EX-99 2 dex99.htm PRESS RELEASE Press Release

Exhibit 99

Patterson Companies Reports Improved Fourth Quarter Operating Results

St. Paul, MN—May 22, 2008—Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated sales of $778,388,000 for the fourth quarter of fiscal 2008 ended April 26, an increase of 5% from $739,143,000 in the year-earlier quarter. Net income came to $63,209,000 or $0.51 per diluted share, up 5% from $59,924,000 or $0.44 per diluted share in the fourth quarter of fiscal 2007.

For full-year fiscal 2008, consolidated sales increased 7% to $2,998,729,000 from $2,798,398,000 in fiscal 2007. Net income of $224,858,000 or $1.69 per diluted share was up 8% from $208,336,000 or $1.51 in fiscal 2007.

Sales of Patterson Dental, Patterson’s largest business, increased 4% to $562,112,000 in the fourth quarter.

 

   

Sales of consumable dental supplies and printed office products rose 5% during this period.

 

 

 

Sales of dental equipment and software increased 1% in the fourth quarter. Sales of basic dental equipment were affected by lower than forecasted sales of digital radiography systems, including chair-side software and related computer hardware. Sales of CEREC 3D® dental restorative systems increased a strong 14% in the fourth quarter.

 

   

Sales of other services and products, consisting primarily of technical service, parts and labor, software support services, artificial teeth, increased 2% in the fourth quarter.

Sales of the Webster Veterinary unit increased 9% in the fourth quarter of fiscal 2008 to $119,469,000. Sales of Patterson Medical, Patterson’s rehabilitation supply and equipment unit, increased 11% in the fourth quarter to $96,807,000 in comparison to the year-earlier level. Excluding the impact of acquisitions earlier in the year related to this unit’s branch office strategy and foreign currency translations, fourth quarter sales of Patterson Medical rose approximately 7%.

James W. Wiltz, president and chief executive officer, commented: “Our Patterson Dental unit recorded a generally solid quarter. Sales of consumable supplies increased 5%, while sales of basic dental equipment, excluding digital x-ray products, were up 7% for the quarter. We are particularly encouraged by the strong 14% year-over-year sales growth of the CEREC line, which followed the 10% year-over-year increase reported in this year’s third quarter. We are starting to generate growing momentum in CEREC systems sales, reflecting the positive impact of the new software and crown milling chamber introduced in last year’s fourth quarter. We believe the sales progress generated during the second half of fiscal 2008 for our CEREC line should continue in the new fiscal year. Sales of digital x-ray systems were below forecasted levels. This shortfall also affected sales of related chair-side software and computer hardware. While it is true that digital sales benefited from a special promotion in last year’s fourth quarter, we are not satisfied by this performance and are acting aggressively to correct this situation.”

He continued: “Patterson’s veterinary business benefited from the continued growth of its consumables business in the fourth quarter. Sales of equipment and IntraVet practice management software were below planned levels, the short-term result of efforts to restructure and further refine this relatively new aspect of Webster’s business. We believe equipment and software sales will benefit from these initiatives going forward in fiscal 2009. We also are encouraged by Patterson Medical’s strong fourth quarter sales growth, which is benefiting from the revenues generated by its branch office strategy and other growth initiatives.”

During the fourth quarter, Patterson closed on $525 million of long-term debt financing and the repurchase of approximately 6.3 million shares of its common stock from J.P. Morgan Chase


Bank, N.A. under an accelerated share repurchase (ASR) agreement. As a result of the ASR transaction and open-market purchases made since late November 2007, Patterson has repurchased approximately 18 million shares under its previously announced 25 million share repurchase authorization. The positive impact of the accretion from the ASR and open market purchases during the quarter on Patterson’s earnings was largely offset by increased interest expense and lower interest income on cash reserves. However, going forward, the accretion from this buyback activity is estimated at approximately $0.08 per share.

Wiltz added: “Each of our businesses is implementing sales and marketing strategies designed to accelerate Patterson’s growth and profitability over the next few years. As a result, we believe fiscal 2009 should be a year of improved performance for Patterson. We are forecasting earnings of $0.38 to $0.40 per diluted share for the first quarter of fiscal 2009 ending July 26, 2008, and for the full year, we are forecasting earnings of $1.94 to $1.98 per diluted share.”

Patterson also announced that Mr. Wiltz will be on a limited schedule for four to six weeks following routine surgery. Peter L. Frechette, chairman of the board and former president and chief executive officer, will assist with Wiltz’s duties while he is recuperating.

