10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________ 

FORM 10-Q

 ______________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 27, 2018.

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-20572

 _____________________________

PATTERSON COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

______________________________

Minnesota	41-0886515
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
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 the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨	Non-accelerated filer	¨
Smaller reporting company	¨	Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 29, 2018, there were 94,954,000 shares of Common Stock of the registrant issued and outstanding.

PATTERSON COMPANIES, INC.

INDEX

	Page
PART I - FINANCIAL INFORMATION
Item 1- Financial Statements	3
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Income and Other Comprehensive Income	4
Condensed Consolidated Statements of Changes in Stockholders' Equity	5
Condensed Consolidated Statements of Cash Flows	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	25
Item 4 - Controls and Procedures	25
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings	26
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 6 - Exhibits	30
Signatures	31

2

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	October 27, 2018			April 28, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	165,515		$	62,984
Receivables, net of allowance for doubtful accounts	571,232			826,877
Inventory	792,533			779,834
Prepaid expenses and other current assets	176,019			103,029
Total current assets	1,705,299			1,772,724
Property and equipment, net	289,602			290,590
Long-term receivables, net	86,513			135,175
Goodwill	814,348			815,977
Identifiable intangibles, net	368,185			389,424
Other	80,307			67,774
Total assets	$	3,344,254		$	3,471,664
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	662,731		$	610,368
Accrued payroll expense	61,602			69,099
Other accrued liabilities	164,301			136,316
Current maturities of long-term debt	80,286			76,598
Borrowings on revolving credit	—			16,000
Total current liabilities	968,920			908,381
Long-term debt	738,341			922,030
Other non-current liabilities	181,305			179,463
Total liabilities	1,888,566			2,009,874
Stockholders’ equity:
Common stock, $.01 par value: 600,000 shares authorized; 94,950 and 94,756 shares issued and outstanding	950			948
Additional paid-in capital	116,112			103,776
Accumulated other comprehensive loss	(86,733		)	(74,974		)
Retained earnings	1,473,357			1,497,766
Unearned ESOP shares	(51,722		)	(65,726		)
Total Patterson Companies, Inc. stockholders' equity	1,451,964			1,461,790
Noncontrolling interests	3,724			—
Total stockholders’ equity	1,455,688			1,461,790
Total liabilities and stockholders’ equity	$	3,344,254		$	3,471,664

See accompanying notes

3

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND OTHER COMPREHENSIVE INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Net sales	$	1,404,752		$	1,385,737		$	2,741,072		$	2,689,852
Cost of sales	1,109,676			1,069,994			2,162,333			2,075,061
Gross profit	295,076			315,743			578,739			614,791
Operating expenses	253,860			243,984			533,009			486,199
Operating income	41,216			71,759			45,730			128,592
Other income (expense):
Other income, net	5,941			1,160			7,194			2,672
Interest expense	(9,456		)	(11,468		)	(20,677		)	(22,671		)
Income before taxes	37,701			61,451			32,247			108,593
Income tax expense	9,055			21,207			8,110			37,502
Net income	28,646			40,244			24,137			71,091
Net loss attributable to noncontrolling interests	(223		)	—			(276		)	—
Net income attributable to Patterson Companies, Inc.	$	28,869		$	40,244		$	24,413		$	71,091
Earnings per share attributable to Patterson Companies, Inc.:
Basic	$	0.31		$	0.43		$	0.26		$	0.76
Diluted	$	0.31		$	0.43		$	0.26		$	0.76
Weighted average shares:
Basic	92,683			92,722			92,606			93,037
Diluted	93,289			93,351			93,144			93,683
Dividends declared per common share	$	0.26		$	0.26		$	0.52		$	0.52
Comprehensive income:
Net income	$	28,646		$	40,244		$	24,137		$	71,091
Foreign currency translation gain (loss)	(3,540		)	(3,965		)	(12,860		)	8,119
Cash flow hedges, net of tax	552			438			1,101			875
Comprehensive income	$	25,658		$	36,717		$	12,378		$	80,085

See accompanying notes

4

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock					Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Unearned ESOP Shares			Non-controlling Interests			Total
	Shares		Amount
Balance at April 29, 2017	96,534		$	966		$	72,973	$	(92,669	)	$	1,481,234		$	(68,071	)	$	—		$	1,394,433
Foreign currency translation	—		—			—		15,824			—			—			—			15,824
Cash flow hedges	—		—			—		1,871			—			—			—			1,871
Net income (loss)	—		—			—		—			200,974			—			—			200,974
Dividends declared	—		—			—		—			(96,964		)	—			—			(96,964		)
Common stock issued and related tax benefits	369		4			12,403		—			—			—			—			12,407
Repurchases of common stock	(2,147	)	(22		)	—		—			(87,478		)	—			—			(87,500		)
Stock based compensation	—		—			18,400		—			—			—			—			18,400
ESOP activity	—		—			—		—			—			2,345			—			2,345
Balance at April 28, 2018	94,756		948			103,776		(74,974		)	1,497,766			(65,726		)	—			1,461,790
Foreign currency translation	—		—			—		(12,860		)	—			—			—			(12,860		)
Cash flow hedges	—		—			—		1,101			—			—			—			1,101
Net income (loss)	—		—			—		—			24,413			—			(276		)	24,137
Dividends declared	—		—			—		—			(48,822		)	—			—			(48,822		)
Common stock issued and related tax benefits	194		2			2,710		—			—			—			—			2,712
Stock based compensation	—		—			9,626		—			—			—			—			9,626
ESOP activity	—		—			—		—			—			14,004			—			14,004
Increase from business combination	—		—			—		—			—			—			4,000			4,000
Balance at October 27, 2018	94,950		$	950		$	116,112	$	(86,733	)	$	1,473,357		$	(51,722	)	$	3,724		$	1,455,688

5

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	October 27, 2018			October 28, 2017
Operating activities:
Net income	$	24,137		$	71,091
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	22,145			22,458
Amortization	19,781			19,375
Bad debt expense	3,533			3,716
Non-cash employee compensation	13,926			16,635
Deferred consideration in securitized receivables	(165,567		)	(24,581		)
Change in assets and liabilities, net of acquired	282,259			(31,586		)
Net cash provided by operating activities	200,214			77,108
Investing activities:
Additions to property and equipment	(22,094		)	(16,431		)
Collection of deferred purchase price receivables	165,567			24,581
Other investing activities	2,875			11,626
Net cash provided by investing activities	146,348			19,776
Financing activities:
Dividends paid	(49,980		)	(49,969		)
Repurchases of common stock	—			(71,254		)
Retirement of long-term debt	(180,321		)	(7,377		)
Draw on (payment on) revolving credit	(16,000		)	33,000
Other financing activities	3,592			3,561
Net cash used in financing activities	(242,709		)	(92,039		)
Effect of exchange rate changes on cash	(1,322		)	1,652
Net change in cash and cash equivalents	102,531			6,497
Cash and cash equivalents at beginning of period	62,984			94,959
Cash and cash equivalents at end of period	$	165,515		$	101,456

See accompanying notes

6

PATTERSON COMPANIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars, except per share amounts, and shares in thousands)

(Unaudited)

Note 1. General

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Patterson Companies, Inc. (referred to herein as "Patterson" or in the first person notations "we," "our," and "us") as of October 27, 2018, and our results of operations and cash flows for the periods ended October 27, 2018 and October 28, 2017. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended October 27, 2018 are not necessarily indicative of the results to be expected for any other interim period or for the year ending April 27, 2019. These financial statements should be read in conjunction with the financial statements included in our 2018 Annual Report on Form 10-K filed on June 27, 2018.

The unaudited condensed consolidated financial statements include the assets and liabilities of PDC Funding Company, LLC ("PDC Funding"), PDC Funding Company II, LLC ("PDC Funding II") and PDC Funding Company III, LLC ("PDC Funding III"), which are our wholly owned subsidiaries and separate legal entities formed under Minnesota law. PDC Funding and PDC Funding II are fully consolidated special purpose entities established to sell customer installment sale contracts to outside financial institutions in the normal course of their business. PDC Funding III is a fully consolidated special purpose entity established to sell certain receivables to unaffiliated financial institutions. The assets of PDC Funding, PDC Funding II and PDC Funding III would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding, PDC Funding II or PDC Funding III. The unaudited condensed consolidated financial statements also include the assets and liabilities of Technology Partner Innovations, LLC, which is further described in Note 7.

Fiscal Year End

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. The second quarter of fiscal 2019 and 2018 represents the 13 weeks ended October 27, 2018 and the 13 weeks ended October 28, 2017, respectively. The six months ended October 27, 2018 and October 28, 2017 each included 26 weeks. Fiscal 2019 will include 52 weeks and fiscal 2018 included 52 weeks.

Comprehensive Income

Comprehensive income is computed as net income including certain other items that are recorded directly to stockholders’ equity. Significant items included in comprehensive income are foreign currency translation adjustments and the effective portion of cash flow hedges, net of tax. Foreign currency translation adjustments do not include a provision for income tax because earnings from foreign operations are considered to be indefinitely reinvested outside the U.S. The income tax expense related to cash flow hedges was $173 and $265 for the three months ended October 27, 2018 and October 28, 2017, respectively. The income tax expense related to cash flow hedges was $357 and $530 for the six months ended October 27, 2018 and October 28, 2017, respectively.

Earnings Per Share

The following table sets forth the computation of the weighted average shares outstanding used to calculate basic and diluted earnings per share ("EPS"):

7

	Three Months Ended		Six Months Ended
	October 27, 2018	October 28, 2017	October 27, 2018	October 28, 2017
Denominator for basic EPS – weighted average shares	92,683	92,722	92,606	93,037
Effect of dilutive securities – stock options, restricted stock and stock purchase plans	606	629	538	646
Denominator for diluted EPS – weighted average shares	93,289	93,351	93,144	93,683

Potentially dilutive securities representing 1,890 and 1,905 shares for the three and six months ended October 27, 2018, respectively, and 1,581 and 1,272 shares for the three and six months ended October 28, 2017, respectively, were excluded from the calculation of diluted EPS because their effects were anti-dilutive using the treasury stock method.

Revenue Recognition

Revenues are generated from the sale of consumable products, equipment and support, software and support, technical service parts and labor, and other sources. Revenues are recognized when or as performance obligations are satisfied. Performance obligations are satisfied when the customer obtains control of the goods or services.

Consumable, equipment, software and parts sales are recorded upon delivery, except in those circumstances where terms of the sale are FOB shipping point, in which case sales are recorded upon shipment. Technical service labor is recognized as it is provided. Revenue derived from equipment and software support is recognized ratably over the period in which the support is provided.

In addition to revenues generated from the distribution of consumable products under arrangements (buy/sell agreements) where the full market value of the product is recorded as revenue, we earn commissions for services provided under agency agreements. The agency agreement contrasts to a buy/sell agreement in that we do not have control over the transaction, as we do not have the primary responsibility of fulfilling the promise of the good or service and we do not bill or collect from the customer in an agency relationship. Commissions under agency agreements are recorded when the services are provided.

Estimates for returns, damaged goods, rebates, loyalty programs and other revenue allowances are made at the time the revenue is recognized based on the historical experience for such items. The receivables that result from the recognition of revenue are reported net of related allowances. We maintain a valuation allowance based upon the expected collectability of receivables held. Estimates are used to determine the valuation allowance and are based on several factors, including historical collection data, economic trends and credit worthiness of customers. Receivables are written off when we determine the amounts to be uncollectible, typically upon customer bankruptcy or non-response to continuous collection efforts. The portions of receivable amounts that are not expected to be collected during the next twelve months are classified as long-term.

Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales tax.

Contract Balances

Contract balances represent amounts presented in our condensed consolidated balance sheets when either we have transferred goods or services to the customer or the customer has paid consideration to us under the contract. These contract balances include accounts receivable, contract assets and contract liabilities.

Contract asset balances as of October 27, 2018 and April 28, 2018 were not material. Our contract liabilities primarily relate to advance payments from customers, upfront payments for software and support provided over time, and options that provide a material right to customers, such as our customer loyalty programs. At October 27, 2018 and April 28, 2018, contract liabilities of $24,386 and $26,166 were reported in other accrued liabilities, respectively. During the six months ended October 27, 2018, we recognized $15,932 of the amount previously deferred at April 28, 2018.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". ASU No. 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 605)," and requires entities to recognize revenue in a way

8

that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new guidance as of April 29, 2018 using the modified retrospective method, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In January 2016, the FASB issued ASU No. 2016-01 "Financial Instruments- Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)", which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. We adopted ASU No. 2016-01 in the first quarter of fiscal 2019, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by most leases, as well as requires additional qualitative and quantitative disclosures. We are required to adopt ASU 2016-02 in the first quarter of fiscal 2020, with early adoption permitted. We plan to adopt the new guidance in the first quarter of fiscal 2020 and are currently evaluating the impact of adopting this pronouncement, but anticipate that the new guidance will impact our condensed consolidated balance sheets.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects that are stranded in accumulated other comprehensive income as a result of tax reform. This standard also requires certain disclosures about stranded tax effects. We are required to adopt ASU No. 2018-02 in the first quarter of fiscal 2020, with early adoption permitted and apply it either in the period of adoption or retrospectively to each period in which the income tax effects of the tax reform related to items in accumulated other comprehensive income are recognized. We are currently evaluating the impact of adopting this pronouncement.

Note 2. Receivables Securitization Program

On July 24, 2018, we entered into a Receivables Purchase Agreement (the “Receivables Purchase Agreement”) with MUFG Bank, Ltd. Under this agreement, MUFG Bank, Ltd. acts as an agent to facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”). The sale of these receivables is accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We utilize PDC Funding III to facilitate the sale to fulfill requirements within the agreement.

Sales of Receivables occur daily and are settled with the Purchasers on a monthly basis. The proceeds from the sale of these Receivables comprise a combination of cash and a deferred purchase price (“DPP”) receivable. The DPP receivable is ultimately realized by Patterson following the collection of the underlying Receivables sold to the Purchasers. The amount available under the Receivables Purchase Agreement fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business, with maximum availability of $200,000. As of October 27, 2018, $172,000 of the amount available under the Receivables Purchase Agreement was utilized.

We have no retained interests in the transferred Receivables, other than our right to the DPP receivable and collection and administrative services. We consider the fees received adequate compensation for services rendered, and accordingly have recorded no servicing asset or liability. The DPP receivable is recorded at fair value within the condensed consolidated balance sheets within prepaid expenses and other current assets. The DPP receivable was $58,451 as of October 27, 2018. The difference between the carrying amount of the Receivables and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain or loss on sale of the related Receivables. We recorded a loss on sale of Receivables within operating expenses in the condensed consolidated statements of income and other comprehensive income during the three and six months ended October 27, 2018 of $2,192 and $2,871, respectively.

Note 3. Customer Financing

As a convenience to our customers, we offer several different financing alternatives, including a third party program and a Patterson-sponsored program. For the third party program, we act as a facilitator between the customer and the third party financing entity with no on-going involvement in the financing transaction. Under the Patterson-sponsored program, equipment purchased by creditworthy customers may be financed up to a maximum of $1,000. We generally

9

sell our customers’ financing contracts to outside financial institutions in the normal course of our business. These financing arrangements are accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We currently have two arrangements under which we sell these contracts.

First, we operate under an agreement to sell a portion of our equipment finance contracts to commercial paper conduits with MUFG Bank, Ltd. ("MUFG") (f.k.a. The Bank of Tokyo-Mitsubishi UFJ, Ltd.) serving as the agent. We utilize PDC Funding to fulfill a requirement of participating in the commercial paper conduit. We receive the proceeds of the contracts upon sale to MUFG. At least 9.5% of the proceeds are held by the conduit as security against eventual performance of the portfolio. This percentage can be greater and is based upon certain ratios defined in the agreement with MUFG. The capacity under the agreement with MUFG at October 27, 2018 was $525,000.

Second, we maintain an agreement with Fifth Third Bank ("Fifth Third") whereby Fifth Third purchases customers’ financing contracts. PDC Funding II sells its financing contracts to Fifth Third. We receive the proceeds of the contracts upon sale to Fifth Third. At least 11.0% of the proceeds are held by the conduit as security against eventual performance of the portfolio. This percentage can be greater and is based upon certain ratios defined in the agreement with Fifth Third. The capacity under the agreement with Fifth Third at October 27, 2018 was $100,000.

We service the financing contracts under both arrangements, for which we are paid a servicing fee. The servicing fees we receive are considered adequate compensation for services rendered. Accordingly, no servicing asset or liability has been recorded.

The portion of the purchase price for the receivables held by the conduits is deemed a DPP receivable, which is paid to the applicable special purpose entity as payments on the customers’ financing contracts are collected by Patterson from customers. The difference between the carrying amount of the receivables sold under these programs and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain on sale of the related receivables and recorded in net sales in the condensed consolidated statements of income and other comprehensive income. Expenses incurred related to customer financing activities are recorded in operating expenses in our condensed consolidated statements of income and other comprehensive income.

During the three months ended October 27, 2018 and October 28, 2017, we sold $40,713 and $95,588 of contracts under these arrangements, respectively. During the six months ended October 27, 2018 and October 28, 2017, we sold $88,023 and $151,711 of contracts under these arrangements, respectively. In net sales in the condensed consolidated statements of income and other comprehensive income, we recorded a gain of $2,734 and $5,967 during the three months ended October 27, 2018 and October 28, 2017, respectively, related to these contracts sold. In net sales in the condensed consolidated statements of income and other comprehensive income, we recorded a gain of $5,225 and $10,227 during the six months ended October 27, 2018 and October 28, 2017, respectively, related to these contracts sold.

Included in cash and cash equivalents in the condensed consolidated balance sheets are $36,357 and $35,741 as of October 27, 2018 and April 28, 2018, respectively, which represent cash collected from previously sold customer financing contracts that have not yet been settled. Included in current receivables in the condensed consolidated balance sheets are $66,173, net of unearned income of $7, and $46,232, net of unearned income of $8, as of October 27, 2018 and April 28, 2018, respectively, of finance contracts we have not yet sold. A total of $539,426 of finance contracts receivable sold under the arrangements was outstanding at October 27, 2018. The DPP receivable under the arrangements was $100,182 and $150,404 as of October 27, 2018 and April 28, 2018, respectively. Since the internal financing program began in 1994, bad debt write-offs have amounted to less than 1% of the loans originated.

The arrangements require us to maintain a minimum current ratio and maximum leverage ratio. We were in compliance with those covenants at October 27, 2018.

Note 4. Derivative Financial Instruments

We are a party to certain offsetting and identical interest rate cap agreements entered into to fulfill certain covenants of the equipment finance contract sale agreements. The interest rate cap agreements also provide a credit enhancement feature for the financing contracts sold by PDC Funding and PDC Funding II to the commercial paper conduit.

The interest rate cap agreements are canceled and new agreements are entered into periodically to maintain consistency with the dollar maximum of the sale agreements and the maturity of the underlying financing contracts.

10

As of October 27, 2018, PDC Funding had purchased an interest rate cap from a bank with a notional amount of $525,000 and a maturity date of July 2026. We sold an identical interest rate cap to the same bank. As of October 27, 2018, PDC Funding II had purchased an interest rate cap from a bank with a notional amount of $100,000 and a maturity date of December 2025. We sold an identical interest rate cap to the same bank.

These interest rate cap agreements do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change as income or expense during the period in which the change occurs.

In March 2008, we entered into two forward starting interest rate swap agreements, each with notional amounts of $100,000 and accounted for as cash flow hedges, to hedge interest rate fluctuations in anticipation of the issuance of the senior notes due fiscal 2015 and fiscal 2018. Upon issuance of the hedged debt, we settled the forward starting interest rate swap agreements and recorded a $1,000 increase, net of income taxes, to other comprehensive income (loss), which is being amortized as a reduction to interest expense over the life of the related debt.

In January 2014, we entered into a forward interest rate swap agreement with a notional amount of $250,000 and accounted for as cash flow hedge, to hedge interest rate fluctuations in anticipation of refinancing the 5.17% senior notes due March 25, 2015. These notes were repaid on March 25, 2015 and replaced with new $250,0003.48% senior notes due March 24, 2025. A cash payment of $29,003 was made in March 2015 to settle the interest rate swap. This amount is recorded in other comprehensive income (loss), net of tax, and is recognized as interest expense over the life of the related debt.

The following presents the fair value of derivative instruments included in the condensed consolidated balance sheets:

Derivative type	Classification	October 27, 2018		April 28, 2018
Assets:
Interest rate cap agreements	Other noncurrent assets	$	2,753	$	1,613
Liabilities:
Interest rate cap agreements	Other noncurrent liabilities	2,753		1,613

The following table presents the pre-tax effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of income and other comprehensive income ("OCI"):

		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
		Three Months Ended						Six Months Ended
Derivatives in cash flow hedging relationships	Income statement location	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Interest rate swap	Interest expense	$	(725	)	$	(703	)	$	(1,458	)	$	(1,405	)

There were no gains or losses recognized in OCI on cash flow hedging derivatives during the three and six months ended October 27, 2018 or October 28, 2017.

