<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the Quarterly Period ended January 23, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 0-20572
PATTERSON DENTAL COMPANY
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-0886515
--------- ----------
(State of Incorporation) (IRS Employer Identification No.)
1031 Mendota Heights Road, St. Paul, Minnesota 55120
----------------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(651) 686-1600
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
_X_ Yes ___ No
Patterson Dental Company has outstanding 33,638,101 shares of common stock as of
March 8, 1999.
Page 1 of 15
<PAGE>
PATTERSON DENTAL COMPANY
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements 3-8
Condensed Consolidated Balance Sheets as of
January 23, 1999 and April 25, 1998 3
Condensed Consolidated Statements of Income for the three months
and nine months ended January 23, 1999 and January 24, 1998 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended January 23, 1999 and January 24, 1998 5
Notes to Condensed Consolidated Financial
Statements 6-8
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-13
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 14
Signatures 15
Safe Harbor Statement Under The Private Securities Litigation
- -------------------------------------------------------------
Reform Act Of 1995:
- -------------------
This Form 10-Q for the period ended January 23, 1999 contains certain
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995, which may be identified by the use of forward-looking
terminology such as "may", "will", "expect", "anticipate", "estimate",
"believe", "goal", or "continue", or comparable terminology that involves risks
and uncertainties and that are qualified in their entirety by cautionary
language set forth in the Company's Form 10-K report filed July 16, 1998, and
other documents filed with the Securities and Exchange Commission.
See also pages 12-13 of this Form 10-Q.
2
<PAGE>
PART I FINANCIAL INFORMATION
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
ASSETS
January 23, April 25,
1999 1998
--------- ---------
(unaudited)
Current assets:
Cash and cash equivalents ..................... $ 34,782 $ 35,619
Receivables, net .............................. 121,775 106,252
Inventory ..................................... 97,268 81,810
Prepaid expenses .............................. 3,469 2,802
Deferred taxes ................................ 1,178 1,178
--------- ---------
Total current assets ..................... 258,472 227,661
Property and equipment, net ......................... 36,306 37,998
Intangibles, net .................................... 46,653 48,013
Other ............................................... 2,503 2,701
--------- ---------
Total assets ............................. $ 343,934 $ 316,373
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................. $ 57,640 $ 60,652
Accrued payroll expense ....................... 12,156 13,852
Other accrued expenses ........................ 13,305 13,426
Income taxes payable .......................... 1,148 2,009
Bank indebtedness ............................. 1,204 2,033
Current maturities of long-term debt .......... 217 2,433
--------- ---------
Total current liabilities ................ 85,670 94,405
Long-term debt ...................................... 1,547 2,736
Deferred taxes ...................................... 2,017 2,017
--------- ---------
Total liabilities ........................ 89,234 99,158
Deferred credits .................................... 6,248 6,912
Stockholders' equity:
Preferred stock ............................... -- --
Common stock .................................. 334 333
Additional paid-in capital .................... 66,654 63,134
Accumulated other comprehensive income ........ (2,870) (1,624)
Retained earnings ............................. 198,671 162,797
Note receivable from ESOP ..................... (14,337) (14,337)
--------- ---------
Total stockholders' equity ............... 248,452 210,303
--------- ---------
Total liabilities and stockholders' equity $ 343,934 $ 316,373
========= =========
See accompanying notes.
3
<PAGE>
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Jan. 23, Jan. 24, Jan. 23, Jan. 24,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales ............................. $ 230,176 $ 195,540 $ 643,574 $ 567,163
Cost of sales ......................... 144,335 122,204 405,218 357,213
--------- --------- --------- ---------
Gross profit .......................... 85,841 73,336 238,356 209,950
Operating expenses .................... 64,343 56,242 181,939 163,834
--------- --------- --------- ---------
Operating income ...................... 21,498 17,094 56,417 46,116
Other income and expense:
Amortization of deferred credits .. 222 222 665 664
Finance income, net ............... 462 334 1,263 786
Interest expense .................. (113) (126) (398) (543)
Profit (loss) on currency exchange (9) (60) (154) (81)
--------- --------- --------- ---------
Income before income taxes ............ 22,060 17,464 57,793 46,942
Income taxes .......................... 8,312 6,666 21,919 17,741
--------- --------- --------- ---------
Net income ............................ $ 13,748 $ 10,798 $ 35,874 $ 29,201
========= ========= ========= =========
Earnings per share - basic ............ $ 0.41 $ 0.33 $ 1.08 $ 0.88
========= ========= ========= =========
Earnings per share - diluted .......... $ 0.41 $ 0.33 $ 1.07 $ 0.88
========= ========= ========= =========
Weighted average basic shares ......... 33,360 33,104 33,325 33,005
========= ========= ========= =========
Weighted average and dilutive potential
common shares ......................... 33,472 33,210 33,432 33,104
========= ========= ========= =========
</TABLE>
See accompanying notes.
