ExecutiveManagement Group received salaries, bonuses,staff options and other benefits amounting toEUR 12 348 K (EUR 4 798 K). In 2003, nomember of the board of Directors or theExecutive Management Group received additionalfees or compensations for additionalservices performed on behalf of Nobel BiocareHolding AG or its subsidiaries. There are nomaterial loans, securities, advances or creditsgranted to any members of the Board ofDirectors or the Executive Management Group.Transactions with associateTransactions with Entific Medical Systems ABresulted in revenue of EUR 164 K (EUR 920 K),see Note 13 regarding trade receivables.Other related party transactionsOther than the transactions with related partiesreferred to above there were no significanttransactions with related parties.NOTE 28 SubsidiariesCity andOwnership Ownershipcountry of Share interest interestincorporation Capital 2003 2002Nobel Biocare Australia Pty Ltd Sydney, Australia AUD 600 K 100% 100%Nobel Biocare Österreich GmbH St. Pölten, Austria EUR 36 K 100% 100%Nobel Biocare Brasil Ltda Sao Paulo, Brazil BRL 218 K 100% 100%Nobel Biocare Canada Inc Richmond Hill, Canada CAD 3 012 K 100% 100%Nobel Biocare Colombia S.A. Bogotá, Colombia COP 732 246 K 100% -Nobel Biocare France S.A.S. Paris, France EUR 40 K 100% 100%Nobel Biocare Deutschland GmbH Cologne, Germany EUR 307 K 100% 100%Nobel Biocare UK Ltd Uxbridge, Great Britain GBP 620 K 100% 100%Nobel Biocare Asia Ltd Hong Kong HKD 10 K 100% 100%Nobel Biocare Italiana S.r.l. Agrate Brianza, Italy EUR 10 K 100% 100%Nobel Biocare Japan K.K Tokyo, Japan JPY 12 500 K 100% 100%Nobel Biocare Mexico, S.A. de C.V. Mexico City, Mexico MXN 50 K 100% 100%Nobel Biocare Benelux BV Houten, The Netherlands EUR 91 K 100% 100%Nobel Biocare Investments N.V. Willemstad, Curacao,The Netherlands Antilles EUR 1 000 K 100% 100%Nobel Biocare Polska Sp. z o.o. Warsaw, Poland PLN 50 K 100% 100%Nobel Biocare Singapore Pte Ltd Singapore SGD 28 K 100% 100%Nobel Biocare Ibérica S.A Barcelona, Spain EUR 60 K 100% 100%Nobel Biocare AB Gothenburg, Sweden SEK 317 186 K 98.9% 98.9%Nobel Biocare Norden AB Gothenburg, Sweden SEK 350 K 100% 100%Nobel Biocare Dental Products AB Gothenburg, Sweden SEK 100 K 100% 100%Nobel Biocare i Göteborg AB Gothenburg, Sweden SEK 150 K 100% 100%Nobel Biocare Holding AB Gothenburg, Sweden SEK 10 100 K 100% 100%Nobel Biocare Sverige AB Gothenburg, Sweden SEK 10 100 K 100% 100%Nobel Orthopedics AB Gothenburg, Sweden SEK100 K 100% 100%Nobel Biocare Procera AB Stockholm, Sweden SEK 1 000 K 100% 100%Procera Invest AB Gothenburg, Sweden SEK 100 K 100% 100%Nobel Biocare AG Kriens, Switzerland CHF 54 K 100% 100%Nobel Biocare Services AG Opfikon, Switzerland CHF 250 K 100% -Nobel Biocare Procera Inc. Delaware, USA USD 1 K 100% 100%Nobel Biocare USA, Inc. Yorba Linda, CA, USA USD 500 K 100% 100%NOTE 29 Subsequent eventsOn 27 January 2004, the arbitration panel issued a ruling in favor of Nobel Biocare to have theimmediate ownership of the 1.1 percent minority shares in Nobel Biocare AB against a bankguarantee amounting to EUR 20.2 million, which will be issued in the first quarter of 2004. Thearbitration will continue and, unless the parties can agree on an amicable solution, it is expected totake an additional 1–2 years before the final purchase price is decided upon by the arbitration panel.On 3 March 2004, Nobel Biocare received a positive ruling on the arbitration in the US of apatent concerning internal connections. The arbiters ruled that none of Nobel Biocare’s productswith an internal connection infringes the patent owned by Zimmer, Inc. (formerly Centerpulse Dental).In previous decisions the arbiters ruled that Nobel Biocare may not, for contractual reasons,challenge the validity of the patent, however, had decided that the Brånemark System Stargripimplant does not infringe the patent. The final hearing of the arbitration was limited to determine ifthe Replace Select implant infringes the patent, which the panel now has ruled it does not. Theruling of the arbiters is final and binding. The only remaining decision from the panel will berelating to the legal fees to be awarded to Nobel Biocare.The consolidated financial statements of the Nobel Biocare Holding Group were authorized forissue by the Board of Directors of Nobel Biocare Holding AG on 19 March 2004. A resolution toapprove the consolidated financial statements will be proposed at the Annual General Meeting on29 April 2004.There have been no other material events than described above between December 31, 2003and the date of authorization that would require adjustments of the consolidated financialstatements or disclosure.

NOBEL BIOCARE ANNUAL REPORT 200351Report of the Group Auditors to the Board of Directorsof Nobel Biocare Holding AGAs group auditors, we have audited the consolidatedfinancial statements (income statement, balancesheet, statement of changes in equity, cash flowstatement and notes on page 35 to page 50) ofNobel Biocare Holding AG for the year ended31 December 2003.These consolidated financial statements arethe responsibility of the Board of Directors.Our responsibility is to express an opinion onthese consolidated financial statements based onour audits. We confirm that we meet the legalrequirements concerning professional qualificationand independence.Our audit was conducted in accordance withauditing standards promulgated by the Swissprofession and with the International Standardson Auditing (ISA), which require that an audit beplanned and performed to obtain reasonableassurance about whether the consolidated financialstatements are free from material misstatement.We have examined on a test basis evidencesupporting the amounts and disclosures in thefinancial statements. We have also assessed theaccounting principles used, significant estimatesmade and the overall financial statement presentation.We believe that our audit provides a reasonablebasis for our opinion.In our opinion, the consolidated financial statementsgive a true and fair view of the financialposition, the results of operations and the cashflows in accordance with the International FinancialReporting Standards (IFRS) and comply withSwiss law.We recommend that the consolidated financialstatements submitted to you be approved.KPMG Fides PeatErik WillemsDutch Chartered AccountantAnders IvdalAuthorized Public Accountant in SwedenAuditor in ChargeZurich, 22 March 2004

52 NOBEL BIOCARE ANNUAL REPORT 2003PARENT COMPANY ACCOUNTSNobel Biocare Holding AGIncome statementNOTEin CHF’000 1 2003 2001/2002Personnel expenses -551 -Administrative expenses -2 177 -474Restructuring expenses - -6 510Write down of investment - -73 085Result from operations -2 728 -80 069Financial income 597 1Financial expenses -85 -76Net foreign exchange losses -3 687 -Dividend income 240 -Result before taxes -5 663 -80 144Tax expense -1 657 -1 089NET RESULT -7 320 -81 233Balance sheetin CHF’00031 DECEMBER 2003 2002ASSETSInvestments 3 2 242 844 2 242 594Loans to group companies 45 794 -Total non-current assets 2 288 638 2 242 594Other receivables from group companies 418 -Other receivables 88 -Treasury shares 5 568 -Cash and cash equivalents 4 44 290 58Total current assets 45 364 58TOTAL ASSETS 2 334 002 2 242 652SHAREHOLDERS’ EQUITY AND LIABILITIESShare capital 6 51 000 50 230Share premium 2 202 646 2 265 390Reserve for treasury shares 5 568 -Net result -7 320 -81 233Shareholders’ equity 2 246 894 2 234 387Interest-bearing loans - 6 995Loans from group companies 83 684 -Other payables to group companies 738 126Other payables 1 -Tax liability 2 414 985Accrued expenses and deferred income 271 159Total current liabilities 87 108 8 265TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 2 334 002 2 242 652

NOBEL BIOCARE ANNUAL REPORT 200353Notes to the parent company accountsNOTE 1 GeneralNobel Biocare Holding AG was founded on 14 December 2001.In 2003, the domicile was moved from Zurich to Opfikon. The 2003statutory financial statements cover the period 1 January 2003 to31 December 2003. The prior year statutory financial statementscovered the period 14 December 2001 to 31 December 2002.NOTE 2 Basis for preparationThese financial statements have been prepared on a historical costbasis and are in accordance with Swiss law.NOTE 3 Details of investmentsInvestments held directly by Nobel Biocare Holding AG are:2003 2002Company, domicile percentage share percentage sharePurpose held capital held capitalNobel Biocare AB, Gothenburg, Sweden 98.9% SEK'000 317 186Production and distribution of dental implants andindustrialized dental prostheticsNobel Biocare Services AG, Opfikon, Switzerland 100% CHF'000 250Acquisition, sale and administration, includingmarketing and granting of licenses of intellectualproperty rights of any kind in favor of the NobelBiocare Group as well as the rendering of otherservices in favor of the Nobel Biocare Group in thefields of management and marketingNobel Biocare Holding AB, Gothenburg, Sweden 100% SEK'000 10 100 100% SEK'000 100Develop, manufacture and sell pharmaceuticalsand medical technical productsNobel Biocare Sverige AB, Gothenburg, Sweden 100% SEK'000 100Develop, manufacture and sell pharmaceuticalsand medical technical productsNobel Biocare AG, Kriens, Switzerland 100% CHF'000 54 100% CHF'000 54Distribution of dental implants and industrializeddental prostheticsNobel Biocare Investments N.V., Willemstad, Curacao,The Netherlands Antilles 100% EUR'000 1 000 100% EUR'000 6Financing, investments and tradingFor investments held indirectly see note 28 in the notes to the consolidated financial statements.Investments are valued at acquisition cost less adjustments for impairment of value.Nobel Biocare Holding AG is the parent company of the Nobel Biocare Holding Group.