We recorded no ineffectiveness during the three and six month periods ended October 27, 2018 and October 28, 2017. As of October 27, 2018, the estimated pre-tax portion of accumulated other comprehensive loss that is expected to be reclassified into earnings over the next twelve months is $2,900, which will be recorded as an increase to interest expense.

Note 5. Fair Value Measurements

Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. The fair value hierarchy of measurements is categorized into one of three levels based on the lowest level of significant input used:

11

Level 1 -     Quoted prices in active markets for identical assets and liabilities at the measurement date.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs for which there is little or no market data available. These inputs reflect management’s assumptions of what market participants would use in pricing the asset or liability.

Our hierarchy for assets and liabilities measured at fair value on a recurring basis is as follows:

	October 27, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	64,840	$	64,840	$	—	$	—
DPP receivable - receivables securitization program	58,451		—		—		58,451
DPP receivable - customer financing	100,182		—		—		100,182
Derivative instruments	2,753		—		2,753		—
Total assets	$	226,226	$	64,840	$	2,753	$	158,633
Liabilities:
Derivative instruments	$	2,753	$	—	$	2,753	$	—

	April 28, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	6,650	$	6,650	$	—	$	—
DPP receivable - receivables securitization program	—		—		—		—
DPP receivable - customer financing	150,404		—		—		150,404
Derivative instruments	1,613		—		1,613		—
Total assets	$	158,667	$	6,650	$	1,613	$	150,404
Liabilities:
Derivative instruments	$	1,613	$	—	$	1,613	$	—

Cash equivalents – We value cash equivalents at their current market rates. The carrying value of cash equivalents approximates fair value and maturities are less than three months.

DPP receivable - receivables securitization program – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

DPP receivable - customer financing – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include a forward yield curve, the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

Derivative instruments – Our derivative instruments consist of interest rate cap agreements and interest rate swaps. These instruments are valued using inputs such as interest rates and credit spreads.

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments under certain circumstances, such as when there is evidence

12

of impairment. There were no fair value adjustments to such assets during the six month periods ended October 27, 2018 or October 28, 2017.

Our debt is not measured at fair value in the condensed consolidated balance sheets. The estimated fair value of our debt as of October 27, 2018 and April 28, 2018 was $800,636 and $989,124, respectively, as compared to a carrying value of $818,627 and $998,628 at October 27, 2018 and April 28, 2018, respectively. The fair value of debt was measured using a discounted cash flow analysis based on expected market based yields (i.e., Level 2 inputs).

The carrying amounts of receivables, net of allowances, accounts payable, and certain accrued and other current liabilities approximated fair value at October 27, 2018 and April 28, 2018.

Note 6. Income Taxes

The effective income tax rate for the three months ended October 27, 2018 was 24.0% compared to 34.5% for the three months ended October 28, 2017, and for the six months ended October 27, 2018 was 25.1% compared to 34.5% for the six months ended October 28, 2017.

The change in tax rate for the three months ended October 27, 2018 compared to the three months ended October 28, 2017 was primarily due to the impact of the Tax Cuts and Jobs Act ("Tax Act"), enacted on December 22, 2017 by the U.S. government . The change in tax rate for the six months ended October 27, 2018 compared to the six months ended October 28, 2017 was primarily due to the impact of the Tax Act and lower excess tax benefits on employee share-based compensation. The Tax Act significantly revises the future ongoing U.S. federal corporate income tax by, among other things, lowering U.S. federal corporate tax rates and implementing a territorial tax system. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate tax rate from 35.0% to 21.0%. For the fiscal year ended April 28, 2018, we utilized a blended rate of approximately 30.5%. For the three and six months ended October 27, 2018, we utilized a 21.0% U.S. federal statutory rate.

The legislative changes included in the Tax Act are broad and complex. For the fiscal year ended April 28, 2018, we recognized provisional net tax benefit of $76,648, which included provisional amounts of $81,871 of tax benefit on U.S. deferred tax assets and liabilities, $4,006 of tax expense for a one-time transition tax on unremitted foreign earnings and $1,217 in withholding taxes paid on current year distributions. During the six months ended October 27, 2018, there were no changes made to the provisional amounts recognized in fiscal year 2018. We continue to analyze the effects of the Tax Act and will record additional impacts as they are identified. Staff Accounting Bulletin No. 118 provides for a measurement period of up to one year from the enactment date. The final impact of the Tax Act may differ from the provisional amounts that have been recognized.

For the fiscal year ended April 28, 2018, and directly connected to the transition tax legislation, Patterson approved a one-time repatriation of cash included in the transition tax computation. There was an approximate $1,217 one-time cost recorded during fiscal 2018 to reflect the added withholding tax cost associated with this repatriation. With the exception of this one-time repatriation, Patterson continues to apply ASC 740 based on the provisions of the tax law that were in effect immediately prior to the enactment of the new law. With regard to unremitted earnings of foreign subsidiaries generated after December 31, 2017, we do not currently provide for U.S. taxes since we intend to invest such undistributed earnings indefinitely outside of the U.S.

We continue to review the impact of the global intangible low taxed income (“GILTI”) provisions under the Tax Act which are complex and subject to continued regulatory interpretation by the IRS. While we have included an estimate of GILTI in the effective tax rate for the three and six months ended October 27, 2018, we have not yet completed our analysis.

The final transition impacts of the Tax Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any federal and/or state legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the transition impacts. The Securities and Exchange Commission has issued rules, under SAB 118, that will allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

Note 7. Technology Partner Innovations, LLC

13

In the first quarter of fiscal 2019, we entered into an agreement with Cure Partners to form Technology Partner Innovations, LLC (TPI), which is launching a new cloud-based practice management software, NaVetor. Patterson and Cure Partners each contributed net assets of $4,000 to form TPI. We have determined that TPI is a variable interest entity, and we consolidate the results of operations of TPI as we have concluded that we are the primary beneficiary of TPI. During the three and six ended October 27, 2018, net loss attributable to the noncontrolling interest was $223 and $276, respectively, resulting in noncontrolling interests of $3,724 on the condensed consolidated balance sheet at October 27, 2018.

Note 8. Segment and Geographic Data

We present three reportable segments: Dental, Animal Health and Corporate. Dental and Animal Health are strategic business units that offer similar products and services to different customer bases. Dental provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists, dental laboratories, institutions, and other healthcare professionals throughout North America. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results. Corporate assets consist primarily of cash and cash equivalents, accounts receivable, property and equipment and long-term receivables. We evaluate segment performance based on operating income. The costs to operate the fulfillment centers are allocated to the operating units based on the through-put of the unit.

14

The following tables present information about our reportable segments:

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
United States	$	1,173,623	$	1,151,380	$	2,270,087	$	2,231,707
United Kingdom	150,452		148,734		304,357		289,588
Canada	80,677		85,623		166,628		168,557
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
United States	$	495,457	$	500,803	$	949,030	$	967,491
Canada	47,059		52,827		99,550		104,946
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
United States	$	671,338	$	642,053	$	1,309,187	$	1,246,520
United Kingdom	150,452		148,734		304,357		289,588
Canada	33,618		32,796		67,078		63,611
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
United States	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
Consumable	$	1,138,251	$	1,116,091	$	2,247,648	$	2,196,196
Equipment and software	182,120		181,337		329,018		318,286
Other	84,381		88,309		164,406		175,370
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
Consumable	$	303,806	$	311,217	$	608,045	$	631,395
Equipment and software	167,686		169,513		302,643		297,376
Other	71,024		72,900		137,892		143,666
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
Consumable	$	834,445	$	804,874	$	1,639,603	$	1,564,801
Equipment and software	14,434		11,824		26,375		20,910
Other	6,529		6,885		14,644		14,008
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
Other	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

15

	Three Months Ended						Six Months Ended
	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Operating income (loss)
Dental	$	41,594		$	65,207		$	77,467		$	124,726
Animal Health	22,031			23,217			41,063			39,893
Corporate	(22,409		)	(16,665		)	(72,800		)	(36,027		)
Consolidated operating income	$	41,216		$	71,759		$	45,730		$	128,592

	October 27, 2018		April 28, 2018
Total assets
Dental	$	668,603	$	853,555
Animal Health	2,158,144		2,128,800
Corporate	517,507		489,309
Total assets	$	3,344,254	$	3,471,664

Note 9. Accumulated Other Comprehensive Loss ("AOCL")

The following table summarizes the changes in AOCL as of October 27, 2018:

	Cash Flow Hedges			Currency Translation Adjustment			Total
AOCL at April 28, 2018	$	(13,118	)	$	(61,856	)	$	(74,974	)
Other comprehensive loss before reclassifications	—			(12,860		)	(12,860		)
Amounts reclassified from AOCL	1,101			—			1,101
AOCL at October 27, 2018	$	(12,017	)	$	(74,716	)	$	(86,733	)

The amounts reclassified from AOCL during fiscal 2019 represent gains and losses on cash flow hedges, net of taxes of $357. The impact to the condensed consolidated statements of income and other comprehensive income was an increase to interest expense of $1,458.

Note 10. Legal Proceedings

In September 2015, we were served with a summons and complaint in an action commenced in the U.S. District Court for the Eastern District of New York, entitled SourceOne Dental, Inc. v. Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company, Civil Action No. 15-cv-05440-JMA-GRB. SourceOne, as plaintiff, alleges that, through its website, it markets and sells dental supplies and equipment to dentists. SourceOne alleges in the complaint, among other things, that we, along with the defendants Henry Schein and Benco, conspired to eliminate plaintiff as a competitor and to exclude them from the market for the marketing, distribution and sale of dental supplies and equipment in the U.S. and that defendants unlawfully agreed with one another to boycott dentists, manufacturers, and state dental associations that deal with, or considered dealing with, plaintiff. Plaintiff asserts the following claims: (i) unreasonable restraint of trade in violation of state and federal antitrust laws; (ii) tortious interference with prospective business relations; (iii) civil conspiracy; and (iv) aiding and abetting the other defendants’ ongoing tortious and anticompetitive conduct. Plaintiff seeks equitable relief, compensatory and treble damages, jointly and severally, punitive damages, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. In June 2017, Henry Schein settled with SourceOne and was dismissed from this litigation with prejudice. We are vigorously defending ourselves in this litigation. Trial is scheduled to begin on April 29, 2019. We do not anticipate that this matter will have a material adverse effect on our financial statements.

16

Beginning in January 2016, purported antitrust class action complaints were filed against defendants Henry Schein, Inc., Benco Dental Supply Company and Patterson Companies, Inc. Although there were factual and legal variations among these complaints, each alleged that defendants conspired to foreclose and exclude competitors by boycotting manufacturers, state dental associations, and others that deal with defendants’ competitors. On February 9, 2016, the U.S. District Court for the Eastern District of New York ordered all of these actions, and all other actions filed thereafter asserting substantially similar claims against defendants, consolidated for pre-trial purposes. On February 26, 2016, a consolidated class action complaint was filed by Arnell Prato, D.D.S., P.L.L.C., d/b/a Down to Earth Dental, Evolution Dental Sciences, LLC, Howard M. May, DDS, P.C., Casey Nelson, D.D.S., Jim Peck, D.D.S., Bernard W. Kurek, D.M.D., Larchmont Dental Associates, P.C., and Keith Schwartz, D.M.D., P.A. (collectively, “putative class representatives”) in the U.S. District Court for the Eastern District of New York, entitled In re Dental Supplies Antitrust Litigation, Civil Action No. 1:16-CV-00696-BMC-GRB. Subject to certain exclusions, the putative class representatives seek to represent all private dental practices and laboratories who purchased dental supplies or equipment in the U.S. directly from any of the defendants, during the period beginning August 31, 2008 until March 31, 2016. In the consolidated class action complaint, putative class representatives allege a nationwide agreement among Henry Schein, Benco, Patterson and non-party Burkhart Dental Supply Company, Inc. not to compete on price. The consolidated class action complaint asserts a single count under Section 1 of the Sherman Act, and seeks equitable relief, compensatory and treble damages, jointly and severally, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. On September 28, 2018, the parties executed a settlement agreement that proposes a full and final settlement of the lawsuit on a class-wide basis, subject to court approval. Related to this settlement, we recorded a charge of $28,263 in our first quarter 2019 results in our Corporate segment.

On August 31, 2012, Archer and White Sales, Inc. (“Archer”) filed a complaint against Henry Schein, Inc. as well as Danaher Corporation and its subsidiaries Instrumentarium Dental, Inc., Dental Equipment, LLC, Kavo Dental Technologies, LLC and Dental Imaging Technologies Corporation (collectively, the “Danaher Defendants”) in the United States District Court for the Eastern District of Texas, Civil Action No. 2:12-CV-00572-JRG, styled as an antitrust action under Section 1 of the Sherman Act, and the Texas Free Enterprise Antitrust Act. Archer alleges a conspiracy between Henry Schein, an unnamed company and the Danaher Defendants to terminate or limit Archer’s distribution rights. On August 1, 2017, Archer filed an amended complaint, adding Patterson Companies, Inc. and Benco Dental Supply Company as defendants, and alleging that Henry Schein, Patterson, Benco and non-defendant Burkhart Dental Supply Company, Inc. conspired to pressure and agreed to enlist their common suppliers, including the Danaher Defendants, to join a price-fixing conspiracy and boycott by reducing the distribution territory of, and eventually terminating, Archer. Archer seeks injunctive relief, and damages in an amount to be proved at trial, to be trebled with interest and costs, including attorneys’ fees, jointly and severally. On June 25, 2018, the United States Supreme Court granted certiorari to review an arbitration issue raised by the Danaher Defendants, thereby continuing the case stay implemented in March 2018. On October 29, 2018, the United States Supreme Court heard oral argument. The United States Supreme Court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On August 17, 2017, IQ Dental Supply, Inc. (“IQ Dental”) filed a complaint in the United States District Court for the Eastern District of New York, entitled IQ Dental Supply, Inc. v. Henry Schein, Inc., Patterson Companies, Inc. and Benco Dental Supply Company, Case No. 2:17-cv-4834. Plaintiff alleges that it is a distributor of dental supplies and equipment, and sells dental products through an online dental distribution platform operated by SourceOne Dental, Inc. IQ Dental alleges, among other things, that defendants conspired to suppress competition from IQ Dental and SourceOne for the marketing, distribution and sale of dental supplies and equipment in the United States, and that defendants unlawfully agreed with one another to boycott dentists, manufacturers and state dental associations that deal with, or considered dealing with, plaintiff and SourceOne. Plaintiff claims that this alleged conduct constitutes unreasonable restraint of trade in violation of Section 1 of the Sherman Act, New York’s Donnelly Act and the New Jersey Antitrust Act, and also makes pendant state law claims for tortious interference with prospective business relations, civil conspiracy and aiding and abetting. Plaintiff seeks injunctive relief, compensatory, treble and punitive damages, jointly and severally, and reasonable costs and expenses, including attorneys’ fees and expert fees. On December 21, 2017, the District Court granted defendants motion to dismiss the complaint with prejudice. Plaintiff has appealed the District Court’s order. The U.S. Court of Appeals for the Second Circuit heard oral argument on the appeal on September 13, 2018. The court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On February 12, 2018, the Federal Trade Commission (“FTC”) issued an administrative complaint entitled In the Matter of Benco Dental Supply Co., Henry Schein, Inc., and Patterson Companies, Inc. Docket No. 9379. The administrative complaint alleges “reason to believe” that Patterson and the other respondents violated Section 5 of the FTC Act, 15 U.S.C. § 45 by conspiring to refuse to offer discounted prices or otherwise negotiate with buying groups seeking to

17

obtain supply agreements on behalf of groups of solo practitioners or small group dental practices. The administrative complaint seeks injunctive relief against Patterson, including an order to cease and desist from the conduct alleged in the complaint and a prohibition from conspiring or agreeing with any competitor or any person to refuse to provide discounts to or compete for the business of any customer. No money damages are sought. We are vigorously defending ourselves against the administrative complaint. The hearing in front of an Administrative Law Judge of the FTC in Washington, D.C. began on October 16, 2018 and is ongoing. We do not anticipate this matter will have a material adverse effect on our financial statements.

On March 28, 2018, Plymouth County Retirement System (“Plymouth”) filed a federal securities class action complaint against Patterson Companies, Inc. and its former CEO Scott P. Anderson and former CFO Ann B. Gugino in the U.S. District Court for the District of Minnesota in a case captioned Plymouth County Retirement System v. Patterson Companies, Inc., Scott P. Anderson and Ann B. Gugino, Case No. 0:18-cv-00871 MJD/SER. On November 9, 2018, the complaint was amended to add former CEO James W. Wiltz and former CFO R. Stephen Armstrong as individual defendants. Under the amended complaint, on behalf of all persons or entities that purchased or otherwise acquired Patterson’s common stock between June 26, 2013 and February 28, 2018, Plymouth alleges that Patterson violated federal securities laws by failing to disclose that Patterson’s revenue and earnings were “artificially inflated by Defendants’ illicit, anti-competitive scheme with its purported competitors, Benco and Schein, to prevent the formation of buying groups that would allow its customers who were office-based practitioners to take advantage of pricing arrangements identical or comparable to those enjoyed by large-group customers.” In its class action complaint, Plymouth asserts one count against Patterson for violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and a second, related count against the individual defendants for violating Section 20(a) of the Exchange Act.  Plymouth seeks compensatory damages, pre- and post-judgment interest and reasonable attorneys’ fees and experts’ witness fees and costs.  On August 30, 2018, Gwinnett County Public Employees Retirement System and Plymouth County Retirement System, Pembroke Pines Pension Fund for Firefighters and Police Officers, Central Laborers Pension Fund were appointed lead plaintiffs.  While the outcome of litigation is inherently uncertain, we believe that the class action complaint is without merit, and we are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements. Patterson has also received requests under Minnesota Business Corporation Act § 302A.461 to inspect corporate books and records relating to the issues raised in the securities class action and the antitrust matters discussed above.

During the first quarter of fiscal 2019, the U.S. Attorney’s Office for the Western District of Virginia informed us that our subsidiary, Animal Health International, Inc., has been designated a target of a criminal investigation.  The main focus of the investigation to date and the alleged relationships at issue occurred prior to our acquisition of Animal Health International in June 2015 and relate to legacy Animal Health International sales of prescription animal health products to certain persons and/or locations not licensed to receive them in Virginia and Tennessee in violation of federal and state laws.  In October 2018, we entered into a tolling agreement effective for three months to allow us to produce documents responsive to grand jury subpoenas and to allow for further evaluation of evidence.  We also are conducting an internal investigation and are cooperating with the U.S. Attorney’s Office.  At this time, we are unable to make an estimate of the amount of loss, if any, or range of possible loss that we could incur as a result of the foregoing matter.

On August 28, 2018, Kirsten Johnsen filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, James Wiltz, John Buck, Jody Feragen, Ellen Rudnick, Les Vinney, Neil Schrimsher, Sarena Lin, Harold Slavkin, Alex Blanco and Mark Walchirk as individual defendants in Hennepin County District Court in a case captioned Kirsten Johnsen v. Scott P. Anderson et al., Case No. 27-CV-18-14315.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson “suppressed price competition and maintained supracompetitive prices for dental supplies and equipment by entering into agreements with Henry Schein and Benco to:  (i) fix margins for dental supplies and equipment; and (ii) block the entry and expansion of lower-margin, lower-priced, rival dental distributors through threatened and actual group boycotts.”  Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “price-fixing scheme” to the public and purportedly “caused Patterson to repurchase over $412,800 worth of its own stock at artificially inflated prices.”  In the derivative complaint, plaintiff asserts three counts against the individual defendants for:  (i) breach of fiduciary duty; (ii) waste of corporate assets; and (iii) unjust enrichment.  Plaintiff seeks compensatory damages, equitable and injunctive relief as permitted by law, costs, disbursements and reasonable attorneys’ fees, accountants’ fees and experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.”  While the outcome of litigation is inherently uncertain, we believe that the

18

derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 1, 2018, Sally Pemberton filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, Mark Walchirk, John Buck, Alex Blanco, Jody Feragen, Sarena Lin, Ellen Rudnick, Neil Schrimsher, Les Vinney, James Wiltz, Paul Guggenheim, David Misiak and Tim Rogan as individual defendants in the United States District Court for the District of Minnesota in a case captioned Sally Pemberton v. Scott P. Anderson, et al., Case No. 18-CV-2818.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson, with Benco and Henry Schein, “engage[d] in a conspiracy in restraint of trade, whereby the companies agreed to refuse to offer discounted prices or otherwise negotiate with GPOs, agreed to fix margins on dental supplies and equipment, agreed not to poach one another’s customers or sales representatives, and agreed to block the entry and expansion of rival distributors. Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “antitrust misconduct” to the public and purportedly caused Patterson to repurchase $412,800 of its own stock at prices that were artificially inflated. In the derivative complaint, plaintiff asserts six counts against the individual defendants for: (i) breach of fiduciary duty; (ii) waste of corporate assets; (iii) unjust enrichment; (iv) violations of Section 14(a) of the Exchange Act; (v) violations of Section 10(b) and Rule 10b-5 of the Exchange Act and (vi) violations of Section 20(a) of the Exchange Act.  Plaintiff seeks compensatory damages with pre-judgment and post-judgment interest, costs, disbursements and reasonable attorneys’ fees, experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.” While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 9, 2018, Nathaniel Kramer filed indirect purchaser litigation against Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company in the United States District Court for the District of Northern District of California. The purported class action complaint asserts violations of the California Cartwright Act and the California Unfair Competition Act based on an alleged agreement between Schein, Benco, and Patterson (and unnamed co-conspirators) not to compete as to price and margins. Plaintiff alleges that the agreement allowed the defendants to charge higher prices to dental practices for dental supplies and that the dental practices passed on all, or part of, the increased prices to the consumers of dental services. Subject to certain exclusions, the complaint defines the class as all persons residing in California purchasing and/or reimbursing for dental services from California dental practices. The complaint seeks a permanent injunction, actual damages to be determined at trial, trebled, reasonable attorneys’ fees and costs, and pre- and post-judgment interest. While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation.

