Patterson Companies Annual Report 2016

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FY2016 Annual Report · Patterson Companies

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ANNUAL
REPORT
2016

1031 Mendota Heights Road
St. Paul, MN 55120-1419
651.686.1600
pattersoncompanies.com

STRONGFOUNDATION BOLDFUTUREOur Strategic Intents

OUR STRATEGIC
INTENTS GUIDE
OUR FUTURE:

LEAD

our industries and customers
to new market breakthroughs

BROADEN

our view of the markets

DELIVER

best-in-class client experience

COMMIT

to talent excellence

LEVERAGE

our financial strength for market
advantage and shareholder value

Executive Officers

Scott P. Anderson
Chairman, President
and Chief Executive Officer

Ann B. Gugino
Executive Vice President,
Chief Financial Officer
and Treasurer

John E. Adent
Chief Executive Officer
Patterson Animal Health

Kelly A. Baker
Chief Human Resources Officer

Les B. Korsh
Vice President,
General Counsel and Secretary

Corporate Headquarters

Directors

1031 Mendota Heights Road
St. Paul, MN 55120-1419
651.686.1600
www.pattersoncompanies.com

Independent Auditors

Ernst & Young LLP
Minneapolis, MN

Legal Counsel

Briggs and Morgan, P.A.
Minneapolis, MN

Stock Transfer Agent

Wells Fargo Bank, N.A.
Mendota Heights, MN

Investor Relations Contact

John M. Wright
Vice President, Investor Relations

Annual Meeting

The annual meeting of shareholders will
be held at 4:30 p.m. on September 12, 2016,
at Patterson’s corporate headquarters,
1031 Mendota Heights Road, St. Paul, MN.

Form 10-K

A copy of our annual report on Form 10-K is
available to shareholders without charge in
the investor relations section of the Patterson
website (www.pattersoncompanies.com) or
by writing to: John M. Wright, Vice President,
Investor Relations.

Scott P. Anderson
Chairman, President and
Chief Executive Officer
Patterson Companies, Inc.

John D. Buck (L, A, G)
Chief Executive Officer
Whitefish Ventures, LLC

Jody H. Feragen (A, G)
Executive Vice President and
Chief Financial Officer
Hormel Foods Corp.

Sarena S. Lin (A, G)
President
Cargill Feed and Nutrition
Cargill, Inc.

Ellen A. Rudnick (C, F, G)
Senior Advisor
Polsky Center for Entrepreneurship
University of Chicago
Booth School of Business

Neil A. Schrimsher (C, F, G)
President and
Chief Executive Officer
Applied Industrial Technologies, Inc.

Les C. Vinney (C, F, G)
President and
Chief Executive Officer (retired)
STERIS Corporation

James W. Wiltz
President and
Chief Executive Officer (retired)
Patterson Companies, Inc.

Fiscal 2016 was a year of change and key
accomplishments. As we execute on our strategic
intents and optimize our portfolio, we are building
a stronger, more compelling future.

(L) Lead Director

(A) Member of Audit Committee

(G) Member of Governance and Nominating Committee

(F) Member of Finance and Corporate Development Committee

CORPORATEINFORMATIONOur Business Segments

Copy
intentionally
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Growing end markets,
similar customer needs.

Dental practitioners, veterinarians, livestock producers — every Patterson customer shares
a common need: a trusted business partner to lead them through market and technological
change. We help our customers succeed through a combination of differentiators that are
uniquely Patterson: a specialized sales and service team, technology investments, strategic
manufacturer partnerships and local customer service.

Dental Market Demands
Continued migration to digital workflow

Importance of value-added offerings

Consolidating customers desire practice
data and analytics

Shared Characteristics
Technology is a primary change agent

Practice and production-management
software is driving efficiency

Critical need for responsive technical service
and back-office support

Distribution partner serves as
business consultant

Animal Health Market Demands

“Human-level” care for pets; precision
production in livestock

Pharmaceutical innovation drives market advances

Food safety requires customized
distribution models

$5.4B
Total Sales

46%
Dental

54%
Animal Health

$2.5B
Dental

$2.9B
Animal Health

56%
Consumables

33%
Equipment &
Technology

11%
Technical Service
& Other

54%
Companion

16%
Beef

12%
Dairy

10%
Swine
8%
Other

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2 Patterson Companies, Inc.

To Our Shareholders

Scott P. Anderson
Chairman, President
and Chief Executive Officer

We are committed to
being the partner of
choice for future-focused
customers who value
exceptional sales,
service and support.

Recently, Patterson Companies
established five strategic intents to
guide us to more sustainable, profitable
growth. Our bold actions to realign the
company’s business portfolio in fiscal
2016 reflect these five pillars, which are:

Patterson’s transformation is driving us
to scrutinize our legacy operations and
ensure we are optimized and positioned
for the future. We believe this continual
improvement will help strengthen
performance across our organization.

• Leading our industries and customers

to new market breakthroughs

• Broadening our view of our

end markets

• Delivering a best-in-class

client experience

• Committing to talent excellence

• Leveraging our financial strength
to work for market advantage and
shareholder value

Our strategic intents address key
aspects of our business and will
continue to lead us in exciting
new directions.

Today, the company is focused on two
long-term growth markets — dental and
animal health. Customers across both
segments share common operational
needs and seek similar value from their
distribution partner. This compatibility
of need matches the go-to-market
approach and core competencies
that we have invested in for both of
our segments.

We are becoming more technologically
advanced, both in how we serve our
customers and in how we operate our
business. We believe our combination
of customer-focused innovation and
“innovation from within” is reaping
rewards today, putting us on a path for
ever-higher levels of effectiveness, and
enhancing our already market-leading
customer service and support.

Strategic Intents into Action
Guided by our strategic intents, our pace
of execution dramatically accelerated in
fiscal 2016.

• We began with the repositioning of
our portfolio. We sold our medical
business segment and completed
the largest transaction in our history,
the acquisition of Animal Health
International, Inc.

• Integrating our new animal health
platform — bringing together our
companion animal and production
animal businesses — was a key focus.
We are pleased that we met our 2016
targets for synergies and established
this initiative on solid footing moving
forward.

• During the year, we initiated the pilot of
our new enterprise resource planning
(ERP) system. There are several truly
innovative aspects to this powerful
system, which we believe will produce
entirely new levels of operational
effectiveness and significant
enhancements to how we serve
customers. Our pilot locations
generated a steady flow of learnings
that we are using to fine-tune the
system for broader implementation.
We are setting the stage for future
growth, with our new ERP system
providing the scalability to attain it.

We are becoming more technologically advanced, both
in how we serve our customers and how we operate.

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A high-performance culture is central to Patterson,
and we preserved our cultural strengths amid
large-scale change.

• A high-performance culture is central
to Patterson, and we preserved our
cultural strengths amid large-scale
change. We also deepened our
leadership team, attracting seasoned
executives with significant industry
and functional experience.

• Lastly, considering the complexity and
pace of the initiatives we are pursuing,
we finished the year with a strong
bottom line, achieving the adjusted
earnings guidance range established
at the beginning of the year.
Consolidated sales from continuing
operations rose nearly 40 percent on a
constant currency basis to $5.4 billion,
reflecting the acquisition, and we
finished the year with adjusted
earnings per diluted share from
continuing operations of $2.47. Fiscal
2016 was also a strong year in terms
of return to our shareholders, with
a total of $291 million given back
through a combination of dividends
and share repurchases.

Dental
The dental market in fiscal 2016
continued to reflect the stable-to-
strengthening conditions that
promoted more frequent dental
office visits by consumers. This
stability has allowed dentists to
focus on technology investment to
advance their service offerings and
improve the patient experience.

This year, we focused heavily on taking
advantage of positive market dynamics
in consumable sales. We also broadened
our traditional dental equipment
offerings, adding new manufacturer

relationships and product lines to
bring additional product choices to
our customers.

In technology equipment, we introduced
the new CEREC Zirconia workflow,
which allows for single-visit restorations
using this high-strength material. Dental
offices are becoming increasingly digital
in nearly every aspect of their
operations. This translates to an
improved patient experience and
greater operational efficiency. It also
elevates the need for service and
support capabilities to help ensure
reliability of this technology, so our
customers can concentrate on dentistry.
Our unparalleled service and support
capabilities, in many ways, enable
today’s digital practice — a clear
differentiator for Patterson.

Animal Health
Today, Patterson operates the premier
animal health platform in North America
and the United Kingdom, blending our
traditional strength in companion animal
products and services, with the
continent’s foremost production
animal business.

