EX-99.2 4 dex992.txt ACQUISITION PRESENTATION MATERIALS EXHIBIT 99.2 [LOGO OF PATTERSON DENTAL COMPANY] Nasdaq NMS: PDCO ================================================================================ Expanding Patterson's Growth Opportunities by Entering the Companion-Pet Veterinarian Supplies Market through the Acquisition of J.A. Webster, a Leading Full-Service, Value-Added Distributor [LOGO OF PATTERSON DENTAL COMPANY] [LOGO] Forward-Looking Statements ================================================================================ This presentation contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and may be affected by risks and uncertainties which are inherent in the Company's business and beyond the ability of the Company to control. Such risks and uncertainties could cause actual results to differ materially from those anticipated. Accordingly, these risks are qualified in their entirety by the cautionary language contained in the Company's filings with the Securities and Exchange Commission. [LOGO OF PATTERSON DENTAL COMPANY] 2 [LOGO] Transaction Overview ================================================================================ . Patterson acquired assets of J.A. Webster for $92.5 million |X| $81.8 million paid in cash |X| $10.7 million paid in stock to three J.A. Webster shareholders . Transaction includes earn-out |X| Subject to minimum revenue hurdles |X| Five-year term . Issued shares subject to three-year lock-up . J.A. Webster senior management team to join Patterson [LOGO OF PATTERSON DENTAL COMPANY] 3 [LOGO] Questions to Be Answered ================================================================================ . What is the opportunity? . Who is J.A. Webster? . Why companion-pet veterinarian supplies distribution? . Why J.A. Webster? . What is the financial impact on Patterson? [LOGO OF PATTERSON DENTAL COMPANY] 4 [LOGO] What Is the Opportunity? ================================================================================ J.A. Webster expands Patterson's growth opportunities. . Parallel growth opportunity in large, fragmented market . Platform for building leading national position . Excellent strategic fit with Patterson's core competencies in value-added distribution |X| Leverage Patterson's existing distribution infrastructure |X| Consistent cultures |X| Strong senior management team and high-quality sales force [LOGO OF PATTERSON DENTAL COMPANY] 5 [LOGO] Who Is J.A. Webster? ================================================================================ J.A. Webster is a leading value-added distributor of companion-pet veterinarian supplies. . Family-owned business, established in 1946 . Leading distributor of companion-pet veterinarian supplies in New England, mid-Atlantic states and southeastern U.S. |X| Estimated 24% market share in regional markets served |X| Serves over 10,000 animal health clinics in 26 states |X| Strong brand identity in served markets . Third largest distributor nationally |X| 10% national market share . Top financial performer in industry [LOGO OF PATTERSON DENTAL COMPANY] 6 [LOGO] Why Companion-Pet Veterinarian Supplies Distribution? ================================================================================ The dynamics of the companion-pet veterinarian supplies market are similar to those of the dental supplies market. . $2.2 billion market growing at an estimated 6%-7% annually . Market dynamics similar to dental supplies industry . Customers value relationships with sales reps that emphasize quality service . Fragmented distribution and provider base . Consolidation opportunities [LOGO OF PATTERSON DENTAL COMPANY] 7 [LOGO] Large, Growing Market ================================================================================ J.A. Webster competes in the $2.2 billion companion-pet veterinarian supplies & equipment market that is projected to grow at 6% to 7% annually.
Service U.S. Market Growth . Companion Pet Companion Pet Veterinarian Supplies 6% - 7% & Equipment - $2.2 Billion . Companion Pet . Large Animal (Cattle) Veterinarian Supplies & Equipment - $4 Billion . Veterinarian Supplies . Professional Fees . Surgery Costs Veterinarian Services - $12 Billion . Lab Costs . Veterinarian Services . Pet Food Total Animal Health Expenditures - $23 Billion . Retail Stores
Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 8 [LOGO] Favorable Industry Characteristics: Companion-Pet Population: 1996 ================================================================================ The companion-pet market is enormous in terms of number of pets and household ownership. (In millions) Dogs 52.9 31.6% of Households Cats 59.1 27.3% of Households Birds 12.6 4.6% of Households Horses 4.0 1.5% of Households Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 9 [LOGO] Favorable Industry Characteristics: Annual Veterinary Expenditures ================================================================================ Average annual veterinary expenditures have been rising steadily, reflecting the willingness of owners to spend more on their pets. (Per Household) Cats Dogs 1991 $ 80 $ 132 1996 $ 148 $ 187 2001E $ 250 $ 300 Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 10 [LOGO] Favorable Industry Characteristics: Veterinarians by Segment ================================================================================ Small-animal veterinarians constitute the largest and fastest-growing segment of the overall veterinarian market. (In Thousands) 1997 2000 2005E 2010E 2015E Total 51.6 53.2 56.6 60.5 64.8 Large Animal 11.7 11.7 12.0 12.0 12.1 Small Animal 39.9 41.4 44.7 48.4 52.7 Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 11 PAGE [LOGO] Fragmented Distribution and Provider Base ================================================================================ J.A. Webster is well-positioned in a highly fragmented market. Companion