While management currently believes that resolving all of these matters, individually or in the aggregate, will not have a material adverse effect on our financial statements, the litigation and other claims noted above are subject to inherent uncertainties and management’s view of these matters may change in the future.  Adverse outcomes in some or all of the claims pending against us may result in significant monetary damages or injunctive relief against us that could adversely affect our ability to conduct our business.  There also exists the possibility of a material adverse effect on our financial statements for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable.

From time to time, we may become a party to other legal proceedings, including, without limitation, product liability claims, intellectual property claims, employment matters, commercial disputes, governmental inquiries and investigations (which may in some cases involve our entering into settlement arrangements or consent decrees), and other matters arising out of the ordinary course of our business. While the results of any legal proceeding cannot be predicted with certainty, in our opinion none of these other pending matters is anticipated to have a material adverse effect on our financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Form 10-Q for the period ended October 27, 2018, contains certain 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 Patterson’s ability to control. Forward-looking statements

19

generally can be identified by words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of Patterson or the price of Patterson stock. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such risks and uncertainties include, without limitation, the cautionary language set forth herein; operations disruptions attributable to our enterprise resource planning system implementation; our ability to attract or retain qualified sales representatives and service technicians who relate directly with our customers; the reduction, modification, cancellation or delay of purchases of innovative, high-margin equipment; material changes in our purchasing relationships with suppliers; changes in general market and economic conditions; and the other risks and important factors contained and identified in Patterson’s previous filings with the Securities and Exchange Commission, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, any of which could cause actual results to differ materially from the forward-looking statements.

OVERVIEW

Our financial information for the first six months of fiscal 2019 is summarized in this Management’s Discussion and Analysis and the Condensed Consolidated Financial Statements and related Notes. The following background is provided to readers to assist in the review of our financial information.

We present three reportable segments: Dental, Animal Health and Corporate. Dental and Animal Health are strategic business units that offer similar products and services to different customer bases. 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. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results.

Operating margins of the animal health business are considerably lower than the dental business. While operating expenses run at a lower rate in the animal health business when compared to the dental business, gross margins in the animal health business are substantially lower due generally to the low margins experienced on the sale of pharmaceutical products.

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. The second quarter of fiscal 2019 and 2018 represents the 13 weeks ended October 27, 2018 and the 13 weeks ended October 28, 2017, respectively. Fiscal 2019 will include 52 weeks and fiscal 2018 included 52 weeks.

We believe there are several important aspects of our business that are useful in analyzing it, including: (1) growth in the various markets in which we operate; (2) internal growth; (3) growth through acquisition; and (4) continued focus on controlling costs and enhancing efficiency. Management defines internal growth as the increase in net sales from period to period, adjusting for differences in the number of weeks in fiscal years, excluding the impact of changes in currency exchange rates, and excluding the net sales, for a period of twelve months following the transaction date, of businesses we have acquired.

FACTORS AFFECTING OUR RESULTS

U.S. Tax Reform. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act significantly revises the future ongoing U.S. federal corporate income tax by, among other things, lowering U.S. federal corporate tax rates and implementing a territorial tax system. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate tax rate from 35.0% to 21.0%.

Receivables Securitization Program. On July 24, 2018, we entered into a receivables purchase agreement with MUFG Bank, Ltd. Under this agreement, MUFG Bank, Ltd. acts as an agent to facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”).

The proceeds from the sale of these Receivables comprise a combination of cash and a deferred purchase price (“DPP”) receivable. The initial transaction was a sale of $237.6 million of net receivables. From this sale, we received $171.0 million of cash and a DPP receivable with a fair value of $65.9 million. In addition, we recorded a loss of $0.7 million as a result of this transaction. The proceeds from the initial sale were primarily used to reduce debt.

20

The DPP receivable is ultimately realized by Patterson following the collection of the underlying Receivables sold to the Purchasers. The collection of the DPP receivable is recognized as an increase to net cash provided by investing activities within the condensed consolidated statements of cash flows, with a corresponding reduction to net cash provided by operating activities within the condensed consolidated statements of cash flows.

Legal Reserve. In September 2018, we signed an agreement to settle the litigation entitled In re Dental Supplies Antitrust Litigation. Under the terms of the settlement, we will pay $28.3 million upon final court approval. We previously established a pre-tax reserve of $28.3 million ("Legal Reserve") during the first quarter of fiscal 2019 to account for the settlement of this matter. The settlement remains subject to preliminary and final court approval.

RESULTS OF OPERATIONS

QUARTER ENDED OCTOBER 27, 2018 COMPARED TO QUARTER ENDED OCTOBER 28, 2017

The following table summarizes our results as a percent of net sales:

	Three Months Ended
	October 27, 2018		October 28, 2017
Net sales	100.0	%	100.0	%
Cost of sales	79.0		77.2
Gross profit	21.0		22.8
Operating expenses	18.1		17.6
Operating income	2.9		5.2
Other income (expense)	(0.2	)	(0.8	)
Income before taxes	2.7		4.4
Income tax expense	0.7		1.5
Net income	2.0		2.9
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	2.0	%	2.9	%

Net Sales. Consolidated net sales for the three months ended October 27, 2018 were $1,404.8 million, an increase of 1.4% from $1,385.7 million for the three months ended October 28, 2017. Foreign exchange rate changes had an unfavorable impact of 0.3% on current quarter sales.

Dental segment sales for the three months ended October 27, 2018 were $542.5 million, a decrease of 2.0% from $553.6 million for the three months ended October 28, 2017. Foreign exchange rate changes had an unfavorable impact of 0.2% on current quarter sales. Current quarter sales of consumables decreased 2.4%, sales of dental equipment and software decreased 1.1% to $167.7 million, and sales of other dental services and products decreased 2.6%. The decrease in sales of consumables was mainly due to changes in our sales force and disruptions resulting from our ERP system initiatives.

Animal Health segment sales for the three months ended October 27, 2018 were $855.4 million, an increase of 3.9% from $823.6 million for the three months ended October 28, 2017. Foreign exchange rate changes had an unfavorable impact of 0.4% on current quarter sales. Sales of certain products previously recognized on a gross basis were recognized on a net basis during the three months ended October 27, 2018, resulting in an estimated 0.2% unfavorable impact to sales. Positive end market fundamentals contributed to the current quarter sales growth.

Gross Profit. Consolidated gross profit margin rate for the three months ended October 27, 2018 decreased 180 basis points from the prior year quarter to 21.0%. Gross profit margin rates decreased in both the Dental and Animal Health segments during the three months ended October 27, 2018. A greater percentage of sales came from our lower margin Animal Health segment during the three months ended October 27, 2018, resulting in a lower consolidated gross profit margin rate. Unfavorable sales mix, pricing pressure at the point of sale and inventory adjustments in both our Dental

21

and Animal Health segment also contributed to the decline in the gross profit margin rate. In addition, lower net sales in our Corporate segment related to customer financing contracts reduced the gross profit margin rate.

Operating Expenses. Consolidated operating expenses for the three months ended October 27, 2018 were $253.9 million, a 4.0% increase from the prior year quarter of $244.0 million. We incurred higher operating expenses during the three months ended October 27, 2018 primarily as a result of higher professional services expenses. The consolidated operating expense ratio of 18.1% increased 50 basis points from the prior year quarter, which was also driven by this same factor.

Operating Income. For the three months ended October 27, 2018, operating income was $41.2 million, or 2.9% of net sales, as compared to $71.8 million, or 5.2% of net sales for the three months ended October 28, 2017. The decrease in operating income and operating income as a percent of sales was primarily due to a decrease in operating margins in the Dental segment and higher professional services expenses. In addition, a greater percentage of sales came from our lower margin Animal Health segment during the three months ended October 27, 2018, which lowered operating income as a percent of sales.

Dental segment operating income was $41.6 million for the three months ended October 27, 2018, a decrease of $23.6 million from the prior year quarter. The decrease was primarily due to lower net sales and a lower gross profit margin rate in the current quarter, in addition to greater operating expenses.

Animal Health segment operating income was $22.0 million for the three months ended October 27, 2018, a decrease of $1.2 million from the prior year quarter. The decrease was primarily due to greater operating expenses incurred during the three months ended October 27, 2018.

Corporate segment operating loss was $22.4 million for the three months ended October 27, 2018, as compared to a loss of $16.7 million for the three months ended October 28, 2017. The change was driven primarily by higher professional services expenses, as well as lower net sales related to our customer financing contracts during the three months ended October 27, 2018.

Other Income (Expense). Net other expense for the three months ended October 27, 2018 was $3.5 million, compared to $10.3 million for the three months ended October 28, 2017. Net other expense was lower during the three months ended October 27, 2018 due to the recognition of a gain related to an investment, as well as lower interest expense.

Income Tax Expense. The effective income tax rate for the three months ended October 27, 2018 was 24.0% compared to 34.5% for the three months ended October 28, 2017. The change in the tax rate was primarily due to the impact of the Tax Act.

Net Income Attributable to Patterson Companies Inc. and Earnings Per Share. Net income attributable to Patterson Companies Inc. for the three months ended October 27, 2018 was $28.9 million, compared to $40.2 million for the three months ended October 28, 2017. Earnings per diluted share were $0.31 in the current quarter compared to $0.43 in the prior year quarter. Weighted average diluted shares outstanding in the current quarter were 93.3 million, compared to 93.4 million in the prior year quarter. The current quarter and prior year quarter cash dividend was $0.26 per common share.

SIX MONTHS ENDED OCTOBER 27, 2018 COMPARED TO SIX MONTHS ENDED OCTOBER 28, 2017

The following table summarizes our results as a percent of net sales:

22

	Six Months Ended
	October 27, 2018		October 28, 2017
Net sales	100.0	%	100.0	%
Cost of sales	78.9		77.1
Gross profit	21.1		22.9
Operating expenses	19.4		18.1
Operating income	1.7		4.8
Other income (expense)	(0.5	)	(0.8	)
Income before taxes	1.2		4.0
Income tax expense	0.3		1.4
Net income	0.9		2.6
Net loss attributable to noncontrolling interests	—		—
Net income attributable to Patterson Companies, Inc.	0.9	%	2.6	%

Net Sales. Consolidated net sales for the six months ended October 27, 2018 were $2,741.1 million, a 1.9% increase from $2,689.9 million for the six months ended October 28, 2017. Foreign exchange rate changes had a favorable impact of 0.1% on current period sales.

Dental segment sales for the six months ended October 27, 2018 were $1,048.6 million, a 2.2% decrease from $1,072.4 million for the six months ended October 28, 2017. Foreign exchange rate changes had an insignificant impact on current period sales. Current period sales of consumables decreased 3.7%, sales of dental equipment and software increased 1.8% to $302.6 million, and sales of other dental services and products decreased 4.0% for the six months ended October 27, 2018. The decrease in sales of consumables was mainly due to changes in our sales force and disruptions resulting from our ERP system initiatives.

Animal Health segment sales for the six months ended October 27, 2018 were $1,680.6 million, a 5.1% increase from $1,599.7 million for the six months ended October 28, 2017. Foreign exchange rate changes had a favorable impact of 0.1% on current period sales. Sales of certain products previously recognized on a gross basis were recognized on a net basis during the six months ended October 27, 2018, resulting in an estimated 0.3% unfavorable impact to sales. Positive end market fundamentals contributed to the current period sales growth.

Gross Profit. Consolidated gross profit margin rate for the six months ended October 27, 2018 decreased 180 basis points from the prior year period to 21.1%. Gross profit margin rates decreased in both the Dental and Animal Health segment. A greater percentage of sales came from our lower margin Animal Health segment during the six months ended October 27, 2018, resulting in a lower consolidated gross profit margin rate. Unfavorable sales mix, pricing pressure at the point of sale and inventory adjustments in both our Dental and Animal Health segment also contributed to the decline in the gross profit margin rate. In addition, lower net sales in our Corporate segment related to customer financing contracts reduced the gross profit margin rate.

Operating Expenses. Consolidated operating expenses for the six months ended October 27, 2018 were $533.0 million, a 9.6% increase from the prior year period of $486.2 million. We incurred higher operating expenses during the six months ended October 27, 2018 primarily as a result of the Legal Reserve, higher professional services expenses and higher personnel costs. The consolidated operating expense ratio of 19.4% increased 130 basis points from the prior year period, which was also driven by these same factors.

Operating Income. For the six months ended October 27, 2018, operating income was $45.7 million, or 1.7% of net sales, as compared to $128.6 million, or 4.8% of net sales for the six months ended October 28, 2017. The decrease in operating income and operating income as a percent of sales was primarily due to a decrease in operating margins in our Dental segment, the impact of the Legal Reserve and higher professional services expenses. In addition, a greater percentage of sales came from our lower margin Animal Health segment during the six months ended October 27, 2018, which lowered operating income as a percent of sales.

Dental segment operating income was $77.5 million for the six months ended October 27, 2018, a decrease of $47.3 million from the prior year period. The decrease was primarily due to lower net sales and a lower gross profit margin rate in the current period, in addition to greater operating expenses.

23

Animal Health segment operating income was $41.1 million for the six months ended October 27, 2018, an increase of $1.2 million from the prior year period. The increase was primarily due to higher net sales, partially offset by greater operating expenses.

Corporate segment operating loss was $72.8 million for the six months ended October 27, 2018, as compared to a loss of $36.0 million for the six months ended October 28, 2017. The change was driven primarily by the Legal Reserve established during the first quarter of fiscal 2019, as well as higher professional services expenses.

Other Income (Expense). Net other expense was $13.5 million for the six months ended October 27, 2018, compared to $20.0 million for the six months ended October 28, 2017. Net other expense was lower during the six months ended October 27, 2018 due to the recognition of a gain related to an investment, as well as lower interest expense.

Income Tax Expense. The effective income tax rate for the six months ended October 27, 2018 was 25.1% compared to 34.5% for the six months ended October 28, 2017. The change in the tax rate was primarily due to the impact of the Tax Act and lower excess tax benefits on employee share-based compensation.

Net Income Attributable to Patterson Companies Inc. and Earnings Per Share. Net income attributable to Patterson Companies Inc. for the six months ended October 27, 2018 was $24.1 million, compared to $71.1 million for the six months ended October 28, 2017. Earnings per diluted share were $0.26 in the current period compared to $0.76 in the prior year period. Weighted average diluted shares outstanding in the current period were 93.1 million compared to 93.7 million in the prior year period. The current period and prior year period cash dividend was $0.52 per common share.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended October 27, 2018, net cash provided by operating activities was $200.2 million, compared to net cash provided by operating activities of $77.1 million for the six months ended October 28, 2017. The net cash provided by operating activities during the six months ended October 27, 2018 was primarily driven by a reduction in working capital and the impact of the Receivables Securitization Program.

For the six months ended October 27, 2018, net cash provided by investing activities was $146.3 million, compared to net cash provided by investing activities of $19.8 million for the six months ended October 28, 2017. Net cash flows for the six months ended October 27, 2018 were positive primarily due to the collection of $165.6 million of deferred purchase price receivables. We expect to use a total of approximately $70 million for capital expenditures in fiscal 2019.

Net cash used in financing activities for the six months ended October 27, 2018 was $242.7 million. Uses of cash consisted primarily of $180.3 million for retirement of long-term debt and $50.0 million for dividend payments. For the six months ended October 28, 2017, net cash used in financing activities was $92.0 million. Uses of cash consisted primarily of $71.3 million for share repurchases and $50.0 million for dividend payments. Cash proceeds included $33.0 million attributed to draws on our revolving line of credit.

In fiscal 2017, we entered into an amended credit agreement (“Amended Credit Agreement”), consisting of a $295.1 million term loan and a $750 million revolving line of credit. Interest on borrowings is variable and is determined as a base rate plus a spread. This spread, as well as a commitment fee on the unused portion of the facility, is based on our leverage ratio, as defined in the Amended Credit Agreement. The term loan and revolving credit facilities will mature no later than January 2022.

As of October 27, 2018, $96.3 million of the Amended Credit Agreement unsecured term loan was outstanding at an interest rate of 3.79%, and no amount was outstanding under the Amended Credit Agreement revolving line of credit. At April 28, 2018, $276.6 million was outstanding under the Amended Credit Agreement unsecured term loan at an interest rate of 3.40%, and $16.0 million was outstanding under the Amended Credit Agreement revolving line of credit at an interest rate of 2.95%.

We expect funds generated from operations, existing cash balances and credit availability under existing debt facilities will be sufficient to meet our working capital needs and to finance strategic initiatives over the remainder of fiscal 2019.

24

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

See Note 1 to the Condensed Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our exposure to market risk from that disclosed in Item 7A in our 2018 Annual Report on Form 10-K filed June 27, 2018.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our President and Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), management evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 27, 2018. Based upon their evaluation of these disclosure controls and procedures, the CEO and CFO concluded that the disclosure controls and procedures were effective as of October 27, 2018.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended October 27, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In September 2015, we were served with a summons and complaint in an action commenced in the U.S. District Court for the Eastern District of New York, entitled SourceOne Dental, Inc. v. Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company, Civil Action No. 15-cv-05440-JMA-GRB. SourceOne, as plaintiff, alleges that, through its website, it markets and sells dental supplies and equipment to dentists. SourceOne alleges in the complaint, among other things, that we, along with the defendants Henry Schein and Benco, conspired to eliminate plaintiff as a competitor and to exclude them from the market for the marketing, distribution and sale of dental supplies and equipment in the U.S. and that defendants unlawfully agreed with one another to boycott dentists, manufacturers, and state dental associations that deal with, or considered dealing with, plaintiff. Plaintiff asserts the following claims: (i) unreasonable restraint of trade in violation of state and federal antitrust laws; (ii) tortious interference with prospective business relations; (iii) civil conspiracy; and (iv) aiding and abetting the other defendants’ ongoing tortious and anticompetitive conduct. Plaintiff seeks equitable relief, compensatory and treble damages, jointly and severally, punitive damages, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. In June 2017, Henry Schein settled with SourceOne and was dismissed from this litigation with prejudice. We are vigorously defending ourselves in this litigation. Trial is scheduled to begin on April 29, 2019. We do not anticipate that this matter will have a material adverse effect on our financial statements.

Beginning in January 2016, purported antitrust class action complaints were filed against defendants Henry Schein, Inc., Benco Dental Supply Company and Patterson Companies, Inc. Although there were factual and legal variations among these complaints, each alleged that defendants conspired to foreclose and exclude competitors by boycotting manufacturers, state dental associations, and others that deal with defendants’ competitors. On February 9, 2016, the U.S. District Court for the Eastern District of New York ordered all of these actions, and all other actions filed thereafter asserting substantially similar claims against defendants, consolidated for pre-trial purposes. On February 26, 2016, a consolidated class action complaint was filed by Arnell Prato, D.D.S., P.L.L.C., d/b/a Down to Earth Dental, Evolution Dental Sciences, LLC, Howard M. May, DDS, P.C., Casey Nelson, D.D.S., Jim Peck, D.D.S., Bernard W. Kurek, D.M.D., Larchmont Dental Associates, P.C., and Keith Schwartz, D.M.D., P.A. (collectively, “putative class representatives”) in the U.S. District Court for the Eastern District of New York, entitled In re Dental Supplies Antitrust Litigation, Civil Action No. 1:16-CV-00696-BMC-GRB. Subject to certain exclusions, the putative class representatives seek to represent all private dental practices and laboratories who purchased dental supplies or equipment in the U.S. directly from any of the defendants, during the period beginning August 31, 2008 until March 31, 2016. In the consolidated class action complaint, putative class representatives allege a nationwide agreement among Henry Schein, Benco, Patterson and non-party Burkhart Dental Supply Company, Inc. not to compete on price. The consolidated class action complaint asserts a single count under Section 1 of the Sherman Act, and seeks equitable relief, compensatory and treble damages, jointly and severally, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. On September 28, 2018, the parties executed a settlement agreement that proposes a full and final settlement of the lawsuit on a class-wide basis, subject to court approval. Related to this settlement, we recorded a charge of $28.3 million in our first quarter 2019 results in our Corporate segment.

