<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 OCTOBER 30, 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 33,689,222 shares of common stock as of
December 7, 1999.
Page 1 of 15
<PAGE>
PATTERSON DENTAL COMPANY
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements 3-7
Condensed Consolidated Balance Sheets as of
October 30, 1999 and April 24, 1999 3
Condensed Consolidated Statements of Income for the three months
and six months ended October 30, 1999 and October 24, 1998 4
Condensed Consolidated Statements of Cash Flows for the six
months ended October 30, 1999 and October 24, 1998 5
Notes to Condensed Consolidated Financial
Statements 6-7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-13
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 14
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 October 30, 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 19, 1999, 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)
<TABLE>
<CAPTION>
ASSETS
October 30, April 24,
1999 1999
--------- ---------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ....................... $ 79,558 $ 78,746
Short-term investments .......................... 11,252 --
Receivables, net ................................ 114,411 112,521
Inventory ....................................... 106,609 91,722
Prepaid expenses and other current assets ....... 7,009 3,655
--------- ---------
Total current assets ..................... 318,839 286,644
Property and equipment, net ............................ 40,940 37,018
Intangibles, net ....................................... 46,188 46,867
Other .................................................. 2,998 2,721
--------- ---------
Total assets ............................. $ 408,965 $ 373,250
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 79,657 $ 67,213
Accrued payroll expense ......................... 9,852 14,342
Other accrued expenses .......................... 14,792 16,722
Current maturities of long-term debt ............ 402 415
--------- ---------
Total current liabilities ................ 104,703 98,692
Long-term debt ......................................... 1,447 1,682
Deferred taxes ......................................... 1,650 1,650
--------- ---------
Total liabilities ........................ 107,800 102,024
Deferred credits ....................................... 5,584 6,027
Stockholders' equity:
Preferred stock ................................. -- --
Common stock .................................... 337 336
Additional paid-in capital ...................... 67,724 66,992
Accumulated other comprehensive income .......... (1,872) (2,222)
Retained earnings ............................... 243,060 213,761
Note receivable from ESOP ....................... (13,668) (13,668)
--------- ---------
Total stockholders' equity ............... 295,581 265,199
--------- ---------
Total liabilities and stockholders' equity $ 408,965 $ 373,250
========= =========
</TABLE>
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 Six Months Ended
---------------------- ----------------------
Oct. 30, Oct. 24, Oct. 30, Oct. 24,
1999 1998 1999 1998
--------- --------- --------- ---------
(27 weeks) (26 weeks)
<S> <C> <C> <C> <C>
Net sales .................................... $ 248,435 $ 213,325 $ 503,034 $ 413,398
Cost of sales ................................ 157,645 134,401 318,714 260,883
--------- --------- --------- ---------
Gross profit ................................. 90,790 78,924 184,320 152,515
Operating expenses ........................... 68,480 60,248 139,868 117,596
--------- --------- --------- ---------
Operating income ............................. 22,310 18,676 44,452 34,919
Other income and expense:
Amortization of deferred credits ......... 221 221 442 443
Finance income, net ...................... 1,149 397 2,040 801
Interest expense ......................... (56) (145) (102) (285)
Profit (loss) on currency exchange ....... 23 (79) (36) (145)
--------- --------- --------- ---------
Income before income taxes ................... 23,647 19,070 46,796 35,733
Income taxes ................................. 8,836 7,173 17,496 13,607
--------- --------- --------- ---------
Net income ................................... $ 14,811 $ 11,897 $ 29,300 $ 22,126
========= ========= ========= =========
Earnings per share - basic and diluted ....... $ 0.44 $ 0.36 $ 0.87 $ 0.66
========= ========= ========= =========
Weighted average common and dilutive potential
common shares ............................ 33,808 33,437 33,777 33,412
========= ========= ========= =========
</TABLE>
See accompanying notes.
