Weak economy dampens Patterson profits

Patterson reported consolidated sales of $780 million for the fourth quarter, compared with $778 million for the same quarter a year ago, the company announced.

Net income for the quarter was $54 million, down 15% from $63 million in the fourth quarter of 2008.

Full-year fiscal 2009 consolidated sales totaled $3 billion, up 3% from $2.9 billion in fiscal 2008. Net income for the year was $199.6 million, compared with $224.8 million in 2008.

The weak economy affected each of Patterson's three businesses in the fourth quarter, especially in the area of equipment sales, the company noted. This impact was particularly evident on sales of basic dental equipment, although dental practitioners continued investing at solidly higher levels in new technology products, including Cerec dental restorative products and digital radiography systems, the company said.

Sales of Patterson Dental Supply, Patterson's largest business, were $534 million in the fourth quarter, down 5% from $562 million in the same period a year ago. Sales of consumable dental supplies and printed office products were down 2% from last year's fourth quarter, and sales of dental equipment and software declined 10% from a year ago. Sales of other services and products, consisting primarily of technical service parts and labor, software support services, and artificial teeth, rose 4% from last year's fourth quarter.

"Our fourth quarter operating results were below our expectations as we experienced reduced customer demand for the capital equipment offerings at each of our three businesses," said James Wiltz, president and CEO. "In addition, sales of consumable dental supplies continued to be affected by the economy-related trend of patients deferring higher-level and discretionary services."

"Partly offsetting the lower sales of basic dental equipment was the strong sales growth of new technology products, with sales of Cerec systems up 7% and sales of digital x-ray systems up 25%," he said. "We believe the recession is causing many dental practitioners to limit their investments to equipment with rapid rates of return. New technology products, in comparison to such basic dental equipment as chairs and lights, meet this return on investment requirement."

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