On August 31, 2012, Archer and White Sales, Inc. (“Archer”) filed a complaint against Henry Schein, Inc. as well as Danaher Corporation and its subsidiaries Instrumentarium Dental, Inc., Dental Equipment, LLC, Kavo Dental Technologies, LLC and Dental Imaging Technologies Corporation (collectively, the “Danaher Defendants”) in the United States District Court for the Eastern District of Texas, Civil Action No. 2:12-CV-00572-JRG, styled as an antitrust action under Section 1 of the Sherman Act, and the Texas Free Enterprise Antitrust Act. Archer alleges a conspiracy between Henry Schein, an unnamed company and the Danaher Defendants to terminate or limit Archer’s distribution rights. On August 1, 2017, Archer filed an amended complaint, adding Patterson Companies, Inc. and Benco Dental Supply Company as defendants, and alleging that Henry Schein, Patterson, Benco and non-defendant Burkhart Dental Supply Company, Inc. conspired to pressure and agreed to enlist their common suppliers, including the Danaher Defendants, to join a price-fixing conspiracy and boycott by reducing the distribution territory of, and eventually terminating, Archer. Archer seeks injunctive relief, and damages in an amount to be proved at trial, to be trebled with interest and costs, including attorneys’ fees, jointly and severally. On June 25, 2018, the United States Supreme Court granted certiorari to review an arbitration issue raised by the Danaher Defendants, thereby continuing the case stay implemented in March 2018. On October 29, 2018, the United States Supreme Court heard oral argument. The United States Supreme Court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

26

On August 17, 2017, IQ Dental Supply, Inc. (“IQ Dental”) filed a complaint in the United States District Court for the Eastern District of New York, entitled IQ Dental Supply, Inc. v. Henry Schein, Inc., Patterson Companies, Inc. and Benco Dental Supply Company, Case No. 2:17-cv-4834. Plaintiff alleges that it is a distributor of dental supplies and equipment, and sells dental products through an online dental distribution platform operated by SourceOne Dental, Inc. IQ Dental alleges, among other things, that defendants conspired to suppress competition from IQ Dental and SourceOne for the marketing, distribution and sale of dental supplies and equipment in the United States, and that defendants unlawfully agreed with one another to boycott dentists, manufacturers and state dental associations that deal with, or considered dealing with, plaintiff and SourceOne. Plaintiff claims that this alleged conduct constitutes unreasonable restraint of trade in violation of Section 1 of the Sherman Act, New York’s Donnelly Act and the New Jersey Antitrust Act, and also makes pendant state law claims for tortious interference with prospective business relations, civil conspiracy and aiding and abetting. Plaintiff seeks injunctive relief, compensatory, treble and punitive damages, jointly and severally, and reasonable costs and expenses, including attorneys’ fees and expert fees. On December 21, 2017, the District Court granted defendants motion to dismiss the complaint with prejudice. Plaintiff has appealed the District Court’s order. The U.S. Court of Appeals for the Second Circuit heard oral argument on the appeal on September 13, 2018. The court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On February 12, 2018, the Federal Trade Commission (“FTC”) issued an administrative complaint entitled In the Matter of Benco Dental Supply Co., Henry Schein, Inc., and Patterson Companies, Inc. Docket No. 9379. The administrative complaint alleges “reason to believe” that Patterson and the other respondents violated Section 5 of the FTC Act, 15 U.S.C. § 45 by conspiring to refuse to offer discounted prices or otherwise negotiate with buying groups seeking to obtain supply agreements on behalf of groups of solo practitioners or small group dental practices. The administrative complaint seeks injunctive relief against Patterson, including an order to cease and desist from the conduct alleged in the complaint and a prohibition from conspiring or agreeing with any competitor or any person to refuse to provide discounts to or compete for the business of any customer. No money damages are sought. We are vigorously defending ourselves against the administrative complaint. The hearing in front of an Administrative Law Judge of the FTC in Washington, D.C. began on October 16, 2018 and is ongoing. We do not anticipate this matter will have a material adverse effect on our financial statements.

On March 28, 2018, Plymouth County Retirement System (“Plymouth”) filed a federal securities class action complaint against Patterson Companies, Inc. and its former CEO Scott P. Anderson and former CFO Ann B. Gugino in the U.S. District Court for the District of Minnesota in a case captioned Plymouth County Retirement System v. Patterson Companies, Inc., Scott P. Anderson and Ann B. Gugino, Case No. 0:18-cv-00871 MJD/SER. On November 9, 2018, the complaint was amended to add former CEO James W. Wiltz and former CFO R. Stephen Armstrong as individual defendants. Under the amended complaint, on behalf of all persons or entities that purchased or otherwise acquired Patterson’s common stock between June 26, 2013 and February 28, 2018, Plymouth alleges that Patterson violated federal securities laws by failing to disclose that Patterson’s revenue and earnings were “artificially inflated by Defendants’ illicit, anti-competitive scheme with its purported competitors, Benco and Schein, to prevent the formation of buying groups that would allow its customers who were office-based practitioners to take advantage of pricing arrangements identical or comparable to those enjoyed by large-group customers.” In its class action complaint, Plymouth asserts one count against Patterson for violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and a second, related count against the individual defendants for violating Section 20(a) of the Exchange Act.  Plymouth seeks compensatory damages, pre- and post-judgment interest and reasonable attorneys’ fees and experts’ witness fees and costs.  On August 30, 2018, Gwinnett County Public Employees Retirement System and Plymouth County Retirement System, Pembroke Pines Pension Fund for Firefighters and Police Officers, Central Laborers Pension Fund were appointed lead plaintiffs.  While the outcome of litigation is inherently uncertain, we believe that the class action complaint is without merit, and we are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements. Patterson has also received requests under Minnesota Business Corporation Act § 302A.461 to inspect corporate books and records relating to the issues raised in the securities class action and the antitrust matters discussed above.

During the first quarter of fiscal 2019, the U.S. Attorney’s Office for the Western District of Virginia informed us that our subsidiary, Animal Health International, Inc., has been designated a target of a criminal investigation.  The main focus of the investigation to date and the alleged relationships at issue occurred prior to our acquisition of Animal Health International in June 2015 and relate to legacy Animal Health International sales of prescription animal health products to certain persons and/or locations not licensed to receive them in Virginia and Tennessee in violation of federal and state laws.  In October 2018, we entered into a tolling agreement effective for three months to allow us to produce documents responsive to grand jury subpoenas and to allow for further evaluation of evidence.  We also are

27

conducting an internal investigation and are cooperating with the U.S. Attorney’s Office.  At this time, we are unable to make an estimate of the amount of loss, if any, or range of possible loss that we could incur as a result of the foregoing matter.

On August 28, 2018, Kirsten Johnsen filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, James Wiltz, John Buck, Jody Feragen, Ellen Rudnick, Les Vinney, Neil Schrimsher, Sarena Lin, Harold Slavkin, Alex Blanco and Mark Walchirk as individual defendants in Hennepin County District Court in a case captioned Kirsten Johnsen v. Scott P. Anderson et al., Case No. 27-CV-18-14315.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson “suppressed price competition and maintained supracompetitive prices for dental supplies and equipment by entering into agreements with Henry Schein and Benco to:  (i) fix margins for dental supplies and equipment; and (ii) block the entry and expansion of lower-margin, lower-priced, rival dental distributors through threatened and actual group boycotts.”  Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “price-fixing scheme” to the public and purportedly “caused Patterson to repurchase over $412.8 million worth of its own stock at artificially inflated prices.”  In the derivative complaint, plaintiff asserts three counts against the individual defendants for:  (i) breach of fiduciary duty; (ii) waste of corporate assets; and (iii) unjust enrichment.  Plaintiff seeks compensatory damages, equitable and injunctive relief as permitted by law, costs, disbursements and reasonable attorneys’ fees, accountants’ fees and experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.”  While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 1, 2018, Sally Pemberton filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, Mark Walchirk, John Buck, Alex Blanco, Jody Feragen, Sarena Lin, Ellen Rudnick, Neil Schrimsher, Les Vinney, James Wiltz, Paul Guggenheim, David Misiak and Tim Rogan as individual defendants in the United States District Court for the District of Minnesota in a case captioned Sally Pemberton v. Scott P. Anderson, et al., Case No. 18-CV-2818.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson, with Benco and Henry Schein, “engage[d] in a conspiracy in restraint of trade, whereby the companies agreed to refuse to offer discounted prices or otherwise negotiate with GPOs, agreed to fix margins on dental supplies and equipment, agreed not to poach one another’s customers or sales representatives, and agreed to block the entry and expansion of rival distributors. Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “antitrust misconduct” to the public and purportedly caused Patterson to repurchase $412.8 million of its own stock at prices that were artificially inflated. In the derivative complaint, plaintiff asserts six counts against the individual defendants for: (i) breach of fiduciary duty; (ii) waste of corporate assets; (iii) unjust enrichment; (iv) violations of Section 14(a) of the Exchange Act; (v) violations of Section 10(b) and Rule 10b-5 of the Exchange Act and (vi) violations of Section 20(a) of the Exchange Act.  Plaintiff seeks compensatory damages with pre-judgment and post-judgment interest, costs, disbursements and reasonable attorneys’ fees, experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.” While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 9, 2018, Nathaniel Kramer filed indirect purchaser litigation against Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company in the United States District Court for the District of Northern District of California. The purported class action complaint asserts violations of the California Cartwright Act and the California Unfair Competition Act based on an alleged agreement between Schein, Benco, and Patterson (and unnamed co-conspirators) not to compete as to price and margins. Plaintiff alleges that the agreement allowed the defendants to charge higher prices to dental practices for dental supplies and that the dental practices passed on all, or part of, the increased prices to the consumers of dental services. Subject to certain exclusions, the complaint defines the class as all persons residing in California purchasing and/or reimbursing for dental services from California dental practices. The complaint seeks a permanent injunction, actual damages to be determined at trial, trebled, reasonable attorneys’ fees and costs, and pre- and post-judgment interest. While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation.

While management currently believes that resolving all of these matters, individually or in the aggregate, will not have a material adverse effect on our financial statements, the litigation and other claims noted above are subject to inherent uncertainties and management’s view of these matters may change in the future.  Adverse outcomes in some or all

28

of the claims pending against us may result in significant monetary damages or injunctive relief against us that could adversely affect our ability to conduct our business.  There also exists the possibility of a material adverse effect on our financial statements for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable.

From time to time, we may become a party to other legal proceedings, including, without limitation, product liability claims, intellectual property claims, employment matters, commercial disputes, governmental inquiries and investigations (which may in some cases involve our entering into settlement arrangements or consent decrees), and other matters arising out of the ordinary course of our business. While the results of any legal proceeding cannot be predicted with certainty, in our opinion none of these other pending matters is anticipated to have a material adverse effect on our financial statements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

On March 13, 2018, the Board of Directors authorized a new $500 million share repurchase program through March 13, 2021. The new repurchase program replaced the remaining authorization from our previous plan to purchase up to 25 million shares, which was scheduled to expire on March 19, 2018.

No shares were repurchased under the stock repurchase plan during the second quarter of fiscal 2019.

In fiscal 2017, we entered into an amended credit agreement (“Amended Credit Agreement”), consisting of a $295.1 million term loan and a $750 million revolving line of credit. The Amended Credit Agreement permits us to declare and pay dividends, and repurchase shares, provided that no default or unmatured default exists and that we are in compliance with applicable financial covenants.

29

ITEM 6. EXHIBITS

Exhibit No.	Exhibit Description
10.1	Amended and Restated Contract Purchase Agreement dated as of August 12, 2011, among PDC Funding Company II, LLC, as seller, Patterson Companies, Inc., as servicer, the purchasers party thereto, and Fifth Third Bank, as agent, conformed through Tenth Amendment, dated August 3, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q, filed September 5, 2018 (File No. 000-20572)).).
10.2	Third Amended and Restated Receivables Purchase Agreement dated as of December 3, 2010, among PDC Funding Company, LLC, as seller, Patterson Companies, Inc., as servicer, the conduits party thereto, the financial institutions party thereto, the purchaser agents party thereto, and MUFG Bank, Ltd. (f.k.a. The Bank of Tokyo-Mitsubishi UFJ, Ltd.), as agent, conformed through Thirteenth Amendment dated August 10, 2018 (incorporated by reference to our Quarterly Report on Form 10-Q, filed September 5, 2018 (File No. 000-20572)).).
10.3	Patterson Companies, Inc. Amended and Restated Capital Accumulation Plan (filed herewith).
10.4	Patterson Companies, Inc. Amended and Restated 2015 Omnibus Incentive Plan (incorporated by reference to Annex A to our Definitive Schedule 14A (Proxy Statement), filed August 6, 2018 (File No. 000-20572)).
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financials in XBRL format.

All other items under Part II have been omitted because they are inapplicable or the answers are negative, or were previously reported in the 2018 Annual Report on Form 10-K filed June 27, 2018.

30

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 COMPANIES, INC.
		(Registrant)
Dated: December 6, 2018	By:	/s/ Donald J. Zurbay
		Donald J. Zurbay
		Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

31

EX-10.3

Exhibit 10.3

PATTERSON COMPANIES

CAPITAL ACCUMULATION PLAN

(Restated Effective September 5, 2018)

SECTION 1. Purpose of the Plan.

(a)The name of this plan is PATTERSON COMPANIES CAPITAL ACCUMULATION PLAN (the “Plan”). The purpose of the Plan is to enable PATTERSON COMPANIES, INC. (the “Company”) and its Subsidiaries to attract, retain and motivate officers and other key employees, to compensate them for their contributions to the growth and profits of the Company and to encourage ownership of stock in the Company on the part of such personnel. The Plan provides incentives to participating officers and other key employees which are linked directly to increases in stockholder value and will therefore inure to the benefit of all stockholders of the Company.

(b)The Plan, as amended and restated effective January 1, 2009, is intended to comply in form and operation with the provisions of Section 409A of the Code.

(c)    The Plan is amended and restated effective as of September 5, 2018 (i) to freeze participation in the Plan and the right to make new Salary Reduction elections on or after September 5, 2018; (ii) to eliminate effective September 5, 2018 the rights of Participants to elect to extend the Restricted Period under an Award Agreement; and (iii) to reduce by 1,500,000 the total number of authorized shares of Stock that may be issued under the Plan on or after January 1, 2009. Salary Reduction elections in effect for 2018, all Award Agreements outstanding as of September 5, 2018, and Award Agreement that may be issued under the Plan with respect to 2018 Salary Reduction elections will continue to be subject to the terms of the Plan, as amended, until such Participants’ rights thereunder are forfeited or settled in shares of Stock. Upon the forfeiture or settlement in shares of Stock of all remaining Award Agreements, the Plan shall automatically terminate and the remaining number of authorized shares of Stock under Section 5 will be reduced to zero.

SECTION 2. Definitions.

(a)For purposes of the Plan, capitalized terms not otherwise defined herein shall have the meanings set forth below:

“Affiliate” means any person with whom the Company or Subsidiary would be considered a single employer under Sections 414(b) and 414(c) of the Code, namely (i) any corporation at least eighty percent (80%) of whose outstanding securities ordinarily having the right to vote at elections of directors is owned directly or indirectly by the Company or (ii) any other form of business entity in which the Company or Subsidiary, directly or indirectly, owns eighty percent (80%) or more of the controlling interests in such entity. Solely for purposes of determining whether a Termination of Employment has occurred, the term Affiliate will be determined by applying Code section 1563(a)(1), (2) and (3) for purposes of determining a controlled group of corporations under Code section 414(b) and in applying Treas. Reg. Section 1.414(c)-2 for purposes of determining trades or businesses that are under common control for purposes of Code section 414(c), the phrase “at least 50 percent” will be used instead of “at least 80 percent” each place it appears.

“Award Agreement” is the written agreement evidencing a Participant’s Restricted Stock Award or Restricted Stock Unit Award, executed by the Participant.

“Board” means the Board of Directors of the Company.

“Cause” means termination by the Company or a Subsidiary of a Participant's employment on account of (i) the willful and continued failure by such Participant to substantially perform his duties with the Company or a Subsidiary (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to such Participant by the Board, which demand specifically identifies the manner in which the Board believes that such Participant has not substantially performed his duties, or (ii) the willful engaging by a Participant in conduct which is demonstrably and materially injurious to the Company or a Subsidiary, monetarily or otherwise, including a violation of Company policies as set forth in the Company's Policy and Procedure Manual, as the same may be amended from time to time, or policies adopted from time to time by the Company for officers and key employees and communicated in writing to Participants. For purposes of this definition, no act, or failure to act, on a Participant's part shall be deemed “willful” unless done, or omitted to be done, by such Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company or a Subsidiary.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

“Committee” means the Compensation Committee of the Board, appointed by the Board from among its members and shall consist of not less than three members thereof who are and shall remain Committee members only so long as they remain “disinterested persons” as defined in Rule 16b-3 under the Securities Exchange Act of 1934 (“Exchange Act”), as amended.

“Company” means Patterson Companies, Inc.

“Compensation” means the total amount of compensation payable to a Participant for his or her employment with the Company or a Subsidiary for a calendar year (or portion thereof if such Participant is participating for less than the entire calendar year) determined before deferrals to any plan maintained by the Company or any Subsidiary.

“Disabled” means disabled within the meaning of Code section 409A(a)(2)(C), namely, that the Participant is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company or a Subsidiary.

“Eligible Employee” means Officers and other key employees of the Company or its Subsidiaries who are responsible for or contribute to the management, growth and/or profitability of the Company or its Subsidiaries.

2

“Event of Acceleration” means the date upon which any of the following events occurs provided such event is consistent with and satisfies the definition of “change in control event” under Code section 409A:

(i)Any Person other than the Company, a Subsidiary or any employee benefit plan(s) sponsored by the Company or a Subsidiary acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) the beneficial ownership (determined as provided in Rule 13d-3 under the Exchange Act in effect on such date), directly or indirectly, of securities of the Company entitling such Person to 35% or more of the voting power of the Company; or

(ii)A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the Board prior to the date of the appointment or election; or

(iii)The shareholders of the Company approve a merger, consolidation, share exchange, division or sale or other disposition of assets of the Company as a result of which the shareholders of the Company immediately prior to such transaction shall not hold, directly or indirectly, immediately following such transaction, (a) a majority of the voting power of a merger or consolidation, the surviving or resulting corporation; or (b) in the case of a share exchange, the acquiring corporation; or (c) in the case of division or a sale or other disposition of assets, at least 60% of the total gross fair market value of all of the consolidated assets of the Company immediately prior to the transaction.

“Participant” means an Eligible Employee selected by the Committee to receive an award of Restricted Stock who executes a Restricted Stock Award Agreement.

“Plan Rules” are rules, policies, practices or procedures adopted by the Committee or its delegate pursuant to Section 6(b)(vi).

“Plan Year” means the calendar year, commencing January 1 and ending December 31.

“Restricted Period” is the period of time determined under Section 3(e), (f), (g) or (h).

“Restricted Stock” means an award of shares of Stock that is subject to the restrictions set forth in Section 5.

“Restricted Stock Award” means an award of common stock determined in accordance with the provisions of this Plan and an Award Agreement.

“Restricted Stock Unit” means any unit granted under Section 5 evidencing the right to receive one share of stock at a future date.

“Restricted Stock Unit Award” means an award of Restricted Stock Units determined in accordance with the provisions of this Plan and an Award Agreement.

3

“Retirement” means Participant’s Termination of Employment with the Company or any Subsidiary on or after a Participant's 65th birthday other than for Cause.

“Salary Reduction” means the amount of a Participant’s Compensation which has been reduced pursuant to Section 3(b).

“Stock” means the common stock of the Company.

“Subsidiary” means any corporation (other than the Company) 50% or more of the total combined voting power of all classes of stock of which is owned, directly or indirectly, by the Company.

“Termination of Employment” means a termination of a Participant’s employment relationship (both as an employee and independent contractor) with the Company, all Subsidiaries, and all Affiliates or such other change in the Participant’s employment relationship with the Company, all Subsidiaries, and all Affiliates that would be considered a “separation from service” under Section 409A of the Code. A Participant’s employment relationship will be treated as remaining intact while the Participant is on a military leave, a sick leave or other bona fide leave of absence (pursuant to which there is a reasonable expectation that the Participant will return to perform services for the Company, a Subsidiary, or an Affiliate) but only if the period of such leave does not exceed six (6) months, or if longer, so long as the Participant retains a right to reemployment by the Company, a Subsidiary, or an Affiliate under applicable statute or by contract, provided, however, where the Participant’s leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months and such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a twenty-nine (29) month period of absence may be substituted for such six (6) month period of absence. In all cases, the Participant’s Termination of Employment must constitute a “separation from service” under Section 409A of the Code and any “separation from service” under Section 409A of the Code shall be treated as a Termination of Employment.

