EX-99 2 dex99.htm PRESS RELEASE Press Release

Exhibit 99

 

Patterson Companies Reports Improved First Quarter Sales and Earnings

 

Patterson Companies, Inc. (Nasdaq NMS: PDCO) today reported consolidated sales of $595,847,000 for the first quarter of fiscal 2006 ended July 30, an increase of 9% from the year-earlier period on a comparable basis. Comparable basis sales exclude the impact of an extra week in the first quarter of fiscal 2005. The extra week affected the year-over-year sales growth by an estimated six to seven percentage points. Reported sales in last year’s first quarter totaled $577,943,000. Net income for the first quarter of fiscal 2006 came to $42,882,000 or $0.31 per diluted share, an increase of 5% from $40,815,000 or $0.29 per diluted share in the first quarter of fiscal 2005.

 

Patterson Dental, Patterson’s largest business, reported comparable basis sales growth of approximately 7% to $432,056,000 in the first quarter. Substantially all of this growth was internally generated.

 

    Sales of consumable dental supplies and printed office products increased an estimated 8% on a comparable basis in the first quarter. Patterson Dental’s sales force totaled approximately 1,460 at July 30.

 

    Sales of dental equipment and software rose 4% on an actual basis in the first quarter, driven by sales of CEREC® 3D dental restorative systems and digital radiography equipment and related software. Although the additional week in last year’s first quarter had some effect on year-over-year equipment sales growth, it is difficult to measure this impact. As a result, Patterson does not estimate the impact of an additional week on equipment sales.

 

    Sales of other services and products, consisting primarily of parts, technical service, software support, and insurance e-claims increased 12% on a comparable basis in the first quarter.

 

Sales of the Webster Veterinary unit increased approximately 9% in the first quarter of fiscal 2006 to $85,241,000 on a comparable basis. The positive impact of the October 2004 acquisition of Milburn Distributions on Webster’s first quarter sales was largely offset by the loss of revenues related to two factors: the decision by the manufacturer of ProHeart 6® to voluntarily recall this product in last year’s third quarter and the impact of the extra week in last year’s first quarter.

 

Sales of Patterson Medical, the Company’s rehabilitation supply and equipment unit, increased 9% in the first quarter of fiscal 2006 to $78,550,000 on a comparable basis, which excludes the impact of the additional week in last year’s first quarter.

 

James W. Wiltz, president and chief executive officer, commented: “Regarding our dental business, we are encouraged by the continued strong sales growth of dental consumable supplies and ongoing demand for new-technology CEREC and digital radiography equipment. However, our overall performance in this year’s first quarter was affected by the below-plan growth of basic dental equipment, including chairs, lights and units. We have experienced such quarterly fluctuations in the past, and as we have stated in the past, sales of dental equipment can be uneven from quarter to quarter, reflecting the long lead times generally involved with these significant capital expenditures. We believe the willingness of dentists to invest in dental equipment remains strong, based on the need for new equipment that strengthens productivity, improves clinical outcomes and provides dental offices with a state-of-the-art appearance. Our industry-leading position in the dental equipment market was further strengthened in the first quarter with the extension through 2017 of our exclusive North American distribution agreement with Sirona Dental Systems GmbH for CEREC systems. In addition, we extended our exclusive North American distribution agreement through 2007 with Schick Technologies, Inc. (OTC BB: SCHK) for Schick’s complete line of CDR® digital dental products, which are used in the majority of all digital x-ray installations in the U.S. and Canada.”


He continued: “Our Webster Veterinary and Patterson Medical units posted solid first quarter results after accounting for the impact of the extra week in the prior year’s quarter. Webster is benefiting from its strategy of expanding its national footprint through strategic acquisitions and internal expansion. As part of this effort, Webster’s entry into the large California market through internal efforts is proceeding as planned. Webster’s first quarter results also benefited from sales of Rimadyl®, a companion-pet pain relief drug, through a new distribution agreement with Pfizer. Patterson Medical’s first quarter sales performance benefited from the growth of its sports medicine product line, which was strengthened by its acquisition of Medco in May 2004.

 

Wiltz added: “We continue to see fiscal 2006 unfolding as a good year for Patterson. Reflecting their significant market positions, each of our businesses is positioned to continue capitalizing upon growth opportunities. For this reason, we feel good about Patterson’s future.”

 

For the second quarter of fiscal 2006 ending October 29, Patterson is forecasting earnings of $0.35 to $0.37 per diluted share.

 

About Patterson Companies, Inc.

 

Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets.

 

Dental Market

 

As Patterson’s largest business, Patterson Dental provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America.

 

Veterinary Market

 

Webster Veterinary is the nation’s second largest distributor of consumable veterinary supplies, equipment, diagnostic products, vaccines and pharmaceuticals to companion-pet veterinary clinics.

 

Rehabilitation Market

 

Patterson Medical is the world’s leading distributor of rehabilitation supplies and non-wheelchair assistive patient products to the physical and occupational therapy markets. The unit’s global customer base includes hospitals, long-term care facilities, clinics and dealers.

