EX-99 2 dex99.htm PRESS RELEASE Press Release

EXHIBIT 99

Patterson Companies Reports Improved Fourth Quarter Sales and Earnings

St. Paul, MN—May 25, 2006—Patterson Companies, Inc. (Nasdaq NMS: PDCO) today reported consolidated sales of $695,177,000 for the fourth quarter of fiscal 2006 ended April 29, an increase of 11% from $627,272,000 in the year-earlier quarter. Excluding the impact of two acquisitions earlier in fiscal 2006, sales rose approximately 8%. Net income increased 13% to $56,819,000 or $0.41 per diluted share, from $50,242,000 or $0.36 per diluted share in the fourth quarter of fiscal 2005.

For full-year fiscal 2006, consolidated sales increased 8% to $2,615,123,000, from $2,421,457,000 in fiscal 2005. Fiscal 2005 included an additional or fifty-third selling week that adversely impacts the fiscal 2006 revenue growth rate by approximately one to two percentage points. Net income rose 8% to $198,425,000 or $1.43 per diluted share, from $183,698,000 or $1.32 per diluted share in the prior fiscal year.

Patterson Dental, Patterson’s largest business, reported sales growth of 11% to $522,934,000 in the fourth quarter. The September 2005 acquisition of Accu-Bite, Inc., a Michigan-based dental distributor, accounted for approximately four percentage points of Patterson Dental’s fourth quarter sales growth.

 

    Sales of consumable dental supplies and printed office products increased 15% in the fourth quarter. Excluding Accu-Bite, consumable sales were up 9%. Patterson Dental’s sales force numbered over 1,500 at April 29, 2006.

 

    Sales of dental equipment and software increased 8% in the fourth quarter, paced by strong sales of basic equipment and digital radiography systems and software, which more than offset moderately reduced sales of CEREC 3D® dental restorative systems.

 

    Sales of other services and products, consisting primarily of technical service parts and labor, software support services and artificial teeth increased 5% in the fourth quarter.

Sales of the Webster Veterinary unit increased 19% in the fourth quarter of fiscal 2006 to $97,327,000. Excluding the December 2005 acquisition of Intra Corp, one of the nation’s leading developers of veterinary practice management software, Webster’s sales rose 17%. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, were substantially unchanged at $74,916,000 in comparison to the year-earlier level.

James W. Wiltz, president and chief executive officer, commented: “Patterson’s improved fourth quarter results were paced by the strength of our dental and veterinary supply businesses. The performance of our dental unit benefited from robust sales of consumable supplies and new-generation digital equipment and related software, in addition to a solid rebound in sales of basic dental equipment. We believe these factors reflect the continued vitality of the North American dental market and our ability to capitalize upon growth opportunities in this arena. Our veterinary supply business is benefiting from the expansion of its geographic market through targeted acquisitions and its increasingly successful internal start-up in California, the positive impact of new pharmaceutical distribution agreements, and strong sales of veterinary equipment. Webster’s strategic emphasis on veterinary equipment has been strengthened by the acquisition of the IntraVet software product line, which positions us to offer veterinarians a value-added technology solution by maximizing the capabilities of digital radiography equipment. The fourth quarter performance of Patterson Medical was consistent with our forecast, as domestic sales growth of rehabilitation supplies and equipment largely offset continued weakness in the unit’s international operations. Patterson Medical’s new management team has completed its strategic analysis of this business and is now implementing a range of strategies that are expected to result in stronger overall growth in fiscal 2007.”

Wiltz added: “We are optimistic about Patterson’s prospects as we look ahead to fiscal 2007. We believe Patterson Dental is generating growing sales momentum; our Webster unit is


well-positioned for continued growth; and we expect Patterson Medical’s performance to strengthen during the coming fiscal year. Reflecting these factors, Patterson is forecasting earnings of $0.31 to $0.33 per diluted share for the first quarter of fiscal 2007 ending July 29, 2006. For the full year, we are forecasting earnings of $1.61 to $1.64 per diluted share. These forecasts do not include the impact of SFAS No. 123(R), which we expect to be approximately $.04 per diluted share for the full fiscal year”

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 and software, 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    904/415-1415

Fourth Quarter Conference Call and Replay

Patterson’s fourth 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 fourth quarter conference call can be heard through June 1, 2006 by dialing 1-303-590-3000 and providing the 11061073 confirmation code.


PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for earnings per share)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 29,
2006
    April 30,
2005
    April 29,
2006
    April 30,
2005
 

Net sales

   $ 695,177     $ 627,272     $ 2,615,123     $ 2,421,457  

Gross profit

     247,002       226,587       914,429       862,511  

Operating expenses

     154,876       143,891       591,417       560,375  
                                

Operating income

     92,126       82,696       323,012       302,136  

Other expense, net

     (1,361 )     (2,448 )     (6,039 )     (8,689 )
                                

Income before taxes

     90,765       80,248       316,973       293,447  

Income taxes

     33,946       30,006       118,548       109,749  
                                

Net income

   $ 56,819     $ 50,242     $ 198,425     $ 183,698  
                                

Earnings per share:

        

Basic

   $ 0.41     $ 0.37     $ 1.44     $ 1.34  

Diluted

   $ 0.41     $ 0.36     $ 1.43     $ 1.32  

Shares:

        

Basic

     138,103       137,172       137,690       136,839  

Diluted

     139,294       139,129       139,234       138,873  

Gross margin

     35.6 %     36.1 %     35.0 %     35.6 %

Operating expenses as a % of net sales

     22.3 %     22.9 %     22.6 %     23.1 %

Operating income as a % of net sales

     13.3 %     13.2 %     12.4 %     12.5 %

Effective tax rate

     37.4 %     37.4 %     37.4 %     37.4 %

Return on net sales

     8.2 %     8.0 %     7.6 %     7.6 %

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

    

April 29,

2006

  

April 30,

2005

     
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 224,392    $ 245,931

Receivables, net

     350,299      317,168

Inventory

     244,709      206,405

Prepaid expenses and other current assets

     27,974      23,223
             

Total current assets

     847,374      792,727

Property and equipment, net

     141,541      104,488

Goodwill and other intangible assets

     764,214      746,079

Other

     158,589      42,007
             

Total Assets

   $ 1,911,718    $ 1,685,301
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 173,957    $ 160,954

Other accrued liabilities

     145,663      141,307

Current maturities of long-term debt

     90,027      20,027
             

Total current liabilities

     409,647      322,288

Long-term debt

     210,014      301,530

Other non-current liabilities

     49,536      46,411
             

Total liabilities

     669,197      670,229

Stockholders’ equity

     1,242,521      1,015,072
             

Total Liabilities and Stockholders’ Equity

   $ 1,911,718    $ 1,685,301
             

Note: Certain amounts previously reported have been reclassified to conform to the current presentation.

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 29,
2006
    April 30,
2005
    April 29,
2006
    April 30,
2005
 

Consolidated Net Sales

        

Consumable and printed products

   $ 449,309     $ 398,797     $ 1,674,106     $ 1,521,208  

Equipment and software

     194,143       180,407       748,701       722,414  

Other

     51,725       48,068       192,316       177,835  
                                

Total

   $ 695,177     $ 627,272     $ 2,615,123     $ 2,421,457  
                                

Dental Supply

        

Consumable and printed products

   $ 295,057     $ 257,403     $ 1,092,097     $ 998,056  

Equipment and software

     182,394       169,215       703,252       678,318  

Other

     45,483       43,254       171,605       157,829  
                                

Total

   $ 522,934     $ 469,872     $ 1,966,954     $ 1,834,203  
                                

Rehabilitation Supply

        

Consumable and printed products

   $ 64,658     $ 63,682     $ 259,642     $ 249,506  

Equipment

     6,370       8,351       28,056       32,437  

Other

     3,888       3,308       14,323       13,356  
                                

Total

   $ 74,916     $ 75,341     $ 302,021     $ 295,299  
                                

Veterinary Supply

        

Consumable and printed products

   $ 89,594     $ 77,712     $ 322,367     $ 273,646  

Equipment and software

     5,379       2,841       17,393       11,659  

Other

     2,354       1,506       6,388       6,650  
                                

Total

   $ 97,327     $ 82,059     $ 346,148     $ 291,955  
                                

Other (Expense) Income, net

        

Interest income

   $ 1,700     $ 2,079     $ 6,381     $ 6,113  

Interest expense

     (3,719 )     (4,289 )     (13,375 )     (15,141 )

Other

     658       (238 )     955       339  
                                
   $ (1,361 )   $ (2,448 )   $ (6,039 )   $ (8,689 )
                                

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Twelve Months Ended  
     April 29,
2006
    April 30,
2005
 

Operating activities:

    

Net income

   $ 198,425     $ 183,698  

Depreciation & amortization

     23,676       26,862  

Stock-based compensation

     750       —    

Change in assets and liabilities, net of acquired

     (58,893 )     (3,255 )
                

Net cash provided by operating activities

     163,958       207,305  

Investing activities:

    

Additions to property and equipment, net

     (49,153 )     (31,533 )

Acquisitions

     (39,228 )     (72,855 )

Distribution agreement

     (100,000 )     —    

Sale (purchase) of investments, net

     13,382       (5,364 )
                

Net cash used in investing activities

     (174,999 )     (109,752 )

Net cash provided by (used in) financing activities

     2,884       (152,164 )
                

Net decrease in cash and cash equivalents

   $ (8,157 )   $ (54,611 )