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Patterson Companies Reports Third Quarter Operating Results

Patterson MedicalSales for Patterson Medical, the rehabilitation supply and equipment unit, declined slightly to $113,959,000, primarily reflecting weak equipment sales during the quarter. Sales from Patterson Medical currently represent approximately 15% of total company sales.

Anderson concluded: “Patterson Medical sales were essentially in-line with our internal forecasts for the third quarter. Performance has been affected by the continued uncertainty surrounding the nation’s health care system and in international markets from the continued austerity measures that have dampened demand throughout fiscal 2013. Although this situation is likely to persist in the short-term, we believe Patterson Medical is well positioned to leverage its technology and portfolio of value-added products to capture future growth opportunities in the rehabilitation market.”

Year to Date ResultsConsolidated sales for the first nine months of fiscal 2013 totaled $2,672,279,000, an increase of nearly 3% from $2,599,327,000 in the year-earlier period. Net income was $146,710,000, or $1.41 per diluted share, compared to net income of $150,672,000, $1.34 per diluted share, in the year-ago period.

During the third quarter Patterson repurchased approximately 1.4 million common shares under its 25 million share buyback authorization that expires in 2016. Approximately 7 million shares remain available for repurchase under this authorization.

Patterson maintained its financial guidance for fiscal 2013 for earnings per diluted share of $2.00 to $2.06.

Third Quarter Conference Call and ReplayPatterson’s third quarter earnings conference call will start at 10 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com. The conference call will be archived on Patterson’s web site. A replay of the third quarter conference call can be heard for one week at 1-303-590-3030 and providing the conference ID: 4594665.

About Patterson Companies, Inc.Patterson Companies, Inc. is a value-added distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets. Dental MarketAs 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 MarketPatterson Veterinary is a leading distributor of consumable veterinary supplies, equipment and software, diagnostic products, vaccines and pharmaceuticals to companion-pet veterinary clinics. Rehabilitation MarketPatterson 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.

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; unexpected loss of key senior management personnel; 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.

 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share amounts)
(Unaudited)
       
 
Three Months Ended Nine Months Ended
 
January 26, January 28, January 26, January 28,
2013 2012 2013 2012
 
 
Net sales $ 915,861 $ 895,030 $ 2,672,279 $ 2,599,327
Gross profit 300,293 289,534 866,592 848,793
Operating expenses   210,755     199,628     616,593     593,635  
 
Operating income 89,538 89,906 249,999 255,158
Other expense, net   (7,738 )   (8,043 )   (25,081 )   (19,393 )
 
Income before taxes 81,800 81,863 224,918 235,765
Income taxes   28,170     28,755     78,208     85,093  
 
Net income $ 53,630   $ 53,108   $ 146,710   $ 150,672  
 
Earnings per share:
Basic $ 0.53 $ 0.50 $ 1.42 $ 1.35
Diluted $ 0.52 $ 0.50 $ 1.41 $ 1.34
 
Shares:
Basic 102,130 106,504 103,624 111,539
Diluted 102,896 107,206 104,374 112,226
 
Dividends declared per common share $ 0.14 $ 0.12 $ 0.42 $ 0.36
Gross margin 32.8 % 32.3 % 32.4 % 32.7 %
Operating expenses as a % of net sales 23.0 % 22.3 % 23.1 % 22.8 %
Operating income as a % of net sales 9.8 % 10.0 % 9.4 % 9.8 %
Effective tax rate 34.4 % 35.1 % 34.8 % 36.1 %
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
   
 
January 26, April 28,
2013 2012
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 472,449 $ 573,781
Receivables, net 421,506 464,869
Inventory 352,646 319,952
Prepaid expenses and other current assets   41,527   44,911
Total current assets 1,288,128 1,403,513
 
Property and equipment, net 191,385 195,465
Goodwill and other intangible assets 1,022,437 1,022,809
Investments and other   135,540   117,581
 
Total Assets $ 2,637,490 $ 2,739,368
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 220,870 $ 207,915
Other accrued liabilities 186,157 196,733
Current maturities of long-term debt   50,000   125,000
Total current liabilities 457,027 529,648
 
Long-term debt 725,000 725,000
Other non-current liabilities   104,730   109,518
Total liabilities 1,286,757 1,364,166
 
Stockholders' equity   1,350,733   1,375,202
 
Total Liabilities and Stockholders' Equity $ 2,637,490 $ 2,739,368
 
PATTERSON COMPANIES, INC.
SUPPLEMENTARY FINANCIAL DATA
(Dollars in thousands)
(Unaudited)
       
 
 
Three Months Ended Nine Months Ended
January 26, January 28, January 26, January 28,
2013 2012 2013 2012
 
Consolidated Net Sales
Consumable and printed products $ 551,149 $ 550,888 $ 1,725,465 $ 1,695,822
Equipment and software 292,726 273,573 726,687 687,249
Other   71,986     70,569     220,127     216,256  
Total $ 915,861   $ 895,030   $ 2,672,279   $ 2,599,327  
 
Dental Supply
Consumable and printed products $ 308,700 $ 311,356 $ 934,234 $ 932,461
Equipment and software 254,033 231,372 615,282 567,312
Other   63,761     62,313     193,519     189,240  
Total $ 626,494   $ 605,041   $ 1,743,035   $ 1,689,013  
 
Rehabilitation Supply
Consumable and printed products $ 80,628 $ 80,510 $ 273,446 $ 272,235
Equipment and software 27,301 28,783 85,635 91,542
Other   6,030     6,053     19,290     19,591  
Total $ 113,959   $ 115,346   $ 378,371   $ 383,368  
 
Veterinary Supply
Consumable and printed products $ 161,821 $ 159,022 $ 517,785 $ 491,126
Equipment and software 11,392 13,418 25,770 28,395
Other   2,195     2,203     7,318     7,425  
Total $ 175,408   $ 174,643   $ 550,873   $ 526,946  
 
Other (Expense) Income, net
Interest income $ 1,151 $ 1,052 $ 3,492 $ 3,778
Interest expense (9,113 ) (8,358 ) (27,808 ) (20,880 )
Other   224     (737 )   (765 )   (2,291 )
$ (7,738 ) $ (8,043 ) $ (25,081 ) $ (19,393 )
 
PATTERSON COMPANIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
   
Nine Months Ended
January 26, January 28,
2013 2012
 
 
Operating activities:
Net income $ 146,710 $ 150,672
Depreciation & amortization 33,307 30,432
Stock-based compensation 10,985 9,428
ESOP compensation 17,100 544
Change in assets and liabilities, net of acquired   (28,766 )   37,586  
Net cash provided by operating activities 179,336 228,662
 
Investing activities:
Additions to property and equipment, net of disposals (14,259 ) (25,051 )
Acquisitions and equity investments   (14,650 )   (14,193 )
Net cash used in investing activities (28,909 ) (39,244 )
 
Financing activities:
Dividends paid (43,745 ) (39,800 )
Share repurchases (140,468 ) (323,519 )
Proceeds from issuance of long-term debt - 325,000
Other financing activities   (65,790 )   7,935  
Net cash used in financing activities (250,003 ) (30,384 )
 
Effect of exchange rate changes on cash   (1,756 )   (9,607 )
 
 
Net increase (decrease) in cash and cash equivalents $ (101,332 ) $ 149,427  




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