SECTION 3. Eligibility and Participation.

(a)Prior to September 5, 2018, the Participants under the Plan were selected from time to time by the Committee, in its sole discretion, from among Eligible Employees. Effective September 5, 2018, participation in the Plan shall be frozen and Employees shall cease to be eligible to make Salary Reduction elections under the Plan on or after September 5, 2018. Any Participant with a Salary Reduction election in effect for 2018 and any Participant with an outstanding Award shall continue to be subject to the terms and conditions of the Plan, as amended.

(b)An Employee selected by the Company shall affirmatively elect to participate in the Plan. A Participant may elect to reduce his or her Compensation for services rendered during a Plan Year in exchange for a Restricted Stock or Restricted Stock Unit Award. Such Salary Reduction election shall be a whole percentage from 5% to 25%. The election must be filed with the Company prior to the beginning of the Plan Year to which it pertains and shall be effective on the first day of the calendar year following the filing of the election, except with respect to “performance-based

4

compensation” (within the meaning of Code section 409A) for which the election must be made no later than six months prior to the end of the period (which must be at least 12 months) in which the services (to which the performance-based compensation relates) are performed. Subject to paragraph (c), a Salary Reduction election shall be irrevocable for such Plan Year after the last day on which the election may be made. Effective September 5, 2018, the foregoing provisions of this paragraph (b) shall cease to apply.

(c)For calendar year 2005 only, a Participant may, on or before the first day of any calendar quarter of the Company, elect to cease participation in the Plan, whereupon such participation shall be deemed to have been discontinued as of such first day of the calendar quarter following the date such notice was given to the Company. Notice by a Participant to cease participation in the Plan shall be given in writing by a Participant and shall be deemed given to the Company only when received by the Company at its principal executive offices.

(d)A Participant’s Salary Reduction shall not be subject to refund, except as otherwise provided herein.

(e)Restricted Period means the period beginning on the effective date of the Award Agreement and ending on the date elected by the Participant, which is either the 3-year, 4-year or 5-year anniversary of the effective date of the Award Agreement. The Participant shall execute the Award Agreement at the time the Participant makes his or her Salary Reduction election under Section 3(b) and such Agreement will be effective on the date established under Section 3(b).

(f)Notwithstanding the foregoing, a Participant may elect to extend the date on which his or her Restricted Period ends by five (5) full years provided such election is filed with the Company at least 12 months prior to the date the Participant’s Restricted Period is otherwise scheduled to end, subject to Code section 409A(a)(4)(C). Effective September 5, 2018, Participants are not entitled to make an election to extend the date on which the Participant’s Restricted Period will end.

(g)During calendar year 2005, a Participant may, in accordance with Plan Rules, elect to extend any Restricted Period that ends January 1, 2007 to January 1 of the years 2008, 2009, 2010 or 2011.

(h)During calendar year 2008, the following Participants may, in accordance with Plan Rules, make the following elections:

(i)A Participant who was born prior to 1954 and who elected to participate and receive a Restricted Stock Award for a calendar year prior to 2008, may elect to accelerate the end of the Restricted Period to 2009 for any such Restricted Stock Award.

(ii)A Participant who was born prior to 1955 and who elected to participate in the Plan for 2008 and receive a Restricted Stock Award, may elect to cancel his or her right to receive the Restricted Stock Award and to receive, in January of 2009, his or her deferrals made in calendar year 2008, together with interest at the rate determined under Section 5(g)(iii).

5

SECTION 4. Amount and Form of Awards.

(a)Awards of Restricted Stock and Restricted Stock Units under the Plan shall be determined and approved by the Committee in its sole discretion.

(b)Awards of Restricted Stock and Restricted Stock Units will be made in lieu of cash payments of the Participant's Salary Reduction and will be issued immediately following a Plan Year of Salary Reduction. The Committee may also in its sole discretion provide for alternative methods for grants of awards.

(c)In order to reflect the impact of the restrictions on the value of the Restricted Stock or Restricted Stock Units, as well as the possibility of forfeiture, the number of shares of Restricted Stock or units of Restricted Stock Units to be issued is equal to the amount of the Participant’s Salary Reduction divided by a price per share of Stock equal to the lesser of (i) 75% of the price of a share of common stock on the first business day of the calendar year or (ii) 75% of the price of a share of common stock on the last business day of the calendar year. The Committee may, when it deems appropriate, and in its sole discretion, provide for an alternative price per share. For purposes of this Plan, the price of Stock on a given date will be the Stock's closing sale price on the NASDAQ Stock Market as reported in the consolidated transaction reporting system on such date, or if the NASDAQ Stock Market is not open for trading on such date, on the most recent preceding date when such Market is open for trading. The value of fractional shares will be paid in cash to the Participant not later than the March 15 immediately following the calendar year to which the Participant’s Salary Reduction relates.

(d)A Participant shall not have any rights with respect to an award unless or until such Participant has executed an Award Agreement) and has delivered a fully executed copy thereof to the Company within a period of 30 days after the date of the award (or such shorter period after the date of the award as the Committee may specify).

(e)Effective January 1, 2009, Participants who are age 63 or older shall be entitled to receive only Restricted Stock Unit Awards.

SECTION 5. Restricted Stock and Restricted Stock Units.

(a)Effective September 5, 2018, the maximum number of shares of Stock that may be issued under the Plan as Restricted Stock or issued with respect to a Restricted Stock Unit upon lapse of the Restricted Period on or after January 1, 2009 shall be not more than 4,500,000 shares of Stock, subject to adjustment as provided in Section 7, and such shares may be authorized but unissued shares, or previously issued shares reacquired by the Company, or both. In the event Restricted Stock or a Restricted Stock Unit is forfeited prior to the end of the Restricted Stock Period, the shares of Stock called for by such award of Restricted Stock or Restricted Stock Units will become available for future awards. Following the forfeiture or settlement in shares of Stock of all Award Agreements outstanding as of September 5, 2018 and all Award Agreement issued under the Plan with respect to 2018 Salary Reduction elections, the Plan shall automatically terminate and the number of authorized shares of Stock remaining unissued under this Section 5 will be reduced to zero.

6

(b)A Participant who is awarded Restricted Stock will not be issued a stock certificate in respect of such shares of Restricted Stock, but rather such issuance shall be maintained in a “book entry” (i.e., a computerized or manual entry) made in the records of the Company to evidence an award of shares of Restricted Stock to a Participant. Such Company records shall, absent manifest error, be binding on the Participants. A Participant who is awarded Restricted Stock Units will not be issued shares at the time such award is granted. Upon the lapse of the Restricted Period relating to Restricted Stock Units evidencing the right to receive Stock, shares of such Stock will be issued and delivered to the holder of the Restricted Stock Units.

(c)Subject to the provisions of the Plan and the Award Agreements, during the Restricted Period the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock awarded under the Plan. In no event will a Participant be permitted to sell, transfer, pledge or assign Restricted Stock Units awarded under the Plan or the right to receive shares of Stock underlying such Restricted Stock Units.

(d)Unless the Committee in its sole discretion shall determine otherwise at or prior to the time of the grant of any award, the Participant shall have the right to vote his shares of Restricted Stock during the Restricted Period.

(e)The Participant shall have the right to receive any regular dividends on such shares of Restricted Stock. The Committee shall in its sole discretion determine the Participant's rights with respect to extraordinary dividends on the shares of Restricted Stock, including, but not limited to, dividends payable in Stock.

(f)Restricted Stock or shares of Stock issued with respect to Restricted Stock Units may be transferred only after the Restricted Period expires (or such earlier time as the restrictions may lapse in accordance with Section 5(g)(i) or Section 5(h)) without forfeiture in respect of such shares of Restricted Stock.

(g)The following provisions shall apply to a Participant's shares of Restricted Stock or Restricted Stock Units prior to the end of the Restricted Period relating thereto (including extensions thereof):

(i)In the event a Participant dies or becomes Disabled, the restrictions on his or her Restricted Stock or Restricted Stock Units shall lapse and the shares of Stock shall be delivered on the July 1 or the December 31 next succeeding the date in which the Participant dies or becomes Disabled.

(ii)If, prior to reaching age 65, a Participant has a voluntary Termination of Employment, such Participant shall forfeit his or her Restricted Stock and his or her Restricted Stock Units.

(iii)If, prior to reaching age 65, a Participant has an involuntary Termination of Employment, such Participant shall forfeit his or her Restricted Stock and Restricted Stock Units, but shall be entitled to receive in lieu thereof, on the date that is six (6) months following such Termination of Employment, a cash payment equal to his or her Salary

7

Reduction related to such forfeited Restricted Stock or Restricted Stock Units, together with interest thereon at a rate equal to the market yield on U.S. Treasury securities, at 1-year constant maturity, in effect at the time of the issuance of the Restricted Stock or Restricted Stock Unit Award.

(iv)If a Participant has an involuntary Termination of Employment for Cause, he or she shall forfeit his or her Restricted Stock and Restricted Stock Units, and no cash payment shall be made in respect thereto or in lieu thereof.

(v)If a Participant has a Termination of Employment on or after reaching age 65, he or she shall receive his or her Restricted Stock, or shares of Stock for his or her Restricted Stock Units, upon expiration of the Restricted Period.

(h)Notwithstanding any other provision contained in the Plan, in case any Event of Acceleration occurs, the Restricted Period applicable to any Restricted Stock Award or Restricted Stock Unit Award shall be deemed to have expired and lapsed.

SECTION 6. Administration.

(a)The Plan shall be administered by the Committee. The Committee may delegate its duty or any portion thereof to a named person and may from time to time revoke such authority and delegate it to another person.

(b)The Committee shall have the power and authority to grant Restricted Stock and Restricted Stock Unit Awards to Participants, pursuant to the terms of the Plan, and to make all determinations necessary for the administration of the Plan. In particular, the Committee shall have the authority:

(i)to select those employees of the Company and its Subsidiaries who are Eligible Employees;

(ii)to determine whether and to what extent Restricted Stock or Restricted Stock Unit Awards shall be granted to Participants hereunder;

(iii)to determine the number of shares of Stock to be covered by each such award granted hereunder;

(iv)to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted hereunder;

(v)to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Restricted Stock or Restricted Stock Units;

(vi)to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall, from time to time, deem advisable;

8

(vii)to interpret the terms and provisions of the Plan and any award issued under the Plan; and

(viii)to otherwise supervise the administration of the Plan.

(c)All decisions made by the Committee pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and the Participants.

SECTION 7. Adjustments upon a Change in Common Stock.

In the event of any change in the outstanding Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination or exchange of shares or other similar event if such change equitably requires an adjustment in the number or kind of shares that may be issued under the Plan pursuant to Section 5(a), such adjustment shall be made by the Committee and shall be conclusive and binding for all purposes of the Plan.

SECTION 8. Amendment and Termination.

The Plan may be amended or terminated at any time and from time to time by the Board, but no amendment which increases the aggregate number of shares of Stock which may be issued pursuant to the Plan (except as provided in Section 7) shall be effective unless and until the same is approved by the shareholders of the Company. Neither an amendment to the Plan nor the termination of the Plan shall adversely affect any right of any Participant with respect to any Restricted Stock Award or Restricted Stock Unit Award theretofore made without such Participant's written consent.

SECTION 9. General Provisions.

(a)All certificates for shares issued pursuant to Restricted Stock awards may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. All certificates for shares of Stock delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate references to such restrictions.

(b)Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

(c)The adoption of the Plan shall not confer upon any employee of the Company or any Subsidiary any right to continued employment with the Company or a Subsidiary, as the case may be, nor shall it interfere in any way with the right of the Company or a Subsidiary to terminate the employment of any of its employees at any time.

9

(d)No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation.

(e)A Participant's rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of a Participant's death) including, but not by way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no such right or interest of any Participant in the Plan shall be subject to any obligation or liability of such Participant.

(f)The Company and its Subsidiaries shall have the right to deduct from any payment made under the Plan any federal, state or local income or other taxes required by law to be withheld with respect to such payment. It shall be a condition to the obligation of the Company to issue Stock upon the lapse of restrictions on Restricted Stock or at the end of the Restricted Period for shares distributable for Restricted Stock Units that the Participant pay to the Company, upon its demand, such amount as may be requested by the Company for the purpose of satisfying any liability to withhold federal, state or local income or other taxes. If the amount requested is not paid, the Company may refuse to issue shares. Unless the Committee shall in its sole discretion determine otherwise, payment for taxes required to be withheld may be made in whole or in part by an election by a Participant, in accordance with rules adopted by the Committee from time to time to have the Company withhold Stock otherwise issuable pursuant to the Plan having a fair market value equal to such tax liability.

(g)The distribution of cash or Stock following the Restricted Period may not be accelerated, including upon termination of the Plan, if such acceleration would cause the distribution to become subject to tax under Code section 409A.

SECTION 10. Effective Date of Plan.

(a)The Plan was originally adopted by the Board on April 18, 1996 and approved by the Company’s shareholders at the annual meeting held on September 10, 1996.

(b)The Plan was amended and restated effective January 1, 2009.

(c)    The Plan, as amended and restated by this written Plan document, is effective September 5, 2018, unless otherwise provided herein.

10

EX-31.1

Exhibit 31.1

Certification of the Chief Executive Officer Pursuant to

Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Mark S. Walchirk, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended October 27, 2018 of Patterson Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter ended (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 6, 2018

/s/ Mark S. Walchirk

Mark S. Walchirk

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of the Chief Financial Officer Pursuant to

Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Donald J. Zurbay, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended October 27, 2018 of Patterson Companies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter ended (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 6, 2018

/s/ Donald J. Zurbay

Donald J. Zurbay

Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer

pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Patterson Companies, Inc., (the “Company”) on Form 10-Q for the quarterly period ended October 27, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Mark S. Walchirk

Mark S. Walchirk

President and Chief Executive Officer

December 6, 2018

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer

pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906

of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Patterson Companies, Inc., (the “Company”) on Form 10-Q for the quarterly period ended October 27, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Donald J. Zurbay

Donald J. Zurbay

Chief Financial Officer and Treasurer

December 6, 2018

XML

Document and Entity Information - shares	6 Months Ended
	Oct. 27, 2018	Nov. 29, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Oct. 27, 2018
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Trading Symbol	PDCO
Entity Registrant Name	PATTERSON COMPANIES, INC.
Entity Central Index Key	0000891024
Current Fiscal Year End Date	--04-27
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		94,954,000

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 27, 2018	Apr. 28, 2018
Current assets:
Cash and cash equivalents	$ 165,515	$ 62,984
Receivables, net of allowance for doubtful accounts	571,232	826,877
Inventory	792,533	779,834
Prepaid expenses and other current assets	176,019	103,029
Total current assets	1,705,299	1,772,724
Property and equipment, net	289,602	290,590
Long-term receivables, net	86,513	135,175
Goodwill	814,348	815,977
Identifiable intangibles, net	368,185	389,424
Other	80,307	67,774
Total assets	3,344,254	3,471,664
Current liabilities:
Accounts payable	662,731	610,368
Accrued payroll expense	61,602	69,099
Other accrued liabilities	164,301	136,316
Current maturities of long-term debt	80,286	76,598
Borrowings on revolving credit	0	16,000
Total current liabilities	968,920	908,381
Long-term debt	738,341	922,030
Other non-current liabilities	181,305	179,463
Total liabilities	1,888,566	2,009,874
Stockholders’ equity:
Common stock, $.01 par value: 600,000 shares authorized; 94,950 and 94,756 shares issued and outstanding	950	948
Additional paid-in capital	116,112	103,776
Accumulated other comprehensive loss	(86,733)	(74,974)
Retained earnings	1,473,357	1,497,766
Unearned ESOP shares	(51,722)	(65,726)
Total Patterson Companies, Inc. stockholders' equity	1,451,964	1,461,790
Noncontrolling interests	3,724	0
Total stockholders’ equity	1,455,688	1,461,790
Total liabilities and stockholders’ equity	$ 3,344,254	$ 3,471,664

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Oct. 27, 2018	Apr. 28, 2018
Statement of Financial Position [Abstract]
Common stock, par value, (in usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized	600,000,000	600,000,000
Common Stock, shares, issued	94,950,000	94,756,000
Common stock, shares outstanding	94,950,000	94,756,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017
Income Statement [Abstract]
Net sales	$ 1,404,752	$ 1,385,737	$ 2,741,072	$ 2,689,852
Cost of sales	1,109,676	1,069,994	2,162,333	2,075,061
Gross profit	295,076	315,743	578,739	614,791
Operating expenses	253,860	243,984	533,009	486,199
Operating income	41,216	71,759	45,730	128,592
Other income (expense):
Other income, net	5,941	1,160	7,194	2,672
Interest expense	(9,456)	(11,468)	(20,677)	(22,671)
Income before taxes	37,701	61,451	32,247	108,593
Income tax expense	9,055	21,207	8,110	37,502
Net income	28,646	40,244	24,137	71,091
Net loss attributable to noncontrolling interests	(223)	0	(276)	0
Net income attributable to Patterson Companies, Inc.	$ 28,869	$ 40,244	$ 24,413	$ 71,091
Earnings per share attributable to Patterson Companies, Inc.:
Basic (in USD per share)	$ 0.31	$ 0.43	$ 0.26	$ 0.76
Diluted (in USD per share)	$ 0.31	$ 0.43	$ 0.26	$ 0.76
Weighted average shares:
Basic (in shares)	92,683	92,722	92,606	93,037
Diluted (in shares)	93,289	93,351	93,144	93,683
Dividends declared per common share (in USD per share)	$ 0.26000	$ 0.26000	$ 0.52	$ 0.52
Comprehensive income:
Foreign currency translation gain (loss)	$ (3,540)	$ (3,965)	$ (12,860)	$ 8,119
Cash flow hedges, net of tax	552	438	1,101	875
Comprehensive income	$ 25,658	$ 36,717	$ 12,378	$ 80,085

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Unearned ESOP Shares	Non-controlling Interests
Beginning Balance at Apr. 29, 2017	$ 1,394,433	$ 966	$ 72,973	$ (92,669)	$ 1,481,234	$ (68,071)	$ 0
Beginning Balance (in shares) at Apr. 29, 2017		96,534,000
Foreign currency translation	15,824			15,824
Cash flow hedges	1,871			1,871
Net income (loss)	200,974				200,974
Dividends declared	(96,964)				(96,964)
Common stock issued and related tax benefits	12,407	$ 4	12,403
Common stock issued and related tax benefits (in shares)		369,000
Repurchases of common stock	(87,500)	$ (22)			(87,478)
Repurchases of common stock (in shares)		(2,147,000)
Stock based compensation	18,400		18,400
ESOP activity	2,345					2,345
Ending Balance at Apr. 28, 2018	$ 1,461,790	$ 948	103,776	(74,974)	1,497,766	(65,726)	0
Ending Balance (in shares) at Apr. 28, 2018	94,756,000	94,756,000
Foreign currency translation	$ (12,860)			(12,860)
Cash flow hedges	1,101			1,101
Net income (loss)	24,137				24,413		(276)
Dividends declared	(48,822)				(48,822)
Common stock issued and related tax benefits	2,712	$ 2	2,710
Common stock issued and related tax benefits (in shares)		194,000
Stock based compensation	9,626		9,626
ESOP activity	14,004					14,004
Increase from business combination	4,000						4,000
Ending Balance at Oct. 27, 2018	$ 1,455,688	$ 950	$ 116,112	$ (86,733)	$ 1,473,357	$ (51,722)	$ 3,724
Ending Balance (in shares) at Oct. 27, 2018	94,950,000	94,950,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017
Statement of Cash Flows [Abstract]
Net income (loss)	$ 24,137	$ 71,091
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	22,145	22,458
Amortization	19,781	19,375
Bad debt expense	3,533	3,716
Non-cash employee compensation	13,926	16,635
Deferred consideration in securitized receivables	(165,567)	(24,581)
Change in assets and liabilities, net of acquired	282,259	(31,586)
Net cash provided by operating activities	200,214	77,108
Investing activities:
Additions to property and equipment	(22,094)	(16,431)
Collection of deferred purchase price receivables	165,567	24,581
Other investing activities	2,875	11,626
Net cash provided by investing activities	146,348	19,776
Financing activities:
Dividends paid	(49,980)	(49,969)
Repurchases of common stock	0	(71,254)
Retirement of long-term debt	(180,321)	(7,377)
Draw on (payment on) revolving credit	(16,000)	33,000
Other financing activities	3,592	3,561
Net cash used in financing activities	(242,709)	(92,039)
Effect of exchange rate changes on cash	(1,322)	1,652
Net change in cash and cash equivalents	102,531	6,497
Cash and cash equivalents at beginning of period	62,984	94,959
Cash and cash equivalents at end of period	$ 165,515	$ 101,456

XML

General

6 Months Ended

Oct. 27, 2018

Accounting Policies [Abstract]

General

General

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Patterson Companies, Inc. (referred to herein as "Patterson" or in the first person notations "we," "our," and "us") as of October 27, 2018, and our results of operations and cash flows for the periods ended October 27, 2018 and October 28, 2017. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended October 27, 2018 are not necessarily indicative of the results to be expected for any other interim period or for the year ending April 27, 2019. These financial statements should be read in conjunction with the financial statements included in our 2018 Annual Report on Form 10-K filed on June 27, 2018.