In fiscal 2016, companion animal end
markets also benefited from stable-to-
steadily improving economics, which
helped drive favorable performance.
Production animal end markets reflected
some softness, especially in the beef and
dairy cattle sectors. However, we believe
this is part of the natural short-term
fluctuations in livestock markets and
that our animal health segment is
well positioned to capitalize on two
long-term growth catalysts: favorable

trends in consumer spending on pets
and the globe’s escalating demand for
animal protein.

The first year of any business integration
is critical to future success, and we
achieved our synergy goals for fiscal
2016. We consolidated the segment’s
headquarters to Greeley, Colorado,
rationalized support functions and
combined our sales teams. Today, we are
presenting a unified team to the market.

Strong Foundation, Bold Future
Fiscal 2017 will mark Patterson
Companies’ 140th year in business.
For nearly a century and a half, we’ve
weathered economic cycles, adapted
to market changes, and transformed
our company for the betterment of our
customers, employees and, of course,
our shareholders. We enter the new year
building a more formidable company
with attractive growth prospects.

However, some aspects of our company
remain unchanged. We are committed
to being the partner of choice for
future-focused customers who value
exceptional sales, service and support.
We remain a sought-after employer for
those who desire to excel and create
an impact. Finally, we are dedicated to
being a company that is a destination for
shareholders seeking outstanding value.
We thank all of you for joining us as we
create an exciting future.

Scott P. Anderson

Chairman, President and
Chief Executive Officer

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4 Patterson Companies, Inc.

Partner of Choice

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Our vision is to connect expertise to inspired
ideas, products and services, creating a relevant,
memorable difference in the lives of our clients and
their customers. We believe that being a partner
of choice for our customers requires the broadest
possible view of technology, service and innovation.

Technology Leadership

Technology is the catalyst for our vision
in both our dental and animal health
segments. We have undertaken ambitious
steps to serve the common needs of our
customers across markets. From helping
dental customers envision a new practice
environment, to bringing a veterinary
practice’s management software to the
cloud, or adding precision to a cattle
farmer’s feeding regimen, partnership
for Patterson means being a trusted
technology advisor.

Designing the Patient
Experience — Virtually

Moving Veterinary Practice
Technology to the Cloud

Precision Products in
Livestock Production

Patterson Dental’s virtual reality
office design combines Patterson’s
Design Edge 3D software with an
interactive virtual reality experience
to allow customers to accurately
view and customize their new clinical
environment before construction.

We are helping veterinary clinics move
their business to the cloud through
partnerships with best-in-class service
providers. With outstanding training and
support from the Patterson Technology
Center, veterinarians can now manage
practices, launch marketing campaigns
and deploy customer-facing apps from
cloud-based systems.

Patterson’s MicroMachine feeding and
dosing system allows livestock
producers to manage expensive
ingredient dosing with high-level
precision, optimizing herd health and
performance. Exclusive industry
solutions like Patterson’s moisture-
measuring hay applicator and Turnkey
integrated accounting system allow
customers to manage their operations
more efficiently, effectively reducing
labor costs.

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Service & Support Leadership

Whether using a technology product or a practice management
software package, downtime equals lost revenue. At Patterson, our
best-in-class customer experience means providing the superior
service and support that helps our customers confidently embrace
technology to grow their business. As technology advances, our
value increases.

Customers have come to expect responsive, agile support from
Patterson’s highly skilled team of support specialists and local
technicians. The Patterson Technology Center (PTC) supports
customers across both market segments, whether the issue is hardware,
software, computer networking or digital technology. PTC employees
aim to resolve any situation in one call and enhance the customer
service experience with every contact.

Patterson Technology
Center — Industry-Leading
Technology Support

5,000

daily call volume

430

employees

1,000,000

yearly call volume

100,000+

customers served in North America for

both the dental and companion vet markets

Innovation From Within

Committing to excellence within our company is another constant
focus for Patterson. Our multi-year enterprise resource planning
(ERP) initiative will bring new levels of efficiency to our operations
and, most importantly, improve the way we serve our customers.
Patterson’s new ERP system, successfully piloted at several
locations, will deploy productivity enhancers, such as carton
optimization to calculate the best package size for each product.
The system’s voice-guided pick and pack technology also creates
a safer environment in the fulfillment centers.

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6 2016 Financial Highlights

Net Sales
(Dollars in millions)

$3,585

$3,911

$5,387

Diluted Earnings Per Share from
Continuing Operations
(As adjusted)

$2.47

$1.75

$1.89

Financial Highlights

(Dollars in thousands, except per
share amounts) as reported

Net Sales

Gross Profit

Operating Income*

Net Income*

Diluted Earnings Per Share*

Cash and Cash Equivalents

Working Capital

Total Assets

Total Long-Term Debt

Stockholders’ Equity

*from Continuing Operations

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

$ 5,386,703

$ 3,910,865

$ 3,585,141

1,322,748

347,713

185,684

1.90

137,453

918,206

3,520,804

1,022,155

1,441,746

1,060,549

304,586

180,083

1,018,697

293,726

171,332

1.81

1.69

347,260

995,540

2,945,248

722,542

1,514,123

$ 264,908

872,254

2,863,191

723,514

1,471,664

The following non-GAAP table is provided to adjust reported net income and diluted earnings

per share for the impact of tax-affected one-time costs, current and prior-year deal amortization

costs and tax costs related to cash repatriation. Management believes that the adjusted net

income and diluted earnings per share amounts may provide a helpful representation of the

company’s fiscal 2016 performance.

Twelve Months Ended

(Dollars in thousands, except per share amounts)

April 30, 2016

April 25, 2015

April 26, 2014

Cash Returned to Shareholders
(Dollars in millions)

$291

$182

$129

Net Income — reported*

Transaction-related Costs

Deal Amortization

Integration Expense

Accelerated Debt Issuance Costs

Non-recurring IT Training Costs

Tax Impact of Repatriation of Cash

$ 185,684

$ 180,083

$ 171,332

10,360

25,417

3,842

3,205

601

12,300

1.90

0.11

0.26

0.04

0.03

0.01

0.13

928

7,721

–

6,474

–

188,732

$ 177,806

1.81

1.69

0.01

0.08

–

0.06

–

Net Income — adjusted*

$ 241,409

Diluted Earnings Per Share — reported*

Forward-looking statements made in

this report are subject to the cautionary

statements in the Company’s Form

Transaction-related Costs

Deal Amortization

Integration Expense

Accelerated Debt Issuance Costs

10-K, filed with the Securities and

Non-recurring IT Training Costs

Exchange Commission on June 29,

2016, under the headings “Risk Factors”

and “Management’s Discussion and

Analysis of Financial Condition and

Results of Operations.”

Tax Impact of Repatriation of Cash

Diluted Earnings Per Share — adjusted*

2.47

1.89

1.75

*from Continuing Operations

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

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

For the fiscal year ended April 30, 2016

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

For the transition period from to

Commission File No. 0-20572

PATTERSON COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction of
incorporation or organization)

41-0886515
(I.R.S. Employer
Identification No.)

1031 Mendota Heights Road
St. Paul, Minnesota 55120
(Address of principal executive offices including Zip Code)

Registrant’s telephone number, including area code: (651) 686-1600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, par value $.01

Name of exchange on which registered
NASDAQ Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act. Yes

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, and (2) has been subject to such filing requirements for the
past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such
files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act.

Large accelerated filer
Non-accelerated filer

Accelerated filer
Smaller reporting company

Table of Contents

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes

The aggregate market value of voting stock held by non-affiliates of the registrant, computed by reference to the closing sales
price as quoted on the NASDAQ Global Select Market on October 31, 2015, was approximately $4,691,000,000 (For purposes
of this calculation all of the registrant’s executive officers and directors are deemed affiliates of the registrant.)

As of June 20, 2016, there were 99,098,699 shares of Common Stock of the registrant issued and outstanding.

Portions of the registrant’s definitive proxy statement to be filed pursuant to Regulation 14A within 120 days after the
registrant’s fiscal year-end of April 30, 2016 are incorporated by reference into Part III.

Documents Incorporated By Reference

Table of Contents

FORM 10-K INDEX

PART I

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

PART II

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

PART III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

PART IV

Item 15.

