<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K/A
AMENDMENT NO. 2
TO CURRENT REPORT 8-K
FILED OCTOBER 15, 1996
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
PATTERSON DENTAL COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 0-20572 41-0886515
--------- ------- ----------
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
1031 Mendota Heights Road, St. Paul, Minnesota 55120
----------------------------------------------------
(Address of principal executive offices)
(612) 686-1600
--------------
(Registrant's telephone number, including area code)
<PAGE>
The undersigned hereby amends the following items of its Form 8-K Report filed
October 15, 1996 as set forth on the pages attached hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired.
Financial statements required to be filed pursuant to Item 7 of Form
8-K for Colwell (An operating division of Deluxe Corporation)/1/
(b) Pro forma financial information.
Pro forma financial information required to be filed pursuant to Item 7
of Form 8-K reflecting the acquisition of Colwell (An operating
division of Deluxe Corporation)
(c) Exhibits
23(a) Consent of Deloitte & Touche LLP
- -------------------------
/1/ The financial statements for Colwell present the net assets acquired and
revenues and direct operating expenses of Colwell, an operating division of
Deluxe Corporation, and are not intended to be a complete presentation of
Colwell's financial position and results of operations.
2
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
FINANCIAL STATEMENTS
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 4
Statements of Net Assets Acquired as of
December 31, 1995 and 1994 5
Statements of Revenues and Direct
Operating Expenses for the
Years ended December 31, 1995 and 1994 6
Notes to Financial Statements 7
Statements of Net Assets Acquired as of
June 30, 1996 and 1995 (Unaudited) 11
Statements of Revenues and Direct
Operating Expenses for the Six month
periods ended June 30, 1996 and 1995 (Unaudited) 12
Notes to Financial Statements 13
</TABLE>
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of Deluxe Corporation
We have audited the accompanying statements of net assets acquired of Colwell,
an operating division of Deluxe Corporation (the Seller), as of December 31,
1995 and 1994 and the related statements of revenues and direct operating
expenses for the years then ended. These financial statements are the
responsibility of the Seller's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying statements were prepared to present the net assets acquired and
revenues and direct operating expenses of Colwell, an operating division of the
Seller, pursuant to the Purchase Agreement described in Note 1, and are not
intended to be a complete presentation of Colwell's financial position and
results of operations.
In our opinion, the accompanying statements present fairly, in all material
respects, the net assets acquired of Colwell as of December 31, 1995 and 1994
and its revenues and direct operating expenses for the years then ended pursuant
to the Purchase Agreement described in Note 1, in accordance with generally
accepted accounting principles.
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
October 7, 1996
4
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
STATEMENTS OF NET ASSETS ACQUIRED
DECEMBER 31, 1995 AND 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
CURRENT ASSETS:
Trade accounts receivable, less allowance for doubtful
accounts of $126,000 and $123,000 in 1995 and 1994,
respectively $ 6,565,356 $ 5,760,604
Inventory 1,697,484 2,094,108
Deferred advertising 1,128,542 1,253,750
Prepaid expenses and other current assets 32,810 164,709
------------ ------------
Total current assets 9,424,192 9,273,171
PROPERTY, PLANT, AND EQUIPMENT:
Land 227,368 227,368
Buildings and improvements 5,802,970 5,773,856
Machinery and equipment 10,862,575 10,568,014
------------ ------------
16,892,913 16,569,238
Less accumulated depreciation (11,129,755) (10,176,370)
------------ ------------
Total property, plant, and equipment 5,763,158 6,392,868
INTANGIBLES, net 6,268,000 7,342,000
------------ ------------
Total assets 21,455,350 23,008,039
CURRENT LIABILITIES ASSUMED (1,500,000) (1,500,000)
------------ ------------
NET ASSETS ACQUIRED $ 19,955,350 $ 21,508,039
============ ============
</TABLE>
See notes to financial statements.
5
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1995 AND 1994
------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
NET SALES $56,079,040 $53,464,772
DIRECT OPERATING EXPENSES:
Cost of sales 29,546,880 28,071,991
Selling, general, and administrative 24,248,935 26,107,131
----------- -----------
Total direct operating expenses 53,795,815 54,179,122
----------- -----------
EXCESS OF REVENUES OVER (UNDER) DIRECT
OPERATING EXPENSES $ 2,283,225 $ (714,350)
=========== ===========
</TABLE>
See notes to financial statements.
6
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
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1. BASIS OF PRESENTATION
Colwell, an operating division of Deluxe Corporation (the Seller),
produces and sells insurance and billing forms, record-keeping and filing
systems, reference materials, clinical supplies, and a variety of other
products. The primary market segment is small health care providers,
including medical, dental, and chiropractic offices.