The unaudited condensed consolidated financial statements include the assets and liabilities of PDC Funding Company, LLC ("PDC Funding"), PDC Funding Company II, LLC ("PDC Funding II") and PDC Funding Company III, LLC ("PDC Funding III"), which are our wholly owned subsidiaries and separate legal entities formed under Minnesota law. PDC Funding and PDC Funding II are fully consolidated special purpose entities established to sell customer installment sale contracts to outside financial institutions in the normal course of their business. PDC Funding III is a fully consolidated special purpose entity established to sell certain receivables to unaffiliated financial institutions. The assets of PDC Funding, PDC Funding II and PDC Funding III would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding, PDC Funding II or PDC Funding III. The unaudited condensed consolidated financial statements also include the assets and liabilities of Technology Partner Innovations, LLC, which is further described in Note 7.

Fiscal Year End

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. The second quarter of fiscal 2019 and 2018 represents the 13 weeks ended October 27, 2018 and the 13 weeks ended October 28, 2017, respectively. The six months ended October 27, 2018 and October 28, 2017 each included 26 weeks. Fiscal 2019 will include 52 weeks and fiscal 2018 included 52 weeks.

Comprehensive Income

Comprehensive income is computed as net income including certain other items that are recorded directly to stockholders’ equity. Significant items included in comprehensive income are foreign currency translation adjustments and the effective portion of cash flow hedges, net of tax. Foreign currency translation adjustments do not include a provision for income tax because earnings from foreign operations are considered to be indefinitely reinvested outside the U.S. The income tax expense related to cash flow hedges was $173 and $265 for the three months ended October 27, 2018 and October 28, 2017, respectively. The income tax expense related to cash flow hedges was $357 and $530 for the six months ended October 27, 2018 and October 28, 2017, respectively.

Earnings Per Share

The following table sets forth the computation of the weighted average shares outstanding used to calculate basic and diluted earnings per share ("EPS"):

	Three Months Ended		Six Months Ended
	October 27, 2018	October 28, 2017	October 27, 2018	October 28, 2017
Denominator for basic EPS – weighted average shares	92,683	92,722	92,606	93,037
Effect of dilutive securities – stock options, restricted stock and stock purchase plans	606	629	538	646
Denominator for diluted EPS – weighted average shares	93,289	93,351	93,144	93,683

Potentially dilutive securities representing 1,890 and 1,905 shares for the three and six months ended October 27, 2018, respectively, and 1,581 and 1,272 shares for the three and six months ended October 28, 2017, respectively, were excluded from the calculation of diluted EPS because their effects were anti-dilutive using the treasury stock method.

Revenue Recognition

Revenues are generated from the sale of consumable products, equipment and support, software and support, technical service parts and labor, and other sources. Revenues are recognized when or as performance obligations are satisfied. Performance obligations are satisfied when the customer obtains control of the goods or services.

Consumable, equipment, software and parts sales are recorded upon delivery, except in those circumstances where terms of the sale are FOB shipping point, in which case sales are recorded upon shipment. Technical service labor is recognized as it is provided. Revenue derived from equipment and software support is recognized ratably over the period in which the support is provided.

In addition to revenues generated from the distribution of consumable products under arrangements (buy/sell agreements) where the full market value of the product is recorded as revenue, we earn commissions for services provided under agency agreements. The agency agreement contrasts to a buy/sell agreement in that we do not have control over the transaction, as we do not have the primary responsibility of fulfilling the promise of the good or service and we do not bill or collect from the customer in an agency relationship. Commissions under agency agreements are recorded when the services are provided.

Estimates for returns, damaged goods, rebates, loyalty programs and other revenue allowances are made at the time the revenue is recognized based on the historical experience for such items. The receivables that result from the recognition of revenue are reported net of related allowances. We maintain a valuation allowance based upon the expected collectability of receivables held. Estimates are used to determine the valuation allowance and are based on several factors, including historical collection data, economic trends and credit worthiness of customers. Receivables are written off when we determine the amounts to be uncollectible, typically upon customer bankruptcy or non-response to continuous collection efforts. The portions of receivable amounts that are not expected to be collected during the next twelve months are classified as long-term.

Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales tax.

Contract Balances

Contract balances represent amounts presented in our condensed consolidated balance sheets when either we have transferred goods or services to the customer or the customer has paid consideration to us under the contract. These contract balances include accounts receivable, contract assets and contract liabilities.

Contract asset balances as of October 27, 2018 and April 28, 2018 were not material. Our contract liabilities primarily relate to advance payments from customers, upfront payments for software and support provided over time, and options that provide a material right to customers, such as our customer loyalty programs. At October 27, 2018 and April 28, 2018, contract liabilities of $24,386 and $26,166 were reported in other accrued liabilities, respectively. During the six months ended October 27, 2018, we recognized $15,932 of the amount previously deferred at April 28, 2018.

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". ASU No. 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 605)," and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new guidance as of April 29, 2018 using the modified retrospective method, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In January 2016, the FASB issued ASU No. 2016-01 "Financial Instruments- Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)", which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. We adopted ASU No. 2016-01 in the first quarter of fiscal 2019, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by most leases, as well as requires additional qualitative and quantitative disclosures. We are required to adopt ASU 2016-02 in the first quarter of fiscal 2020, with early adoption permitted. We plan to adopt the new guidance in the first quarter of fiscal 2020 and are currently evaluating the impact of adopting this pronouncement, but anticipate that the new guidance will impact our condensed consolidated balance sheets.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects that are stranded in accumulated other comprehensive income as a result of tax reform. This standard also requires certain disclosures about stranded tax effects. We are required to adopt ASU No. 2018-02 in the first quarter of fiscal 2020, with early adoption permitted and apply it either in the period of adoption or retrospectively to each period in which the income tax effects of the tax reform related to items in accumulated other comprehensive income are recognized. We are currently evaluating the impact of adopting this pronouncement.

XML

Receivables Securitization Program

6 Months Ended

Oct. 27, 2018

Transfers and Servicing [Abstract]

Receivables Securitization Program

Receivables Securitization Program

On July 24, 2018, we entered into a Receivables Purchase Agreement (the “Receivables Purchase Agreement”) with MUFG Bank, Ltd. Under this agreement, MUFG Bank, Ltd. acts as an agent to facilitate the sale of certain Patterson receivables (the “Receivables”) to certain unaffiliated financial institutions (the “Purchasers”). The sale of these receivables is accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We utilize PDC Funding III to facilitate the sale to fulfill requirements within the agreement.

Sales of Receivables occur daily and are settled with the Purchasers on a monthly basis. The proceeds from the sale of these Receivables comprise a combination of cash and a deferred purchase price (“DPP”) receivable. The DPP receivable is ultimately realized by Patterson following the collection of the underlying Receivables sold to the Purchasers. The amount available under the Receivables Purchase Agreement fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business, with maximum availability of $200,000. As of October 27, 2018, $172,000 of the amount available under the Receivables Purchase Agreement was utilized.

We have no retained interests in the transferred Receivables, other than our right to the DPP receivable and collection and administrative services. We consider the fees received adequate compensation for services rendered, and accordingly have recorded no servicing asset or liability. The DPP receivable is recorded at fair value within the condensed consolidated balance sheets within prepaid expenses and other current assets. The DPP receivable was $58,451 as of October 27, 2018. The difference between the carrying amount of the Receivables and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain or loss on sale of the related Receivables. We recorded a loss on sale of Receivables within operating expenses in the condensed consolidated statements of income and other comprehensive income during the three and six months ended October 27, 2018 of $2,192 and $2,871, respectively.

XML

Customer Financing

6 Months Ended

Oct. 27, 2018

Receivables [Abstract]

Customer Financing

Customer Financing

As a convenience to our customers, we offer several different financing alternatives, including a third party program and a Patterson-sponsored program. For the third party program, we act as a facilitator between the customer and the third party financing entity with no on-going involvement in the financing transaction. Under the Patterson-sponsored program, equipment purchased by creditworthy customers may be financed up to a maximum of $1,000. We generally sell our customers’ financing contracts to outside financial institutions in the normal course of our business. These financing arrangements are accounted for as a sale of assets under the provisions of ASC 860, Transfers and Servicing. We currently have two arrangements under which we sell these contracts.

First, we operate under an agreement to sell a portion of our equipment finance contracts to commercial paper conduits with MUFG Bank, Ltd. ("MUFG") (f.k.a. The Bank of Tokyo-Mitsubishi UFJ, Ltd.) serving as the agent. We utilize PDC Funding to fulfill a requirement of participating in the commercial paper conduit. We receive the proceeds of the contracts upon sale to MUFG. At least 9.5% of the proceeds are held by the conduit as security against eventual performance of the portfolio. This percentage can be greater and is based upon certain ratios defined in the agreement with MUFG. The capacity under the agreement with MUFG at October 27, 2018 was $525,000.

Second, we maintain an agreement with Fifth Third Bank ("Fifth Third") whereby Fifth Third purchases customers’ financing contracts. PDC Funding II sells its financing contracts to Fifth Third. We receive the proceeds of the contracts upon sale to Fifth Third. At least 11.0% of the proceeds are held by the conduit as security against eventual performance of the portfolio. This percentage can be greater and is based upon certain ratios defined in the agreement with Fifth Third. The capacity under the agreement with Fifth Third at October 27, 2018 was $100,000.

We service the financing contracts under both arrangements, for which we are paid a servicing fee. The servicing fees we receive are considered adequate compensation for services rendered. Accordingly, no servicing asset or liability has been recorded.

The portion of the purchase price for the receivables held by the conduits is deemed a DPP receivable, which is paid to the applicable special purpose entity as payments on the customers’ financing contracts are collected by Patterson from customers. The difference between the carrying amount of the receivables sold under these programs and the sum of the cash and fair value of the DPP receivable received at time of transfer is recognized as a gain on sale of the related receivables and recorded in net sales in the condensed consolidated statements of income and other comprehensive income. Expenses incurred related to customer financing activities are recorded in operating expenses in our condensed consolidated statements of income and other comprehensive income.

During the three months ended October 27, 2018 and October 28, 2017, we sold $40,713 and $95,588 of contracts under these arrangements, respectively. During the six months ended October 27, 2018 and October 28, 2017, we sold $88,023 and $151,711 of contracts under these arrangements, respectively. In net sales in the condensed consolidated statements of income and other comprehensive income, we recorded a gain of $2,734 and $5,967 during the three months ended October 27, 2018 and October 28, 2017, respectively, related to these contracts sold. In net sales in the condensed consolidated statements of income and other comprehensive income, we recorded a gain of $5,225 and $10,227 during the six months ended October 27, 2018 and October 28, 2017, respectively, related to these contracts sold.

Included in cash and cash equivalents in the condensed consolidated balance sheets are $36,357 and $35,741 as of October 27, 2018 and April 28, 2018, respectively, which represent cash collected from previously sold customer financing contracts that have not yet been settled. Included in current receivables in the condensed consolidated balance sheets are $66,173, net of unearned income of $7, and $46,232, net of unearned income of $8, as of October 27, 2018 and April 28, 2018, respectively, of finance contracts we have not yet sold. A total of $539,426 of finance contracts receivable sold under the arrangements was outstanding at October 27, 2018. The DPP receivable under the arrangements was $100,182 and $150,404 as of October 27, 2018 and April 28, 2018, respectively. Since the internal financing program began in 1994, bad debt write-offs have amounted to less than 1% of the loans originated.

The arrangements require us to maintain a minimum current ratio and maximum leverage ratio. We were in compliance with those covenants at October 27, 2018.

XML

Derivative Financial Instruments

6 Months Ended

Oct. 27, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

Derivative Financial Instruments

We are a party to certain offsetting and identical interest rate cap agreements entered into to fulfill certain covenants of the equipment finance contract sale agreements. The interest rate cap agreements also provide a credit enhancement feature for the financing contracts sold by PDC Funding and PDC Funding II to the commercial paper conduit.

The interest rate cap agreements are canceled and new agreements are entered into periodically to maintain consistency with the dollar maximum of the sale agreements and the maturity of the underlying financing contracts. As of October 27, 2018, PDC Funding had purchased an interest rate cap from a bank with a notional amount of $525,000 and a maturity date of July 2026. We sold an identical interest rate cap to the same bank. As of October 27, 2018, PDC Funding II had purchased an interest rate cap from a bank with a notional amount of $100,000 and a maturity date of December 2025. We sold an identical interest rate cap to the same bank.

These interest rate cap agreements do not qualify for hedge accounting treatment and, accordingly, we record the fair value of the agreements as an asset or liability and the change as income or expense during the period in which the change occurs.

In March 2008, we entered into two forward starting interest rate swap agreements, each with notional amounts of $100,000 and accounted for as cash flow hedges, to hedge interest rate fluctuations in anticipation of the issuance of the senior notes due fiscal 2015 and fiscal 2018. Upon issuance of the hedged debt, we settled the forward starting interest rate swap agreements and recorded a $1,000 increase, net of income taxes, to other comprehensive income (loss), which is being amortized as a reduction to interest expense over the life of the related debt.

In January 2014, we entered into a forward interest rate swap agreement with a notional amount of $250,000 and accounted for as cash flow hedge, to hedge interest rate fluctuations in anticipation of refinancing the 5.17% senior notes due March 25, 2015. These notes were repaid on March 25, 2015 and replaced with new $250,0003.48% senior notes due March 24, 2025. A cash payment of $29,003 was made in March 2015 to settle the interest rate swap. This amount is recorded in other comprehensive income (loss), net of tax, and is recognized as interest expense over the life of the related debt.

The following presents the fair value of derivative instruments included in the condensed consolidated balance sheets:

Derivative type	Classification	October 27, 2018		April 28, 2018
Assets:
Interest rate cap agreements	Other noncurrent assets	$	2,753	$	1,613
Liabilities:
Interest rate cap agreements	Other noncurrent liabilities	2,753		1,613

The following table presents the pre-tax effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of income and other comprehensive income ("OCI"):

		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
		Three Months Ended						Six Months Ended
Derivatives in cash flow hedging relationships	Income statement location	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Interest rate swap	Interest expense	$	(725	)	$	(703	)	$	(1,458	)	$	(1,405	)

There were no gains or losses recognized in OCI on cash flow hedging derivatives during the three and six months ended October 27, 2018 or October 28, 2017.

We recorded no ineffectiveness during the three and six month periods ended October 27, 2018 and October 28, 2017. As of October 27, 2018, the estimated pre-tax portion of accumulated other comprehensive loss that is expected to be reclassified into earnings over the next twelve months is $2,900, which will be recorded as an increase to interest expense.

XML

Fair Value Measurements

6 Months Ended

Oct. 27, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value is the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. The fair value hierarchy of measurements is categorized into one of three levels based on the lowest level of significant input used:

Level 1 -     Quoted prices in active markets for identical assets and liabilities at the measurement date.

Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs for which there is little or no market data available. These inputs reflect management’s assumptions of what market participants would use in pricing the asset or liability.

Our hierarchy for assets and liabilities measured at fair value on a recurring basis is as follows:

	October 27, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	64,840	$	64,840	$	—	$	—
DPP receivable - receivables securitization program	58,451		—		—		58,451
DPP receivable - customer financing	100,182		—		—		100,182
Derivative instruments	2,753		—		2,753		—
Total assets	$	226,226	$	64,840	$	2,753	$	158,633
Liabilities:
Derivative instruments	$	2,753	$	—	$	2,753	$	—

	April 28, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	6,650	$	6,650	$	—	$	—
DPP receivable - receivables securitization program	—		—		—		—
DPP receivable - customer financing	150,404		—		—		150,404
Derivative instruments	1,613		—		1,613		—
Total assets	$	158,667	$	6,650	$	1,613	$	150,404
Liabilities:
Derivative instruments	$	1,613	$	—	$	1,613	$	—

Cash equivalents – We value cash equivalents at their current market rates. The carrying value of cash equivalents approximates fair value and maturities are less than three months.

DPP receivable - receivables securitization program – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

DPP receivable - customer financing – We value this DPP receivable based on a discounted cash flow analysis using unobservable inputs, which include a forward yield curve, the estimated timing of payments and the credit quality of the underlying creditor. Significant changes in any of the significant unobservable inputs in isolation would not result in a materially different fair value estimate. The interrelationship between these inputs is insignificant.

Derivative instruments – Our derivative instruments consist of interest rate cap agreements and interest rate swaps. These instruments are valued using inputs such as interest rates and credit spreads.

Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments under certain circumstances, such as when there is evidence of impairment. There were no fair value adjustments to such assets during the six month periods ended October 27, 2018 or October 28, 2017.

Our debt is not measured at fair value in the condensed consolidated balance sheets. The estimated fair value of our debt as of October 27, 2018 and April 28, 2018 was $800,636 and $989,124, respectively, as compared to a carrying value of $818,627 and $998,628 at October 27, 2018 and April 28, 2018, respectively. The fair value of debt was measured using a discounted cash flow analysis based on expected market based yields (i.e., Level 2 inputs).

The carrying amounts of receivables, net of allowances, accounts payable, and certain accrued and other current liabilities approximated fair value at October 27, 2018 and April 28, 2018.

XML

Income Taxes

6 Months Ended

Oct. 27, 2018

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective income tax rate for the three months ended October 27, 2018 was 24.0% compared to 34.5% for the three months ended October 28, 2017, and for the six months ended October 27, 2018 was 25.1% compared to 34.5% for the six months ended October 28, 2017.

The change in tax rate for the three months ended October 27, 2018 compared to the three months ended October 28, 2017 was primarily due to the impact of the Tax Cuts and Jobs Act ("Tax Act"), enacted on December 22, 2017 by the U.S. government . The change in tax rate for the six months ended October 27, 2018 compared to the six months ended October 28, 2017 was primarily due to the impact of the Tax Act and lower excess tax benefits on employee share-based compensation. The Tax Act significantly revises the future ongoing U.S. federal corporate income tax by, among other things, lowering U.S. federal corporate tax rates and implementing a territorial tax system. Effective January 1, 2018, the Tax Act reduced the U.S. federal corporate tax rate from 35.0% to 21.0%. For the fiscal year ended April 28, 2018, we utilized a blended rate of approximately 30.5%. For the three and six months ended October 27, 2018, we utilized a 21.0% U.S. federal statutory rate.

The legislative changes included in the Tax Act are broad and complex. For the fiscal year ended April 28, 2018, we recognized provisional net tax benefit of $76,648, which included provisional amounts of $81,871 of tax benefit on U.S. deferred tax assets and liabilities, $4,006 of tax expense for a one-time transition tax on unremitted foreign earnings and $1,217 in withholding taxes paid on current year distributions. During the six months ended October 27, 2018, there were no changes made to the provisional amounts recognized in fiscal year 2018. We continue to analyze the effects of the Tax Act and will record additional impacts as they are identified. Staff Accounting Bulletin No. 118 provides for a measurement period of up to one year from the enactment date. The final impact of the Tax Act may differ from the provisional amounts that have been recognized.

For the fiscal year ended April 28, 2018, and directly connected to the transition tax legislation, Patterson approved a one-time repatriation of cash included in the transition tax computation. There was an approximate $1,217 one-time cost recorded during fiscal 2018 to reflect the added withholding tax cost associated with this repatriation. With the exception of this one-time repatriation, Patterson continues to apply ASC 740 based on the provisions of the tax law that were in effect immediately prior to the enactment of the new law. With regard to unremitted earnings of foreign subsidiaries generated after December 31, 2017, we do not currently provide for U.S. taxes since we intend to invest such undistributed earnings indefinitely outside of the U.S.

We continue to review the impact of the global intangible low taxed income (“GILTI”) provisions under the Tax Act which are complex and subject to continued regulatory interpretation by the IRS. While we have included an estimate of GILTI in the effective tax rate for the three and six months ended October 27, 2018, we have not yet completed our analysis.

The final transition impacts of the Tax Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any federal and/or state legislative action to address questions that arise because of the Tax Act, any changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the transition impacts. The Securities and Exchange Commission has issued rules, under SAB 118, that will allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts.