BUSINESS

RISK FACTORS

UNRESOLVED STAFF COMMENTS

PROPERTIES

LEGAL PROCEEDINGS

MINE SAFETY DISCLOSURES

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

SELECTED FINANCIAL DATA

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

CONTROLS AND PROCEDURES

OTHER INFORMATION

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

EXECUTIVE COMPENSATION

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE

PRINCIPAL ACCOUNTANT FEES AND SERVICES

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

SIGNATURES

SCHEDULE II

INDEX TO EXHIBITS

Page

Table of Contents

Item 1. BUSINESS

PART I

Certain information of a non-historical nature contained in Items 1, 2, 3 and 7 of this Form 10-K includes forward-looking
statements. Reference is made to “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in Item 7, for a discussion of certain factors that could cause actual operating results to differ materially
from those expressed in any forward-looking statements.

General

Patterson Companies, Inc. is a value-added specialty distributor serving the U.S. and Canadian dental supply and the
U.S., Canadian and U.K. animal health supply markets. Patterson operates through its two strategic business units, Patterson Dental
and Patterson Animal Health, offering similar products and services to different customer bases. Each business is a market leader
with a strong competitive position, serves a fragmented market that offers consolidation opportunities and offers relatively low-
cost consumable supplies, making our value-added business proposition highly attractive to customers. We believe that we have
a strong brand identity as a value-added, full-service distributor with broad product and service offerings, having begun distributing
dental supplies in 1877.

Fiscal 2016 was a transformative year for Patterson. In June 2015, we more than doubled the size of our animal health
supply business through the acquisition of Animal Health International, Inc., for $1.1 billion in cash. This acquisition added a
leading production animal supply business to our pre-existing companion animal supply business, resulting in the renaming of
our veterinary supply segment to our animal health supply segment. In August 2015, we completed the disposition of our
rehabilitative and assistive products supply business, Patterson Medical, for $717 million in cash; the results of this business are
now presented as discontinued operations. See Notes 4 and 5 to the Consolidated Financial Statements for further information
about these transactions.

The following table sets forth consolidated net sales (in millions) by segment. Prior period segment results have been
restated to conform to the revised current period presentation in which we present three reportable segments: Dental, Animal
Health and Corporate.

April 30, 2016

April 25, 2015

April 26, 2014

Fiscal Year Ended

Dental

Animal Health

Corporate

Consolidated net sales

2,476

2,862

5,387

2,415

1,457

3,911

2,348

1,203

3,585

Our strategically located fulfillment centers enable us to better serve our customers and increase our operating efficiency.
This infrastructure, together with broad product and service offerings at competitive prices, and a strong commitment to customer
service, enables us to be a single source of supply for our customers’ needs. Our infrastructure also allows us to provide convenient
ordering and rapid, accurate and complete order fulfillment.

Patterson became publicly traded in October 1992 and is a corporation organized under the laws of the state of Minnesota.
We are headquartered in St. Paul, Minnesota. Our principal executive offices are located at 1031 Mendota Heights Road, St. Paul,
Minnesota, and our telephone number is (651) 686-1600. Unless the context specifically requires otherwise, the terms the
“Company,” “Patterson,” “we,” “us” and “our” mean Patterson Companies, Inc., a Minnesota corporation, and its consolidated
subsidiaries.

The Specialty Distribution Markets We Serve

We provide manufacturers with cost effective logistics and high-caliber sales professionals to access a geographically
diverse customer base, which is critical to the supply chain for both of the markets we serve. We provide our customers with a
vast array of value-added services, a dedicated and highly skilled sales team, and a broad selection of products through a single

Table of Contents

channel, thereby helping them efficiently manage their ordering process. Due in part to the inability of office-based customers to
store and manage large quantities of supplies in their offices, the distribution of supplies and small equipment to office-based
customers has been characterized by frequent, small quantity orders, and a need for rapid, reliable and substantially complete order
fulfillment. Supplies and small equipment are generally purchased from more than one distributor, with one generally serving as
the primary supplier.

We believe that consolidation within the industry will continue as distributors, particularly those with limited financial,
operating and marketing resources, seek to combine with larger companies that can provide growth opportunities. This consolidation
also may continue to result in distributors seeking to acquire companies that can enhance their current product and service offerings
or provide opportunities to serve a broader customer base.

Dental Supply Market

We estimate the dental supply market we serve to be approximately $7.5 billion annually and our share of this market,
when direct distribution by manufacturers is included, to be approximately 33%. This market consists of a sizeable geographically
dispersed number of fragmented dental practices. Customers range in size from sole practitioners to large group practices or service
organizations. According to the American Dental Association and the Canadian Dental Association, there are over 195,000 dentists
practicing in the U.S. and 19,000 dentists practicing in Canada, respectively. We believe the average dental practitioner purchases
about 40% of their supplies from their top supplier.

Total expenditures for dental services in the U.S. increased from $105 billion in 2010 to $114 billion in 2014. We believe
the dental supply market continues to experience growth due to U.S. population growth, the aging population, advances in dentistry,
demand for preventive dentistry and specialty services, the need for increased office productivity, demand for infection control
products, and coverage by dental plans. Demographic trends indicate that our markets are growing, as an aging U.S. population
is increasingly using dental services. In the dental industry, there is predicted to be a rise in oral health care expenditures as the
45 and older segment of the population increases. There is increasing demand for new technologies that allow dentists to increase
productivity, and this is being driven in the U.S. by lower insurance reimbursement rates. At the same time, there is an expected
increase in dental insurance coverage.

We support dental professionals through the many stock keeping units (“SKUs”) that we offer, as well as through important
value-added services, including practice management software, electronic claims processing, financial services and continuing
education, all designed to help maximize a practitioner’s efficiency.

Animal Health Supply Market

We estimate the animal health supply market we serve to be approximately $14 billion annually and our share of this
market, when direct distribution by manufacturers is included, to be approximately 23%. Similar to the dental supply market, the
animal health supply market is fragmented and diverse. The animal health market is a mix of the production animal market, which
primarily consists of beef and dairy cattle, poultry and swine, and other food-producing animals, and the companion animal market,
which primarily consists of dogs, cats and horses. Our production animal supply customers include large animal veterinarians,
beef producers (cow/calf, stocker and feedlots), dairy producers, poultry producers, swine producers and retail customers.
According to the American Veterinary Medical Association, there are more than 66,000 veterinarians in private practice in the
U.S. and Canada. Furthermore, there are approximately 20,000 veterinarians in the U.K. practicing in veterinary outlets; however,
we believe there has been a shift in the U.K. market toward consolidation of veterinary practices. National Veterinary Services
Limited, our veterinary products distributor in the U.K., has the highest percentage of buying groups and corporations as customers
compared to its competitors. The average purchase of consumables in the animal health market is noticeably higher than that of
the dental practitioner due predominantly to pharmaceutical products.

The animal health market, impacted by growing companion pet ownership and care, as well as increased focus on safety
and efficiency in livestock production, provides growth opportunities for us. We support our animal health customers through the
distribution of biologicals, pharmaceuticals, parasiticides, supplies and equipment and by actively engaging in the development,
sale and distribution of inventory, accounting and health management systems. Within the companion animal market, we anticipate
increasing demand for veterinary services due to the following factors: the increasing number of households with companion
animals, increased expenditures on animal health and preventative care, an aging pet population, advancements in animal health
products and diagnostic testing, and extensive marketing programs sponsored by companion animal nutrition and pharmaceutical
companies.

Product sales in the production animal market are impacted by volatility in commodity prices such as milk, grains,
livestock and poultry. Changes in weather patterns also influence how long cattle will graze and consequently the number of days
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an animal is on feed during a finishing phase. In addition, changes in the general economy can shift the number of animals treated,
the timing of when animals are treated, to what extent they are treated and with which products they are treated. Historically, sales
in this market have been largely driven by spending on animal health products to improve productivity, weight gain and disease
prevention, as well as a growing focus on food safety.

Competition

Our industry is highly competitive. It consists principally of national, regional and local full-service distributors, mail-
order distributors and, increasingly, Internet-based businesses. Most of the products we sell are available to customers from a
number of suppliers. In addition, our competitors could obtain exclusive rights from manufacturers to market particular products.
Some manufacturers also sell directly to end-users, thereby eliminating or reducing our role and that of other distributors.

We compete with other distributors, as well as several manufacturers, of dental and animal health products, primarily on
the basis of price, breadth of product line, customer service and value-added products and services. To differentiate ourselves from
our competition we deploy a strategy of premium customer service with multiple value-added components, a highly qualified and
motivated sales force, highly-trained and experienced service technicians, an extensive breadth and mix of products and services,
technology solutions allowing customers to easily access our inventory, accurate and timely delivery of product, strategic location
of sales offices and fulfillment centers, and competitive pricing.