4
<PAGE>
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
Jan. 23, Jan. 24,
1999 1998
-------- --------
<S> <C> <C>
Operating activities:
Net income ........................................... $ 35,874 $ 29,201
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation .................................... 4,505 4,212
Amortization of deferrals ....................... (664) (664)
Amortization of goodwill ........................ 2,011 1,762
Bad debt expense ................................ 755 731
Change in assets and liabilities, net of acquired (39,151) (244)
-------- --------
Net cash (used) provided by operating activities ........... 3,330 34,998
Investing activities:
Proceeds from sale of facilities ..................... 2,250 --
Additions to property and equipment, net ............. (5,331) (4,832)
Cash (used) received from acquisitions, net .......... (344) 69
Other ................................................ -- (25)
-------- --------
Net cash used in investing activities ..................... (3,425) (4,788)
Financing activities:
Decrease in bank indebtedness ........................ (632) (2,853)
Payments and retirement of long-term debt and
obligations under capital leases ................... (3,232) (3,826)
Common stock issued, net ............................. 3,151 2,353
-------- --------
Net cash used by financing activities ...................... (713) (4,326)
Effect of exchange rate changes on cash .................... (29) (273)
-------- --------
Net (decrease) increase in cash and cash equivalents ....... (837) 25,611
Cash and cash equivalents at beginning of period ........... 35,619 9,095
-------- --------
Cash and cash equivalents at end of period ................. $ 34,782 $ 34,706
======== ========
</TABLE>
See accompanying notes.
5
<PAGE>
PATTERSON DENTAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(Unaudited)
January 23, 1999
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments necessary to present
fairly the financial position as of January 23, 1999, and the results of
operations and the cash flows for the periods ended January 23, 1999, and
January 24, 1998. Such adjustments are of a normal recurring nature. The results
of operations for the quarter and nine months ended January 23, 1999, and
January 24, 1998, are not necessarily indicative of the results to be expected
for the full year. The balance sheet at April 25, 1998, is derived from the
audited balance sheet as of that date. These financial statements should be read
in conjunction with the financial statements included in the 1998 Annual Report
on Form 10-K filed on July 16, 1998. The accompanying financial statements and
Management's Discussion and Analysis give retroactive effect to the acquisition
of Canadian Dental Supply Ltd. ("CDS") and include CDS for all periods
presented. See Note 3 below.
2. The fiscal year end of the Company is the last Saturday in April. The third
quarter and nine months of fiscal year 1999 and 1998 represent the 13 weeks and
the thirty-nine weeks ended January 23, 1999 and January 24, 1998, respectively.
3. Effective August 26, 1997, the Company acquired Canadian Dental Supply Ltd.
("CDS") a Vancouver, British Columbia based distributor of dental supplies and
equipment. Each share of CDS's outstanding common stock was converted into the
right to receive 6.324 shares of Company common stock. The Company issued
168,648 shares of its common stock to acquire CDS. The transaction was accounted
for as a pooling of interests. The accompanying financial statements and
Management's Discussion and Analysis give retroactive effect to the acquisition
and include CDS for all periods presented.