4
<PAGE>
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------------
Oct. 30, Oct. 24,
1999 1998
---------- ----------
(27 weeks) (26 weeks)
<S> <C> <C>
Operating activities:
Net income ............................................. $ 29,300 $ 22,126
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation .................................... 3,455 2,971
Amortization of deferrals ....................... (443) (443)
Amortization of goodwill ........................ 1,485 1,338
Bad debt expense ................................ 584 492
Change in assets and liabilities, net of acquired (12,826) (28,656)
-------- --------
Net cash provided by (used in) by operating activities ........ 21,555 (2,172)
Investing activities:
Proceeds from sale of facilities ....................... -- 2,250
Additions to property and equipment, net ............... (7,301) (3,507)
Acquisitions, net ...................................... (2,654) (343)
Purchase of short-term investments ..................... (11,252) --
-------- --------
Net cash provided by (used in) investing activities .......... (21,207) (1,600)
Financing activities:
Decrease in bank indebtedness .......................... -- (762)
Payments and retirement of long-term debt and
obligations under capital leases ..................... (301) (2,216)
Common stock issued, net ............................... 732 857
-------- --------
Net cash provided by (used in) financing activities ........... 431 (2,121)
Effect of exchange rate changes on cash ....................... 33 1
-------- --------
Net increase (decrease) in cash and cash equivalents .......... 812 (5,892)
Cash and cash equivalents at beginning of period .............. 78,746 35,619
-------- --------
Cash and cash equivalents at end of period .................... $ 79,558 $ 29,727
======== ========
</TABLE>
See accompanying notes.
5
<PAGE>
PATTERSON DENTAL COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
(Unaudited)
October 30, 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 October 30, 1999, and the
results of operations and the cash flows for the periods ended October 30,
1999, and October 24, 1998. Such adjustments are of a normal recurring
nature. The results of operations for the quarter ended October 30, 1999,
and October 24, 1998, are not necessarily indicative of the results to be
expected for the full year. The balance sheet at April 24, 1999, 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
1999 Annual Report on Form 10-K filed on July 19, 1999.
2. The fiscal year end of the Company is the last Saturday in April. The
second quarter of fiscal year 2000 and 1999 represent the 13 weeks ended
October 30, 1999 and October 24, 1998, respectively. The first six months
of fiscal year 2000 include 27 weeks while the first six months of fiscal
year 1999 include 26 weeks.
3. Cash equivalents consist of investments in money market funds, highly rated
commercial paper and government securities. The maturities of these
securities at the time of purchase is 90 days or less. Short-term
investments consist of highly rated commercial paper and government
securities with maturities longer than 90 days at the date of purchase. All
cash equivalents and short-term investments are classified as available for
sale and cost approximates market value.
4. The Company made the following acquisitions that affect the periods covered
by these financial statements:
Dentaplex, Inc. July 27, 1998
J&S Dental Supply Company, Inc. February 9, 1999
Barr Dental Supply, Inc. June 28, 1999
Kentucky Dental Supply Company, Inc. October 25, 1999
These acquisitions were accounted for as purchases 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 these
acquisitions individually, and in the aggregate, were not material to the
financial statements on a pro forma basis.
5. On February 5, 1999, the Company acquired Professional Business Systems,
Inc. in exchange for 214,317 shares of common stock. The acquisition was
accounted for as a pooling-of-interests and was not material to the
financial statements on a pro forma basis. The financial statements have
not been restated to reflect the financial position and results of the
operations prior to the date of acquisition based on materiality.
6
<PAGE>
7. The following table sets forth the denominator for the computation of basic
and diluted earnings per share:
Three Months Ended Six Months Ended
------------------ -------------------
Oct. 30, Oct. 24, Oct. 30, Oct. 24,
1999 1998 1999 1998
------ ------ ------ ------
Denominator:
Denominator for basic earnings per
share - weighted-average shares 33,676 33,323 33,665 33,307
Effect of dilutive securities:
Director Stock Option Plan 69 53 61 55
Employee Stock Purchase Plan 5 5 5 5
Capital Accumulation Plan 58 56 46 45
------ ------ ------ ------
Dilutive potential common shares 132 114 112 105
------ ------ ------ ------
Denominator for diluted earnings per
share - adjusted weighted-average
shares and assumed conversions 33,808 33,437 33,777 33,412
====== ====== ====== ======
7
<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.