54 NOBEL BIOCARE ANNUAL REPORT 2003NOTES TO THE PARENT COMPANY ACCOUNTSNOTE 4 Cash and Cash EquivalentsIncluded in cash and cash equivalents is CHF 31 485 K which isrestricted in favor of the compulsory redemption process related tothe minority shares in Nobel Biocare AB (see Note 6 Share Capital).NOTE 5 Treasury SharesOn 23 April 2003, the company acquired 10 000 bearer shares ofNobel Biocare Holding AG for a total purchase price of CHF 568 K.As of 31 December 2003 those shares were capitalized at purchaseprice.NOTE 7 Major ShareholdersThe Board of Directors is aware of the following major shareholderswith a holding exceeding 5% of all votes :2003 2002Fidelity Funds (USA) 3 817 164 15.0% 3 609 150 14.4%BB Medtech(Switzerland) 2 692 713 10.6% 3 261 624 13.0%Metalor SA(Switzerland) - - 1 280 000 5.1%Others 18 989 950 74.4% 16 964 413 67.5%Total 25 499 827 100.0% 25 115 187 100.0%NOTE 6 Share CapitalAs of 31 December 2003, the share capital of the Company consistsof 25 499 827 bearer shares with a par value of CHF 2 each (2002:25 115 187 bearer shares with a par value of CHF 2 each). The bearershares of the Company are listed on the SWX Swiss Exchange andthe Stockholm Stock Exchange, Sweden.There are no voting restrictions.NOTE 8 Tax ExpenseAs a holding company, Nobel Biocare Holding AG is only subject todirect federal tax at an effective tax rate of 7.83% in Switzerland.Dividend income of subsidiaries or of other qualifying participationsas well as gain on disposal of qualified participations are basicallyexempt from tax due to a participation relief. The tax expense ofCHF 1 657 K (1 089) relates to capital tax only.Reconciliation of Share Capitalas of 31 December 2003 Shares CHFOpening Balance 1 January 2003 25 115 187 50 230 374Capital Increase 259 713 519 426Staff Option Program 124 927 249 854Total as of 31 December 2003 25 499 827 50 999 654Conditional share capital :The share capital may be increased through the issuance of no morethan 1 117 491 (1 242 418) bearer shares of a par value of CHF 2 each,to be fully paid up by an amount of no more than CHF 2 234 982(2 484 836) by virtue of the exercise of option rights granted toemployees, directors and officers of the Group (see Note 19 to theconsolidated financial statements).In 2003, a total of 124 927 staff options have been exercised.As of 31 December 2003, the not claimed part of the conditionalshare capital is 1 117 491 shares of a par value of CHF 2 each.Authorized share capital :The approved share capital was completely claimed in 2003. In 2003,the share capital was increased through the issuance of 259 713 fullypaid in bearer shares of a par value of CHF 2 each. The emission priceamounted to CHF 519 426. The total amount earned on those sharesshould be used for the purchase of the remaining shares of NobelBiocare AB, Sweden, still held by minority shareholders. Therefore,the Board of Directors has excluded, in accordance with the Articlesof Association, the rights of the other shareholders to subscribe inpriority and has allocated such right to a bank pursuant to theprovisions of an Underwriting Agreement.The shares were sold per December 2003. Based on the UnderwritingAgreement, Nobel Biocare Holding AG received CHF 31 485 Kfrom the sale of those shares (see Note 4 Cash and Cash Equivalents).NOTE 9 Securities, sureties, guarantees andpledges in favor of third partiesPledged assetsin CHF'000 2003 2002Cash and cash equivalents 31 485 -Total pledged assets 31 485 -Contingent liabilitiesin CHF'000 2003 2002Guarantees on behalf of Group companies 13 437 -Total contingent liabilities 13 437 -During 2003, the principal part of the Group’s existing credit lineswas transferred to Nobel Biocare Holding AG.Existing credit lines include a negative clause. Covenants coveringkey ratios such as interest coverage and net debt/equity are includedin these agreements. All covenants were met at 31 December 2003.There are no further facts which would require disclosure in accordancewith Art. 663b of the Swiss Code of Obligations.

NOBEL BIOCARE ANNUAL REPORT 200355Proposal of the Board of Directors for the appropriationof available earningsCHF 2003Deficit for the year -7 319 974Transfer from share premium 40 469 749Available earnings at the disposalof the Annual General Meeting 33 149 775Dividend of CHF 1.30 gross per CHF 2 bearer share -33 149 775Carry forward 0If the Annual General Meeting approves the above proposal fromthe Board of Directors, the dividend of CHF 1.30 per bearer share,less 35 percent withholding tax, will be paid as of 4 May 2004 at theoffices designated in the publication organ of the company and inselected daily newspapers.Dividends on staff options and warrants which may be exercisedbefore the date of dividend payment totalling 107 130 shares, couldlead to additional dividend payments of CHF 139 269.Report of the Statutory Auditors to the General Meetingof Nobel Biocare Holding AGAs statutory auditors, we have audited the accountingrecords and the financial statements (income statement,balance sheet and notes on page 52 to 54) of Nobel BiocareHolding AG for the year ended 31 December 2003.These financial statements are the responsibility of theBoard of Directors. Our responsibility is to express anopinion on these financial statements based on our audit.We confirm that we meet the legal requirements concerningprofessional qualification and independence.Our audit was conducted in accordance with auditingstandards promulgated by the Swiss profession, whichrequire that an audit be planned and performed to obtainreasonable assurance about whether the financial statementsare free from material misstatement. We have examined ona test basis evidence supporting the amounts and disclosuresin the financial statements. We have also assessed theaccounting principles used, significant estimates made andthe overall financial statement presentation. We believethat our audit provides a reasonable basis for our opinion.In our opinion, the accounting records and financialstatements and the proposed appropriation of availableearnings comply with Swiss law and the company’s articlesof association.We recommend that the financial statements submittedto you be approved.KPMG Fides PeatErik WillemsDutch Chartered AccountantAnders IvdalAuthorized Public Accountant in SwedenAuditor in ChargeZurich, 22 March 2004

56 NOBEL BIOCARE ANNUAL REPORT 2003Corporate Governance1 Group structure and shareholders1.1 Group structure1.1.1 Executive Management structureChart Executive Management structure as of 1 March 2004Finance & ControlHarrieth SundaeusGlobal MarketingManagementRobert GottlanderSales US, Canada, LatinAmericaMartin J. DymekResearch & DevelopmentJeppe MagnussonBusiness DevelopmentThomas NortoftPresident & CEOHeliane CanepaExecutive AssistantCristina RybczynskiLegal AffairsMichaela AhlbergGlobal ProductManagementLars EnbomSales Europe, Pacific Rim,JapanThomas M. OlsenHuman ResourcesPeter StrömgrenQuality & EnvironmentalAssuranceBjörn Bergh1.1.3 Legal structureChart Legal structure as of 1 March 2004100%Nobel Biocare USA, IncYorba Linda, CA, USAUSD 500 KNobel BiocareProcera IncDelaware, USAUSD 1 KNobel Biocare Mexico,S.A. de C.V.Mexico City, MexicoMXN 50 KNobel Biocare BrasilLtdaSao Paulo, BrazilBRL 218 KNobel Biocare ColombiaS.A. Bogotá, ColombiaCOP 732 246 KNobel Biocare Holding AGOpfikon, Switzerland100%Nobel Biocare Holding ABGothenburg, SwedenSEK 10 100 K100%Nobel Biocare Sverige ABGothenburg, SwedenSEK 10 100 K98,9%Nobel Biocare ABGothenburg, SwedenSEK 317 186 KNobel BiocareDeutschland GmbHCologne, GermanyEUR 307 KNobel BiocareÖsterreich GmbH,St.Pölten, AustriaEUR 36 KNobel Biocare UK LtdUxbridge, Middlesex,UK, GBP 620 KNobel BiocareBenelux BVHouten,The NetherlandsEUR 91 KNobel Biocare InvestmentsN.VWillemstad, CuracaoThe Netherlands AntillesEUR 1 000 KNobel Biocare Asia LtdHong KongHKD 10 K100%Nobel Biocare Polska Sp.z.o.o.Warsaw, PolandPLN 50 KNobel Biocare IbéricaS.A. Barcelona, SpainEUR 60 KNobel Biocare ItalianaS.r.l. Agrate Brianza,ItalyEUR 10 KNobel Biocare FranceS.A.S, Paris, FranceEUR 40 KNobel BiocareNorden ABGothenburg, SwedenSEK 350 KNobel Biocare AGKriens, SwitzerlandCHF 54 KNobel Biocare AustraliaPty Ltd, SydneyAustraliaAUD 600 KNobel Biocare Japan KKTokyo, JapanJPY 12 500 KNobel Biocare ServicesAGOpfikon, SwitzerlandCHF 250 KSupply ChainManagement/ITUlf WallinInvestor RelationsSuha DemokanNobel Biocare CanadaIncRichmond Hill, CanadaCAD 3 012 K1.1.2 Listed CompanyName:Nobel Biocare Holding AGDomicile: 8152 Opfikon, SwitzerlandListed at: SWX Swiss Exchange andStockholm Stock Exchange, SwedenMarketCapitalization: CHF 4 150 million (as of 1 March 2004)Security No.: 11 403 004ISIN No.: CH 00140.30040Reuters: NOBE.S and NOBE.STBloomberg: NOBE.SW and NOBE.SSNobel Biocare Holding AG is the only listed company ofthe Group.1.2 Significant shareholdersAs of 1 March 2004, the largest shareholders in Nobel BiocareHolding AG known to the company and as published in theSwiss Official Gazette of Commerce are Fidelity, throughFidelity International Limited and FMR Corp (FidelityManagement & Research), USA (15.0%) and BB MedtechAG, Switzerland, (10.6%).As duly published in the Swiss Official Gazette ofCommerce, the following changes have been announced1 January 2003–1 March 2004:•6 June 2003, Metalor Technologies SA, headquartered inNeuchatel (Switzerland), dropped below the 5% thresholdas of 3 June 2003.•3 November 2003, FMR Corp. dropped below the 5%threshold as per 27 October 2003 and at that time was