Separate results of operations for the periods prior to the merger with
CDS are as follows:
Period from
April 27, 1997 to
August 26, 1997
Net Sales -----------------
---------
Patterson Dental Company $ 231,350
CDS
8,190
----------
Total Combined $ 239,540
==========
Net Income
----------
Patterson Dental Company $ 11,292
CDS
31
----------
Total Combined $ 11,323
==========
Other Changes in Stockholder's Equity
-------------------------------------
Patterson Dental Company $ 1,106
CDS
(24)
----------
Total Combined $ 1,082
==========
6
<PAGE>
4. On January 12, 1998 the Company declared a 3 for 2 stock split in the form of
a 50% stock dividend payable February 17, 1998, to shareholders of record
January 30, 1998. The accompanying financial statements and Management's
Discussion and Analysis give retroactive effect to the 3 for 2 stock split.
5. On February 2, 1998, the Company acquired Hill Dental Company, Inc. ("Hill")
a Birmingham, Alabama based distributor of dental supplies and equipment in a
transaction accounted for as a purchase. Each share of Hill's outstanding common
stock was converted into the right to receive 9.39 shares of Company common
stock subject to certain conditions. The Company issued 100,770 shares of its
common stock in connection with the Hill acquisition. The results of the
operations of Hill prior to the acquisition date were not material to the
financial statements on a pro forma basis.
6. On July 27, 1998, the Company acquired the assets of Dentaplex, Inc. This
acquisition was accounted for as a purchase and, accordingly, the net assets and
operating results are included in the Company's financial statements from the
date of acquisition. The results of operations of Dentaplex, Inc. are not
material to the financial statements on a pro forma basis.
7. On February 5, 1999, after the end of the quarter, the Company acquired
Professional Business Systems, Inc. ("PBS") a Roselle, Illinois based
manufacturer and distributor of filing systems and other practice management
systems. The acquisition will be accounted for as a pooling of interests and
will not be material to the financial statements on a pro forma basis.
8. As of April 26, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income." This Statement establishes
new rules for the display of comprehensive income and its components; however,
the adoption of the Statement had no impact on the Company's net income or
stockholders' equity. Statement 130 requires the Company's foreign currency
translation adjustments, which prior to adoption were reported separately in
stockholders' equity, to be included in other comprehensive income. Prior year
financial statements have been reclassified to conform to the requirements of
Statement 130.
Total comprehensive income for the three months and nine months ended January
23, 1999 and January 24, 1998 is as follows:
7
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Jan. 23, Jan. 24, Jan. 23, Jan. 24,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 13,748 $ 10,798 $ 35,874 $ 29,201
Other comprehensive income (loss):
Foreign currency translation adjustments 336 (969) (1,246) (939)
-------- --------- -------- ---------
Total comprehensive income $ 14,084 $ 9,829 $ 34,628 $ 28,262
======== ========= ======== =========
</TABLE>
9. The following table sets forth the denominator for the computation of basic
and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Jan. 23, Jan. 24, Jan. 23, Jan. 24,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Denominator:
Denominator for basic earnings per
share - weighted-average shares 33,360 33,104 33,325 33,005
Effect of dilutive securities:
Director Stock Option Plan 60 50 57 43
Employee Stock Purchase Plan 5 6 5 7
Capital Accumulation Plan 47 50 45 49
------ ------ ------ ------
Dilutive potential common shares 112 106 107 99
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 33,472 33,210 33,432 33,104
====== ====== ====== ======
</TABLE>
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain operational data.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Jan. 23, Jan. 24, Jan. 23, Jan. 24,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .......................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ...................... 62.7% 62.5% 63.0% 63.0%
------- ------- ------- -------
Gross profit ....................... 37.3% 37.5% 37.0% 37.0%
Operating expenses ................. 28.0% 28.8% 28.3% 28.9%
------- ------- ------- -------
Operating income ................... 9.3% 8.7% 8.7% 8.1%
Other income and expense, net....... 0.3% 0.2% 0.3% 0.2%
------- ------- ------- -------
Income before income taxes ......... 9.6% 8.9% 9.0% 8.3%
Income taxes ....................... 3.6% 3.4% 3.4% 3.2%
------- ------- ------- -------
Net income ......................... 6.0% 5.5% 5.6% 5.1%
======= ======= ======= =======
</TABLE>
QUARTER ENDED JANUARY 23, 1999 COMPARED TO QUARTER ENDED JANUARY 24, 1998.