Three Months Ended Six Months Ended
------------------ ----------------
Oct. 30, Oct. 24, Oct. 30, Oct. 24,
1999 1998 1999 1998
----- ----- ----- -----
Net sales...................... 100.0% 100.0% 100.0% 100.0%
Cost of sales.................. 63.4% 63.0% 63.4% 63.1%
----- ----- ----- -----
Gross profit................... 36.6% 37.0% 36.6% 36.9%
Operating expenses............. 27.6% 28.2% 27.8% 28.5%
----- ----- ----- -----
Operating income............... 9.0% 8.8% 8.8% 8.4%
Other income and expense, net.. 0.5% 0.1% 0.5% 0.2%
----- ----- ----- -----
Income before income taxes..... 9.5% 8.9% 9.3% 8.6%
Income taxes................... 3.5% 3.3% 3.5% 3.2%
----- ----- ----- -----
Net income..................... 6.0% 5.6% 5.8% 5.4%
===== ===== ===== =====
QUARTER ENDED OCTOBER 30, 1999 COMPARED TO QUARTER ENDED OCTOBER 24, 1998.
Net Sales. Net sales increased 16.5% to $248.4 million for the three
months ended October 30, 1999 ("Current Quarter") from $213.3 million for
the three months ended October 24, 1998 ("Prior Quarter"). All product
categories contributed to the sales increase. Sales of dental sundry
products increased 16.4% due primarily to an increase in the customer base
and a 10 percent year-to-year increase in the sales force. Equipment sales
increased 14.2%. Sales of Colwell printed office products were up 32.2%,
which included the February 1999 acquisition of Professional Business
Systems ("PBS"). Excluding the impact of PBS, sales were up 7.6%. EagleSoft
software and related product sales were up 37.9% as customers upgraded
their systems to be year 2000 compliant. Sales in Canada improved 14.2%,
benefiting from an improving economy.
Gross Profit. Gross profit margin declined to 36.6% for the Current
Quarter from 37.0% for the Prior Quarter. The 40 basis point gross margin
decrease was due primarily to the absence of certain buying opportunities
that were available last year. Gross profit increased 15.0% to $90.8
million for the Current Quarter from $78.9 million for the Prior Quarter.
The majority of the increase in gross profit was due to increased sales.
8
<PAGE>
Operating Expenses. Operating expenses increased 13.7% to $68.5
million for the Current Quarter from $60.2 million for the Prior Quarter.
The increase in operating expenses was principally related to the higher
sales volume and increased health care costs. Operating expenses as a
percent of sales, however, decreased from 28.2% in the Prior Quarter to
27.6% in the Current Quarter.
Operating Income. Operating income increased 19.5% to $22.3 million
for the Current Quarter from $18.7 million for the Prior Quarter. Operating
income as a percent of net sales increased from 8.8% to 9.0%, due to
improved operating leverage.
Finance Income. Finance income, net of expenses, was $1.1 million for
the Current Quarter compared to $.4 million for the Prior Quarter. Finance
income increased $.8 million due primarily to higher average short-term
investments of cash.
Income Taxes. The effective income tax rate decreased slightly to
37.4% for the Current Quarter from 37.6% for the Prior Quarter.
Net Income. Net income was $14.8 million, up $2.9 million or 24.5%
from $11.9 million reported in the second quarter of last year due to the
factors discussed above.
Earnings Per Share. Earnings per share were 44 cents which represents
an 8 cent or 22.2% increase over the same quarter a year ago.