In the U.S. and Canadian dental supply market, we compete against Henry Schein, Inc., Benco Dental Supply Company,
at least 15 full-service distributors that operate on a regional level, and hundreds of small local distributors. Also, as noted above,
some manufacturers sell directly to end users. With regard to our dental practice management software, we compete against
numerous companies, including Carestream Health, Inc. and Henry Schein, Inc.

In the U.S. and Canadian animal health supply market, our primary competitors are AmerisourceBergen and Henry Schein,
Inc. We also compete against a number of regional and local animal health distributors, as well as a number of manufacturers,
including pharmaceutical companies that sell directly to production animal operators, animal health product retailers and
veterinarians. To a lesser extent, we also compete with mail order distributors and buying groups. We face significant competition
in the animal health supply market in the U.K., where we compete on the basis of price and customer service with several large
competitors, including Henry Schein, Inc. and AmerisourceBergen. We also compete directly with pharmaceutical companies who
sell certain products or services directly to the customer. In the animal health practice management market, our primary competitors
are IDEXX Laboratories, Inc. and Henry Schein, Inc.

Successful distributors are increasingly providing value-added services in addition to the products they have traditionally
provided. We believe that to remain competitive we must continue to add value to the distribution channel, while removing
unnecessary costs associated with product movement. Significant price reductions by our competitors could result in a similar
reduction in our prices. Any of these competitive pressures may materially adversely affect our operating results.

Competitive Strengths

We have more than 130 years of experience in distributing products resulting in strong awareness of the Patterson brand.
Although further information regarding these competitive strengths is set forth below in the discussion of our two strategic business
units, our competitive strengths include:

•

Broad product and service offerings at competitive prices. We offer over 190,000 SKUs to our customers,
including many proprietary branded products. We believe that our proprietary branded products and our
competitive pricing strategy have generated a loyal customer base that is confident in our brands. Of the SKUs
offered, approximately 90,000 are offered to our dental customers and approximately 100,000 are offered to our
animal health customers. Our product offerings include consumables, equipment and software. Our service
offerings include software and design services, repair and maintenance, and equipment financing.

Focus on customer relationships and exceptional customer service. Our sales and marketing efforts are designed
to establish and solidify customer relationships through personal visits by field sales representatives, interaction
via phone with sales representatives, web-based activities including e-commerce and frequent direct marketing,
emphasizing our broad product lines, including exclusive distribution agreements, competitive prices and ease
of order placement. We focus on providing our customers with exceptional order fulfillment and a streamlined
ordering process.

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•

Cost-effective purchasing and efficient distribution. We believe that cost-effective purchasing is a key element
to maintaining and enhancing our position as a competitive-pricing provider of dental and animal health products.
We distribute our products from strategically located fulfillment centers. We strive to maintain optimal inventory
levels in order to satisfy customer demand for prompt and complete order fulfillment.

Business Strategy

Our objective is to continue to expand as a leading value-added distributor of dental and animal health products and

services. To accomplish this, we will apply our competitive strengths in executing the following strategies:

•

Emphasizing our value-added, full-service capabilities. We are positioned to meet virtually all of the needs of
dental practitioners, veterinarians, production animal operators and animal health product retailers by providing
a broad range of consumable supplies, technology, equipment and software and value-added services. We believe
our knowledgeable sales representatives can create special relationships with customers by providing an
informational link to the overall industry. Our value-added strategy is further supported by our equipment
specialists who offer consultation on design, equipment requirements and financing, our service technicians
who perform equipment installation, maintenance and repair services, our business development professionals
who provide business tools and educational programs to our customers, and our technology advisors who provide
guidance on integrating technology solutions.

Using technology to enhance customer service. As part of our commitment to providing superior customer
service, we offer our customers easy order placement. Although we offer computerized order entry systems that
we believe help establish relationships with new customers and increase loyalty among existing customers,
predominant platforms for ordering today include www.pattersondental.com, www.pattersonvet.com and
www.animalhealthinternational.com. The use of these methods of ordering enables our sales representatives to
spend more time with existing and prospective customers. Our Internet environment includes order entry,
customer support for digital and our proprietary products, customer-loyalty program reports and services, and
access to articles and manufacturers’ product information. We also provide real-time customer and sales
information to our sales force, managers and vendors via the Internet. In addition, we believe that the Patterson
Technology Center (the “PTC”) differentiates Patterson from our competition by positioning Patterson as the
only single-source solution for digital components. In addition to trouble-shooting through the PTC’s support
center, customers can access various service capabilities offered by the PTC, including electronic claims and
statement processing and system back-up capabilities.

Continuing to improve operating efficiencies. We continue to implement programs designed to improve our
operating efficiencies and allow for continued sales growth. This strategy includes our continuing investment
in management information systems and consolidation and leveraging of fulfillment centers and sales branches
between our operating segments. In addition, we have established shared sales branch offices in several locations.

Growing through internal expansion and acquisitions. We intend to continue to grow by hiring established sales
representatives, hiring and training skilled sales professionals, opening additional sales offices as needed, and
acquiring other distributors in order to enter new, or more deeply penetrate existing, geographic markets, gain
access to additional product lines, and expand our customer base. We believe both of our operating segments
are well positioned to take advantage of expected continued consolidation in our markets.

Dental Supply Segment - Products, Services and Sources of Supply

Patterson Dental, one of the two largest distributors of dental products in North America, has operations in the U.S. and
Canada. As a full-service, value-added supplier to over 120,000 dentists, dental laboratories, institutions, and other healthcare
professionals, Patterson Dental provides consumable products (including infection control, restorative materials, hand instruments
and sterilization products); basic and advanced technology dental equipment; exclusive, innovative technology solutions, including
practice management software and e-commerce solutions; patient education systems; and office forms and stationery. Patterson
Dental offers customers more than 90,000 SKUs of which approximately 5,000 are private-label products sold under the Patterson
brand. Patterson Dental also offers customers a range of related services including software and design services, maintenance and
repair, and equipment financing. Net sales of this segment were $2.5 billion in fiscal 2016 and operating income from this segment
was $312 million for the same period.

The following table sets forth the percentage of total sales by the principal categories of products and services offered

to our dental segment customers:

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Consumable
Equipment and software
Other (1)

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

56%
33
11
100%

55%
34
11
100%

(1) Consists of other value-added services, including software and design service, maintenance and repair, and equipment

financing.

Patterson Dental obtains products from more than 800 vendors. Although our relationships with most vendors are non-
exclusive, we do obtain certain products on an exclusive basis. For example, we have an exclusive distribution agreement with
an entity now known as Dentsply Sirona, Inc., the manufacturer of the CEREC® dental restorative systems and Schick® digital x-
rays, in addition to panoramic and cone beam radiography products. While Patterson Dental makes purchases from many suppliers,
and there is generally more than one source of supply for most of the categories of products we sell, the concentration of business
with key suppliers is considerable. Our top ten supply vendors accounted for approximately 57% and 61% of the cost of dental
products sold in fiscal 2016 and fiscal 2015. Of these ten, the top two vendors accounted for 25% and 7% for fiscal 2016 and 18%
and 8% for fiscal 2015 cost of sales, respectively.

Animal Health Supply Segment - Products, Services and Sources of Supply

Patterson Animal Health is a leading distributor of animal health products in the U.S., Canada and the U.K. We sell more
than 100,000 SKUs sourced from over 3,400 manufacturers to over 50,000 customers in the highly fragmented animal health
supply market. Products we distribute include pharmaceuticals, vaccines, parasiticides, diagnostics, prescription and non-
prescription diets, nutritionals, consumable supplies, equipment and software. We offer a private label portfolio of products to
veterinarians, producers, and retailers through our Aspen, First Companion and Patterson Veterinary brands. We also provide a
range of value-added services to our animal health customers. Within our companion animal market, our principal customers are
companion-pet and equine veterinarians, veterinary clinics, public and private institutions, and shelters. In our production animal
market, our principal customers are large animal veterinarians, production animal operators and animal health product retailers.
Net sales of this segment were $2.9 billion in fiscal 2016 and operating income from this segment was $94 million for the same
period.