Net Sales. Net sales increased 17.7% to $ 230.2 million for the
three months ended January 23, 1999 ("Current Quarter") from $ 195.5
million for the three months ended January 24, 1998 ("Prior Quarter").
Sales in our U.S. dental market increased 21.2% resulting from
contributions from a larger sales force, a special short-term equipment
financing offer and acquisitions. Sales of sundries in the U.S.
increased 19.8% due primarily to increased volume. Equipment sales
increased 27.3%. Sales of business forms and stationery through Colwell
Systems were up 4.5% due to growth in sales to dental customers and to a
lesser extent medical customers. Canadian sales were up 4.0% in Canadian
dollars but were down 3.7% in U.S. dollars due to an unfavorable
exchange rate during the Current Quarter. Software sales increased
16.6%.
Gross Profit. Gross margin decreased to 37.3% for the Current
Quarter from 37.5% for the Prior Quarter. The decline in gross margin
was primarily caused by the shift in sales mix to a greater
concentration of equipment sales which generally carry a lower gross
margin than sundries, and higher raw material costs at Colwell. Gross
profit increased 17.1% to $85.8 million for the Current Quarter from
$73.3 million for the Prior Quarter. The majority of the increase in
gross profit was due to increased sales volume.
9
<PAGE>
Operating Expenses. Operating expenses increased 14.4% to $64.3
million for the Current Quarter from $56.2 million for the Prior
Quarter. The increase in operating expenses was principally related to
increased variable costs related to the higher sales volume. Operating
expenses as a percent of sales decreased to 28.0% for the Current
Quarter from 28.8% in the Prior Quarter due primarily to improved
operating leverage in both the U.S and Canadian operation offset by
higher operating costs in relation to sales at Colwell and EagleSoft.
Operating Income. Operating income increased 25.8% to $21.5
million for the Current Quarter from $17.1 million for the Prior
Quarter. Operating income as a percent of net sales increased to 9.3%
from 8.7%, due to lower operating expenses in relation to sales.
Finance Income. Finance income, net of expenses, was $0.5 million
for the Current Quarter compared to $0.3 million for the Prior Quarter.
The increase in finance income was caused by higher average short-term
investments of cash.
Income Taxes. The effective income tax rate decreased to 37.7%
for the Current Quarter from 38.2% for the Prior Quarter. The decrease
in rate was caused by a reduced loss in the Canadian operation for the
Current Quarter versus the Prior Quarter. No tax benefit has been
recorded for the losses.
NINE MONTHS ENDED JANUARY 23, 1999 COMPARED TO NINE MONTHS ENDED JANUARY 24,
1998.
Net Sales. Net sales increased 13.5% to $643.6 million for the
nine months ended January 23, 1999 ("Current Period") from $567.2
million for the nine months ended January 24, 1998 ("Prior Period").
Sales in the U.S. dental business were up 16.7% on strong equipment and
to a lesser extent sundry sales. Sales in Canada were down 7.1% in U.S.
dollars but were up 0.4% in Canadian currency. Colwell sales were
essentially flat with the Prior Period. EagleSoft sales increased $3.5
million versus the Prior Period which included only seven months of
operating results for EagleSoft.
Gross Profit. Gross margin, at 37.0%, remained the same
comparing the two periods. Gross profit increased 13.5% to $ 238.4
million for the Current Period from $ 210.0 million for the Prior
Period. The increase in gross profit was due primarily to the increase
in sales.
Operating Expenses. Operating expenses increased 11.0% to $
181.9 million for the Current Period from $ 163.8 million for the Prior
Period. The majority of the increase in operating expenses was variable
costs related to increased sales. Operating expenses as a percent of
sales have decreased from 28.9% in the Prior Period to 28.3% in the
Current Period. Expenses in relation to sales declined in the U.S. and
Canada but increased at Colwell and EagleSoft due primarily to increased
marketing costs.
10
<PAGE>
Operating Income. Operating income increased 22.3% to $ 56.4
million for the Current Period from $ 46.1 million for the Prior Period.