NOBEL BIOCARE ANNUAL REPORT 200357holding 1 225 527 shares which represent 4.8% of theshares in Nobel Biocare Holding AG.•3 November 2003, Fidelity International Limited washolding 2 591 637 shares as per 28 October 2003, whichrepresent 10.2% of the shares in Nobel Biocare Holding AG.• 24 February 2004, the company received notification thatthe holding of Fidelity International Limited was reducedto 2 516 616 shares which represent 9.9% of the shares inNobel Biocare Holding AG.• 25 February 2004, the company received notification that theholding of FMR Corp. increased to 1 276 936 shares whichrepresent 5.1% of the shares in Nobel Biocare Holding AG.On 27 January 2004, BB Medtech published its annualreport 2003 according to which it, as per 31 December2003, held 2 692 713 shares which represent 10.6% of thetotal shares in Nobel Biocare Holding AG (3 261 624 sharesas per 31 December 2002).Nobel Biocare Holding AG is not aware of any otherperson directly or indirectly holding more than 5% of itsshare capital.There have been no other reports under Art. 20 SESTAfrom 1 January 2003 until 1 March 2004.Nobel Biocare Holding AG does not know of any materialshareholders’ agreements or any other significant understandingsreached between shareholders regarding the bearershares of Nobel Biocare Holding AG they own or theexecution of their ensuing shareholders’ rights.1.3 Cross-shareholdingNobel Biocare Holding AG has no cross-shareholdingswith other companies, neither in capital shareholdings norin voting rights.2 Capital structure2.1 Share CapitalAs of 31 December 2003, Nobel Biocare Holding AG’sissued share capital amounted to CHF 50 999 654, and isdivided into 25 499 827 bearer shares at a nominal value ofCHF 2 fully paid-up.As of 31 December 2003, the total conditional share capitalof Nobel Biocare Holding AG amounted to CHF 2 234 982(for the issuance of 1 117 491 shares at par value CHF 2).As of 31 December 2003, Nobel Biocare Holding AGhad no authorized share capital.As of 31 December 2003, Nobel Biocare Holding AG hadissued neither participation certificates nor bonus certificates.2.2 Authorized and conditional capitalThe conditional share capital of CHF 2 234 982 (for theissuance of 1 117 491 shares at par value CHF 2) may beused for the exercise of option rights which the employeesand officers of the Company and/or of group companies aregranted including in particular options and warrantsdescribed under section 2.7 below (for details pertaining towarrants and staff options, see section 2.7 “Convertiblebonds and warrants/options” below). The rights of theshareholders to subscribe shares in priority are excluded.2.3 Changes in CapitalChanges in Share Capital (in CHF):Issued Share Authorized Cond. ShareCapital Share Capital CapitalMay 2002 100 000 - -(50 000 sh) (-) (-)June 2002 48 010 484 2 739 316 2 484 836(24 005 242 sh) (1 369 658 sh) (1 242 418 sh)July 2002 50 230 374 519 426 -(25 115 187 sh) (259 713 sh) (-)31 Dec 2002 50 230 374 519 426 2 484 836(25 115 187 sh) (259 713 sh) (1 242 418 sh)Issuance of +519 426 -519 426 -shares (259 713 sh) (259 713 sh) (-)Aug 2003 50 749 800 - -(25 374 900 sh) (-) (-)Excercised staff +249 854 - -249 854options (124 927 sh) (-) (124 927 sh)July–Dec 03 50 999 654 (-) 2 234 982(25 499 827 sh) (-) (1 117 491 sh)31 Dec 2003 50 999 654 - 2 234 982(25 499 827 sh) (-) (1 117 491 sh)In August 2003 the remaining authorized share capital ofCHF 519 426 (259 713 shares at par value CHF 2) was issuedand the 259 713 shares were subsequently sold by the Companyto secure the future purchase price for the remaining1.1% minority (259 713 shares in Nobel Biocare AB), whichis subject to compulsory redemption arbitration in Sweden.As a consequence, the issued share capital in Nobel BiocareHolding AG amounted to CHF 50 749 800 (divided into25 374 900 shares at par value CHF 2).In addition, during the year 2003, holders of 119 531options and 5 396 warrants have exercised these options andwarrants, thereby creating an increased share capital ofCHF 50 999 654 (divided into 25 499 827 shares at parvalue CHF 2) and a decreased conditional share capital ofCHF 2 234 982 (for the issuance of 1 117 491 shares at parvalue CHF 2).

58 NOBEL BIOCARE ANNUAL REPORT 20032.4 Shares and participation certificatesAll Nobel Biocare Holding AG shares are bearer shares at anominal value of CHF 2. All shares are fully paid in, haveequal voting rights and entitle the owners to the same sharein the company’s assets and profits.The entire share capital is evidenced by a PermanentGlobal Share Certificate. The shareholders are co-owners(Miteigentum) of such global certificate in proportion oftheir shareholding. Shareholders have no right to requestthe issue and delivery of individual share certificates.As of 31 December 2003, Nobel Biocare Holding AGhad issued neither participation certificates nor bonuscertificates.2.5 Profit sharing certificatesNobel Biocare Holding AG has not issued any profitsharing certificates.2.6 Limitations on transferability and nomineeregistrationsAll shares of Nobel Biocare Holding AG are bearer shares,which have no limitations on transferability or any provisionsof registration.2.7 Convertible bonds and warrants/optionsConvertible bondsNobel Biocare Holding AG has not issued any convertiblebonds.Staff optionsAt the Annual General Meeting of Nobel Biocare AB in 2001it was decided to launch a staff option program, aimed ataround 125 senior executives and newly appointed key persons.The staff option program comprises a total of 1 176 000options, distributed over four years. The allotted optionscan be utilized after two years.1 st year (2001)During 2001, 265 303 staff options were allotted withoutconsideration. The subscription price was set at SEK 392(CHF 63.83), the average share price during five tradingdays following the day of publication of the first quarterlyreport for 2001. These options can be utilized during theperiod 1 July 2003 up to and including 30 June 2004. At theend of 2002, 165 639 options of the first series remained,following that, 99 664 options expired as a result of theholder leaving the company.At the end of 2003, 46 108 options of the first seriesremained since 119 531 options had been exercised duringthe year and none had expired as a result of the holderleaving the company.2 nd year (2002)During 2002, 267 337 staff options were allotted withoutconsideration. The subscription price for these options isSEK 438 (CHF 71.33), the average share price during fivetrading days following the publication of the full year reportfor 2001. These options can be utilized during the period1 July 2004 up to and including 30 June 2005.At the end of 2002, 256 337 options of the second seriesremained, following that, 11 000 options expired as a resultof the holder leaving the company.At the end of 2003, 241 341 options of the second seriesremained, following 14 996 additional options expired as aresult of the holder leaving the company.3 rd year (2003)During 2003, 305 473 options were allotted without consideration.The subscription price for these options wasCHF 80.47, the average share price during five trading daysfollowing the publication of the full year report for 2002.These options can be utilized during the period 1 July 2005up to and including 30 June 2006. At the end of 2003,304 473 options of the third series remained following that,1 000 options expired as a result of the holder leaving thecompany.4 th year (2004)At present there are additionally 337 887 options availablefor allotment without consideration. The subscription pricefor options allotted 2004 is CHF 159.80, the average shareprice during five trading days following the publication ofthe full year report for 2003. Options allotted during 2004can be utilized during the period 1 July 2006 up to and including30 June 2007.The Board of Directors will determine the allotment ofthese options after recommendation by the RemunerationCommittee.For further information on employee options, pleaserefer to Note 19 of the consolidated financial statements onpage 47.WarrantsIn conjunction with the acquisition of Steri-Oss, Inc on 10September 1998, warrants in Steri-Oss, Inc were convertedto warrants in Nobel Biocare AB. A total of 665 196 warrantswere issued in three series; Series I, originally 303 860 warrants,has a subscription price of SEK 12.50 with a term ending on8 January 2007. Series II, originally 233 823 warrants, has asubscription price of SEK 12.50 with a term ending on 16 May2007. Series III, originally 127 513 warrants, has a subscriptionprice of SEK 36.87 and a term ending on 2 April 2008.The unsubscribed 66 418 warrants were converted intowarrants in Nobel Biocare Holding AG with subscriptionprice of CHF 2.04, CHF 2.04 and CHF 6, respectively.At the end of 2003 a total of 61 022 warrants remainedunsubscribed for. Of these, 26 190 were of Series I, 6 478were of series II and 28 354 of series III.

NOBEL BIOCARE ANNUAL REPORT 2003593 The Board of Directors3.1 Members of the Board of DirectorsRolf SoironChairman of the Board(non-executive)SwissDr. Soiron has experience fromseveral international managementand CEO positions in Protek Group(orthopedic implants), Sandoz Group (pharmaceuticals andagro) and Jungbunzlauer (chemicals) in Switzerland and the US.Education: Dr.phil. from Basel UniversityOther assignments: Chairman of HOLCIM (Cement,Switzerland) and Stratec Inc. (Orthopaedics, USA),Chairman of the Council of Basel University.Jan EkbergNon-executive MemberSwedishDr. Ekberg’s professionalbackground includes positions asChairman and CEO of PharmaciaAB, CEO of Procordia AB, CEO ofKabiPharmacia AB and CEO of Kabi AB.Education: Director, Med Dr hcOther assignments: Chairman of the board ofHandelsbanken Region Syd and Doxa AB. Member of theBoard of Semper AB, PULS AB, Niconovum AB andMalmberggruppen AB.Jan KvarnströmNon-executive MemberSwedishJan Kvarnström is member of theBoard of Managing Directors ofDresdner Bank AG. His formerprofessional career includespositions as CEO of AB Securum and CEO of Esselte AB.Education: MA and MBAOther assignments: Chairman of the Board of CastellumAB. Member of the Board of Posten AB and Doxa AB.Hansjörg GrafNon-executive MemberSwissHansjörg Graf has a long experiencein banking.Education: Degree in Economics.Other assignments: Member of theBoard of Bank am Bellevue and Bellevue Asset Management.Ernst ZaengerleNon-executive MemberSwissErnst Zaengerle has many years ofsenior management experience inglobal logistics and supply chainmanagement from Hilti AG, OmegaSA, Bally AG and Movado Group Inc.Education: Master in mechanical engineering and a masterin economy.Other assignments: No other Board membership.None of the Board members has or has had any operationalpositions within Nobel Biocare Holding AG or anyof its subsidiaries during the last three years. Neither arethere any business relations between individual Boardmembers, including companies or organizations representedby any individual member, and the Group.3.2 Other activities and vested interestsNone of the Board members has any• position in governing or supervisory bodies of any importantorganization, institution or foundation under privateor public law,• permanent management or consultancy function for importantinterest groups,•official function or political post.Cross involvementThere are no interdependent memberships in the Board ofDirectors of Nobel Biocare Holding AG and any othercompany.3.4 Elections and terms of office3.4.1 Principles of election and limits on terms ofofficeThe Board of Directors consists of at least 4 and up to amaximum of 9 members. The members of the Board ofDirectors are elected by the Annual General Meeting ineach case for a term of office of one year. The term of officeof a member of the Board of Directors expires, subject toprior resignation and removal, upon the day of the nextAnnual General Meeting. Newly-appointed members shallcomplete the term of office of their predecessors.There are no limits of how many times a member can bere-elected, or any upper age limit for election.