The following table sets forth the percentage of total sales by the principal categories of products and services offered

to animal health segment customers:

Consumable
Equipment and software

Other

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

97%

100%

95%

100%

94%

100%

Patterson Animal Health obtains products from nearly 2,600 vendors in the U.S. and Canada and nearly 900 vendors

in the U.K. While Patterson Animal Health makes purchases from many vendors and there is generally more than one source of
supply for most of the categories of products, the concentration of business with key vendors is considerable. In fiscal 2016 and
2015, Patterson Animal Health’s top 10 animal health supply manufacturers comprised approximately 70% of the total cost of
animal health supply sales, and the single largest supplier comprised 17% of the total cost of animal health supply sales.

Sales, Marketing and Distribution

During fiscal 2016, we sold products or services to over 170,000 customers who made one or more purchases during the
year. Our customers include dentists, laboratories, institutions, other healthcare professionals, veterinarians, other animal health
professionals, production animal operators and animal health product retailers. No single customer accounted for more than 10%
of sales during fiscal 2016, and we are not dependent on any single customer or geographic group of customers.

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We have offices throughout the U.S. and Canada so that we can provide a presence in the market and decision-making
near the customer. Patterson Animal Health also has a central office in the U.K. These offices, or sales branches, are staffed with
a complete complement of our capabilities, including sales, customer service and technical service personnel, as well as a local
manager who has broad decision-making authority with regard to customer-related transactions and issues.

A primary component of our value-added approach is our sales force. Due to the fragmented nature of the markets we
serve, we believe that a large sales force is necessary to reach potential customers and to provide full service. Sales representatives
provide an informational link to the overall industry, assist practitioners in selecting and purchasing products and help customers
efficiently manage their supply inventories. Our need for a large dedicated sales force in the U.K. is reduced due to the presence
of buying groups and corporate customers as well as the significant number of orders placed electronically in the U.K.

In the U.S., customer service representatives in call centers work in tandem with our sales representatives, providing a
dual coverage approach for individual customers. In addition to processing orders, customer service representatives are responsible
for assisting customers with ordering, informing customers of monthly promotions, and responding to general inquiries. In the
U.K., our customer service team is primarily responsible for handling customer inquiries and resolving issues.

To assist our customers with their purchasing decisions, we provide a multi-touch point shopping experience. From print
to digital, this seamless experience is inclusive of products and services information. Patterson offers online and in-print showcases
of our expansive merchandise and equipment offerings, including digital imaging and computer-aided design and computer-aided
manufacturing ("CAD/CAM") technologies, hand-held and similar instruments, sundries, office design, e-services, repair and
support assistance, as well as financial services. We also promote select products and services through our monthly magazine,
Insight, in the U.S. and Canada, and our quarterly magazine, The Cube, in the U.K. Additional direct marketing tools that we
utilize include customer loyalty programs, social media, and participation in trade shows.

We believe that responsive delivery of quality supplies and equipment is key to customer satisfaction. We ship consumable
supplies from our strategically located fulfillment centers in the U.S. and Canada. In the U.K., orders are accepted in a centralized
fulfillment center and shipped nationwide to one of our depots located throughout the country at which pre-packed orders are
sorted by route for delivery to customers. Orders for consumable supplies can be placed through our sales representatives, customer
service representatives or electronically 24 hours a day, seven days a week. Rapid and accurate order fulfillment is another principal
component of our value-added approach.

In order to assure the availability of our broad product lines for prompt delivery to customers, we must maintain sufficient
inventories at our fulfillment centers. Purchasing of consumables and standard equipment is centralized, and our purchasing
department uses a real-time perpetual inventory system to manage inventory levels. Our inventory consists mostly of consumable
supply items and pharmaceutical products. Additionally, in this competitive market, some of our contracts contain minimum
purchase commitments to maintain exclusivity.

Geographic Information

For information on revenues and long-lived assets of our dental and animal health segments by geographic area, see Note

14 to the Consolidated Financial Statements.

Discontinued Operations

In August 2015, we sold Patterson Medical Holdings, Inc., our wholly owned subsidiary responsible for our rehabilitation
supply business known as Patterson Medical, for $717 million in cash to Madison Dearborn Partners. For a limited period of time
following the disposition, Patterson will continue to provide certain transition services to Patterson Medical, as owned by Madison
Dearborn Partners, pursuant to a transition services agreement. See Note 5 to the Consolidated Financial Statements for additional
information.

Seasonality

Our business in general is not seasonal; however, there are some products that typically sell more often during the winter
or summer season. In any given month, unusual weather patterns (e.g., unusually hot or cold weather) could impact the sales
volumes of these products, either positively or negatively.

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Governmental Regulation

Operating, Security and Licensure Standards

Our dental and animal health supply businesses involve the distribution of pharmaceuticals and medical devices, and in
this regard we are subject to various local, state, federal and foreign governmental laws and regulations applicable to the distribution
of pharmaceuticals and medical devices. Among the U.S. federal laws applicable to us are the Controlled Substances Act, the
Federal Food, Drug, and Cosmetic Act, as amended, and Section 361 of the Public Health Service Act. We are also subject to
comparable foreign regulations.

The Federal Food, Drug, and Cosmetic Act (“FDC Act”) and similar foreign laws generally regulate the introduction,
manufacture, advertising, labeling, packaging, storage, handling, reporting, marketing and distribution of, and record keeping for,
pharmaceuticals and medical devices shipped in interstate commerce, and states may similarly regulate such activities within the
state. Section 361 of the Public Health Service Act, which provides authority to prevent the spread of communicable diseases,
serves as the legal basis for the U.S. Food and Drug Administration’s (“FDA”) regulation of human cells, tissues and cellular and
tissue-based products, also known as “HCT/P products.”

The federal Drug Quality and Security Act of 2013 brought about significant changes with respect to pharmaceutical
supply chain requirements and pre-empts state law. Title II of this measure, known as the Drug Supply Chain Security Act
(“DSCSA”), will be phased in over 10 years, and is intended to build a national electronic, interoperable system to identify and
trace certain prescription drugs as they are distributed in the U.S. The law’s track and trace requirements applicable to manufacturers,
wholesalers, repackagers and dispensers (e.g., pharmacies) of prescription drugs began to take effect in January 2015. The DSCSA
product tracing requirements replace the former FDA drug pedigree requirements and pre-empt state requirements that are
inconsistent with, more stringent than, or in addition to, the DSCSA requirements. Also in January 2015, the DSCSA required
manufacturers and wholesale distributors to have systems in place by which they can identify whether a product in their possession
or control is a “suspect” or “illegitimate” product, and handle it accordingly.

The DSCSA also establishes certain requirements for the licensing and operation of prescription drug wholesalers and
third party logistics providers (“3PLs”), and includes the creation of national wholesaler and 3PL licenses in cases where states
do not license such entities. The DSCSA requires that wholesalers and 3PLs distribute drugs in accordance with certain standards
regarding the recordkeeping, storage and handling of prescription drugs. Beginning January 1, 2015, the DSCSA required
wholesalers and 3PLs to submit annual reports to the FDA, which include information regarding each state where the wholesaler
or 3PL is licensed, the name and address of each facility and contact information. According to FDA guidance, states are pre-
empted from imposing any licensing requirements that are inconsistent with, less stringent than, directly related to, or covered by
the standards established by federal law in this area. Current state licensing requirements will likely remain in effect until the FDA
issues new regulations as directed by the DSCSA.

The Food and Drug Administration Amendments Act of 2007 (“FDAAA”) and the Food and Drug Administration Safety
and Innovation Act of 2012 (“FDASIA”) amended the FDC Act to require the FDA to promulgate regulations to implement a
Unique Device Identification System. The FDA issued a final rule in September 2013 implementing the Unique Device
Identification System, requiring the labels of most medical devices to bear a unique device identifier (“UDI”), and prescribing the
content and format of the UDI. The rule also requires the submission of certain information concerning UDI-labeled devices to
an FDA database, the Global Unique Device Identification Database (“GUDID”). Additional FDA UDI guidance has subsequently
been issued, and the FDA’s UDI regulations are being phased in over seven years from the rule’s promulgation in September 2013,
beginning with the highest-risk devices (i.e., Class III medical devices) and ending with the lowest-risk devices. For the lowest-
risk, Class I medical devices, a Universal Product Code may take the place of a UDI on the device’s label.

The FDA’s UDI regulations require certain entities, referred to as “labelers,” to develop and include UDIs on the labels
of medical devices, and to directly mark certain devices with UDIs. Labelers are entities that cause a device’s label to be applied
or modified, without any subsequent replacement or modification. Typically, these entities are device manufacturers, specification
developers, single-use device reprocessors, convenience kit assemblers, repackagers and relabelers.