XML

Technology Partner Innovations, LLC

6 Months Ended

Oct. 27, 2018

Business Combinations [Abstract]

Technology Partner Innovations, LLC

Technology Partner Innovations, LLC

In the first quarter of fiscal 2019, we entered into an agreement with Cure Partners to form Technology Partner Innovations, LLC (TPI), which is launching a new cloud-based practice management software, NaVetor. Patterson and Cure Partners each contributed net assets of $4,000 to form TPI. We have determined that TPI is a variable interest entity, and we consolidate the results of operations of TPI as we have concluded that we are the primary beneficiary of TPI. During the three and six ended October 27, 2018, net loss attributable to the noncontrolling interest was $223 and $276, respectively, resulting in noncontrolling interests of $3,724 on the condensed consolidated balance sheet at October 27, 2018.

XML

Segment and Geographic Data

6 Months Ended

Oct. 27, 2018

Segment Reporting [Abstract]

Segment and Geographic Data

Segment and Geographic Data

We present three reportable segments: Dental, Animal Health and Corporate. Dental and Animal Health are strategic business units that offer similar products and services to different customer bases. Dental provides a virtually complete range of consumable dental products, equipment and software, turnkey digital solutions and value-added services to dentists, dental laboratories, institutions, and other healthcare professionals throughout North America. Animal Health is a leading, full-line distributor in North America and the U.K. of animal health products, services and technologies to both the production-animal and companion-pet markets. Our Corporate segment is comprised of general and administrative expenses, including home office support costs in areas such as information technology, finance, legal, human resources and facilities. In addition, customer financing and other miscellaneous sales are reported within Corporate results. Corporate assets consist primarily of cash and cash equivalents, accounts receivable, property and equipment and long-term receivables. We evaluate segment performance based on operating income. The costs to operate the fulfillment centers are allocated to the operating units based on the through-put of the unit.

The following tables present information about our reportable segments:

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
United States	$	1,173,623	$	1,151,380	$	2,270,087	$	2,231,707
United Kingdom	150,452		148,734		304,357		289,588
Canada	80,677		85,623		166,628		168,557
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
United States	$	495,457	$	500,803	$	949,030	$	967,491
Canada	47,059		52,827		99,550		104,946
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
United States	$	671,338	$	642,053	$	1,309,187	$	1,246,520
United Kingdom	150,452		148,734		304,357		289,588
Canada	33,618		32,796		67,078		63,611
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
United States	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
Consumable	$	1,138,251	$	1,116,091	$	2,247,648	$	2,196,196
Equipment and software	182,120		181,337		329,018		318,286
Other	84,381		88,309		164,406		175,370
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
Consumable	$	303,806	$	311,217	$	608,045	$	631,395
Equipment and software	167,686		169,513		302,643		297,376
Other	71,024		72,900		137,892		143,666
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
Consumable	$	834,445	$	804,874	$	1,639,603	$	1,564,801
Equipment and software	14,434		11,824		26,375		20,910
Other	6,529		6,885		14,644		14,008
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
Other	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

	Three Months Ended						Six Months Ended
	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Operating income (loss)
Dental	$	41,594		$	65,207		$	77,467		$	124,726
Animal Health	22,031			23,217			41,063			39,893
Corporate	(22,409		)	(16,665		)	(72,800		)	(36,027		)
Consolidated operating income	$	41,216		$	71,759		$	45,730		$	128,592

	October 27, 2018		April 28, 2018
Total assets
Dental	$	668,603	$	853,555
Animal Health	2,158,144		2,128,800
Corporate	517,507		489,309
Total assets	$	3,344,254	$	3,471,664

XML

Accumulated Other Comprehensive Loss ("AOCL")

6 Months Ended

Oct. 27, 2018

Equity [Abstract]

Accumulated Other Comprehensive Loss (AOCL)

Accumulated Other Comprehensive Loss ("AOCL")

The following table summarizes the changes in AOCL as of October 27, 2018:

	Cash Flow Hedges			Currency Translation Adjustment			Total
AOCL at April 28, 2018	$	(13,118	)	$	(61,856	)	$	(74,974	)
Other comprehensive loss before reclassifications	—			(12,860		)	(12,860		)
Amounts reclassified from AOCL	1,101			—			1,101
AOCL at October 27, 2018	$	(12,017	)	$	(74,716	)	$	(86,733	)

The amounts reclassified from AOCL during fiscal 2019 represent gains and losses on cash flow hedges, net of taxes of $357. The impact to the condensed consolidated statements of income and other comprehensive income was an increase to interest expense of $1,458.

XML

Legal Proceedings

6 Months Ended

Oct. 27, 2018

Commitments and Contingencies Disclosure [Abstract]

Legal Proceedings

Legal Proceedings

In September 2015, we were served with a summons and complaint in an action commenced in the U.S. District Court for the Eastern District of New York, entitled SourceOne Dental, Inc. v. Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company, Civil Action No. 15-cv-05440-JMA-GRB. SourceOne, as plaintiff, alleges that, through its website, it markets and sells dental supplies and equipment to dentists. SourceOne alleges in the complaint, among other things, that we, along with the defendants Henry Schein and Benco, conspired to eliminate plaintiff as a competitor and to exclude them from the market for the marketing, distribution and sale of dental supplies and equipment in the U.S. and that defendants unlawfully agreed with one another to boycott dentists, manufacturers, and state dental associations that deal with, or considered dealing with, plaintiff. Plaintiff asserts the following claims: (i) unreasonable restraint of trade in violation of state and federal antitrust laws; (ii) tortious interference with prospective business relations; (iii) civil conspiracy; and (iv) aiding and abetting the other defendants’ ongoing tortious and anticompetitive conduct. Plaintiff seeks equitable relief, compensatory and treble damages, jointly and severally, punitive damages, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. In June 2017, Henry Schein settled with SourceOne and was dismissed from this litigation with prejudice. We are vigorously defending ourselves in this litigation. Trial is scheduled to begin on April 29, 2019. We do not anticipate that this matter will have a material adverse effect on our financial statements.

Beginning in January 2016, purported antitrust class action complaints were filed against defendants Henry Schein, Inc., Benco Dental Supply Company and Patterson Companies, Inc. Although there were factual and legal variations among these complaints, each alleged that defendants conspired to foreclose and exclude competitors by boycotting manufacturers, state dental associations, and others that deal with defendants’ competitors. On February 9, 2016, the U.S. District Court for the Eastern District of New York ordered all of these actions, and all other actions filed thereafter asserting substantially similar claims against defendants, consolidated for pre-trial purposes. On February 26, 2016, a consolidated class action complaint was filed by Arnell Prato, D.D.S., P.L.L.C., d/b/a Down to Earth Dental, Evolution Dental Sciences, LLC, Howard M. May, DDS, P.C., Casey Nelson, D.D.S., Jim Peck, D.D.S., Bernard W. Kurek, D.M.D., Larchmont Dental Associates, P.C., and Keith Schwartz, D.M.D., P.A. (collectively, “putative class representatives”) in the U.S. District Court for the Eastern District of New York, entitled In re Dental Supplies Antitrust Litigation, Civil Action No. 1:16-CV-00696-BMC-GRB. Subject to certain exclusions, the putative class representatives seek to represent all private dental practices and laboratories who purchased dental supplies or equipment in the U.S. directly from any of the defendants, during the period beginning August 31, 2008 until March 31, 2016. In the consolidated class action complaint, putative class representatives allege a nationwide agreement among Henry Schein, Benco, Patterson and non-party Burkhart Dental Supply Company, Inc. not to compete on price. The consolidated class action complaint asserts a single count under Section 1 of the Sherman Act, and seeks equitable relief, compensatory and treble damages, jointly and severally, interest, and reasonable costs and expenses, including attorneys’ fees and expert fees. On September 28, 2018, the parties executed a settlement agreement that proposes a full and final settlement of the lawsuit on a class-wide basis, subject to court approval. Related to this settlement, we recorded a charge of $28,263 in our first quarter 2019 results in our Corporate segment.

On August 31, 2012, Archer and White Sales, Inc. (“Archer”) filed a complaint against Henry Schein, Inc. as well as Danaher Corporation and its subsidiaries Instrumentarium Dental, Inc., Dental Equipment, LLC, Kavo Dental Technologies, LLC and Dental Imaging Technologies Corporation (collectively, the “Danaher Defendants”) in the United States District Court for the Eastern District of Texas, Civil Action No. 2:12-CV-00572-JRG, styled as an antitrust action under Section 1 of the Sherman Act, and the Texas Free Enterprise Antitrust Act. Archer alleges a conspiracy between Henry Schein, an unnamed company and the Danaher Defendants to terminate or limit Archer’s distribution rights. On August 1, 2017, Archer filed an amended complaint, adding Patterson Companies, Inc. and Benco Dental Supply Company as defendants, and alleging that Henry Schein, Patterson, Benco and non-defendant Burkhart Dental Supply Company, Inc. conspired to pressure and agreed to enlist their common suppliers, including the Danaher Defendants, to join a price-fixing conspiracy and boycott by reducing the distribution territory of, and eventually terminating, Archer. Archer seeks injunctive relief, and damages in an amount to be proved at trial, to be trebled with interest and costs, including attorneys’ fees, jointly and severally. On June 25, 2018, the United States Supreme Court granted certiorari to review an arbitration issue raised by the Danaher Defendants, thereby continuing the case stay implemented in March 2018. On October 29, 2018, the United States Supreme Court heard oral argument. The United States Supreme Court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On August 17, 2017, IQ Dental Supply, Inc. (“IQ Dental”) filed a complaint in the United States District Court for the Eastern District of New York, entitled IQ Dental Supply, Inc. v. Henry Schein, Inc., Patterson Companies, Inc. and Benco Dental Supply Company, Case No. 2:17-cv-4834. Plaintiff alleges that it is a distributor of dental supplies and equipment, and sells dental products through an online dental distribution platform operated by SourceOne Dental, Inc. IQ Dental alleges, among other things, that defendants conspired to suppress competition from IQ Dental and SourceOne for the marketing, distribution and sale of dental supplies and equipment in the United States, and that defendants unlawfully agreed with one another to boycott dentists, manufacturers and state dental associations that deal with, or considered dealing with, plaintiff and SourceOne. Plaintiff claims that this alleged conduct constitutes unreasonable restraint of trade in violation of Section 1 of the Sherman Act, New York’s Donnelly Act and the New Jersey Antitrust Act, and also makes pendant state law claims for tortious interference with prospective business relations, civil conspiracy and aiding and abetting. Plaintiff seeks injunctive relief, compensatory, treble and punitive damages, jointly and severally, and reasonable costs and expenses, including attorneys’ fees and expert fees. On December 21, 2017, the District Court granted defendants motion to dismiss the complaint with prejudice. Plaintiff has appealed the District Court’s order. The U.S. Court of Appeals for the Second Circuit heard oral argument on the appeal on September 13, 2018. The court’s decision is pending. We are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On February 12, 2018, the Federal Trade Commission (“FTC”) issued an administrative complaint entitled In the Matter of Benco Dental Supply Co., Henry Schein, Inc., and Patterson Companies, Inc. Docket No. 9379. The administrative complaint alleges “reason to believe” that Patterson and the other respondents violated Section 5 of the FTC Act, 15 U.S.C. § 45 by conspiring to refuse to offer discounted prices or otherwise negotiate with buying groups seeking to obtain supply agreements on behalf of groups of solo practitioners or small group dental practices. The administrative complaint seeks injunctive relief against Patterson, including an order to cease and desist from the conduct alleged in the complaint and a prohibition from conspiring or agreeing with any competitor or any person to refuse to provide discounts to or compete for the business of any customer. No money damages are sought. We are vigorously defending ourselves against the administrative complaint. The hearing in front of an Administrative Law Judge of the FTC in Washington, D.C. began on October 16, 2018 and is ongoing. We do not anticipate this matter will have a material adverse effect on our financial statements.

On March 28, 2018, Plymouth County Retirement System (“Plymouth”) filed a federal securities class action complaint against Patterson Companies, Inc. and its former CEO Scott P. Anderson and former CFO Ann B. Gugino in the U.S. District Court for the District of Minnesota in a case captioned Plymouth County Retirement System v. Patterson Companies, Inc., Scott P. Anderson and Ann B. Gugino, Case No. 0:18-cv-00871 MJD/SER. On November 9, 2018, the complaint was amended to add former CEO James W. Wiltz and former CFO R. Stephen Armstrong as individual defendants. Under the amended complaint, on behalf of all persons or entities that purchased or otherwise acquired Patterson’s common stock between June 26, 2013 and February 28, 2018, Plymouth alleges that Patterson violated federal securities laws by failing to disclose that Patterson’s revenue and earnings were “artificially inflated by Defendants’ illicit, anti-competitive scheme with its purported competitors, Benco and Schein, to prevent the formation of buying groups that would allow its customers who were office-based practitioners to take advantage of pricing arrangements identical or comparable to those enjoyed by large-group customers.” In its class action complaint, Plymouth asserts one count against Patterson for violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and a second, related count against the individual defendants for violating Section 20(a) of the Exchange Act.  Plymouth seeks compensatory damages, pre- and post-judgment interest and reasonable attorneys’ fees and experts’ witness fees and costs.  On August 30, 2018, Gwinnett County Public Employees Retirement System and Plymouth County Retirement System, Pembroke Pines Pension Fund for Firefighters and Police Officers, Central Laborers Pension Fund were appointed lead plaintiffs.  While the outcome of litigation is inherently uncertain, we believe that the class action complaint is without merit, and we are vigorously defending ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements. Patterson has also received requests under Minnesota Business Corporation Act § 302A.461 to inspect corporate books and records relating to the issues raised in the securities class action and the antitrust matters discussed above.

During the first quarter of fiscal 2019, the U.S. Attorney’s Office for the Western District of Virginia informed us that our subsidiary, Animal Health International, Inc., has been designated a target of a criminal investigation.  The main focus of the investigation to date and the alleged relationships at issue occurred prior to our acquisition of Animal Health International in June 2015 and relate to legacy Animal Health International sales of prescription animal health products to certain persons and/or locations not licensed to receive them in Virginia and Tennessee in violation of federal and state laws.  In October 2018, we entered into a tolling agreement effective for three months to allow us to produce documents responsive to grand jury subpoenas and to allow for further evaluation of evidence.  We also are conducting an internal investigation and are cooperating with the U.S. Attorney’s Office.  At this time, we are unable to make an estimate of the amount of loss, if any, or range of possible loss that we could incur as a result of the foregoing matter.

On August 28, 2018, Kirsten Johnsen filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, James Wiltz, John Buck, Jody Feragen, Ellen Rudnick, Les Vinney, Neil Schrimsher, Sarena Lin, Harold Slavkin, Alex Blanco and Mark Walchirk as individual defendants in Hennepin County District Court in a case captioned Kirsten Johnsen v. Scott P. Anderson et al., Case No. 27-CV-18-14315.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson “suppressed price competition and maintained supracompetitive prices for dental supplies and equipment by entering into agreements with Henry Schein and Benco to:  (i) fix margins for dental supplies and equipment; and (ii) block the entry and expansion of lower-margin, lower-priced, rival dental distributors through threatened and actual group boycotts.”  Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “price-fixing scheme” to the public and purportedly “caused Patterson to repurchase over $412,800 worth of its own stock at artificially inflated prices.”  In the derivative complaint, plaintiff asserts three counts against the individual defendants for:  (i) breach of fiduciary duty; (ii) waste of corporate assets; and (iii) unjust enrichment.  Plaintiff seeks compensatory damages, equitable and injunctive relief as permitted by law, costs, disbursements and reasonable attorneys’ fees, accountants’ fees and experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.”  While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 1, 2018, Sally Pemberton filed a stockholder derivative complaint against Patterson Companies, Inc., as a nominal defendant, and the following former and current officers and directors of Patterson:  Scott Anderson, Ann Gugino, Mark Walchirk, John Buck, Alex Blanco, Jody Feragen, Sarena Lin, Ellen Rudnick, Neil Schrimsher, Les Vinney, James Wiltz, Paul Guggenheim, David Misiak and Tim Rogan as individual defendants in the United States District Court for the District of Minnesota in a case captioned Sally Pemberton v. Scott P. Anderson, et al., Case No. 18-CV-2818.  Derivatively on behalf of Patterson, plaintiff alleges that Patterson, with Benco and Henry Schein, “engage[d] in a conspiracy in restraint of trade, whereby the companies agreed to refuse to offer discounted prices or otherwise negotiate with GPOs, agreed to fix margins on dental supplies and equipment, agreed not to poach one another’s customers or sales representatives, and agreed to block the entry and expansion of rival distributors. Plaintiff further alleges that the individual defendants failed to disclose Patterson’s alleged “antitrust misconduct” to the public and purportedly caused Patterson to repurchase $412,800 of its own stock at prices that were artificially inflated. In the derivative complaint, plaintiff asserts six counts against the individual defendants for: (i) breach of fiduciary duty; (ii) waste of corporate assets; (iii) unjust enrichment; (iv) violations of Section 14(a) of the Exchange Act; (v) violations of Section 10(b) and Rule 10b-5 of the Exchange Act and (vi) violations of Section 20(a) of the Exchange Act.  Plaintiff seeks compensatory damages with pre-judgment and post-judgment interest, costs, disbursements and reasonable attorneys’ fees, experts’ fees, costs and expenses, and an order awarding restitution from the individual defendants and directing Patterson “to take all necessary actions to reform and improve its corporate governance and internal procedures.” While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation. We do not anticipate that this matter will have a material adverse effect on our financial statements.

On October 9, 2018, Nathaniel Kramer filed indirect purchaser litigation against Patterson Companies, Inc., Henry Schein, Inc. and Benco Dental Supply Company in the United States District Court for the District of Northern District of California. The purported class action complaint asserts violations of the California Cartwright Act and the California Unfair Competition Act based on an alleged agreement between Schein, Benco, and Patterson (and unnamed co-conspirators) not to compete as to price and margins. Plaintiff alleges that the agreement allowed the defendants to charge higher prices to dental practices for dental supplies and that the dental practices passed on all, or part of, the increased prices to the consumers of dental services. Subject to certain exclusions, the complaint defines the class as all persons residing in California purchasing and/or reimbursing for dental services from California dental practices. The complaint seeks a permanent injunction, actual damages to be determined at trial, trebled, reasonable attorneys’ fees and costs, and pre- and post-judgment interest. While the outcome of litigation is inherently uncertain, we believe that the derivative complaint is without merit, and we intend to vigorously defend ourselves in this litigation.

While management currently believes that resolving all of these matters, individually or in the aggregate, will not have a material adverse effect on our financial statements, the litigation and other claims noted above are subject to inherent uncertainties and management’s view of these matters may change in the future.  Adverse outcomes in some or all of the claims pending against us may result in significant monetary damages or injunctive relief against us that could adversely affect our ability to conduct our business.  There also exists the possibility of a material adverse effect on our financial statements for the period in which the effect of an unfavorable final outcome becomes probable and reasonably estimable.

From time to time, we may become a party to other legal proceedings, including, without limitation, product liability claims, intellectual property claims, employment matters, commercial disputes, governmental inquiries and investigations (which may in some cases involve our entering into settlement arrangements or consent decrees), and other matters arising out of the ordinary course of our business. While the results of any legal proceeding cannot be predicted with certainty, in our opinion none of these other pending matters is anticipated to have a material adverse effect on our financial statements.

XML

General (Policies)

6 Months Ended

Oct. 27, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of Patterson Companies, Inc. (referred to herein as "Patterson" or in the first person notations "we," "our," and "us") as of October 27, 2018, and our results of operations and cash flows for the periods ended October 27, 2018 and October 28, 2017. Such adjustments are of a normal recurring nature. The results of operations for the three and six months ended October 27, 2018 are not necessarily indicative of the results to be expected for any other interim period or for the year ending April 27, 2019. These financial statements should be read in conjunction with the financial statements included in our 2018 Annual Report on Form 10-K filed on June 27, 2018.

The unaudited condensed consolidated financial statements include the assets and liabilities of PDC Funding Company, LLC ("PDC Funding"), PDC Funding Company II, LLC ("PDC Funding II") and PDC Funding Company III, LLC ("PDC Funding III"), which are our wholly owned subsidiaries and separate legal entities formed under Minnesota law. PDC Funding and PDC Funding II are fully consolidated special purpose entities established to sell customer installment sale contracts to outside financial institutions in the normal course of their business. PDC Funding III is a fully consolidated special purpose entity established to sell certain receivables to unaffiliated financial institutions. The assets of PDC Funding, PDC Funding II and PDC Funding III would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding, PDC Funding II or PDC Funding III.

Fiscal Year End

Fiscal Year End

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. The second quarter of fiscal 2019 and 2018 represents the 13 weeks ended October 27, 2018 and the 13 weeks ended October 28, 2017, respectively. The six months ended October 27, 2018 and October 28, 2017 each included 26 weeks. Fiscal 2019 will include 52 weeks and fiscal 2018 included 52 weeks.