60 NOBEL BIOCARE ANNUAL REPORT 20033.4.2 Time of first election and remaining term ofoffice for each board memberThe Annual General Meeting on 24 April 2003 elected thefollowing members of the Board:Name Position First Elected Elected UntilRolf Soiron Chairman 2003 2004Jan Ekberg Member 2002 2004Hansjörg Graf Member 2002 2004Jan Kvarnström Member 2002 2004Ernst Zaengerle Member 2002 20043.5 Internal organizational structureThe Board constitutes itself at its first meeting. It appointsits Chairman as well as a Secretary who is not necessarily amember of the Board. During 2003, the Head of LegalAffairs, Michaela Ahlberg, has been secretary of the Board.Since 24 April until the end of 2003, the Board has met 8times, of which 5 in meetings, 2 by telephone conferencesand 1 by circular resolution. The Board has agreed toOrganizational Regulations that include an annual agenda aswell as instructions pertaining to allocation of assignmentsbetween the Board and the CEO. The OrganizationalRegulations include instructions for financial reporting.The Chairman of the BoardThe following duties and competencies are some of theissues specifically delegated to the Chairman:•regular contact with the CEO in order to be regularlyinformed about all important business developments andstrategic issues• overseeing the convocation and preparation of the Boardmeetings•presiding over the Annual General Meetings and theBoard meetings• relaying information as soon as possible to the Boardregarding extraordinary events.Board committeesIn accordance with the Organizational Regulations, theBoard has appointed a Remuneration Committee and anAudit Committee.The members of the committees and their chairpersonsare appointed each year at the first Board meeting after theAnnual General Meeting for the period of one year. Thecommittees report to the Board on their activities andfindings. The overall responsibility for duties delegated tothe committees remains with the Board.Remuneration CommitteeThe Remuneration Committee consists of Jan Kvarnström,Rolf Soiron and Heliane Canepa. The committee meets atleast once per year and has the following responsibilitiesand duties:• to review and approve the remuneration of the ExecutiveManagement• to review and recommend employee option plans to theBoard• to carry out any other tasks conferred on it by the Boardfrom time to time.The Remuneration Committee ascertains that the remunerationspaid by the company correspond with market andperformance criteria in order to win persons of appropriateability and background for long-term engagements with thecompany and its group companies. The RemunerationCommittee submits the principles of remuneration of themembers of the Board of Directors and of the ExecutiveManagement to the Board of Directors for approval.Remunerations must be defendable and depend on thesustained success of the company as well as the personalcontribution of the person remunerated to this success.For the financial year 2003, the Remuneration Committeemet once. Remuneration for the CEO and the ExecutiveManagement as well as the proposal on the optionallotment for 2004 was on the agenda.Audit CommitteeThe Audit Committee consists of all Board members andthe CEO. The committee meets at least once a year and itsprimary objective is to form an independent judgment ofthe quality of the external auditors, the internal controlsystem and the annual financial statements.After completion of the audit, the Audit Committee holdsa conference with the auditors. Based on this conference, itmakes its own recommendation to the Board whether theconsolidated financial statements can be submitted to theAnnual General Meeting. The Audit Committee assessesthe performance and remuneration of the external auditorsand ascertains their independence. It examines the compatibilityof the auditors’ duties with eventual consultingmandates, if they exist.During 2003, the Audit Committee has met once. Subjectof that meeting was the audit and management report bythe auditors for the financial year 2002.In February 2004, the Audit Committee has met toreview the audit and management report by the auditors forthe financial year 2003.3.6 Definition of areas of responsibilityThe Board of Directors is the legally constituted executivebody of the Company constituting the highest instancewithin the Group management structure.The Board shall decide on all matters, which have not

NOBEL BIOCARE ANNUAL REPORT 200361been reserved for or conferred upon another governingbody of the Company by law, by the Articles of Association,or by the company’s Organizational Regulations.In particular, the Board shall have the following dutiesand competencies:• to ultimately direct, supervise and control the companyand the group as a whole and approve guidelines for thegeneral policy and strategy, including the review andapproval of new business plans• to appoint and recall the CEO and the representation ofthe company and to approve the CEO’s proposal forappointments and recalls of the Executive Management• to supervise and rate the performance of the CEO and toapprove the remuneration of the CEO and the ExecutiveManagement on the basis of their rating as recommendedby the Remuneration Committee• be responsible for the finances and control of the Group• be responsible for the relationship with shareholders, inparticular calling shareholders meetings, includingproposals to the shareholders meeting such as annual andinterim reports to the shareholders, payment of dividends,appointment or re-appointment of the Board membersand the auditors and changes or amendments to theArticles of Association.•To grant signatory power.3.7 Information and control instrumentsGroup Management reports in a regular and structuredfashion to its superiors.Each member of the Board of Directors may requestinformation on all matters concerning the company. At eachmeeting, the CEO informs the Board of Directors on thestatus of current business operations as well as majorbusiness transactions.The Board of Directors determines who are grantedsigning authority, procuration or commercial mandates onbehalf of the Company. During 2003, any two of the Boardmembers and the CEO, CFO and General Counsel togetherhad signatory rights.4. Executive Management GroupThe Board delegates the day-to-day management of theCompany to the CEO and the Executive ManagementGroup that has the following responsibilities and duties:• to carry out the day-to-day management of the businessin compliance with the applicable laws and the Articles ofAssociation• to implement the principles of corporate policy and toplan, organize, implement, and monitor the corporatestrategy• to prepare all matters for and to report to the Board ofDirectors• to prepare and execute the decisions of the Board ofDirectors and ensure their group wide implementation•to conduct accounting, including the analysis of theannual financial statement, and to implement thenecessary control measures.4.1 Members of the Executive Management GroupMembers of the Executive Management Group areappointed by the Board of Directors after proposal from theCEO. The following members constituted the ExecutiveManagement Group in 2003:Name Born Nationality Position EmployedHeliane Canepa 1948 Swiss President and CEO 2001Michaela Ahlberg 1955 Swedish Head of Legal Affairs 2002Björn Bergh 1952 Swedish Head of Quality Assurance& Environmental 1986Martin J. Dymek 1956 USA President of NobelBiocare USA, Inc. 1990Lars Enbom 1947 Swedish Head of Global ProductManagement 1993Michael Girard 1951 Canadian Head of MarketingNobel Biocare USA, Inc.(from 1 Nov GeneralManager Nobel BiocareCanada Inc.) 1997Robert Gottlander 1956 Swedish Head of Global MarketingManagement 1984Jeppe Magnusson 1952 Swedish Head of Research &Development 2000Thomas Nortoft 1950 Swedish Head of BusinessDevelopment 1985Thomas M. Olsen 1957 USA Head of Sales Europe,Japan and Asia/Pacific 1994Mats Pettersson 1951 Swedish Head of GlobalProduction 1988Peter Strömgren 1958 Swedish Head of HumanResources 2002Harrieth Sundaeus 1956 Swedish Head of Finance &Control 1997Ulf Wallin 1960 Swedish Head of Supply ChainManagement & IT 2002Additional information about the Executive Management isdisclosed on page 66 and 67.4.2 Other activities and functionsNone of the Executive Management Group members has any• position in governing or supervisory bodies of anyimportant organization, institution or foundation underprivate or public law,• permanent management or consultancy function forimportant interest groups,•official function or political post.

62 NOBEL BIOCARE ANNUAL REPORT 20034.3 Management contractsThe Board of Directors conducts business directly and havenot delegated any management tasks to companies outsidethe Company.5 Compensations, shareholdings and loans5.1 Content and method of determining thecompensation and the share-ownership programsThe remuneration of the Board is decided at the first boardmeeting after the Annual General Meeting.The Executive Management receives a fixed salary, bonusand staff options.For the CEO, the bonus is based upon personal as well ascorporate objectives such as the EBIT and the growth forthe Group. The maximum bonus achievable is 200 percentof the fixed salary. For the Executive Management Group,the bonus is based upon targets for the departments of therespective management executives as well as corporateobjectives to a maximum of 50 percent of the fixed salary.The value of the staff options is calculated as thedifference between the market price of the shares as per 31December 2003 and the agreed strike price. The number ofoptions allotted to the CEO and the Executive ManagementGroup in 2003 amounted to 139 000 (112 665). For furtherinformation on the staff option program, please refer tosection 2.7 (Convertible bonds and warrants/options) ofthis Corporate Governance Report on page 58 and to Note19 of the consolidated financial statements on page 47.The CEO contract contains a six months period of notice.The Company has the opportunity to maintain a noncompetitionclause for one year against payment of salary.The CEO is entitled to a pension premium of 25 percent ofthe annual gross salary.The Swedish Executive Management has a period ofnotice of six months on the part of the company withseverance pay of 12 months' salary, but with deduction ofthe income received from a potential new employer. Theseexecutives receive a pension in accordance with the ITP(supplementary pensions for salaried employees) plan.The age of retirement varies between 62 and 65 years.For two members of the executive management based inthe US, the period of notice is 3-6 months and the severancepay 12-18 months' salary. These executives participatein the national 401K pension scheme. Normal retirementage is 62 years, but for the two members there is an optionof taking retirement at the age of 55.The pension expenses for the CEO amounted to EUR150 K (95) and for the Executive Management Group toEUR 376 K (281).5.2 Compensations for acting members ofgoverning bodiesIn 2003, aggregate compensations for Members of theBoard and Members of the Executive Management Groupamounted to a total of EUR 12 348 K, (4 798 K) of whichstaff options represented a value of EUR 8 888 K on 31December 2003.Compensations to all non-executive members of the Boardof Directors during the year under review totalled EUR111 561 and has not been changed compared to 2002.The distribution per each Board member was as follows:Board of DirectorsErnst Thomke (until 24 April 2003)Rolf Soiron (effective 24 April 2003)Jan EkbergHansjörg GrafJan KvarnströmErnst Zaengerle9 948 EUR23 057 EUR19 639 EUR19 639 EUR19 639 EUR19 639 EURExecutive Management GroupIn 2003 the value of received salaries, bonuses, staff options andother benefits for the Executive Management Group was:Fixed Pension Staff OtherIn EUR’000 Salaries Bonuses expense options benefits TotalCEO 273 327 150 1 161 8 1 919(273) (177) (95) (257) (8) (810)OtherMembers 1 594 519 376 7 725 103 10 319of the EMG (1 387) (417) (281) (1 425) (87) (3 597)Formermembers - - - - - -of the EMG (182) (89) (-) (-) (8) (279)Total 1 867 846 526 8 888 111 12 238(1 842) (683) (376) (1 682) (103) (4 686)There were no severance payments to any personsmentioned above.5.3 Compensations for former members ofgoverning bodiesIn 2003, there were no compensations paid to formermembers of governing bodies.5.4 Share allotment in the year under reviewIn 2003, there were no share allotments to neither anymember of the Board of Directors nor to any member ofthe Executive Management Group.5.5 Share ownershipAs of 31 December 2003 the members of the Board ofDirectors held a total of 465 277 shares while the membersof the Executive Management Group held a total of 345 988shares.