Violations of the UDI regulations, including failure to include a UDI on a device’s label after the effective date for the
device type, result in the misbranding of the device. The FDC Act makes it unlawful to introduce or deliver for introduction into
interstate commerce a misbranded device. It is also unlawful to cause a device to become misbranded.

Under the Controlled Substances Act, as a distributor of controlled substances, we are required to obtain and renew
annually registrations for our facilities from the U.S. Drug Enforcement Administration (“DEA”) permitting us to handle controlled
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substances. We are also subject to other statutory and regulatory requirements relating to the storage, sale, marketing, handling
and distribution of such drugs, in accordance with the Controlled Substances Act and its implementing regulations, and these
requirements have been subject to heightened enforcement activity in recent times. We are subject to inspection by the DEA.

Certain of our businesses are also required to register for permits and/or licenses with, and comply with operating and
security standards of, the DEA, the FDA, the U.S. Department of Health and Human Services, and various state boards of pharmacy,
state health departments and/or comparable state agencies as well as comparable foreign agencies, and certain accrediting bodies
depending on the type of operations and location of product distribution, manufacturing or sale. These businesses include those
that distribute, manufacture and/or repackage prescription pharmaceuticals and/or medical devices and/or HCT/P products, or
own pharmacy operations, or install, maintain or repair equipment. In addition, Section 301 of the National Organ Transplant Act,
and a number of comparable state laws, impose civil and/or criminal penalties for the transfer of certain human tissue (for example,
human bone products) for valuable consideration, while generally permitting payments for the reasonable costs incurred in
procuring, processing, storing and distributing that tissue. We are also subject to foreign government regulation of such products.
The DEA, the FDA and state regulatory authorities have broad inspection and enforcement powers, including the ability to suspend
or limit the distribution of products by our fulfillment centers, seize or order the recall of products and impose significant criminal,
civil and administrative sanctions for violations of these laws and regulations. Foreign regulations subject us to similar foreign
powers. Furthermore, compliance with legal requirements has required and may in the future require us to institute voluntary
recalls of products we sell, which could result in financial losses and potential reputational harm. Our customers are also subject
to significant federal, state, local and foreign governmental regulation.

Certain of our businesses are subject to various additional federal, state, local and foreign laws and regulations, including
with respect to the sale, transportation, storage, handling and disposal of hazardous or potentially hazardous substances, and safe
working conditions. There have also been increasing efforts by various levels of government globally to regulate the pharmaceutical
distribution system in order to prevent the introduction of counterfeit, adulterated or misbranded pharmaceuticals into the
distribution system.

Certain of our businesses also maintain contracts with governmental agencies and are subject to certain regulatory

requirements specific to government contractors.

Health Care Fraud

Certain of our businesses are subject to federal and state (and similar foreign) health care fraud and abuse, referral and
reimbursement laws and regulations with respect to their operations. Some of these laws, referred to as “false claims laws,” prohibit
the submission or causing the submission of false or fraudulent claims for reimbursement to federal, state and other health care
payers and programs. Other laws, referred to as “anti-kickback laws,” prohibit soliciting, offering, receiving or paying remuneration
in order to induce the referral of a patient or ordering, purchasing, leasing or arranging for or recommending ordering, purchasing
or leasing, of items or services that are paid for by federal, state and other health care payers and programs.

Failure to comply with fraud and abuse laws and regulations could result in significant civil and criminal penalties and
costs, including the loss of licenses and the ability to participate in federal and state health care programs, and could have a material
adverse effect on our business. Also, these measures may be interpreted or applied by a prosecutorial, regulatory or judicial authority
in a manner that could require us to make changes in our operations or incur substantial defense and settlement expenses. Even
unsuccessful challenges by regulatory authorities or private relators could result in reputational harm and the incurring of substantial
costs. In addition, many of these laws are vague or indefinite and have not been interpreted by the courts, and have been subject
to frequent modification and varied interpretation by prosecutorial and regulatory authorities, increasing the risk of noncompliance.

Health Care Reform

The U.S. Health Care Reform Law adopted through the March 2010 enactment of the Patient Protection and Affordable
Care Act and the Health Care and Education Reconciliation Act increased federal oversight of private health insurance plans and
included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud
and abuse, and to provide access to increased health coverage.

A Health Care Reform Law provision, generally referred to as the Physician Payment Sunshine Act or Open Payments
Program, has imposed reporting and disclosure requirements for drug and device manufacturers with regard to payments or other
transfers of value made to certain practitioners (including physicians, dentists and teaching hospitals), and for such manufacturers
and for group purchasing organizations, with regard to certain ownership interests held by physicians in the reporting entity. On
February 1, 2013, the Centers for Medicare and Medicaid Services (“CMS”) released the final rule to implement the Physician
Payment Sunshine Act. Under this rule, data collection activities began on August 1, 2013, and as required under the Physician
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Payment Sunshine Act, CMS publishes information from these reports on a publicly available website, including amounts
transferred and physician, dentist and teaching hospital identities.

Under the Physician Payment Sunshine Act we are required to collect and report detailed information regarding certain
financial relationships we have with physicians, dentists and teaching hospitals. The Physician Payment Sunshine Act pre-empts
similar state reporting laws, although we or our subsidiaries may also be required to report under certain state transparency laws
that address circumstances not covered by the Physician Payment Sunshine Act, and some of these state laws, as well as the federal
law, can be ambiguous. We are also subject to foreign regulations requiring transparency of certain interactions between suppliers
and their customers. Our compliance with these rules imposes additional costs on us.

Regulated Software; Electronic Health Records

The FDA has become increasingly active in addressing the regulation of medical device software, and has developed and
continues to develop policies on regulating clinical decision support tools and other types of software as medical devices. Certain
of our businesses involve the development and sale of software and related products to support physician and dental practice
management, and it is possible that the FDA or foreign government authorities could determine that one or more of our products
is a medical device, which could subject us or one or more of our businesses to substantial additional requirements with respect
to these products.

In addition, our businesses that involve physician and dental practice management products include electronic information
technology systems that store and process personal health, clinical, financial and other sensitive information of individuals. These
information technology systems may be vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which
could require us to expend significant resources to eliminate these problems and address related security concerns, and could
involve claims against us by private parties and/or governmental agencies. For example, we are directly or indirectly subject to
numerous and evolving federal, state, local and foreign laws and regulations that protect the privacy and security of such information,
such as the privacy and security provisions of the federal Health Insurance Portability and Accountability Act of 1996, as amended,
and implementing regulations (“HIPAA”). HIPAA requires, among other things, the implementation of various recordkeeping,
operational, notice and other practices intended to safeguard that information, limit its use to allowed purposes and notify individuals
in the event of privacy and security breaches.

We also sell products and services that health care providers, such as physicians and dentists, use to store and manage
patient medical or dental records. These customers are subject to laws and regulations, such as HIPAA, which require that they
protect the privacy and security of those records, and our products may be used as part of these customers’ comprehensive data
security programs, including in connection with their efforts to comply with applicable privacy and security laws. Perceived or
actual security vulnerabilities in our products or services, or the perceived or actual failure by us or our customers who use our
products to comply with applicable legal requirements, may not only cause us significant reputational harm, but may also lead to
claims against us by our customers and/or governmental agencies and involve substantial fines, penalties and other liabilities and
expenses and costs for remediation.

International Transactions

In addition, U.S. and foreign import and export laws and regulations require us to abide by certain standards relating to
the importation and exportation of products. We also are subject to certain laws and regulations concerning the conduct of our
foreign operations, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and other anti-bribery laws and laws
pertaining to the accuracy of our internal books and records, as well as other types of foreign requirements similar to those imposed
in the U.S.

See “Item 1A. Risk Factors” for a discussion of additional burdens, risks and regulatory developments that may affect

our results of operations and financial condition.

Proprietary Rights

We hold trademarks relating to the “Patterson®” name and logo, as well as certain other trademarks. Our U.S. trademark
registrations have 10-year terms, and may be renewed for additional 10-year terms. We intend to protect our trademarks to the
fullest extent practicable.

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Employees

As of April 30, 2016, we had approximately 7,000 full-time employees. We have not experienced a shortage of qualified
personnel in the past and believe that we will be able to attract such employees in the future. We believe our relations with employees
to be good.

