ST. PAUL, Minn., May 22 /PRNewswire/ -- Patterson Dental Company
(Nasdaq: PDCO) today reported strong performance for the fourth quarter and
year ended April 26, 1997, due both to its continuing acquisition program and
internal growth. In reporting on results, Peter L. Frechette, president and
chief executive officer, said the company's favorable momentum appears to be
continuing into fiscal 1998.
"On the acquisition front, our purchase of Colwell added healthcare forms
and stationery to Patterson's consumable and equipment product lines, creating
an opportunity to expand into the business portion of the dental office.
Additionally, we broadened our customer base by purchasing Thau-Nolde of St.
Louis, Mo., and Dental Service Company of Erie, Pa., and San Antonio, Texas,"
said Frechette.
"Our internal growth strategies were equally effective. We formalized and
expanded our training program for new sales representatives; introduced major
new equipment options that make our dental clients more productive; rolled out
a multi-task electronic order-entry system; and broadened our Patterson Plus
marketing campaign, which rewards customers who agree to an annual purchase
commitment."
For the year, net income was $32.4 million compared with $28.7 million a
year earlier. Earnings Per Share (EPS) rose 14.5 percent to $1.50 per share,
from $1.31 per share, a year ago. Net income available to common
shareholders, for purposes of computing earnings per share, was $32.4 million
up 15.3 percent from $28.1 million last year. Net sales for fiscal 1997 were
$661.5 million, up 13.7 percent compared with $581.9 million in the same
period a year ago. Gross margin increased to 35.9 percent versus 35.3 percent
last year while operating margin improved to 7.7 percent from 7.5 percent last
year. Frechette said strong contributions to operating margin from the
Colwell division should have a favorable effect on overall margins going
forward.
Net income for the fourth quarter was $9.3 million compared with
$8.4 million a year earlier. EPS rose 13.2 percent to $0.43 per share from
$0.38 per share a year ago. Net income available to common shareholders was
$9.3 million up 12.7 percent from $8.3 million a year earlier. Net sales for
the fiscal 1997 fourth quarter grew 16.9 percent to $181.4 million from
$155.2 million in the year-ago quarter.
"U.S. operations and contributions from our Colwell division were very
strong for the fourth quarter and fiscal year -- more than compensating for
the continued challenges presented by our Canadian operation. Sales in Canada
were essentially flat and margin pressure in that market led to a Canadian
loss of $678,000, or $0.03 per share, for fiscal 1997. Currently, we are
working to reduce expenses at this operation in an effort to offset the impact
of the soft market environment," said Frechette.
Excluding Colwell, dental supplies represented 61 percent of sales in
fiscal 1997 versus 60 percent a year earlier; equipment held steady at
29 percent of sales; and other products and services were 10 percent versus
11 percent in fiscal 1996.
"Patterson has long been a leader in providing new technologies to dental
practitioners," Frechette said. "Our most recent introductions -- the KCP
1000, a cavity preparation device; and the Cerec 2, which allows dentists to
perform complex procedures, such as inlays and onlays, in a single visit --
have been generating increased demand. Dentists can perform a procedure in
less time with this advanced equipment, enabling them to handle more
procedures. The quality of care also improves dramatically along with the
patients' comfort level, which favorably affects the number of patients
visiting the dentist," said Frechette.
Patterson continues to report a strong financial position. The company's
cash and cash equivalents decreased year-over-year as a result of the
acquisition of Colwell Systems. Shareholders' equity advanced 28 percent in
fiscal 1997 to $162.7 million from $127.1 million a year ago. Debt was an
extremely modest 2 percent of capitalization, and the current ratio was a
healthy 2.4 to 1.
"Starting in the second half of the year, our sales force will begin
selling Colwell products to our customers. We expect to see measurable
results from this initiative in the next fiscal year," Frechette said. "We are
very pleased with the progress of this acquisition to date, but most of the
benefits we anticipate are multi-year in nature."
"Our strategy to increase market share, while broadening our product line
and developing additional value-added services, is on track. We are
optimistic about fiscal 1998 and our ability to achieve our financial goals,
grow market share and build on our leadership position," said Frechette.
Statements in this press release which are not strictly historical are
"forward-looking" statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, and are
qualified in their entirety by cautionary language set forth in documents
filed by the company with the Securities and Exchange Commission. Forward-
looking statements involve known and unknown risks, uncertainties and other
factors, which may cause the company's actual results in the future to differ
materially from expected results. These risks, uncertainties and other
factors include, among others, competition and growth within the dental supply
and healthcare forms industries; the successful integration of the Colwell
operations; unforeseen operating risks; and the effects of economic
conditions. These factors, among others, are described in greater detail in
the company's filings with the Securities and Exchange Commission.
Patterson Dental Company is the largest distributor of dental products in
North America. The company supplies more than 70,000 products to dentists,
dental laboratories and institutions, including x-ray film and solutions,
impression and restorative materials, hand instruments, sterilization and
protective products and equipment. Patterson markets its products and
services through 786 direct sales representatives and equipment specialists in
the United States and Canada, and ships approximately 97 percent of its
consumable goods within 24 hours of receipt. In addition, using a direct
marketing approach, its Colwell subsidiary produces and sells stationery and
office products to healthcare providers.
For further information on Patterson Dental free of charge via fax,
dial 1-800-PRO-INFO and enter the number 207.
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands except earnings per share)
(Unaudited)
Total Year Fourth Quarter
April 26, 1997 April 27, 1996 1997 1996
Net sales $661,518 $581,893 $181,392 $155,172
Cost of sales 423,911 376,507 114,932 99,877
Gross profit 237,607 205,386 66,460 55,295
Operating expense 186,956 161,676 51,351 42,951
Operating income 50,651 43,710 15,109 12,344
Other income and
expense, net 1,304 1,998 168 632
Income before taxes 51,955 45,708 15,277 12,976
Income taxes 19,540 16,961 5,971 4,563
Net income $32,415 $28,747 $9,306 $8,413
Net income available
for common shareholders $32,415 $28,125 $9,306 $8,256
Earnings per common and
common equivalent share $1.50 $1.31 $0.43 $0.38
Weighted average common and
common equivalent shares
outstanding 21,681 21,539 21,759 21,561
Gross margin percent 35.9% 35.3% 0.0% 35.6%
Operating income as
a % of sales 7.7% 7.5% 8.3% 7.9%
Effective tax rate 37.6% 37.1% 39.1% 35.2%
Net income as
a % of sales 4.9% 4.9% 5.1% 5.4%
PATTERSON DENTAL COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
April 26, April 27,
1997 1996
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $9,095 $46,056
Accounts and notes receivables, net 90,897 77,215
Inventory 60,335 48,787
Prepaid expenses and deferred taxes 3,967 2,627
Total current assets 164,294 174,685
Property and equipment, net 34,532 25,740
Intangibles and other 45,636 2,375
Total assets $244,462 $202,800
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $46,597 $42,520
Other current liabilities 22,983 20,145
Note payable and current maturities
of long-term debt 186 151
Total current liabilities 69,766 62,816
Long-term debt 2,790 3,024
Deferred taxes 1,362 1,157
Total liabilities 73,918 66,997
Deferred credits 7,797 8,682
Stockholders' equity 162,747 127,121
TOTAL LIABILITIES AND STOCKHOLDERS' $244,462 $202,800
SOURCE Patterson Dental Company
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CONTACT:
Ronald Ezerski, Vice President & CFO of
Patterson Dental, 612-686-1600; or General Information: Michael
Rosenbaum or Kathy Brunson, or Analyst Inquiries: Leslie
Hunziker, of The Financial Relations Board, 312-266-7800
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