NOBEL BIOCARE ANNUAL REPORT 2003635.6 OptionsAs of 31 December 2003 the members of the ExecutiveManagement Group held a total of 264 331 options resultingfrom 3 allotments and featuring weighted average exerciseprices of CHF 75.78 and a weighted duration of 1.98 years.Movements in the number of staff options outstandingare to be found in the tables below.Number of options 2003 2002 2001Options outstanding at 1 January 421 976 165 639 -Options issued 305 473 267 337 265 303Options exercised -119 531 - -Options expired -15 996 -11 000 -99 664Options outstanding at31 December 591 922 421 976 165 639Options outstanding at the end of the year have the following terms:StrikeGrant Expiry priceyear Date CHF 2003 2002 20012001 30-Jun-2004 63.83 46 108 165 639 165 6392002 30-Jun-2005 71.33 241 341 256 3372003 30-Jun-2006 80.47 304 473Total 591 922 421 976 165 639Overview Share ownership and options:Board of DirectorsName Position Elected Nationality SharesRolf Soiron Chairman 2003 Swiss 90 000Jan Ekberg Member 2002 Swedish -Hansjörg Graf Member 2002 Swiss 370 777Jan Kvarnström Member 2002 Swedish -Ernst Zaengerle Member 2002 Swiss 4 500Executive Management GroupName No. of shares No. of warrants No. of optionsHeliane Canepa 340 000 - 40 000Michaela Ahlberg - - 15 333Björn Bergh - - 12 000Martin J. Dymek - 16 873 15 000Lars Enbom - - 24 666Michael Girard - - 7 666Robert Gottlander 5 888 - 24 666Jeppe Magnusson - - 20 000Thomas Nortoft - - 19 667Thomas M. Olsen - 9 046 15 000Mats Pettersson 100 - 15 000Peter Strömgren - - 15 333Harrieth Sundaeus - - 25 000Ulf Wallin - - 15 000Total 345 988 25 919 264 3315.7 Additional fees and remunerationsIn 2003, no member of the Board of Directors or theExecutive Management Group received additional fees orcompensations for additional services performed on behalfof Nobel Biocare Holding AG or its subsidiaries in excess ofthe amounts disclosed.5.8 Loans granted to members governing bodiesThere are no loans, securities, advances, or credits grantedto any members of the Board of Directors or the ExecutiveManagement Group.5.9 Highest total compensationIn 2003, the highest total compensation for a member ofthe Board of Director was EUR 23 057. There were noshare or option allotments.6 Shareholders’ participation rightsThe shareholders’ participation rights are described indetail in the Articles of Association of Nobel BiocareHolding AG. These Articles of Association can be downloadedfrom the website www.nobelbiocare.com or can beordered via the contact addresses in section 9 of this report.6.1 Voting-rights restrictions and representationThere are no statutory voting-rights restrictions. The Boardof Directors issues procedural regulations regarding participationand representation in the Annual General Meeting.All shareholders have the same right to attend the AnnualGeneral Meeting or to be represented by a legal representativeor, with written authorization, by another person, bygoverning bodies, by the independent voting proxy, or by adepository proxy. The Chairman of the Annual GeneralMeeting decides on the recognition of the authorization.Each share entitles to one vote.Each shareholder may be represented at the shareholders’meeting by any other person who is authorized by a writtenpower of attorney presented at such shareholders’ meeting.The Annual General Meeting passes its resolutions andcarry out its elections with an absolute majority of the sharevotes represented, to the extent that neither the law nor theArticles of Association provide otherwise.If an election cannot be completed upon the first ballot,there will be a second ballot at which the relative majoritydecides.The Chairman has no casting vote.Elections and votes take place openly provided thatneither the Chairman nor a simple majority of the sharevotes requests a secret ballot.

64 NOBEL BIOCARE ANNUAL REPORT 20036.2 Statutory quorumsThe Annual General Meeting passes its resolutions andcarries out its elections with an absolute majority of theshare votes represented, to the extent that neither the lawnor the Articles of Association provide otherwise.Decisions at the Annual General Meeting calling for aquorum of at least two thirds of the votes represented andthe absolute majority of the represented shares par valuesare required for:• the cases listed in art. 704 para. 1 CO;• the conversion of global share certificates into individualshare certificates;• the conversion of bearer shares into registered shares;• any change to the provisions of this article relating toquorums.6.3 Convocation of the General MeetingThe Annual General Meeting is held within six monthsafter the close of the financial year.Extraordinary Shareholders Meetings can be called asoften as necessary, in particular, in all cases required by law.Extraordinary Shareholders Meetings are convened bythe Board of Directors within two months if shareholdersrepresenting at least ten percent of the share capital requestsuch meeting in writing, setting forth the items to bediscussed and the proposals to be decided upon.Shareholders Meetings are convened by the Board ofDirectors and, if need be, by the Auditors.The convening of the Annual General Meeting takesplace by a one publication in the Swiss Official Gazette ofCommerce at least twenty days prior to the day of theMeeting. The convening text states the day, time and placeof the Meeting, the agenda, the proposals of the Board ofDirectors and the proposal of the shareholders who haverequested the Shareholders’ Meeting or that an item beincluded on the agenda.6.4 AgendaThe Articles of Association of Nobel Biocare Holding AGdo not contain any respective provisions deviating from law.6.5 Registrations in the share registerThere is no share register since the shares issued by thecompany are bearer shares.7 Change of control and defensivemeasures7.1 Duty to make an offerThe Articles of Association do not contain any provisionson opting-out or opting-up (article 22 of the Swiss FederalAct on Stock Exchanges and Securities Trading).Under the Swedish Rules on Public Offers for Acquisitionof Shares there are rules for public offers which are applicableshould a public offer be made for the shares of a foreigncompany such as Nobel Biocare Holding AG. The SwedishSecurities Council can apply exemptions from these rules inorder to avoid conflict of rules. Under the Swedish Rulesthere are also provisions for mandatory offers, however theseare not applicable for Nobel Biocare Holding AG shares.7.2 Clauses on changes of controlAs of 31 December 2003, agreements and plans benefitingmembers of the Board of Directors and/or the ExecutiveManagement Group or additional members of managementcontain no clauses on changes of control.8 Auditors8.1 Duration of the mandate and term of office ofthe lead auditorKPMG Fides Peat assumed the existing auditing mandatefor the Nobel Biocare Holding Group on 24 April 2003(first time elected in 2002). The Annual General Meetingelects the auditors for a term of one year. The head auditorsresponsible for the mandate are Mr Erik Willems and MrAnders Ivdal. Mr Erik Willems began serving in his rolewhen KPMG Fides Peat was initially elected in 2002, whileMr Anders Ivdal assumed his new responsibility in 2003.8.2/8.3 Auditing and additional feesThe following fees were charged for professional servicesrendered by KPMG Fides Peat and Ernst & Young respectively,for the 12-month period ended 31 December:in EUR'000 2003 2002KPMG Fides PeatAudit Services 429 598Audit Related Services 213 80Subtotal 642 678Ernst & YoungAudit Services - 226Subtotal - 226Total 642 904Audit Services are defined as the standard audit work thatneeds to be performed each year in order to issue an opinionon the consolidated financial statements of the Group andto issue reports on the local statutory financial statements.It also includes services that can only be provided by theGroup auditor and includes audit of prospectuses, imple-

NOBEL BIOCARE ANNUAL REPORT 200365mentation of new or revised accounting policies and internalcontrol review of systems.Audit Related Services include those other services providedby auditors but not restricted to those that can onlybe provided by the auditor signing the audit report. Theycomprise amounts for services in relation to the grouprestructuring activities as well as audit of pension plans.8.4 Supervisory and control instruments vis-à-visthe auditorsThe Board of Directors performs its supervisory and controlfunctions towards the external auditors through the AuditCommittee, which meets at least once a year. The primaryobjective of the Audit Committee is to assist the Board ofDirectors in monitoring the Company’s internal control,accounting principles, risk management, financial reportingand auditing.9 Information policyFor the benefit of both the financial markets and the generalpublic, Nobel Biocare Holding AG pursues an open andactive information policy. The governing principle is that allstakeholders should be given the same opportunity to followGroup developments. Nobel Biocare’s transparent reportingsurpasses legal requirements.Investor Relations (IR) is a staff function at Nobel Biocareand reports to the CEO, who has the ultimate responsibilityfor all external information to the financial community. TheIR Department has the task of continuously providing shareholdersand the stock market with factual, relevant informationto make correct, all-round assessments of the companypossible.Nobel Biocare’s general information policy in financialmatters provides that Nobel Biocare will not publish explicitearnings forecasts. Nevertheless, Nobel Biocare still aims todisclose wherever possible detailed information about thecurrent course of business in order to assist analysts andinvestors in developing their forecasts and to enable them tocomprehensively assess Nobel Biocare and its businessprospects. The Board of Directors has issued guidelines tomake sure that investors will be informed in a timely andappropriate fashion in compliance with the rules specified inthe registration contracts with the SWX Swiss Exchange,and Stockholmsbörsen (The Stockholm Stock Exchange),Sweden, respectively.external consultants from making use of confidentialinformation. The Board of Directors has established socalled blocking periods to prevent insiders from tradingduring sensitive periods.Financial reporting and contact informationNobel Biocare publishes the Group’s financial accounts,together with interim reports every quarter. These reports arepublished in German, Swedish and English. In each case,results are published before the stock market opens by way ofthe media and a posting on the company’s website(www.nobelbiocare.com).Media and analyst conferences take place at least once ayear. Telephone conferences for analysts and investors takeplace at least once every quarter.On www.nobelbiocare.com, the company offers access to itscurrent share price, annual reports, quarterly reports, mediareleases and presentations of investors’ and analysts’ conferences.The website also presents a financial calendar listing allrelevant dates for investors.2004 Financial Calendar:Q1 January-March, 29 AprilAnnual General Meeting, 29 AprilEx-dividend date, 4 MayPayment of dividend, 4 MayQ2 April-June, 13 AugustQ3 July-September, 22 OctoberContact information:Suha Demokan, Head of Investor Relations,tel. +41 43 211 53 30, +41 79 430 81 46,e-mail suha.demokan@nobelbiocare.comGunilla Ekholtz, Investor Relations Officer,tel. +46 31 81 88 36, +46 708 81 88 36,e-mail gunilla.ekholtz@nobelbiocare.comGlobal e-mail address:investor.relations@nobelbiocare.comCompany address: Nobel Biocare Holding AG,Postfach, 8058 Zurich-Flughafen, Switzerland,tel +41 43 211 32 50www.nobelbiocare.comInsider Dealing PolicyIn order to prevent insiders from benefiting from confidentialinformation, the Board of Directors issued guidelines on howto maintain secrecy so as to deter both corporate insiders and

