ST. PAUL, Minn., May 21 /PRNewswire/ -- Patterson Dental Company
(Nasdaq: PDCO) today reported record results for its fourth quarter and fiscal
year ended April 25, 1998, due to the market's growing demand for innovative
high-technology equipment; a broader, well-trained sales force; and solid
contributions from acquisitions.
In fiscal 1998, net income increased 25 percent to $40.8 million, or $1.23
per share, from $32.6 million, or $1.00 per share, last year. The company's
basic and diluted earnings per share are the same. Sales rose 13 percent to
$778.2 million from $687.9 million. Gross margin advanced to 37 percent from
36 percent a year ago. Strong operating margins in the Colwell and EagleSoft
product lines, and a highly efficient domestic operating structure resulted in
an operating margin expansion of 90 basis points to 8.3 percent.
For the fourth quarter of fiscal 1998, net income increased 26 percent to
$11.6 million from $9.2 million, yielding a per-share comparison of 35 cents
in the recent quarter, up 25 percent from 28 cents in the prior year. Sales
increased 12 percent to $211.0 million from $187.6 million. Revenues
benefited from a 16.2 percent sales increase from equipment; a 10.6 percent
increase in sales of consumables; and strong contributions from EagleSoft and
Hill Dental.
Consolidated results for the prior year periods have been restated to
include operations of Canadian Dental Supply, acquired in August 1997, and
accounted for as a pooling of interests. In addition, per share results
reflect the 3-for-2 stock split in the form of a 50 percent stock dividend
declared January 12, 1998. The stock split brought shares outstanding to
approximately 33 million.
"In spite of the challenges experienced by our Canadian operation, we
exceeded our goal of 20 percent earnings growth and sales growth 4 percentage
points higher than the industry average in fiscal 1998. Three strategic
acquisitions made during the year supported our growth goals by broadening our
product offering (EagleSoft); capitalizing on a consolidating market to expand
our customer base and sales force (Hill Dental); and, strengthening our market
position in Canada (Canadian Dental Supply). Our high-technology equipment
offerings also improved results. Led by Cerec 2, a chairside crown
restoration technology requiring only a single patient visit, and with notable
contributions from our air abrasion products, equipment sales rose
11.5 percent from a year earlier. Consumable sales increased 13.9 percent
year-over-year," said Peter Frechette, Chairman and Chief Executive Officer.
Patterson continues to report a strong financial position. The company's
cash and cash equivalents were $35.6 million at April 25, 1998. Shareholders'
equity advanced 28 percent in fiscal 1998 to $210.3 million from
$163.7 million a year ago. Debt was a modest 2 percent of capitalization, and
the current ratio was a healthy 2.5 to 1.
According to Frechette, fiscal 1999 brings with it more opportunities for
Patterson to build its financial position and expand market share:
* The dental distribution market continues to consolidate.
* Patterson now has 886 sales representatives promoting its product
lines, a 13 percent increase over fiscal 1997. These new sales people
offer greater coverage for the Colwell, EagleSoft and Patterson lines.
* In fiscal 1999, the company expects approximately 80 new sales people
will go through its training program. These trainees will fill
vacancies created by normal turnover and build new sales territories.
* The company will introduce a new electronic order entry system that
allows customers to use the Internet to purchase its products.
* New high-tech equipment such as the Wand(TM), a computerized local
anesthetic delivery system, are being introduced to the dental market
place.
"As we capitalize on these opportunities, we believe we can continue to
achieve our goal of double-digit growth in fiscal 1999," said Frechette.
Patterson Dental Company is one of the largest distributors of dental
products in North America. The company supplies more than 75,000 products to
dentists, dental laboratories, institutions, physicians and other heath care
providers. These products include x-ray film, impression and restorative
materials, hand instruments, sterilization products, front office forms and
stationery as well as capital equipment. Patterson markets its products and
services through nearly 900 direct sales representatives and equipment
specialists in the United States and Canada.
This document contains forward looking statements as defined in the
Private Securities Litigation Reform Act of 1995 regarding new product
introductions, expectations in Canada, acquisition opportunities, and sales
force expansion. Forward looking statements involve risks and uncertainties
which are beyond the company's ability to control and in many cases the
company cannot predict what factors may cause actual results to differ
materially from those indicated by the forward looking statements. These
factors may include, among others: competition within the dental supply
industry; changes in the economics of dentistry, including reduced growth in
expenditures by private dental insurance plans and the effects of healthcare
reform, which may affect future per capita expenditures for dental services
and the ability of dentists to invest in or obtain reimbursement for the use
of high-technology products; the ability of the company to maintain
satisfactory relationships with its sales force; the effects of economic
conditions; unforeseen operating risks; risks associated with the dependence
on manufacturers of the company's products; and the availability of capital to
finance planned growth. These risks are qualified in their entirety by
cautionary language set forth in the company's Form 10-K report filed July 25,
1997, and other documents filed with Securities and Exchange Commission.
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except for earnings per share)
(Unaudited)
Quarter ended Year ended
April 25, April 26, April 25, April 26,
1998 1997 1998 1997
(Restated) (Restated)
Net sales $211,006 $187,587 $778,169 $687,895
Gross profit 79,940 68,836 289,890 247,633
Operating income 18,266 14,955 64,382 51,185
Other income, net 498 122 1,324 1,119
Income taxes 7,196 5,887 24,937 19,687
Net income $11,568 $9,190 $40,769 $32,617
Earnings per share --
basic and diluted $0.35 $0.28 $1.23 $1.00
Weighted average and
dilutive potential
shares outstanding 33,340 32,807 33,163 32,689
Gross margin 37.9% 36.7% 37.3% 36.0%
Operating expenses as
a % of sales 29.2% 28.7% 29.0% 28.6%
Operating income as
a % of sales 8.7% 8.0% 8.3% 7.4%
Effective tax rate 38.4% 39.0% 38.0% 37.6%
Return on net sales 5.5% 4.9% 5.2% 4.7%
Restated to reflect results of Canadian Dental Supply Limited which was
accounted for as a pooling of interests.
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
April 25, April 26,
1998 1997
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $35,619 $9,095
Accounts and notes
receivable, net 106,252 95,132
Inventory 81,810 65,486
Prepaid expenses and
deferred taxes 3,980 4,105
Total current assets 227,661 173,818
Property and equipment, net 37,998 35,563
Intangibles and other 50,714 45,930
Total assets $316,373 $255,311
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $60,652 $48,472
Other accrued liabilities 29,287 23,226
Current maturities of long-term
debt and bank indebtedness 2,366 5,227
Total current liabilities 92,305 76,925
Long-term debt 4,836 5,565
Deferred taxes 2,017 1,362
Total liabilities 99,158 83,852
Deferred credits 6,912 7,797
Stockholders' equity 210,303 163,662
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $316,373 $255,311
Restated to reflect results of Canadian Dental Supply Limited which was
accounted for as pooling of interests.
SOURCE Patterson Dental Company
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Related links:
http://www.pattersondental.com
CONTACT:
Ronald Ezerski, Executive Vice President &
CFO of Patterson Dental, 612-686-1600; or General Information,
Leslie Hunziker, or Analyst Inquiries, Kathy Brunson,
312-266-7800, both of The Financial Relations Board
NOTE TO EDITORS: For further information on Patterson Dental free
of charge via fax, dial 1-800-PRO-INFO and enter the number 207.
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