SIX MONTHS ENDED OCTOBER 30, 1999 COMPARED TO SIX MONTHS ENDED OCTOBER 24, 1998.
Net Sales. Net sales increased 21.7% to $503.0 million for the six
months ended October 30, 1999 ("Current Period") from $413.4 million for
the six months ended October 24, 1998 ("Prior Period"). The Current Period
includes 27 weeks versus 26 weeks in the Prior Period. Excluding the impact
of the additional week, sales increased approximately 17%. Sales references
in parentheses exclude the additional week. Sales of sundries increased
21.0%(17%) due primarily to contributions from an expanded sales force and
an increase in number of customers. Equipment sales increased 20.8%(16%) on
strong demand across the line. Sales of printed office products through
Colwell Systems were up 36.0%. Excluding the impact of the acquisition of
PBS and the additional week sales increased 6.6%. An expanded product
offering and better account penetration by the dental sales force were the
major factors contributing to the increase. EagleSoft software and related
services sales increased 64.6%(58%).
Gross Profit. Gross profit margin decreased to 36.6% for the Current
Period from 36.9% for the Prior Period due primarily to the absence of
certain buying opportunities that were available last year. Gross profit
increased 20.9% to $184.3 million for the Current Period from $152.5
million for the Prior Period. The increase in gross profit was due
primarily to the increase in sales volume.
Operating Expenses. Operating expenses increased 18.9% to $139.9
million for the Current Period from $117.6 million for the Prior Period.
The majority of the increase in operating expenses was related to greater
sales volume, incentive compensation and higher health care costs.
Operating expenses as a percent of sales declined from 28.5% to 27.8% due
to improved operating leverage.
9
<PAGE>
Operating Income. Operating income increased 27.3% to $44.5 million
for the Current Period from $34.9 million for the Prior Period. As a
percent of net sales, operating income increased from 8.4% to 8.8%, due to
better leverage of the Company's infrastructure.
Finance Income. Finance income, net of expenses, was $2.0 million for
the Current Period compared to $.8 million for the Prior Period. Finance
income increased $1.2 million due primarily to increased average short-term
investments of cash.
Income Taxes. The effective income tax rate decreased to 37.4% for the
Current Period from 38.1% for the Prior Period as a result of operating
profit in Canada and utilization of tax-loss carryforwards in that country.
Net Income. Net income was $29.3 million, up $7.2 million or 32.4 %
from $22.1 million reported in the first half of last year due to the
factors discussed above.
Earnings Per Share. Earnings per share were 87 cents which represents
a 21 cent or 31.8% increase over the same period a year ago.
LIQUIDITY AND CAPITAL RESOURCES
Available liquid resources at October 30, 1999 consisted of $90.8 million
of cash and short-term investments and $11.3 million available under
existing bank lines at October 30, 1999. Inventory increased $14.9 million
from the beginning of the fiscal year. However, inventory turnover
increased from 6.0 at the beginning of fiscal year 2000 to 6.2 turns at
October 30, 1999. Accounts receivable increased $1.9 million to $106.6
million from the beginning of the year, while days sales outstanding
declined to 41 days from 43 days. Capital expenditures increased $3.8
million in the Current Period versus the Prior Period as the Company
invested in a new distribution center that is expected to come on line in
February 2000. The Company believes that cash and short-term investments
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 widespread 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. Necessary modifications or replacements of existing systems,
including testing of these systems, have been completed. The Company has
also assessed the need for modifications or replacements of existing
hardware, particularly personal computers, and has completed this
assessment phase. The remediation and testing of existing hardware has been
completed. As a result, the Company believes that substantially all
critical business systems and hardware are Year 2000 compliant. The Company
has been implementing the necessary modifications and replacements of its
operating systems in the ordinary course of its business over
10
<PAGE>
the last four years and believes the incremental costs to complete this
program were less than $200,000. Over the past four years the Company has
invested approximately $500,000 in new systems.