As a percent of net sales, operating income increased to 8.7% in the
Current Period from 8.1% reported in the Prior Period due principally to
lower operating expenses as a percent of sales.
Finance Income. Finance income, net of expenses, was $1.3
million for the Current Period compared to $0.8 million for the Prior
Period. Finance income increased $0.5 million due primarily to higher
short-term investments of cash.
Interest Expense. Interest expense decreased to $0.4 million for
the Current Period from $0.5 million for the Prior Period. This decrease
is due primarily to lower borrowings.
Income Taxes. The effective income tax rate remained essentially
the same.
LIQUIDITY AND CAPITAL RESOURCES
Available liquid resources at January 23, 1999 consisted of $34.8
million cash and cash equivalents and $30.6 million available under
existing bank lines. Inventory increased $ 15.5 million from the
beginning of the fiscal year to support the acceleration in sales growth
and increased forward buying to take advantage of supplier discounts.
Accounts receivable increased $15.5 million and days sales outstanding
increased from 42 to 48 days. This increase was the result of a special
calendar year-end equipment financing offer that increased receivables $
23.9 million. The Company believes that cash and cash equivalents and
the remainder of its credit lines are sufficient to meet any existing
and presently anticipated cash needs. In addition, because of its low
debt to equity ratio, the Company believes it has sufficient debt
capacity to replace its existing revolver and provide the necessary
funds to achieve its corporate objectives.
IMPACT OF YEAR 2000
The Year 2000 issue is the result of the wide spread use of computer
programs which were written using two digits rather than four to define
the applicable year in performing computations or decision-making
functions. The Company has completed its assessment of its major
information technology and technology reliant operating systems,
including its internal accounting, general ledger, billing, inventory
and accounts payable systems. The Company anticipates that all necessary
modifications or replacements of existing systems, including testing of
these systems, will be completed by April 30, 1999. The Company has
assessed the need for modifications or replacements of existing
hardware, particularly personal computers, and has completed this
assessment phase. The Company anticipates that remediation and testing
of existing hardware will be completed by April 30, 1999. The Company
has been implementing the necessary modifications and replacements of
its operating systems in the ordinary course of its business over the
last four years and believes the incremental costs to complete this
program will not be material.
The Company is in the process of querying its significant suppliers of
products and services to determine the impact on the Company if such
suppliers fail to convert their computer systems. The Company has not
yet completed its assessment of the impact on the Company if such
significant suppliers fail to convert their systems.
11
<PAGE>
The risk to the Company if significant product vendors fail to convert
their computer systems and, as a result, are unable to ship products to
the Company in a timely manner after the year 2000 is that the Company
may not be able to offer such products to its customers and will be able
to offer only replacement products, if available. The Company generally
has more than one source of supply for almost all categories of products
it sells. The risks to the Company if significant service providers fail
to timely convert their computer systems may include, in the case of
vital utility services, the inability of a branch office or distribution
center to operate. In such an event, the Company does have the ability
to shift its distribution and branch office operations to other
distribution centers and branches within its system. The Year 2000
efforts of third parties are ultimately beyond the Company's control.
However, notwithstanding the Company's efforts to substitute products or
shift distribution or branch operations, the inability of significant
suppliers of products and services to complete their Year 2000
resolution process in a timely fashion could materially adversely affect
the Company. The amount of lost revenue and impact on the Company can
not be reasonably estimated at this time.
The Company currently has no contingency plans in place in the event all
phases of the Year 2000 program are not completed or significant
suppliers of products and services fail to complete their Year 2000
resolution process. The Company is in the process of evaluating whether
such a plan is necessary.
The Company believes it has an effective program in place to resolve the
Year 2000 issue in a timely manner. As noted above, the failure of
significant suppliers of products and services to the Company to resolve
their own Year 2000 issues could materially adversely affect the
Company. In addition, disruptions in the economy generally as a result
of Year 2000 issues could also materially adversely affect the Company.