Basis of Presentation - The accompanying statements of net assets
acquired and statements of revenues and direct operating expenses have
been prepared pursuant to Section 11.03 of the Asset Purchase Agreement
(the Purchase Agreement) between Patterson Dental Company (the Buyer) and
the Seller dated September 12, 1996. Section 11.03 of the Purchase
Agreement requires the Seller to prepare statements of net assets acquired
as of December 31, 1995 and 1994 and statements of revenues and direct
operating expenses for the years ended December 31, 1995 and 1994,
determined in accordance with generally accepted accounting principles.
The statements include all revenues and costs and expenses directly
incurred by, or related to, Colwell, including depreciation and rental
costs related to facilities used in the business and payroll-based
employee benefits. Costs and expenses also include allocated charges for
the corporate profit sharing and pension expense. The costs of
administrative and marketing personnel and facilities in certain locations
are shared with, and allocated among, other Deluxe Corporation business
units. The statements do not reflect corporate income taxes or the cost
of certain other corporate services provided, such as legal, treasury,
certain information systems costs, tax planning, shareholder services, and
financing. The various allocated costs and expenses, as described herein,
are not necessarily indicative of the costs and expenses that would have
resulted had Colwell been operated as a separate company.
7
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition - Substantially all revenues are recognized upon
shipment of product to customers with appropriate provision for
uncollectible accounts.
Inventory - Inventory is included at the lower of cost, on the last-in,
first-out (LIFO) method, or market. LIFO inventories at December 31, 1995
and 1994 were approximately $646,000 and $486,000, respectively, less than
replacement cost. The cost of inventory includes material only, as the
labor and overhead cost associated with processed inventory is deemed
immaterial for capitalization by Colwell.
Property, Plant, and Equipment - Property, plant, and equipment are
stated at cost. Buildings with 40-year lives and machinery and equipment
with lives of 5 to 11 years are generally depreciated using accelerated
methods. Leasehold and building improvements are depreciated on a
straight-line basis over the estimated useful life of the property or the
life of the lease, whichever is shorter.
Intangibles - Intangibles include a customer data file which the Seller
purchased in 1985 when it acquired Colwell. The intangible is shown in
the statements of net assets acquired, net of amortization determined on
the straight-line basis. The amortization period is 15 years.
Intangibles are as follows at December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cost $16,125,000 $16,125,000
Less accumulated amortization (9,857,000) (8,783,000)
----------- -----------
Intangibles, net $ 6,268,000 $ 7,342,000
=========== ===========
</TABLE>
Impairment of Long-Lived Assets - Effective January 1, 1995, Colwell
adopted Statement of Financial Accounting Standards No. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of. Colwell evaluates the recoverability of long-lived assets by
measuring the unamortized balance of the long-lived assets against
estimated future cash flows. At the time such evaluations indicate that
undiscounted estimated future cash flows of certain long-lived assets are
not sufficient to recover the carrying value of such assets, the assets
will be adjusted to their fair value. Based on current evaluations, there
were no adjustments to the carrying value of long-lived assets in 1995.
8
<PAGE>
Deferred Advertising - In accordance with the provisions of American
Institute of Certified Public Accountants' Statement of Position No. 93-7,
Colwell estimates and defers certain costs related to direct-response
advertising of its products. These costs consist of materials,
production, postage, and design costs required to produce catalogs for
Colwell's direct mail businesses. Such costs are amortized over periods
(generally less than 12 months) that correspond to the estimated revenue
stream of the individual catalogs. Actual results could differ from the
estimates noted above. The total amount charged to expense for the years
ended December 31, 1995 and 1994 was $4,073,352 and $5,159,588,
respectively.
Current Liabilities Assumed - Pursuant to Section 1.03 of the Purchase
Agreement, the Buyer has agreed to assume up to $1,500,000 of certain of
Colwell's liabilities. These liabilities include accrued profit sharing
and vacation for those who are employed by Colwell immediately preceding
the closing date and who are hired by the Buyer and other current
liabilities. The financial statements reflect a total of $1,500,000 of
liabilities at December 31, 1995 and 1994, as the total division assumable
liabilities are in excess of the $1,500,000 at those dates.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
3. LEASE COMMITMENTS
Minimum future rental payments for leased equipment under noncancelable
operating leases for the five years ending December 31, 2000 are
approximately $130,000, $50,000, $22,000, $13,000, and $3,000. There are
no lease commitments extending past the year 2000. Rental expense was
$316,500 and $345,429 for 1995 and 1994, respectively.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of accounts receivable and current liabilities
assumed approximate fair value due to the short-term nature of these
instruments.