The Company is also dependent on its vendors to supply the products it
sells and on service providers, including transportation providers and
utilities. The Company has sought assurances from its significant suppliers
of products and services to determine the impact on the Company if such
suppliers fail to convert their computer systems. While the vast majority
of the Company's significant suppliers have assured the Company that their
systems are currently Year 2000 compliant, or will be made Year 2000
compliant prior to December 31, 1999, there can be no assurance that there
will not be a material adverse impact on the Company if a substantial
number of significant suppliers fail to convert their systems.
The Year 2000 efforts of third parties are ultimately beyond the Company's
control. 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. 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 the impact on the Company can not be reasonably
estimated at this time.
The Company has developed contingency plans in the event significant
suppliers of products or services fail to complete their Year 2000
resolution process. These plans include identifying alternate sources of
products, increasing the inventory of certain products, testing the
operation of critical systems at each location during the holiday week-end,
preparing to shift operations from any branch or distribution center
location which fails to operate to other branches or distribution centers
which are operational, and temporarily redirecting staff to certain
customer service functions to help resolve Year 2000 issues which may
arise.
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 also could 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.
11
<PAGE>
FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
Certain information of a non-historical nature contain forward-looking
statements. Words such as "believes", "expects", "plans", "estimates" and
variations of such words are intended to identify such forward-looking
statements. The statements are not guaranties of future performance and are
subject to certain risks, uncertainties or assumptions that are difficult
to predict: therefore, the Company cautions 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. 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.
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.
12
<PAGE>
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.
o Future operating results of the Company's printed office products
group depends upon its ability to attract and retain customers by
offering quick response time and innovative products that meet
industry reporting standards. Because the cost of paper stock
represents over half the cost of its paper and printed products,
future operating results may be subject to fluctuations in paper
prices. In addition, the introduction of computer-based technologies
into the management of health care practices may affect future demand
for printed products.
13
<PAGE>
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a) The Company's Annual Meeting of Shareholders was held on September 13,
1999.
c)(1) The shareholders voted for two director nominees, Ronald E. Ezerski
and Andre B. Lacy, for a three year term. 31,251,580 shares were voted
for Mr. Ezerski and 584,808 shares withheld authority. 31,394,967
shares were voted for Mr. Lacy and 441,421 shares withheld authority.
There were no abstentions and no broker non-votes.
(2) The shareholders voted to ratify the appointment of Ernst & Young LLP
as independent auditors of the Company for the fiscal year ending
April 29, 2000. The vote was 31,776,602 shares for, 4,555 shares
against and 55,231 abstentions. There were no broker non-votes.
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 19, 1999.
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: December 10, 1999
By: /s/ R. Stephen Armstrong
------------------------
R. Stephen Armstrong
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> 6-MOS
<FISCAL-YEAR-END> APR-29-2000
<PERIOD-START> APR-25-1999
<PERIOD-END> OCT-30-1999
<CASH> 79,558
<SECURITIES> 11,252
<RECEIVABLES> 118,509
<ALLOWANCES> 4,098
<INVENTORY> 106,609
<CURRENT-ASSETS> 318,839
<PP&E> 72,562
<DEPRECIATION> 31,622
<TOTAL-ASSETS> 408,965
<CURRENT-LIABILITIES> 104,703
<BONDS> 1,447
0
0
<COMMON> 337
<OTHER-SE> 295,244
<TOTAL-LIABILITY-AND-EQUITY> 408,965
<SALES> 503,034
<TOTAL-REVENUES> 503,034
<CGS> 318,714
<TOTAL-COSTS> 318,714
<OTHER-EXPENSES> 139,284
<LOSS-PROVISION> 584
<INTEREST-EXPENSE> 102
<INCOME-PRETAX> 46,796
<INCOME-TAX> 17,496
<INCOME-CONTINUING> 29,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,300
<EPS-BASIC> .87
<EPS-DILUTED> .87
</TABLE>