Pet Veterinarian Supplies Market Companion Pet Manufacturers Products Channel Veterinarian Practices * 500 * 10,000 Distributors 66% * 17,000 * 50 Agency 23% Direct 11% J.A. Webster: * 400 * 8,000 Top 3 * 10,000 Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] * = greater than 12 [LOGO] Typical Customer Profile ================================================================================ The typical veterinarian practice purchases $80,000 to $120,000 of supplies each year. . Size |X| $500,000 - $750,000 revenue |X| 2 veterinarians |X| 2 veterinarian technicians |X| 4 - 5 other employees . Pharmaceuticals and Supplies |X| Represents approximately 16% of practice revenues Source: A.A.H.A., A.V.M.A., KPMG and J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 13 [LOGO] High Dependence on Distributors ================================================================================ Veterinarians depend heavily on distributors for purchasing supplies for their practices. Top Supplier 59% 2nd Supplier 22% 3rd Supplier 11% 4th Supplier 5% All Others 3% Source: DVM Newsmagazine. [LOGO OF PATTERSON DENTAL COMPANY] 14 [LOGO] Why J.A. Webster? ================================================================================ Strong position in companion-pet veterinarian supplies market with business model and culture similar to Patterson's. . Third largest distributor and #1 in served regional markets . Strong platform for national growth . Seasoned management team . Productive sales force and loyal customer relationships . Solid manufacturer relationships . Strong financial performance [LOGO OF PATTERSON DENTAL COMPANY] 15 [LOGO] Nation's Third Largest Companion-Pet Distributor ================================================================================ J.A. Webster is positioned well within its market and has significant room to grow. J.A. Webster 10% Burns 12% Butler 17% All Others (47+) 61% Source: J.A. Webster management estimates. [LOGO OF PATTERSON DENTAL COMPANY] 16 [LOGO] Seasoned Management Team ================================================================================ J.A. Webster's senior management team averages over 14 years of company experience and is highly regarded within the industry.
YEARS WITH ----------------------------- NAME AGE POSITION J.A. WEBSTER INDUSTRY ---- --- ---------------------- --------------- ------------- Jeff H. Webster 39 President 17 17 John A. Webster, III 41 VP, Operations 18 18 Scott A. Webster 36 VP, Marketing 6 12 Jim Herring 49 VP, Sales 13 27 Doug Simmons 55 VP, Business Development 17 32
[LOGO OF PATTERSON DENTAL COMPANY] 17 [LOGO] Highly Productive Sales Force with Loyal Customer Relationships ================================================================================ Experienced direct sales force lies at the core of J.A. Webster's value-added culture. . Viewed as consultants by customers . 73 direct sales reps and large in-house tele-sales support . Each sales rep averages 11 years of experience . Average of $2 million in sales per direct sales rep [LOGO OF PATTERSON DENTAL COMPANY] 18 [LOGO] Solid Manufacturer Relationships ================================================================================ J.A. Webster is recognized as the distributor of choice with the top product vendors. [LOGO OF DEXX] [LOGO OF FORT DODGE] . Highest market penetration of key vendor products in markets [LOGO OF PHOENIX PHARMACEUTICAL, INC.] [LOGO OF SCHERING] served [LOGO OF Abbott Laboratories Animal Health] [LOGO OF KENDALL HEALTHCARE PRODUCTS COMPANY] . Finest sales force in industry [LOGO OF Bayer] [LOGO OF dvm] [LOGO OF Upjohn] [LOGO OF vinbac] [LOGO OF MERIAL] [LOGO OF Bloodworth]
[LOGO OF PATTERSON DENTAL COMPANY] 19 [LOGO] Historical Financial Performance - Revenues ================================================================================ 1998A 1999A 2000A Total $ 113.3 $ 132.3 $ 148.5 Agency Commissions $ 6.6 $ 5.8 $ 4.5 Distributed Products Revenue $ 106.8 $ 126.5 $ 144.0 [LOGO OF PATTERSON DENTAL COMPANY] 20 [LOGO] Historical Financial Performance - Gross Profit ================================================================================ 1998A 1999A 2000A $33.7 $37.9 $41.4 29.8% margin 28.7% margin 27.9% margin [LOGO OF PATTERSON DENTAL COMPANY] 21 [LOGO] Historical Financial Performance - EBIT =============================================================================== ($ in millions) 1998A 1999A 2000A $11.3 $9.2 $10.5 10.0% margin 7.0% margin 7.1% margin [LOGO OF PATTERSON DENTAL COMPANY] 22 [LOGO] What Is the Financial Impact on Patterson? ================================================================================ The acquisition of J.A. Webster will be immediately accretive to Patterson's consolidated financial results. . Earnings contribution of $0.03 to $0.04 per diluted share in fiscal year 2002 . Potential to accelerate Patterson's revenue growth . Upside exists through national expansion effort and the realization of synergies [LOGO OF PATTERSON DENTAL COMPANY] 23 [LOGO] Potential Synergies ================================================================================ Potential upside exists from both revenue and expense items. Marketing Operations . Expand product offerings . Logistics / distribution . Equipment business . Administrative cost savings . Internet / electronic order entry [LOGO OF PATTERSON DENTAL COMPANY] 24 [LOGO] Conclusion ================================================================================ J.A. Webster is an excellent opportunity for Patterson. . Similar growth prospects in attractive market . Foundation for national expansion . Fits well with Patterson's strategy of value-added distribution [X] Leverage Patterson's existing distribution infrastructure [X] Consistent cultures [X] Seasoned management team and productive sales force [LOGO OF PATTERSON DENTAL COMPANY] 25