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 May 29, 2008 by dialing 1-303-590-3000 and providing the 11114285 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 26,
2008
    April 28,
2007
    April 26,
2008
    April 28,
2007
 

Net sales

   $ 778,388     $ 739,143     $ 2,998,729     $ 2,798,398  

Gross profit

     273,154       260,563       1,031,725       968,872  

Operating expenses

     171,885       164,117       672,522       633,182  
                                

Operating income

     101,269       96,446       359,203       335,690  

Other expense, net

     (3,537 )     (1,038 )     (1,775 )     (6,082 )
                                

Income before taxes

     97,732       95,408       357,428       329,608  

Income taxes

     34,523       35,484       132,570       121,272  
                                

Net income

   $ 63,209     $ 59,924     $ 224,858     $ 208,336  
                                

Earnings per share:

        

Basic

   $ 0.52     $ 0.44     $ 1.70     $ 1.52  

Diluted

   $ 0.51     $ 0.44     $ 1.69     $ 1.51  

Shares:

        

Basic

     122,571       135,695       132,078       136,815  

Diluted

     123,035       136,612       132,910       137,769  

Gross margin

     35.1 %     35.2 %     34.4 %     34.6 %

Operating expenses as a % of net sales

     22.1 %     22.2 %     22.4 %     22.6 %

Operating income as a % of net sales

     13.0 %     13.0 %     12.0 %     12.0 %

Effective tax rate

     35.3 %     37.2 %     37.1 %     36.8 %

Return on net sales

     8.1 %     8.1 %     7.5 %     7.4 %

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

     April 26,
2008
   April 28,
2007
     (Unaudited)     

ASSETS

     

Current assets:

     

Cash and short-term investments

   $ 308,164    $ 241,791

Receivables, net

     364,050      361,401

Inventory

     281,238      250,207

Prepaid expenses and other current assets

     30,326      33,091
             

Total current assets

     983,778      886,490

Property and equipment, net

     148,932      131,952

Goodwill and other intangible assets

     781,120      762,930

Other

     161,280      158,948
             

Total Assets

   $ 2,075,110    $ 1,940,320
             

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 194,405    $ 182,761

Other accrued liabilities

     141,652      144,694

Current maturities of long-term debt

     130,010      50,014
             

Total current liabilities

     466,067      377,469

Long-term debt

     525,024      130,010

Other non-current liabilities

     79,232      53,627
             

Total liabilities

     1,070,323      561,106

Stockholders’ equity

     1,004,787      1,379,214
             

Total Liabilities and Stockholders’ Equity

   $ 2,075,110    $ 1,940,320
             

 

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PATTERSON COMPANIES, INC.

SUPPLEMENTARY FINANCIAL DATA

(Dollars in thousands)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     April 26,
2008
    April 28,
2007
    April 26,
2008
    April 28,
2007
 

Consolidated Net Sales

        

Consumable and printed products

   $ 494,418     $ 462,329     $ 1,887,703     $ 1,757,472  

Equipment and software

     223,880       218,912       866,969       821,091  

Other

     60,090       57,902       244,057       219,835  
                                

Total

   $ 778,388     $ 739,143     $ 2,998,729     $ 2,798,398  
                                

Dental Supply

        

Consumable and printed products

   $ 318,013     $ 301,930     $ 1,218,188     $ 1,154,422  

Equipment and software

     191,047       188,828       744,333       714,343  

Other

     53,052       51,815       218,765       195,865  
                                

Total

   $ 562,112     $ 542,573     $ 2,181,286     $ 2,064,630  
                                

Rehabilitation Supply

        

Consumable and printed products

   $ 65,194     $ 61,328     $ 259,793     $ 241,112  

Equipment and software

     26,312       21,473       92,686       77,252  

Other

     5,301       4,082       18,537       15,978  
                                

Total

   $ 96,807     $ 86,883     $ 371,016     $ 334,342  
                                

Veterinary Supply

        

Consumable and printed products

   $ 111,211     $ 99,071     $ 409,722     $ 361,938  

Equipment and software

     6,521       8,611       29,950       29,496  

Other

     1,737       2,005       6,755       7,992  
                                

Total

   $ 119,469     $ 109,687     $ 446,427     $ 399,426  
                                

Other Income (Expense), net

        

Interest income

   $ 1,860     $ 2,135     $ 9,731     $ 8,070  

Interest expense

     (5,313 )     (3,228 )     (12,792 )     (14,230 )

Other

     (84 )     55       1,286       78  
                                
   $ (3,537 )   $ (1,038 )   $ (1,775 )   $ (6,082 )
                                

 

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PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

     Twelve Months Ended  
     April 26,
2008
    April 28,
2007
 

Operating activities:

    

Net income

   $ 224,858     $ 208,336  

Depreciation & amortization

     26,280       25,501  

Share-based compensation

     7,723       7,757  

Change in assets and liabilities, net of acquired

     6,518       1,911  
                

Net cash provided by operating activities

     265,379       243,505  

Investing activities:

    

Additions to property and equipment, net of acquired

     (35,991 )     (19,507 )

Proceeds from disposals of property and equipment

     —         9,163  

Acquisitions

     (22,694 )     (12,665 )
                

Net cash used in investing activities

     (58,685 )     (23,009 )

Financing activities:

    

Payments of long-term debt

     (50,024 )     (120,017 )

Proceeds from issuance of long-term debt

     525,000       —    

Repurchases of common stock

     (636,093 )     —    

Loan to ESOP

     —         (105,000 )

Other

     13,872       21,065  
                

Net cash used in financing activities

     (147,245 )     (203,952 )

Effect of exchange rate changes on cash

     6,924       855  
                

Net increase in cash and cash equivalents

   $ 66,373     $ 17,399