5. RELATED-PARTY TRANSACTIONS
Purchases of inventory from Deluxe Corporation divisions and affiliated
companies were $2,554,000 and $2,327,000, respectively, for the years
ended December 31, 1995 and 1994.
9
<PAGE>
6. INVENTORY
The following is a breakdown of inventory, by category, as of December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Raw materials $2,329,220 $2,324,442
Semifinished goods 99,959 76,988
Finished goods 327,809 538,764
LIFO reserve (646,401) (486,300)
Reserve for obsolescence (413,103) (359,786)
---------- ----------
$1,697,484 $2,094,108
========== ==========
</TABLE>
7. BENEFIT PLANS
Colwell participated in the Deluxe Corporation Pension Plan, a defined
contribution pension plan that covers substantially all employees of
Colwell. Colwell's allocated pension expense was $740,040 and $795,526
for the years ended December 31, 1995 and 1994, respectively.
Colwell also participates in the Seller's profit sharing plan. Colwell
was allocated $1,110,061 and $1,193,288 for the years ended December 31,
1995 and 1994, respectively, of its share of corporate contributions under
these plans. Expenses were allocated to Colwell based on calculations for
each Colwell employee participating in the plans.
10
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS ACQUIRED
JUNE 30, 1996 AND 1995
(UNAUDITED)
----------------------------------------------------------------------------------------
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Trade accounts receivable, less allowance for doubtful
accounts of $126,000 in 1996 and 1995 $ 6,235,686 $ 6,123,699
Inventory, net 1,532,069 1,959,617
Deferred advertising 703,448 997,513
Prepaid expenses and other current assets 32,480 35,506
------------ -----------
Total current assets 8,503,683 9,116,335
PROPERTY PLANT & EQUIPMENT:
Land 227,368 227,368
Buildings and improvements 5,802,970 5,802,970
Machinery and equipment 10,111,329 10,944,575
------------ -----------
16,141,667 16,974,913
Less accumulated depreciation (10,942,343) (10,727,625)
------------ -----------
Total property, plant, and equipment 5,199,324 6,247,288
INTANGIBLES, net 5,730,000 6,805,000
------------ -----------
Total assets 19,433,007 22,168,623
CURRENT LIABILITIES - Assumed (1,500,000) (1,500,000)
------------ -----------
NET ASSETS ACQUIRED $ 17,933,007 $20,668,623
============ ===========
</TABLE>
See notes to financial statements.
11
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
NET SALES $27,998,068 $27,167,155
DIRECT OPERATING EXPENSES:
Cost of sales 14,299,852 14,526,650
Selling, general and administrative 11,130,529 12,558,410
----------- -----------
Total direct operating expenses 25,430,381 27,085,060
----------- -----------
EXCESS OF REVENUES OVER DIRECT
OPERATING EXPENSES $ 2,567,687 $ 82,095
=========== ===========
</TABLE>
See notes to financial statements.
12
<PAGE>
COLWELL
(AN OPERATING DIVISION OF DELUXE CORPORATION)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
------------------------------------------------------------------------------
1. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the net assets
acquired as of June 30, 1996, and the results of revenues and direct operating
expenses for the six months ended June 30, 1996 and 1995. Such adjustments
are of a normal recurring nature. The results of revenues and direct
operating expenses for the six months ended June 30, 1996 and 1995, are not
necessarily indicative of the results to be expected for the full year. These
financial statements should be read in conjunction with the audited financial
statements for the years ended December 31, 1995 and 1994 included herein.
13
<PAGE>
PATTERSON DENTAL COMPANY
Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by Patterson Dental Company (the "Company") of
Colwell (an operating division of Deluxe Corporation) ("Colwell") using the
purchase method of accounting, and are based on estimates and assumptions set
forth below and in the notes to such statements, which include pro forma
adjustments. These pro forma financial statements are based upon the
historical financial statements of Patterson Dental Company, adjusted to give
effect to the acquisition of Colwell on October 1, 1996.
A pro forma consolidated balance sheet has not been presented herein as the
acquisition is reflected in the October 26, 1996 Condensed Consolidated
Balance Sheet of Patterson Dental Company. Such balance sheet reflects the
application of purchase accounting adjustments to the historical balance sheet
of Colwell. The aggregate purchase price of Colwell was $61.1 million
allocated $6.1 million to accounts receivable, $2.3 million to inventory, $.6
million to prepaid assets, $9.7 million to property and equipment, $16.3
million to customer lists and trade names, $27.2 million to goodwill, and $1.1
million to accrued expenses. The pro forma Condensed Consolidated Statements
of Income for the year ended April 27, 1996 and the six months ended October
26, 1996 give effect to the acquisition as if it had occurred at the beginning
of the periods presented. Such statements are based on historical statements
of revenues and direct operating expenses of Colwell for the year ended
December 31, 1995 and five months ended September 30, 1996. The operating
results of Colwell are included in the Company's financial statements from the
date of acquisition, October 1, 1996.
The pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deemed appropriate;
however, management does not expect the final purchase price allocation to
materially differ from the above amounts. The unaudited pro forma consolidated
financial information does not profess to represent the Company's results of
operations had the above transaction, in fact, occurred on these dates, or to
project the Company's combined results of operations for any date or period.
The pro forma consolidated financial information should be read in conjunction
with the Company's historical financial statements and notes thereto.
14
<PAGE>
PATTERSON DENTAL COMPANY
Pro Forma Condensed Consolidated Statement of Income
For the Year Ended April 27, 1996
(In Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Patterson
Dental Pro forma Pro forma
Company Colwell (a) Adjustments Consolidated
-------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales $581,893 $56,079 $637,972
Cost of Sales 376,507 29,547 ($440) (b) 405,614
-------- ------- ------- --------
Gross Profit 205,386 26,532 440 232,358
Operating expenses 161,676 24,249 1,152 (c) 187,077
-------- ------- ------- --------
Operating income 43,710 2,283 (712) 45,281
Other
(expense)income 1,998 -- (3,668) (d) (1,670)
-------- ------- ------- --------
Income before
income taxes 45,708 2,283 (4,380) 43,611
Income taxes 16,961 -- (817) (e) 16,144
-------- ------- ------- --------
Net income $ 28,747 $ 2,283 ($3,563) $ 27,467
======== ======= ======= ========
Net income
available to
common
shareholders $ 28,125 $ 2,283 ($3,563) $ 26,845
======== ======= ======= ========
Earnings per
common and
common equivalent $1.31 $1.25
share
Weighted average
common and
common equivalent 21,539 21,539
shares outstanding
15
</TABLE>
<PAGE>
PATTERSON DENTAL COMPANY
Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended October 26, 1996
(In Thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Patterson
Dental Pro forma Pro forma
Company Colwell (a) Adjustments Consolidated
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Sales $304,071 $23,765 $327,836
Cost of Sales 196,782 11,531 ($265) (b) 208,048
-------- ------- ------- --------
Gross Profit 107,289 12,234 265 119,788
Operating expenses 86,257 9,106 (241) (c) 95,122
-------- ------- ------- --------
Operating income 21,032 3,128 506 24,666
Other
(expense)income 1,024 -- (1,552) (d) (528)
-------- ------- ------- --------
Income before
income taxes 22,056 3,128 (1,046) 24,138
Income taxes 7,993 -- 812 (e) 8,805
-------- ------- ------- --------
Net income $ 14,063 $ 3,128 ($1,858) $ 15,333
======== ======= ======= ========
Net income
available to
common shareholders $ 14,063 $ 3,128 ($1,858) $ 15,333
======== ======= ======= ========
Earnings per
common and
common equivalent $0.65 $0.71
share
Weighted average
common and
common equivalent 21,625 21,625
shares outstanding
16
</TABLE>
<PAGE>
PATTERSON DENTAL COMPANY
Notes to Pro Forma Condensed Consolidated Financial Statements
October 26, 1996
(Unaudited)
Pro Forma Adjustments
---------------------
(a) The financial statements for Colwell present the net assets acquired and
revenues and direct operating expenses of Colwell, an operating division
of Deluxe Corporation, and are not intended to be a complete presentation
of Colwell's financial position and results of operations.
(b) Reflects the elimination of the employee benefit plans of Deluxe and
replacement with Patterson's ESOP, bonus and incentive programs; and
additional depreciation expense related to the fair value of assets
acquired.
(c) Reflects the elimination of the employee benefit plans of Deluxe and
replacement with Patterson's ESOP, bonus and incentive programs;
additional depreciation and amortization expense related to the fair
value of assets acquired, identifiable intangible assets (e.g., customer
lists) and incremental goodwill; and adjustments for costs previously
allocated from Deluxe.
(d) Reflects additional interest expense and reduction in interest income.
(e) Reflects additional income tax expense at the statutory rate based on the
adjusted income of Colwell.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PATTERSON DENTAL COMPANY
Dated: February 10, 1997 By : /s/ Ronald E. Ezerski
-----------------------
Ronald E. Ezerski
Vice President and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
18