66 NOBEL BIOCARE ANNUAL REPORT 2003Management GroupHeliane CanepaPresident & CEO of Nobel Biocare AB, Sweden, sinceAugust 2001. In 2002, Heliane Canepa also becameCEO of the new group parent company Nobel BiocareHolding AG. Earlier, Heliane Canepa held the positionof CEO of Schneider Worldwide, a medtech companyin the cardiology, balloon dilatation field.In 1999, Heliane Canepa was named Entrepreneurof the year in Switzerland.EDUCATION: Business school in Dornbirn, Austria, WestLondon College in London, UK, Sorbonne, Universitéde Paris, Foreign Executive Development Program atPrinceton University, USA.EXTERNAL ASSIGNMENTS: Member of the board of themedtech companies Phonak AG and Entific MedicalSystems AB.Michaela AhlbergMichaela Ahlberg joined Nobel Biocare as Head ofLegal Affairs in April 2002 from a position as generalcounsel in a joint venture company between Ericssonand Hewlett-Packard. Previous experiences includework for one of the largest lawfirms in Sweden,Mannheimer&Swartling.EDUCATION: Masters of Law, University of Lund, Sweden.EXTERNAL ASSIGNMENTS: Member of the board ofDunross & Co AB.Björn BerghBjörn Bergh was appointed head of Quality &Environmental Assurance in 2002. He has 15 years ofexperience within both Quality Assurance and RegulatoryAffairs. Previous to his present position, Björn Berghwas head of Quality Assurance & Regulatory Affairssince 1994.EDUCATION: MSc, Chalmers University of Technology,Gothenburg, Sweden.EXTERNAL ASSIGNMENTS: Member of the board of theSwedish Inst. for Quality (SIQ) Members Association.Martin J. DymekMartin J. Dymek has been President of Nobel BiocareUSA Inc. since the acquisition of Steri-Oss Inc. in 1998.Prior to the acquisition he held the following positionswith Steri-Oss; President, Senior Vice President of Salesand Marketing, Vice President of Marketing.EDUCATION: BA, Cornell University, USA.Lars EnbomLars Enbom was appointed Director of Global ProductManagement in 2002 after holding several positionswithin Nobel Biocare since 1993. Before joining NobelBiocare, Lars Enbom ran a clinic that was one of thefirst to get started with Brånemark System implants in1982.EDUCATION: Specialist in Prosthodontics, University ofUmeå, Sweden.Michael GirardIn March of 2002, Mike Girard became Vice Presidentof Marketing, North America, and joined the ExecutiveManagement Group . From November 2003, MikeGirard is the General Manager of Nobel Biocare CanadaInc. He has a 25-year career as technician/lab owner,partner and marketing manager in the Shaw Group oflabs in Canada.EDUCATION: Business Program, University of Detroit,USA, Dental Technology Program, George BrownCollege, Toronto, Canada.Robert GottlanderRobert Gottlander joined the Executive ManagementGroup in 2002 as Head of Global Marketing Management.Robert Gottlander took active part in the launchof Brånemark System and Procera globally and hasheld several positions within Nobel Biocare for nearly20 years.EDUCATION: School of Dentistry, University of Gothenburg,Sweden, Business program, Northwestern University,Chicago, USA.

NOBEL BIOCARE ANNUAL REPORT 200367Jeppe MagnussonJeppe Magnusson joined Nobel Biocare as Head ofResearch & Development in 2000. During his career,Dr. Magnusson has been responsible for R&Dorganizations within companies like Nobel Industries,Union Carbide, Mölnlycke and SCA Hygien Products.EDUCATION: MSc Chemical Engineering and PhDChemical Reaction Engineering, Chalmers University ofTechnology, Gothenburg, Sweden.Thomas NortoftThomas Nortoft has held the position as Head of BusinessDevelopment since 2000. His career within NobelBiocare includes positions such as General ManagerEurope, President of Nobel Biocare in USA, and VicePresident with responsibility for sales.EDUCATION: BA, University of Gothenburg, Sweden.Thomas M. OlsenThomas M. Olsen has been Vice President, Europe andAsia, since 1999. He has more than 22 years of experiencein the dental industry. Mr Olsen entered the implantindustry with Steri-Oss in 1994 and became VicePresident of Sales and Marketing in 1997.EDUCATION: BA, Long Beach State University, ExecutiveMBA program, University of La Verne, USA.Mats PetterssonMats Pettersson was appointed Head of GlobalProduction in 2002 after several years as Vice Presidentwith responsibility for Manufacturing and Logistics inNobel Biocare USA, Inc. Mats Pettersson’s career includespositions as plant controller and plant manager as wellas production controller.EDUCATION: Economic and Computer Science, Universityof Örebro, Sweden.Peter StrömgrenPeter Strömgren joined Nobel Biocare in August 2002as Head of Human Resources and member of theExecutive Management Group. Before joining NobelBiocare, Peter Strömgren was Human Resource ManagerBusiness Regions at Volvo Bus. He has also held HRmanager positions at both Forbo Forshaga AB and ABBFläkt Industri AB.EDUCATION: B.ch., Personnel Management, University ofGothenburg, Sweden.Harrieth SundaeusHarrieth Sundaeus is Vice President & CFO and part ofthe Executive Management Group since 2001.Ms Sundaeus is a former Authorized Public Accountantwithin PricewaterhouseCoopers (formerly Coopers &Lybrand) with 18 years of experience from auditingand consulting assignments for multinational groups.EDUCATION: BA, University of Gothenburg, Sweden.Ulf WallinUlf Wallin joined Nobel Biocare in 2002 as Head ofSupply Chain Management & CIO. Ulf Wallin’s careerincludes several positions within companies such asSKF, ESAB, Xdin and IBM.EDUCATION: MSc, Industrial & Management Engineering,University of Technology in Linköping, Sweden.FROM LEFT:JEPPE MAGNUSSON, BJÖRN BERGH, MATS PETTERSSON, ROBERT GOTTLANDER,HARRIETH SUNDAEUS, MARTIN J. DYMEK, HELIANE CANEPA, MICHAEL GIRARD, LARS ENBOM,MICHAELA AHLBERG, THOMAS NORTOFT, THOMAS M. OLSEN, ULF WALLIN AND PETER STRÖMGREN.

68NOBEL BIOCARE ANNUAL REPORT 2003Articles of associationof Nobel Biocare Holding AG, (Nobel Biocare Holding SA), (Nobel Biocare Holding Ltd)I. General provisionsArticle 1:Corporate Name, Registered OfficeUnder the corporate nameNobel Biocare Holding AG(Nobel Biocare Holding SA)(Nobel Biocare Holding Ltd)a Company exists pursuant to art. 620 et seq.of the Swiss Code of Obligations (hereinafter“CO”) having its registered office in Opfikon.The duration of the Company is unlimited.Article 2: PurposeThe purpose of the Company is the acquisition,holding, administration and sale of direct andindirect participations in Swiss and foreignenterprises of all kind.The Company may open branch offices andsubsidiaries in Switzerland and abroad. It mayalso acquire participations in other companiesin Switzerland and abroad.The Company may acquire, hold, and sellreal estate.The Company may also engage in anycommercial, financial or other activities whichare related to the purpose of the Company.In particular, the Company may provide loans,guarantees and other kinds of financing andsecurity for group companies and borrow andinvest money on the money and capital markets.II. CapitalArticle 3: Share capitalThe share capital of the Company amounts toCHF 50 749 800 and is divided into 25 374 900bearer shares with a par value of CHF 2.00 pershare. The share capital is fully paid-in.Conditional capitalThe share capital of the Company shall beincreased by a maximum aggregate amountof CHF 2 484 836 through the issuance of amaximum of 1 242 418 bearer shares, whichshall be fully paid-up, with a par value of CHF2.00 per share, by the exercise of optionrights which the employees and officers of theCompany and/or of group companies aregranted. The rights of the shareholders tosubscribe shares in priority are excluded.Article 4: Share certificates,Conversion of sharesThe entire share capital will be evidenced by aPermanent Global Share Certificate. Theshareholders will be co-owners (Miteigentum)of such global certificate in proportion of theirshareholding. Shareholders shall have no rightto request the issue and delivery of individualshare certificates.The ownership or the usufruct of a Shareand each exercise of shareholders’ rightsautomatically entails recognition of the versionof the Articles of Association then in force.The Shareholders Meeting may, at anytime, convert registered shares into bearershares or bearer shares into registered sharesby amending the Articles of Association.III. OrganizationA. The shareholders meetingArticle 5: AuthoritiesThe Shareholders Meeting is the supremecorporate body of the Company. It has thefollowing non-transferable powers:1. to adopt and amend the Articles ofAssociation;2. to elect and recall the members of theBoard of Directors and the Auditors;3. to approve the annual report and theannual accounts as well as to pass resolutionsregarding the allocation of profits asshown on the balance sheet, in particularto determine the dividends;4. to grant discharge to the members of theBoard of Directors;5. to pass resolutions regarding issues whichare reserved to the Shareholders Meetingby law or by the Articles of Association orwhich are presented to it by the Board ofDirectors.Article 6: MeetingsThe ordinary Shareholders Meeting shall beheld annually within six months after theclose of the business year.Extraordinary Shareholders Meetings shallbe called as often as necessary, in particular,in all cases required by law.Extraordinary Shareholders Meetings shall beconvened by the Board of Directors within 2months if shareholders representing at least tenpercent of the share capital request such meetingin writing, setting forth the items to bediscussed and the proposals to be decided upon.Article 7: Convening, Universal MeetingShareholders Meetings shall be convened bythe Board of Directors and, if need be, by theAuditors. The liquidators shall also be entitledto convene a Shareholders Meeting.The convening of the Shareholders Meetingshall take place by a one publication in the SwissOfficial Journal of Commerce at least twentydays prior to the day of the Meeting. The conveningtext shall state the day, time and placeof the Meeting, the agenda, the proposals ofthe Board of Directors and the proposal of theshareholders who have requested the ShareholdersMeeting or that an item be included onthe agenda.Subject to the provisions concerning theUniversal Shareholders Meeting, no resolutionscan be passed regarding matters which havenot been announced in this manner, exceptregarding the proposals to convene an extraordinaryShareholders Meeting or to carry out aspecial audit. Proposals regarding items on theagenda and discussions not followed by resolutionsdo not need to be announced in advance.The owners, usufructuaries or representativesof all the shares may, if no objection israised, hold a Shareholders Meeting withoutobserving the formal requirements for the conveningof the Shareholders Meeting (UniversalShareholders Meeting). As long as the ownersor representatives of all the shares are present,all subjects falling within the scope of businessof the Shareholders Meeting may be validlydiscussed and decided upon at such meeting.The annual business report and the Auditors’report must be submitted for examination bythe shareholders at the registered office of theCompany at least twenty days prior to the dateof the ordinary Shareholders Meeting. Referenceto such submission and to the shareholders’right to request the conveying ofthese documents to them shall be included inthe invitation to the Shareholders Meeting.Article 8: Chair, MinutesThe Shareholders Meeting shall be chaired bythe chairman of the board of directors, or, inhis absence, by another member of the Boardof Directors, or by another chairman electedfor that day by the Shareholders Meeting (the“Chairman”).The Chairman designates a Secretary forthe minutes as well as the scrutineers whoneed not be shareholders.The Board of Directors is responsible forthe keeping of the minutes, which are to besigned by the Chairman and by the Secretary.Article 9: ResolutionsEach share entitles to one vote.Each shareholder may be represented at theshareholders meeting by any other person whois authorized by a written power of attorneypresented at such shareholders meetingThe Shareholders Meeting shall pass itsresolutions and carry out its elections with anabsolute majority of the share votes represented,to the extent that neither the law northe Articles of Association provide otherwise.If an election cannot be completed uponthe first ballot, there shall be a second ballotat which the relative majority shall decide.The Chairman shall have no casting vote.Elections and votes shall take place openlyprovided that neither the Chairman nor asimple majority of the share votes requests asecret ballot.Article 10: QuorumsA resolution of the Shareholders Meetingpassed by at least two thirds of the representedshare votes and the absolute majority of therepresented shares par value is required for:1. the cases listed in art. 704 para. 1 CO;2. the conversion of global share certificatesinto individual share certificates;3. the conversion of bearer shares intoregistered shares;4. any change to the provisions of this article10.