The foregoing discussion regarding Year 2000, including the discussion
of the timing and effectiveness of the Company's Year 2000 remediation
efforts, contains forward-looking statements which are based on
management's best estimates derived using assumptions and information
considered reasonable. These forward-looking statements involve inherent
risks and uncertainties, and actual results could differ materially from
those contemplated by such statements. Factors that might cause material
differences include, but are not limited to, the Company's ability to
locate and correct all relevant Year 2000 computer code and the ability
of significant suppliers of products and services to effectively address
the Year 2000 issue. Such material differences could result in business
disruption, operational problems, and similar risks.
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
The Company wishes to caution shareholders and prospective investors
that the following important factors, among others, could in the future
affect the Company's actual operating results which could differ
materially from those expressed in any forward-looking statements made
by the Company. The statements under this caption are intended to serve
as cautionary statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The following information is not intended
to limit in any way the characterization of other statements or
information under other captions as cautionary statements for such
purpose. The order in which such factors appear below should not be
construed to indicate their relative importance or priority.
12
<PAGE>
o Reduced growth in expenditures for dental services by private
dental insurance plans.
o Accuracy of the Company's assumptions concerning future per
capita expenditures for dental services, including assumptions
as to population growth and the demand for preventive dental
services such as periodontic, endodontic and orthodontic
procedures.
o The rate of growth in demand for infection control products
currently used for prevention of the spread of communicable
diseases such as AIDS, hepatitis and herpes.
o The effects of health care reform, increasing emphasis on
controlling health care costs and legislation or regulation of
health care pricing, all of which may affect the ability of
dentists to obtain reimbursement for use of new and
state-of-the-art procedures and technologies.
o The amount and growth of the Company's selling, general and
administrative expenses.
o The effects of, and changes in, U.S. and world social and
economic conditions, monetary and fiscal conditions, laws and
regulations, other activities of governments, agencies and
similar organizations, trade policies and taxes, import and
other charges, inflation and monetary fluctuations; the ability
or inability of the Company to obtain or hedge against foreign
currencies, foreign exchange rates and fluctuations in those
rates.
o Ability of the Company to retain its base of customers and to
increase its market share.
o The ability of the Company to maintain satisfactory
relationships with qualified and motivated sales personnel.
o Changes in economics of dentistry affecting dental practice
growth and the demand for dental products, including the ability
and willingness of dentists to invest in high-technology
diagnostic and therapeutic products.
o The Company's ability to meet increased competition from
national, regional and local full-service distributors and
mail-order distributors of dental products, while maintaining
current or improved profit margins.
o Continued ability of the company to maintain satisfactory
relationships with key vendors and the ability of the Company to
create relationships with additional manufacturers of quality,
innovative products.
o The ability of the Company and its suppliers to upgrade their
computer systems to adequately address the Year 2000 issue.
13
<PAGE>
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Item 27 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
All other items under Part II have been omitted because they are inapplicable or
the answers are negative, or, in the case of legal proceedings, were previously
reported in the annual report on Form 10-K filed July 16, 1998.
14
<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, thereunto duly authorized.
PATTERSON DENTAL COMPANY
(Registrant)
Dated: March 8, 1998.
By: /s/ Ronald E. Ezerski
-----------------------------------
Ronald E. Ezerski
Executive Vice President, Treasurer
and Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-24-1999
<PERIOD-START> APR-26-1998
<PERIOD-END> JAN-23-1999
<CASH> 34,782
<SECURITIES> 0
<RECEIVABLES> 125,668
<ALLOWANCES> 3,913
<INVENTORY> 97,268
<CURRENT-ASSETS> 258,472
<PP&E> 61,564
<DEPRECIATION> 25,258
<TOTAL-ASSETS> 343,934
<CURRENT-LIABILITIES> 85,670
<BONDS> 1,547
0
0
<COMMON> 334
<OTHER-SE> 248,118
<TOTAL-LIABILITY-AND-EQUITY> 343,934
<SALES> 643,574
<TOTAL-REVENUES> 643,574
<CGS> 405,218
<TOTAL-COSTS> 405,218
<OTHER-EXPENSES> 181,939
<LOSS-PROVISION> 755
<INTEREST-EXPENSE> 398
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<INCOME-TAX> 21,919
<INCOME-CONTINUING> 35,874
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,874
<EPS-PRIMARY> 1.08
<EPS-DILUTED> 1.07
</TABLE>