Available Information

We make available free of charge through our website, www.pattersoncompanies.com, our Annual Report on Form 10-
K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, statements of beneficial ownership of securities on Forms 3,
4 and 5 and amendments to these reports and statements filed or furnished pursuant to Section 13(a) and Section 16 of the Securities
Exchange Act of 1934 as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the U.S.
Securities and Exchange Commission, or SEC. This material may be accessed by visiting the Investor Relations section of our
website.

The above information is also available at the SEC’s Public Reference Room at U.S. Securities and Exchange Commission,
100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 a.m. to 3:00 p.m., or obtainable
by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at www.sec.gov, where the above
information can be viewed.

Information relating to our corporate governance, including our Principles of Business Conduct and Code of Ethics, and
information concerning executive officers, Board of Directors and Board committees, and transactions in Patterson securities by
directors and officers, is available on or through our website, www.pattersoncompanies.com in the Investor Relations section.

Information maintained on the website is not being included as part of this Annual Report on Form 10-K.

Executive Officers of the Registrant

Set forth below is the name, age and position of the executive officers of Patterson, who are elected annually and serve at

the discretion of our Board of Directors, as of June 20, 2016.

Scott P. Anderson

49 President, Chief Executive Officer, Chairman of the Board – Patterson

Ann B. Gugino

John E. Adent
Les B. Korsh
Kelly A. Baker

Background of Executive Officers

Companies, Inc.

44 Executive Vice President, Chief Financial Officer and Treasurer – Patterson

Companies, Inc.

48 Chief Executive Officer - Patterson Animal Health
46 Vice President, General Counsel and Secretary - Patterson Companies, Inc.
47 Chief Human Resources Officer - Patterson Companies, Inc.

Scott P. Anderson was elected President and Chief Executive Officer of Patterson in April 2010, and became our Chairman
in April 2013. Mr. Anderson has worked with Patterson since 1993. Prior to June 2006 when he became President of Patterson
Dental, Mr. Anderson held senior management positions in the dental unit, including Vice President, Sales, and Vice President,
Marketing. Mr. Anderson started his career as a territory sales representative in the dental business before becoming national
equipment manager, manager of the San Francisco branch and manager of the Minnesota branch, two of Patterson’s largest dental
branch offices. Mr. Anderson became one of our directors in June 2010. He also has served as a director of C.H. Robinson
Worldwide, Inc. since January 2012.

Ann B. Gugino became Vice President, Chief Financial Officer and Treasurer in November 2014 and was promoted to
Executive Vice President, Chief Financial Officer and Treasurer in June 2015. She previously served as Vice President, Strategy &
Planning since April 2012. Before that, she was Vice President of Finance and Operations - Patterson Dental from 2008 until April
2012. She joined Patterson in 2000 as an assistant controller and became Controller - Patterson Dental in 2004. Prior to her career
with Patterson, she worked for Ernst & Young LLP and achieved her Certified Public Accountant designation.

John E. Adent, who currently serves as Chief Executive Officer of Patterson Animal Health, served as President and
Chief Executive Officer of Animal Health International, Inc. from 2004 through Patterson’s acquisition of that company in June
2015.

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Les B. Korsh became Vice President, General Counsel and Secretary of Patterson in July 2015. Mr. Korsh served as
Patterson’s Associate General Counsel since June 2014. Prior to joining Patterson, Mr. Korsh held positions as Vice President and
Associate General Counsel for MoneyGram International, Inc. from May 2004 to May 2014, and was a principal in the law firm
of Gray Plant Mooty, P.A. from June 1999 to May 2004.

Kelly A. Baker became Chief Human Resources Officer in February 2016. Prior to joining Patterson, Ms. Baker was
employed at General Mills for more than 20 years in multiple human resources roles. Her most recent position at General Mills
was Vice President, Human Resources for the U.S. Retail Operating Segment of General Mills, a position she held from April
2014 to January 2016. Prior to that, Ms. Baker was Vice President, Human Resources, Corporate Groups of General Mills since
February 2009.

Item 1A. RISK FACTORS

The risks described below could have a material adverse effect on our business, reputation, financial condition and/or

the trading price of our common stock. Although it is not possible to predict or identify all such risks and uncertainties, they
may include, but are not limited to, the factors discussed below. Our business operations could also be adversely affected by
additional factors that are not presently known to us or that we currently consider not to be material to our operations. You
should not consider this list to be a complete statement of all risks and uncertainties we face. The order in which these factors
appear should not be construed to indicate their relative importance or priority.

The dental and animal health supply markets are highly fragmented and competitive, and we may not be able to compete
successfully.

Our competitors include national, regional and local full-service distributors, mail-order distributors and, increasingly,

Internet-based businesses. Some of our competitors have greater resources than we do, or operate through different sales and
distribution models that could allow them to compete more successfully. For example, many of our suppliers are manufacturers,
some of whom compete with us by selling directly to customers. Furthermore, Internet-based businesses may be able to offer
the same product at a lower cost.

Most of our products are available from multiple sources, and our customers tend to have relationships with several
different distributors who can fulfill their orders. Our competitors could obtain exclusive rights to market particular products,
which we would then be unable to market. Manufacturers also could increase their efforts to sell directly to end-users and
thereby eliminate or reduce the role of distributors. These suppliers could sell their products at lower prices and maintain a
higher gross margin on the product sales than we can. Increased competition from any supplier of dental or animal health
products could significantly reduce our market share and adversely impact our financial results.

Industry consolidation among suppliers, price competition, the unavailability of products, or the emergence of new

competitors also could increase competition. There has also been increasing consolidation among manufacturers, which could
have a material adverse effect on our margins and product availability. This consolidation could cause the industry to become
more competitive as greater economies of scale are achieved by competitors, or as competitors with new lower cost business
models are able to operate with lower prices and gross profit on products. These competitive pressures could adversely affect
our sales and profitability. Our failure to compete effectively may limit and/or reduce our revenue, profitability and cash flow.

We may be unable to successfully integrate the operations of Animal Health International, Inc. or realize targeted cost
savings and other benefits of the acquisition.

In June 2015, we acquired Animal Health International, Inc. Achieving the targeted benefits of the acquisition will

depend in part upon whether we can integrate Animal Health International, Inc.’s businesses in an efficient and effective
manner. We may not be able to accomplish this integration process smoothly or successfully. The necessity of coordinating
geographically separated organizations, systems and facilities and addressing possible differences in business backgrounds,
corporate cultures and management philosophies may increase the difficulties of integration. We and Animal Health
International, Inc. operate numerous systems, including those involving management information, purchasing, accounting and
finance, sales, billing, and regulatory compliance. Moreover, the integration of our respective operations will require the
dedication of significant management resources, which is likely to distract management’s attention from day-to-day operations.
Employee uncertainty and lack of focus during the integration process may also disrupt our business and result in undesired
employee attrition. An inability of management to successfully integrate the operations of the two companies could have a
material adverse effect on our business, results of operations and financial condition.

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In addition, our actual cost-savings could differ materially from our initial estimates of synergies to be realized from

the Animal Health International, Inc. acquisition. Actual cost-savings, the costs required to realize the cost-savings and the
source of the cost-savings could differ materially from our estimates, and we cannot assure you that we will achieve cost-
savings, or that these cost-savings programs will not have other adverse effects on our business.

Finally, we may not be able to achieve the targeted operating or long-term strategic benefits of the Animal Health

International, Inc. acquisition. An inability to realize the full extent of, or any of, the anticipated benefits of the Animal Health
International, Inc. acquisition, as well as any delays encountered in the integration process, could have an adverse effect on our
business, results of operations and financial condition.

General economic conditions could adversely affect our operating results and financial condition.

Uncertain weak economic conditions in the U.S. or global economy, or an uncertain economic outlook, could

materially adversely affect our operating results and financial condition. These uncertainties, including, among other things,
sovereign debt levels, the inability of political institutions to effectively resolve actual or perceived economic, currency or
budgetary crises or issues, consumer confidence, election results, unemployment levels (and a corresponding increase in
uninsured and underinsured population), interest rates, availability of capital, fuel and energy costs, tax rates, healthcare costs
and the threat or outbreak of terrorism or public unrest, could adversely impact our customers and suppliers, which could
materially adversely affect us. Changes in government, government debt and/or budget crises may lead to reductions in
government spending in certain countries and/or higher income or corporate taxes, which could depress spending overall. In
addition, recessionary conditions and depressed levels of consumer and commercial spending may cause customers to reduce,
modify, delay, or cancel purchasing our products and services, and a prolonged period of economic instability could reduce
their ability to make payments. Furthermore, such conditions could cause our suppliers to reduce their production, decrease
their number of product offerings, or change their terms of sale to us. Increasing commodity prices may also increase our cost
of operations, either directly through increased energy costs or indirectly through what we are charged by our suppliers.
Recessionary economic conditions could also cause changes in our product mix as our customers prioritize established, low-
margin products rather than innovative, high-margin products, which could reduce our profit margin.