NOBEL BIOCARE ANNUAL REPORT 200369B. The Board of DirectorsArticle 11: Election, ConstitutionThe Board of Directors consists of at least 4and up to a maximum of 9 members. Themembers of the Board of Directors shall, as arule, be elected by the ordinary ShareholdersMeeting in each case for a term of office ofone year. The term of office of a member ofthe Board of Directors shall, subject to priorresignation and removal, expire upon the dayof the next ordinary Shareholders Meeting.Newly-appointed members shall completethe term of office of their predecessors.The Board of Directors shall constituteitself. It appoints its Chairman as well as aSecretary who needs not be a shareholder ora member of the Board of Directors.Article 12:Ultimate Direction, DelegationThe Board of Directors is entrusted with theultimate direction of the Company as well asthe supervision of the management. It representsthe Company towards third parties andattends to all matters which are not delegatedto or reserved for another corporate body ofthe Company by law, the Articles of Associationor the regulations.The Board of Directors may entrust themanagement and the representation of theCompany wholly or in part to one or severalpersons, members of the Board of Directorsor third parties who need not be shareholdersof the Company. The Board of Directors shallenact the organizational regulation and arrangefor the appropriate contractual relationships.Article 13: DutiesThe Board of Directors has the following nontransferableand irrevocable duties:1. to ultimately direct the Company andissue the necessary directives;2. to determine the organization;3. to organize the accounting, the financialcontrol, as well as the financial planning;4. to appoint and recall the persons entrustedwith the management and representation ofthe Company and to grant signatory power;5. to ultimately supervise the personsentrusted with the management, inparticular with respect to compliance withthe law and with the Articles of Association,regulations and directives;6. to prepare the business report, as well asthe Shareholders Meeting and toimplement the latter’s resolutions;7. to inform the judge in the event ofoverindebtedness;8. to pass resolutions regarding the subsequentpayment of capital with respectto non-fully paid-in shares;9. to pass resolutions confirming increases inshare capital and regarding the amendmentsto the Articles of Associationentailed thereby;10. to examine the professional qualificationsof the specially qualified Auditors in thecases in which the law foresees the use ofsuch Auditors.Article 14: Organization, MinutesThe organization of the meetings, the presencequorum and the passing of resolutions of theBoard of Directors shall be in compliance withthe organizational regulation.The Chairman shall have the casting vote.Minutes shall be kept of the deliberationsand resolutions of the Board of Directors. Theminutes shall be signed by the Chairman andthe Secretary of the Board of Directors.Article 15: CompensationThe members of the Board of Directors areentitled to reimbursement of their expensesincurred in the interest of the Company and tocompensation corresponding to their activities,as determined by the Board of Directors.C. The AuditorsArticle 16: Eligibility, DutiesThe Shareholders Meeting elects one or severalAuditors each year as corporate Auditors.Individuals, commercial companies or cooperativesmay be elected as corporateAuditors. The corporate Auditors must beregistered in the Register of Commerce.The Auditors need not be shareholders;they may not be members of the Board ofDirectors or employees of the Company. Theymay not undertake any duties for the Companywhich are not compatible with their auditingmandate. They must be independent fromthe Board of Directors and from a shareholderwho has the majority of voting rights. TheAuditors must be able to perform their dutiestowards the Company.The corporate auditor’s rights and obligationsare those foreseen in art. 727 et seq. CO. Itmust attend the Shareholders Meeting towhich it must report. By a unanimous votethe Shareholders Meeting may waive its rightto the corporate Auditor’s presence.IV. Accounting principlesArticle 17: Annual AccountsThe annual accounts, consisting of the profitand loss statement, the balance sheet and theannex, shall be drawn up in accordance withthe provisions of the Swiss Code of Obligations,in particular art. 662a et seq. and 958 et seq.CO, and in accordance with generally acceptedcommercial principles and customary rules inthat bus iness area.The board of directors shall determine thedate of beginning and closing of the Company’sannual accounts.Article 18: Distribution of ProfitsSubject to the legal provisions regarding thedistribution of profits, in particular art. 671 etseq. CO, the profits as shown on the balancesheet may be allocated by the ShareholdersMeeting at its discretion.The dividend may only be determinedafter the transfers foreseen by law to the compulsoryreserve funds have been deducted.All dividends unclaimed within a period offive years after their due date shall be forfeitedto the Company.IV. LiquidationArticle 19: Dissolution and LiquidationThe Shareholders Meeting may at any timeresolve the dissolution and liquidation of theCompany in accordance with the provisionsof the law and of the Articles of Association.The liquidation shall be carried out by theBoard of Directors to the extent that theShareholders Meeting has not entrusted thesame to other persons.The liquidation of the Company shall takeplace in accordance with art. 742 et seq. CO.The liquidators are authorized to dispose ofthe assets (including real estate) by way ofprivate contract.After all debts have been satisfied, the netproceeds shall be distributed among the shareholdersin proportion to the amounts paid-in.VI. InformationArticle 20: Notices and AnnouncementsInvitations and notices of the Company shallbe published in the Swiss Official Journal ofCommerce. The public ation instrument ofthe Company is the Swiss Official Journal ofCommerce. The board of directors is authorisedto employ additional publication instruments.Article 21: Contribution in KindIn connection with the capital increase decidedby the shareholders meeting of 14 May 2002and the relating contribution in kind agreementof 21 June 2002, the Company acquiresfrom Skandinaviska Enskilda Banken AB (publ)acting as Commission Agent in its own namebut for the account of shareholders of NobelBiocare AB, Göteborg (Sweden), havingaccepted the public tender offer by the Companydated 27 May 2002 in respect of NobelBiocare AB, 23 955 242 shares in NobelBiocare AB with a nominal value of SEK 12.5each at an aggregate value of CHF2208 673 312,40 in exchange for23 955 242 bearer shares of the Companywith a par value of CHF 2.00 each.In connection with the decision of theboard of directors of 11 July 2002 to increasethe share capital, which was based on art. 3aof the articles of association, and the relatingcontribution in kind agreement of 11 July2002, the Company acquires from SkandinaviskaEnskilda Banken AB (publ) acting asCommission Agent in its own name but forthe account of shareholders of Nobel BiocareAB, Göteborg (Sweden), having acceptedduring the additional acceptance period thepublic tender offer by the Company dated 27May 2002 and extended by resolution of theboard of directors of 20 June 2002 until 9 July2002, in respect of Nobel Biocare AB,1109 945 shares in Nobel Biocare AB with anominal value of SEK 12.5 each at an aggregatevalue of CHF 102 336 929 in exchangefor 1 109 945 bearer shares of the Companywith a par value of CHF 2.00 each.Zurich, 12 August 2003