 

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This release 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 are subject to risks and uncertainties that are beyond the Company’s ability to control. The Company cautions shareholders and prospective investors that the following factors, among others, may cause actual results to differ materially from those indicated by the forward-looking statements: competition within the dental, veterinary, and rehabilitative and assistive living supply industries; changes in the economics of dentistry, including reduced growth in expenditures by private dental insurance plans, the effects of economic conditions and the effects of healthcare reform, which may affect future per capita expenditures for dental services and the ability and willingness of dentists to invest in high-technology products; the effects of healthcare related legislation and regulation which may affect expenditures or reimbursements for rehabilitative and assistive products; changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets; the ability of the Company to maintain satisfactory relationships with its sales force; unforeseen operating risks; risks associated with the dependence on manufacturers of the Company’s products; and the ability of the Company to successfully integrate the recent acquisitions into its existing business. Forward-looking statements are qualified in their entirety by the cautionary language set forth in the Company’s filings with the Securities and Exchange Commission.

 

For additional information contact:

 

R. Stephen Armstrong   Richard G. Cinquina
Executive Vice President & CFO   Equity Market Partners
651/686-1600   904/261-2210 or 800/522-1744


First Quarter Conference Call and Replay

 

Patterson’s first quarter earnings conference call will start at 10:00 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com. Listeners should go to this website at least 15 minutes prior to the call to download and install any necessary audio software. The conference call will be archived on Patterson’s web site.

 

A replay of the first quarter conference call can be heard through September 1, 2005 by dialing 1-303-590-3000 and providing the 11037120 confirmation code.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended

 
     July 30,
2005


    July 31,
2004


 

Net sales

   $ 595,847     $ 577,943  

Gross profit

     207,244       203,969  

Operating expenses

     137,730       136,367  
    


 


Operating income

     69,514       67,602  

Other expense, net

     (1,012 )     (2,396 )
    


 


Income before taxes

     68,502       65,206  

Income taxes

     25,620       24,391  
    


 


Net income

   $ 42,882     $ 40,815  
    


 


Earnings per share:

                

Basic

   $ 0.31     $ 0.30  

Diluted

   $ 0.31     $ 0.29  

Shares:

                

Basic

     137,309       136,522  

Diluted

     139,117       138,608  

Gross margin

     34.8 %     35.3 %

Operating expenses as a % of net sales

     23.1 %     23.6 %

Operating income as a % of net sales

     11.7 %     11.7 %

Effective tax rate

     37.4 %     37.4 %

Return on net sales

     7.2 %     7.1 %

 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

    

July 30,

2005


  

April 30,

2005


     (Unaudited)     

ASSETS

             

Current assets:

             

Cash and short-term investments

   $ 155,226    $ 245,931

Receivables, net

     305,824      317,168

Inventory

     225,776      206,405

Prepaid expenses and other current assets

     32,182      30,533
    

  

Total current assets

     719,008      800,037

Property and equipment, net

     109,826      97,178

Goodwill and other intangible assets

     744,648      746,079

Other

     145,719      42,007
    

  

Total Assets

   $ 1,719,201    $ 1,685,301
    

  

LIABILITIES AND STOCKHOLDERS’ EQUITY

             

Current liabilities:

             

Accounts payable

   $ 147,696    $ 160,954

Other accrued liabilities

     144,902      141,307

Current maturities of long-term debt

     20,027      20,027
    

  

Total current liabilities

     312,625      322,288

Long-term debt

     296,523      301,530

Other non-current liabilities

     50,244      46,411
    

  

Total liabilities

     659,392      670,229

Stockholders’ equity

     1,059,809      1,015,072
    

  

Total Liabilities and Stockholders’ Equity

   $ 1,719,201    $ 1,685,301
    

  

 

-more-


PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended

 
     July 30,
2005


    July 31,
2004


 

Consolidated Net Sales

                

Consumable and printed products

   $ 400,340     $ 389,863  

Equipment and software

     150,063       144,984  

Other

     45,444       43,096  
    


 


Total

   $ 595,847     $ 577,943  
    


 


Dental Supply

                

Consumable and printed products

   $ 251,730     $ 253,127  

Equipment and software

     139,512       134,085  

Other

     40,814       38,405  
    


 


Total

   $ 432,056     $ 425,617  
    


 


Rehabilitation Supply

                

Consumable and printed products

   $ 67,657     $ 65,529  

Equipment

     7,530       8,257  

Other

     3,363       3,459  
    


 


Total

   $ 78,550     $ 77,245  
    


 


Veterinary Supply

                

Consumable and printed products

   $ 80,953     $ 71,207  

Equipment

     3,021       2,642  

Other

     1,267       1,232  
    


 


Total

   $ 85,241     $ 75,081  
    


 


Other (Expense) Income, net

                

Interest income

   $ 2,096     $ 1,321  

Interest expense

     (3,077 )     (3,758 )

Other

     (31 )     41  
    


 


     $ (1,012 )   $ (2,396 )
    


 


 

-more-


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended

 
     July 30,
2005


    July 31,
2004


 

Operating activities:

                

Net income

   $ 42,882     $ 40,815  

Depreciation & amortization

     5,279       6,449  

Stock-based compensation

     200       —    

Change in assets and liabilities, net of acquired

     (19,196 )     18,207  
    


 


Net cash provided by operating activities

     29,165       65,471  

Investing activities:

                

Additions to property and equipment, net

     (16,295 )     (8,100 )

Acquisitions

     —         (52,856 )

Distribution agreement

     (100,000 )     —    

Sale (purchase) of investments, net

     3,360       (1,939 )
    


 


Net cash used in investing activities

     (112,935 )     (62,895 )

Net cash used in financing activities

     (3,575 )     (1,438 )
    


 


Net (decrease) increase in cash and cash equivalents

   $ (87,345 )   $ 1,138