Comprehensive Income

Comprehensive Income

Comprehensive income is computed as net income including certain other items that are recorded directly to stockholders’ equity. Significant items included in comprehensive income are foreign currency translation adjustments and the effective portion of cash flow hedges, net of tax. Foreign currency translation adjustments do not include a provision for income tax because earnings from foreign operations are considered to be indefinitely reinvested outside the U.S.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". ASU No. 2014-09 supersedes the revenue recognition requirements in "Revenue Recognition (Topic 605)," and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new guidance as of April 29, 2018 using the modified retrospective method, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In January 2016, the FASB issued ASU No. 2016-01 "Financial Instruments- Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10)", which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. We adopted ASU No. 2016-01 in the first quarter of fiscal 2019, and the adoption had no impact on our consolidated net earnings, financial position, or cash flows.

In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by most leases, as well as requires additional qualitative and quantitative disclosures. We are required to adopt ASU 2016-02 in the first quarter of fiscal 2020, with early adoption permitted. We plan to adopt the new guidance in the first quarter of fiscal 2020 and are currently evaluating the impact of adopting this pronouncement, but anticipate that the new guidance will impact our condensed consolidated balance sheets.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220) Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects that are stranded in accumulated other comprehensive income as a result of tax reform. This standard also requires certain disclosures about stranded tax effects. We are required to adopt ASU No. 2018-02 in the first quarter of fiscal 2020, with early adoption permitted and apply it either in the period of adoption or retrospectively to each period in which the income tax effects of the tax reform related to items in accumulated other comprehensive income are recognized. We are currently evaluating the impact of adopting this pronouncement.

XML

General (Tables)

6 Months Ended

Oct. 27, 2018

Accounting Policies [Abstract]

Computation of Basic and Diluted Earnings Per Share (EPS)

The following table sets forth the computation of the weighted average shares outstanding used to calculate basic and diluted earnings per share ("EPS"):

	Three Months Ended		Six Months Ended
	October 27, 2018	October 28, 2017	October 27, 2018	October 28, 2017
Denominator for basic EPS – weighted average shares	92,683	92,722	92,606	93,037
Effect of dilutive securities – stock options, restricted stock and stock purchase plans	606	629	538	646
Denominator for diluted EPS – weighted average shares	93,289	93,351	93,144	93,683

XML

Derivative Financial Instruments (Tables)

6 Months Ended

Oct. 27, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Derivative Instruments Included in Condensed Consolidated Balance Sheets

The following presents the fair value of derivative instruments included in the condensed consolidated balance sheets:

Derivative type	Classification	October 27, 2018		April 28, 2018
Assets:
Interest rate cap agreements	Other noncurrent assets	$	2,753	$	1,613
Liabilities:
Interest rate cap agreements	Other noncurrent liabilities	2,753		1,613

Effect of Derivative instruments in Cash Flow Hedging Relationship on Condensed Consolidated Statements of Income and Other Comprehensive Income (OCI)

The following table presents the pre-tax effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of income and other comprehensive income ("OCI"):

		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)
		Three Months Ended						Six Months Ended
Derivatives in cash flow hedging relationships	Income statement location	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Interest rate swap	Interest expense	$	(725	)	$	(703	)	$	(1,458	)	$	(1,405	)

XML

Fair Value Measurements (Tables)

6 Months Ended

Oct. 27, 2018

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

Our hierarchy for assets and liabilities measured at fair value on a recurring basis is as follows:

	October 27, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	64,840	$	64,840	$	—	$	—
DPP receivable - receivables securitization program	58,451		—		—		58,451
DPP receivable - customer financing	100,182		—		—		100,182
Derivative instruments	2,753		—		2,753		—
Total assets	$	226,226	$	64,840	$	2,753	$	158,633
Liabilities:
Derivative instruments	$	2,753	$	—	$	2,753	$	—

	April 28, 2018
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	6,650	$	6,650	$	—	$	—
DPP receivable - receivables securitization program	—		—		—		—
DPP receivable - customer financing	150,404		—		—		150,404
Derivative instruments	1,613		—		1,613		—
Total assets	$	158,667	$	6,650	$	1,613	$	150,404
Liabilities:
Derivative instruments	$	1,613	$	—	$	1,613	$	—

XML

Segment Reporting (Tables)

6 Months Ended

Oct. 27, 2018

Segment Reporting [Abstract]

Information about Reportable Segments

The following tables present information about our reportable segments:

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
United States	$	1,173,623	$	1,151,380	$	2,270,087	$	2,231,707
United Kingdom	150,452		148,734		304,357		289,588
Canada	80,677		85,623		166,628		168,557
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
United States	$	495,457	$	500,803	$	949,030	$	967,491
Canada	47,059		52,827		99,550		104,946
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
United States	$	671,338	$	642,053	$	1,309,187	$	1,246,520
United Kingdom	150,452		148,734		304,357		289,588
Canada	33,618		32,796		67,078		63,611
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
United States	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

	Three Months Ended				Six Months Ended
	October 27, 2018		October 28, 2017		October 27, 2018		October 28, 2017
Consolidated net sales
Consumable	$	1,138,251	$	1,116,091	$	2,247,648	$	2,196,196
Equipment and software	182,120		181,337		329,018		318,286
Other	84,381		88,309		164,406		175,370
Total	$	1,404,752	$	1,385,737	$	2,741,072	$	2,689,852
Dental net sales
Consumable	$	303,806	$	311,217	$	608,045	$	631,395
Equipment and software	167,686		169,513		302,643		297,376
Other	71,024		72,900		137,892		143,666
Total	$	542,516	$	553,630	$	1,048,580	$	1,072,437
Animal Health net sales
Consumable	$	834,445	$	804,874	$	1,639,603	$	1,564,801
Equipment and software	14,434		11,824		26,375		20,910
Other	6,529		6,885		14,644		14,008
Total	$	855,408	$	823,583	$	1,680,622	$	1,599,719
Corporate net sales
Other	$	6,828	$	8,524	$	11,870	$	17,696
Total	$	6,828	$	8,524	$	11,870	$	17,696

	Three Months Ended						Six Months Ended
	October 27, 2018			October 28, 2017			October 27, 2018			October 28, 2017
Operating income (loss)
Dental	$	41,594		$	65,207		$	77,467		$	124,726
Animal Health	22,031			23,217			41,063			39,893
Corporate	(22,409		)	(16,665		)	(72,800		)	(36,027		)
Consolidated operating income	$	41,216		$	71,759		$	45,730		$	128,592

	October 27, 2018		April 28, 2018
Total assets
Dental	$	668,603	$	853,555
Animal Health	2,158,144		2,128,800
Corporate	517,507		489,309
Total assets	$	3,344,254	$	3,471,664

XML

Accumulated Other Comprehensive Loss ("AOCL") (Tables)

6 Months Ended

Oct. 27, 2018

Equity [Abstract]

Summary of Accumulated Other Comprehensive Loss

The following table summarizes the changes in AOCL as of October 27, 2018:

	Cash Flow Hedges			Currency Translation Adjustment			Total
AOCL at April 28, 2018	$	(13,118	)	$	(61,856	)	$	(74,974	)
Other comprehensive loss before reclassifications	—			(12,860		)	(12,860		)
Amounts reclassified from AOCL	1,101			—			1,101
AOCL at October 27, 2018	$	(12,017	)	$	(74,716	)	$	(86,733	)

XML

General - Additional Information (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017
Accounting Policies [Abstract]
Income tax expense related to cash flow hedges	$ 173	$ 265	$ 357	$ 530
Incremental Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Securities excluded from calculation of diluted earnings per share (in shares)	1,890	1,581	1,905	1,272

XML

General - Computation of Basic and Diluted Earnings Per Share (EPS) (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017
Earnings Per Share [Abstract]
Denominator for basic earnings per share – weighted average shares (in shares)	92,683	92,722	92,606	93,037
Effect of dilutive securities - stock options, restricted stock and stock purchase plans (in shares)	606	629	538	646
Denominator for diluted earnings per share – weighted average shares (in shares)	93,289	93,351	93,144	93,683

XML

General - Contract Balances (Details) - USD ($) $ in Thousands	6 Months Ended
	Oct. 27, 2018	Apr. 28, 2018
Accounting Policies [Abstract]
Contract liability	$ 24,386	$ 26,166
Contract liability, revenue recognized	$ 15,932

XML

Receivables Securitization Program (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Oct. 27, 2018	Oct. 27, 2018	Jul. 24, 2018
Transfers and Servicing [Abstract]
Eligible receivables, maximum available under Purchase Agreement			$ 200,000
Eligible Receivables, amount utilized under Purchase Agreement	$ 172,000	$ 172,000
DPP receivable	58,451	58,451
Loss on sale of receivables	$ (2,192)	$ (2,871)

XML

Customer Financing (Detail)	3 Months Ended		6 Months Ended
	Oct. 27, 2018 USD ($)	Oct. 28, 2017 USD ($)	Oct. 27, 2018 USD ($) finance_agreement	Oct. 28, 2017 USD ($)	Apr. 28, 2018 USD ($)	Apr. 29, 2017 USD ($)
Customer Financing [Line Items]
Maximum credit financed for equipment purchases for any one customer	$ 1,000,000		$ 1,000,000
Number of customer financing contracts | finance_agreement			2
Financing contracts sold under ASC 860	40,713,000	$ 95,588,000	$ 88,023,000	$ 151,711,000
Revenues from Sale of Financing Contracts	2,734,000	5,967,000	5,225,000	10,227,000
Cash and cash equivalents	165,515,000	$ 101,456,000	165,515,000	$ 101,456,000	$ 62,984,000	$ 94,959,000
Current receivables of finance contracts not yet sold	66,173,000		66,173,000			46,232,000
Unearned income	7,000		7,000			8,000
Finance contracts receivable sold and outstanding	539,426,000		539,426,000
Deferred purchase price	100,182,000		$ 100,182,000			150,404,000
Bad debt write-offs, percentage (less than)			1.00%
Unsettled Financing Arrangements
Customer Financing [Line Items]
Cash and cash equivalents	36,357,000		$ 36,357,000			$ 35,741,000
The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Customer Financing [Line Items]
Percentage of principal amount of financing contracts held as collateral (at least)			9.50%
Capacity under agreement	525,000,000		$ 525,000,000
Fifth Third Bank
Customer Financing [Line Items]
Percentage of principal amount of financing contracts held as collateral (at least)			11.00%
Capacity under agreement	$ 100,000,000		$ 100,000,000

XML

Derivative Financial Instruments - Additional Information (Detail)		1 Months Ended			3 Months Ended		6 Months Ended
	Mar. 25, 2015 USD ($)	Mar. 31, 2015 USD ($)	Jan. 31, 2014 USD ($)	Mar. 31, 2008 USD ($) agreement	Oct. 27, 2018 USD ($)	Oct. 28, 2017 USD ($)	Oct. 27, 2018 USD ($)	Oct. 28, 2017 USD ($)
Derivative [Line Items]
Effective portion of gains or losses recognized in OCI							$ 0
Ineffectiveness recorded during period					$ 0	$ 0	0	$ 0
Increase (decrease) in interest expense							(2,900,000)
Interest Rate Cap
Derivative [Line Items]
Notional amount of derivatives					525,000,000		525,000,000
New Interest Rate Cap
Derivative [Line Items]
Notional amount of derivatives					100,000,000		100,000,000
Interest Rate Swap
Derivative [Line Items]
Number of interest rate swap agreements | agreement				2
Notional amount of derivative asset				$ 100,000,000
Increase to other comprehensive income				1,000,000
Increase (decrease) in interest expense					$ (725,000)	$ (703,000)	$ (1,458,000)	$ (1,405,000)
Interest Rate Swap Two
Derivative [Line Items]
Notional amount of derivative asset				$ 100,000,000
Interest Rate Swap Agreement
Derivative [Line Items]
Settlement of swap		$ 29,003,000
Interest Rate Swap Agreement | 5.17% Senior Notes
Derivative [Line Items]
Notional amount of derivatives			$ 250,000,000
Percentage of senior notes			5.17%
Maturity date of long-term loan			Mar. 25, 2015
Interest Rate Swap Agreement | Senior Notes 3.48%
Derivative [Line Items]
Percentage of senior notes	3.48%
Maturity date of long-term loan	Mar. 24, 2025
Aggregate principal amount	$ 250,000,000

XML

Derivative Financial Instruments - Fair Value of Derivative Instruments Included in Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands	Oct. 27, 2018	Apr. 28, 2018
Derivatives, Fair Value [Line Items]
Interest rate contracts, assets, fair value	$ 2,753	$ 1,613
Interest rate contracts, liabilities, fair value	2,753	1,613
Other Noncurrent Assets | Interest Rate Contracts
Derivatives, Fair Value [Line Items]
Interest rate contracts, assets, fair value	2,753	1,613
Other Noncurrent Liabilities | Interest Rate Contracts
Derivatives, Fair Value [Line Items]
Interest rate contracts, liabilities, fair value	$ 2,753	$ 1,613

XML

Derivative Financial Instruments - Effect of Derivative Instruments in Cash Flow Hedging Relationships on Condensed Consolidated Statements of Income and Other Comprehensive Income (OCI) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017
Derivative Instruments, Gain (Loss) [Line Items]
Accumulated other comprehensive loss expected to be reclassified into earnings			$ (2,900)
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Accumulated other comprehensive loss expected to be reclassified into earnings	$ (725)	$ (703)	$ (1,458)	$ (1,405)

XML

Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Oct. 27, 2018	Apr. 28, 2018
Assets:
Cash equivalents	$ 64,840	$ 6,650
DPP receivable - receivables securitization program	58,451	0
DPP receivable - customer financing	100,182	150,404
Derivative instruments	2,753	1,613
Total assets	226,226	158,667
Liabilities:
Derivative instruments	2,753	1,613
Fair Value, Inputs, Level 1
Assets:
Cash equivalents	64,840	6,650
DPP receivable - receivables securitization program	0	0
DPP receivable - customer financing	0	0
Derivative instruments	0	0
Total assets	64,840	6,650
Liabilities:
Derivative instruments	0	0
Fair Value, Inputs, Level 2
Assets:
Cash equivalents	0	0
DPP receivable - receivables securitization program	0	0
DPP receivable - customer financing	0	0
Derivative instruments	2,753	1,613
Total assets	2,753	1,613
Liabilities:
Derivative instruments	2,753	1,613
Fair Value, Inputs, Level 3
Assets:
Cash equivalents	0	0
DPP receivable - receivables securitization program	58,451	0
DPP receivable - customer financing	100,182	150,404
Derivative instruments	0	0
Total assets	158,633	150,404
Liabilities:
Derivative instruments	$ 0	$ 0

XML

Fair Value Measurements - Additional Information (Detail) - USD ($)	3 Months Ended
	Oct. 28, 2017	Oct. 27, 2018	Apr. 28, 2018
Fair Value Disclosures [Abstract]
Impairment charge	$ 0
Estimated fair value of debt		$ 800,636,000	$ 989,124,000
Carrying value of debt		$ 818,627,000	$ 998,628,000

XML

Income Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017	Apr. 28, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	24.00%	34.50%	25.10%	34.50%
Blended income tax rate, percent					30.50%
Tax Cuts And Jobs Act Of 2017,incomplete accounting, provisional income tax benefit					$ (76,648)
Tax Cuts And Jobs Act Of 2017, incomplete accounting, change in tax rate, deferred taxes, provisional income tax expense					81,871
Tax Cuts And Jobs Act Of 2017, incomplete accounting, transition tax for unremitted foreign earnings					(4,006)
Tax Cuts And Jobs Act of 2017, incomplete Accounting, transition tax withholding associated with repatriation of foreign earnings					$ 1,217

XML

Technology Partner Innovations, LLC (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017	Apr. 28, 2018
Business Acquisition [Line Items]
Net loss attributable to noncontrolling interest	$ 223	$ 0	$ 276	$ 0
Noncontrolling interest	3,724		3,724		$ 0
Technology Partner Innovations, LLC
Business Acquisition [Line Items]
Net assets contributed	4,000
Net loss attributable to noncontrolling interest	223
Noncontrolling interest	$ 3,724		$ 3,724

XML

Segment Reporting - Narrative (Detail)	6 Months Ended
	Oct. 27, 2018 Segment
Segment Reporting [Abstract]
Number of reportable segments	3

XML

Segment Reporting - Information about Reportable Segments (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017	Apr. 28, 2018
Segment Reporting Information [Line Items]
Net sales	$ 1,404,752	$ 1,385,737	$ 2,741,072	$ 2,689,852
Operating income (loss)	41,216	71,759	45,730	128,592
Total assets	3,344,254		3,344,254		$ 3,471,664
Consumable
Segment Reporting Information [Line Items]
Net sales	1,138,251	1,116,091	2,247,648	2,196,196
Equipment and software
Segment Reporting Information [Line Items]
Net sales	182,120	181,337	329,018	318,286
Other
Segment Reporting Information [Line Items]
Net sales	84,381	88,309	164,406	175,370
Dental
Segment Reporting Information [Line Items]
Net sales	542,516	553,630	1,048,580	1,072,437
Dental | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	41,594	65,207	77,467	124,726
Total assets	668,603		668,603		853,555
Dental | Consumable
Segment Reporting Information [Line Items]
Net sales	303,806	311,217	608,045	631,395
Dental | Equipment and software
Segment Reporting Information [Line Items]
Net sales	167,686	169,513	302,643	297,376
Dental | Other
Segment Reporting Information [Line Items]
Net sales	71,024	72,900	137,892	143,666
Animal Health
Segment Reporting Information [Line Items]
Net sales	855,408	823,583	1,680,622	1,599,719
Animal Health | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	22,031	23,217	41,063	39,893
Total assets	2,158,144		2,158,144		2,128,800
Animal Health | Consumable
Segment Reporting Information [Line Items]
Net sales	834,445	804,874	1,639,603	1,564,801
Animal Health | Equipment and software
Segment Reporting Information [Line Items]
Net sales	14,434	11,824	26,375	20,910
Animal Health | Other
Segment Reporting Information [Line Items]
Net sales	6,529	6,885	14,644	14,008
Corporate
Segment Reporting Information [Line Items]
Net sales	6,828	8,524	11,870	17,696
Corporate | Operating Segments
Segment Reporting Information [Line Items]
Operating income (loss)	(22,409)	(16,665)	(72,800)	(36,027)
Total assets	517,507		517,507		$ 489,309
Corporate | Other
Segment Reporting Information [Line Items]
Net sales	6,828	8,524	11,870	17,696
United States
Segment Reporting Information [Line Items]
Net sales	1,173,623	1,151,380	2,270,087	2,231,707
United States | Dental
Segment Reporting Information [Line Items]
Net sales	495,457	500,803	949,030	967,491
United States | Animal Health
Segment Reporting Information [Line Items]
Net sales	671,338	642,053	1,309,187	1,246,520
United States | Corporate
Segment Reporting Information [Line Items]
Net sales	6,828	8,524	11,870	17,696
United Kingdom
Segment Reporting Information [Line Items]
Net sales	150,452	148,734	304,357	289,588
United Kingdom | Animal Health
Segment Reporting Information [Line Items]
Net sales	150,452	148,734	304,357	289,588
Canada
Segment Reporting Information [Line Items]
Net sales	80,677	85,623	166,628	168,557
Canada | Dental
Segment Reporting Information [Line Items]
Net sales	47,059	52,827	99,550	104,946
Canada | Animal Health
Segment Reporting Information [Line Items]
Net sales	$ 33,618	$ 32,796	$ 67,078	$ 63,611

XML

Accumulated Other Comprehensive Loss ("AOCL") - Summary of Accumulated Other Comprehensive Loss (Detail) $ in Thousands	6 Months Ended
	Oct. 27, 2018 USD ($)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	$ 1,461,790
Ending Balance	1,451,964
Cash Flow Hedges
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(13,118)
Other comprehensive loss before reclassifications	0
Amounts reclassified from AOCL	1,101
Ending Balance	(12,017)
Currency Translation Adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(61,856)
Other comprehensive loss before reclassifications	(12,860)
Amounts reclassified from AOCL	0
Ending Balance	(74,716)
Total
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning Balance	(74,974)
Other comprehensive loss before reclassifications	(12,860)
Amounts reclassified from AOCL	1,101
Ending Balance	$ (86,733)

XML

Accumulated Other Comprehensive Loss ("AOCL") - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Oct. 27, 2018	Oct. 28, 2017	Oct. 27, 2018	Oct. 28, 2017
Equity [Abstract]
Income tax expense related to cash flow hedges	$ 173	$ 265	$ 357	$ 530
Increase in interest expense			$ 1,458

XML

Legal Proceedings Legal (Details) - USD ($) $ in Thousands			12 Months Ended
	Oct. 01, 2018	Aug. 28, 2018	Apr. 28, 2018	Oct. 27, 2018
Loss Contingencies [Line Items]
Stock repurchased			$ 87,500
Class Action Complaints Against Henry Schein Inc., Benco Dental Supply Company And Patterson Companies, Inc.
Loss Contingencies [Line Items]
Litigation settlement reserve				$ 28,263
Kirsten Johnsen V. Scott P Anderson Et Al
Loss Contingencies [Line Items]
Stock repurchased	$ 412,800	$ 412,800