70 NOBEL BIOCARE ANNUAL REPORT 2003Additional shareinformationNobel Biocare vs Swiss Market Index 24/06/2002–28/02/2004CHF17515012510075Nobel Biocare vs AFGX 24/06/2002–28/02/2004100050jun800600400SEK2000jun jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec jan feb2002 2003 2004Nobel Biocare Holding AGAFGX10 years vs AFGX 18/03/1994–18/03/2004SEK1000800600jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov dec jan feb2002 2003 2004Nobel Biocare Holding AG Swiss Market indexSource: SIX/Hallvarsson & HalvarssonNo. of 1000 sharesNo. of shares bought and sold per month800700600500400300200100Source: SIX/Hallvarsson & HalvarssonNobel Biocare Holding AG is listed on SWX Swiss Exchange in Zurich,Switzerland, (primary listing) and Stockholmsbörsen, Sweden,(secondary listing). In 2003, the share price increased by 41 percent.Further capital and share related information is to be found in the CorporateGovernance section on pages 56–65.Share trends and share turnoverIn 2003, the highest quoted price at the SWX Swiss Exchange in Zurich wasCHF 128 (21 October) and SEK 749 (8 October) at Stockholmsbörsen,Sweden, and the lowest price quoted was CHF 60.35 (12 March) andSEK 390 (12 March), respectively.The closing price paid at the end of the year was CHF 125.25 (88.90) andSEK 702 (556) respectively. On 31 December, Nobel Biocare’s total marketvalue amounted to CHF 3 194 (2 233) million. During the year, some 19.2million shares (13.9) were traded, 16.4 in Zurich and 2.8 in Stockholm. Theaverage number of shares sold per trading day amounted to 76 750, of which65 661 in Zurich and 11 089 in Stockholm.Dividend policy and dividend proposalNobel Biocare’s dividend to its shareholders should reflect the Group’s longtermfinancial development. Over the long term, around one third of netprofit should be distributed as dividend. However, in some years, significantcapital investments or unfavorable economic fluctuations must be taken intoaccount.The Board of Directors proposes an increase of the dividend by 68 percentto CHF 1.30 (0.79) per share for the 2003 financial year, equivalent to 30percent (36) of the profit after tax. The proposed dividend equals a directyield of 1.03 percent (0.89) based on the share price on 31 December 2003.Analyses of Nobel Biocare sharesNobel Biocare has been analyzed by the following stockbrokers and banks:ABG Sundal CollierErik MagnussonABN Amro Alfred BergPaula Treutiger/Sten GustavssonBank am BellevueMirjam KaiserCAI Cheuvreux de VireauD.CarnegieKristofer Liljeberg SvenssonCazenoveMichael YatesCredit SuisseChristoph GretlerDeutsche BankYi-dan WanEnskilda SecuritiesNiels Granholm-LethGoldman SachsHans BoströmHandelsbanken MarketsPatrik LingBank Julius BaerDaniel JelovcanKepler EquitiesDoris SchurdakLombard Odier Darier Hentsch Christoph GublerMerrill LynchMichael JünglingNordea SecuritiesStefan WikholmNZB Neue Zurcher Bank Zubin DastoorSwedbank MarketsMartin SikorskiUBS WarburgMaja Stephanie PatakiZürcher KantonalbankYasemin Ersan4002000I I I I I1994 1995 1996 1997 1998 1999Nobel Biocare AB/Nobel Biocare Holding AGII I I I2000 2001 2002 2003 2004AFGXSource: SIX/Hallvarsson & HalvarssonContact information:Suha Demokan, Head of Investor Relations, tel. +41 43 211 53 30,+41 79 430 81 46, e-mail suha.demokan@nobelbiocare.comGunilla Ekholtz, Investor Relations Officer, tel. +46 31 81 88 36,+46 708 81 88 36, e-mail gunilla.ekholtz@nobelbiocare.comGlobal e-mail address: Investor.relations@nobelbiocare.comHomepage: www.nobelbiocare.com

NOBEL BIOCARE ANNUAL REPORT 200371AddressesPARENT COMPANYNobel Biocare Holding AGPostfachCH-8058 Zurich-FlughafenSwitzerlandVisiting address:BalsbergBalz Zimmermann-Str.7CH-8152 GlattbruggPhone +41 43 211 53 20Fax +41 43 211 32 60SWEDENNobel Biocare ABP O Box 5190SE-402 26 Göteborg, SwedenVisiting address: Bohusgatan 15,SE-411 39 Göteborg, SwedenPhone: +46 31 81 88 00Fax: +46 31 16 31 52Production KarlskogaNobel Biocare ABDimbovägen 2SE-691 51 Karlskoga, SwedenPhone: +46 586 818 50Fax: +46 586 365 60Production StockholmNobel Biocare Procera ABLerkrogsvägen 19SE-126 80 Stockholm, SwedenPhone: +46 8 726 66 52Fax: +46 8 726 66 21THE NETHERLANDS ANTILLESNobel Biocare Investments N.V.A.M. Chumaceiro Blvd 11CuraçauThe Netherlands AntillesPhone: +5999 462-9302Fax: +5999 462-9303ARGENTINANobel Biocare USA, Inc.Suc. ArgentinaAv. Santa Fe 2844, Torre C, Piso 21425 Buenos Aires, ArgentinaPhone: +54 11 4825 9696Fax: +54 11 4829 9592AUSTRALIANobel Biocare Australia Pty. Ltd.Level 11, BMA Bldg815 Pacific HighwayChatswood, NSW 2067, AustraliaPhone: +61 2 9412 11 44Fax: +61 2 9411 84 37AUSTRIANobel Biocare Österreich GmbHPeppertstrasse 33/2AT-3100 St. Pölten, AustriaPhone: +43 (0) 2742-31 00 11Fax: +43 (0) 2742-31 00 31BENELUX COUNTRIESNobel Biocare BeneluxSphere Business ParkDoornveldIndustriezone Asse 3, nr 11, Bus 29B-1731 Zellik, BelgiumPhone: +32 2 467 41 70Fax: +32 2 467 41 80Nobel Biocare Benelux B.V.De Molen 23NL-3994 DA HoutenThe NetherlandsPhone: +31 30 635 49 49Fax: +31 30 635 49 50BRAZILNobel Biocare Brasil LtdaRua Samuel Morse, 120 – 4° andarBrooklin – São Paulo/SPBrazilCEP: 04576-060Phone: +55 11 5102 7000Fax: +55 11 5102 7001CANADANobel Biocare Canada Inc9133 Leslie St. Unit 100Richmond Hill, Ontario L4B 4NICanadaPhone: +1 905 762 3500Fax: +1 905 762 3504Toll Free: +1 800 263 4017CHILENobel Biocare Chile USA, Inc.Edificio Marriott, Av. Pfe. Kennedy 5757,Torre Oriente, oficina 303.Las Condes, Santiago, ChilePhone: +56 2 201 9282Fax: +56 2 201 9283FRANCENobel Biocare France S.A.S80, avenue des Terroirs de FranceFR-75607 Paris Cedex 12, FrancePhone: +33 1 53 33 89 10Fax: +33 1 53 33 89 33GERMANYNobel Biocare Deutschland GmbHStolberger Straße 200DE-50933 Köln, GermanyPhone: +49 221 500 850Fax: +49 221 500 853 33HONG KONGNobel Biocare Asia LtdRoom 1507-8, Harcourt House39 Gloucester RoadWanchai, Hong KongPhone: +852 2 845 12 66/14 12Fax: +852 2 537 66 04ITALYNobel Biocare Italiana S.r.l.Centro Direzionale ColleoniPalazzo Orione, Viale Colleoni 1520041 Agrate Brianza (MI), ItalyPhone: +39 039 683 61Fax: +39 039 689 94 74JAPANNobel Biocare Japan K.K.6F Shuwa Shinagawa Building3-26-33 TakanawaMinato-Ku, Tokyo 108-0074, JapanPhone: +81 3 542 344 94Fax: +81 3 542 345 22MEXICONobel Biocare, S.A. de C.V.Blvd. Manuel Avila Camacho # 36Piso 11, Lomas de ChapultepecC.P. 11000, Mexico, D.FPhone: +52 55 524 974 60Fax: +52 55 554 072 77NORDIC COUNTRIESNobel Biocare Norden ABBox 5211SE-402 24 Göteborg, SwedenPhone: +46 31 335 49 00Fax: +46 31 40 69 15Branches:Nobel Biocare Norden ABStrandvejen 130DK-2900 Hellerup, DenmarkPhone: +45 39 404 846Fax: +45 39 404 225Nobel Biocare Norden ABHandelshusgatan 7 A 57SF-00930 Helsingfors, FinlandPhone: +358 9 323 99 33Fax: +358 9 323 90 90Nobel Biocare Norden ABKristian Augusts gate 7B, 6 etg.N-0164 Oslo, NorwayPhone: +47 22 999 180Fax: +47 22 999 181POLANDNobel Biocare Polska Sp. z o.o.Domaniewska 41PL-02-672 Warszawa, PolandPhone & Fax: + 48 22 874 59 44,+48 22 874 59 45, +48 22 874 59 46PORTUGALNobel Biocare Ibérica SAEdificio Via GaiaRua Rei Ramiro, 870 5º, s-F4400 V.N. Gaia, PortugalTel: +351 22 370 96 98/99Fax: +351 22 370 97 00SPAINNobel Biocare Ibérica S.A.Moll de Barcelona, s/nWorld Trade Center, Edif. Este, 7aES-08039 Barcelona, SpainPhone: +34 93 508 88 00Fax: +34 93 508 88 01SWITZERLANDNobel Biocare AGPostfachCH-8058 Zürich-FlughafenSwitzerlandVisiting address:BalsbergBalz Zimmermann-Str.7CH-8152 GlattbruggPhone: +41 43 211 53 20Fax: +41 43 211 32 60SOUTH AFRICANobel Biocare ABP O Box 3377Parklands 2121, South AfricaPhone: +27 11 802 0112Fax: +27 11 802 0120UNITED KINGDOMNobel Biocare U.K. LimitedNobel House, The Grand Union OfficePacket Boat Lane, CowleyUxbridge UB8 2GH, United KingdomPhone: +44 (0) 1895 430 650Fax: +44 (0) 1895 430 636Branch:Nobel Biocare UK LimitedBurnaby BuildingsChurch RoadGreystonesCounty Wicklow, IrelandPhone: +353 (0) 1201 6412Fax: +353 (0) 1201 6413USANobel Biocare USA Inc.22715 Savi Ranch ParkwayYorba Linda, CA 92887, USAPhone: +1 714 282 4800Fax : +1 714 998 9236Nobel Biocare Procera, Inc.18-72 McBride AvenueFair Lawn, NJ 07410, USAPhone: +1 201 398 74 00Fax: +1 201 398 74 35Idea, text and project leadership: 31 Corporate Communications. Graphic design: CLF Reklambyrå AB. Print: Geson Skandiatryckeriet.

Printed in Sweden. © Nobel Biocare AB 2003. Nobel Biocare ® , Brånemark System ® , Procera ® and Replace ® are registered trademarks of Nobel Biocare.Nobel Biocare Holding AG, Postfach 8058 Zurich-Flughafen, SwitzerlandContact Investor Relations: Tel. +41 43 211 53 20 or +46 31 81 88 00www.nobelbiocare.comNobel Biocare AB including all production units are certified according to the Environmental Management System ISO 14001.