Disruption to our distribution capabilities, including service issues with our third-party shippers, could materially adversely
affect our results.

Weather, natural disaster, fire, terrorism, pandemic, strikes, geopolitical events or other reasons could impair our

ability to distribute our products and conduct our business. If we are unable to manage effectively such events if they occur,
there could be a material adverse effect on our business, financial condition or results of operations. Similarly, strikes or other
service interruptions by third-party shippers could cause our operating expenses to rise and materially adversely affect our
ability to deliver products on a timely basis. Our ability to provide same-day shipping and next-day delivery is an integral
component of our business strategy and any such disruption could adversely impact our business, financial condition or results
of operations.

We are dependent on our relationships with our sales representatives, service technicians and our customers.

The inability to attract or retain qualified employees, particularly sales representatives and service technicians who
relate directly with our customers, or our inability to build or maintain relationships with customers in the dental and animal
health markets, may have an adverse effect on our business. Due to the specialized nature of many of our products and services,
generally only highly qualified and trained personnel have the necessary skills to market such products and provide such
services. These individuals develop relationships with our customers that could be damaged if these employees are not retained.
We face intense competition for the hiring of these professionals, and many professionals in the field that may otherwise be
attractive candidates for us to hire may be bound by non-competition agreements with our competitors. Any failure on our part
to hire, train and retain a sufficient number of qualified professionals would damage our business.

We are dependent on our suppliers because we do not manufacture the majority of the products we sell.

Interruptions in supply could adversely affect our operating results. If a supplier is unable to deliver product in a

timely and efficient manner, whether due to financial difficulties, natural disasters or other reasons, we could experience lost
sales. We generally do not have long-term contracts with our suppliers that commit them to producing products for us and there
is considerable concentration within our animal health and dental businesses with a few key suppliers. In addition, because we
generally do not control the actual production of the products we sell, we may be subject to delays caused by interruption in
production based on conditions outside of our control, including the failure to comply with applicable government
requirements. The failure of manufacturers of products regulated by the FDA or other governmental agencies to meet these

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requirements, could result in product recall, cessation of sales or other market disruptions. An extended interruption in the
supply of our products would have an adverse effect on our results of operations.

In addition, a portion of our products is sourced, directly or indirectly, from outside the U.S. Political or financial

instability, increased tariffs, restrictions on trade, currency exchange rates, labor unrest, outbreak of pandemics or other events
could slow distribution activities, affect foreign trade beyond our control and adversely affect our results of operations.

Material changes in our purchasing relationship with suppliers could have a material adverse effect on our business.

Our ability to sustain our gross profits depends, in part, on the structure of our relationship with our suppliers. Such

relationships are subject to change from time to time, such as changing from a “buy/sell” to an agency relationship, or from an
agency to a “buy/sell” relationship, either of which could adversely affect our revenues and operating income. Suppliers may
also choose to change the method in which products are taken to market. A supplier may change our relationship from a
complete distribution provider, including logistics and sales support, to only a logistics provider, or only a sales support
provider. A reduction in our role as a value-added service provider would result in reduced margins on product sales, which
could have a material adverse effect on our business, financial condition or results of operations.

Patterson’s continued success is substantially dependent on positive perceptions of Patterson’s reputation.

One of the reasons why customers choose to do business with Patterson and why employees choose Patterson as a

place of employment is the reputation that Patterson has built over many years. To be successful in the future, Patterson must
continue to preserve, grow and leverage the value of Patterson’s brand. Reputational value is based in large part on perceptions
of subjective qualities. Even an isolated incident, or the aggregate effect of individually insignificant incidents, can erode trust
and confidence, particularly if they result in adverse publicity, governmental investigations or litigation, and as a result, could
tarnish Patterson’s brand and lead to adverse effects on our business, financial condition and results of operations.

Risks inherent in acquiring other businesses could offset the anticipated benefits of such acquisitions and we may face
difficulty in efficiently and effectively integrating acquired businesses.

As a part of our business strategy, we have acquired businesses in the ordinary course and expect to continue acquiring
businesses in the future. These acquisitions can involve a number of risks and challenges, any of which could cause significant
operating inefficiencies and adversely affect our growth and profitability, and may not result in the benefits and revenue growth
we expect. Such risks and challenges include underperformance relative to our expectations and the price paid for the
acquisition; unanticipated demands on our management and operational resources; difficulty in integrating personnel,
operations and systems; retention of customers of the combined businesses; assumption of contingent liabilities; and
acquisition-related earnings charges.

As we operate through two strategic business units, we consolidate the distribution, information technology, human

resources, financial and other administrative functions of those business units jointly to meet their needs while addressing
distinctions in the individual markets of those segments. We may not be able to do so effectively and efficiently.

Our ability to continue to make acquisitions will depend upon our success in identifying suitable targets, which

requires substantial judgment in assessing their values, strengths, weaknesses, liabilities and potential profitability, as well as
the availability of suitable candidates at acceptable prices, and whether restrictions are imposed by anti-trust or other
regulations.

Our acquired technology or developed technology may not be successful in maintaining existing customers or gaining new
customers, or the technology may fail to produce its intended results.

The process of acquiring or developing new technology products and solutions is inherently complex and uncertain. It

requires accurate anticipation of customers’ changing needs and emerging technological trends. We must make long-term
investments and commit significant resources before knowing whether these investments will eventually result in products or
services that achieve customer acceptance and generate the revenue required to provide desired returns. If we fail to accurately
anticipate and meet our customers’ needs through the development of new products and technologies and service offerings or if
we fail to adequately protect our intellectual property rights, or if our new products are not widely accepted or if our current or
future products fail to meet applicable regulatory requirements, we could lose customers to our competitors and that could
materially and adversely affect our results of operations and financial condition. In addition, if technology investments do not
achieve the intended results, we may write-off the investments, and we face the risk of claims from system users that the
systems failed to produce the intended result or negatively affected the operation of our customers’ businesses. Any such

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claims, even those without merit, could be expensive and time-consuming to defend, cause us to lose customers and the
associated revenue, divert management’s attention and resources, or require us to pay damages.

We are subject to a variety of litigation that could adversely affect our results of operations and financial condition.

We are subject to a variety of litigation incidental to our business, including product liability claims, intellectual
property claims, employment claims, commercial disputes, governmental inquiries and investigations, and other matters arising
out of the ordinary course of our business, including antitrust litigation. We also may be subject to securities litigation. From
time to time we are named as a defendant in cases as a result of our distribution of products. Additionally, we own interests in
companies that manufacture certain dental products. As a result, we are subject to the potential risk of product liability or other
claims relating to the manufacture and distribution of products by those entities. Additionally, purchasers of private-label
products may seek recourse directly from us, rather than the ultimate product manufacturer, for product-related claims. Another
potential risk we face in the distribution of our products is liability resulting from counterfeit or tainted products infiltrating the
supply chain. In addition, some of the products that we transport and sell are considered hazardous materials. The improper
handling of such materials or accidents involving the transportation of such materials could subject us to liability. Defending
against such claims may divert our management’s attention, may be expensive, and may require that we pay damage awards or
settlements or become subject to equitable remedies that could adversely affect our financial condition and results of
operations. A successful claim brought against us in excess of available insurance or not covered by insurance or
indemnification agreements, or any claim that results in significant adverse publicity against us, could have a material adverse
effect on our business and our reputation. Furthermore, the outcome of litigation is inherently uncertain.

Changes in consumer preferences could adversely affect our business.

The demand for production animal health products is heavily dependent upon consumer demand for beef, dairy,
poultry and swine. The food industry in general is subject to changing consumer trends, demands and preferences. Trends
within the food industry change often and our failure to anticipate, identify or react to changes in these trends could lead to,
among other things, reduced demand and price reductions for our animal health products, and could have a material adverse
effect on our business. Moreover, even if we do anticipate and identify these trends, we may be unable to react effectively. For
example, changes in consumer diets may negatively affect consumer demand for beef, dairy, poultry and/or swine, and
therefore reduce the demand for our production animal health products which could have a material adverse effect on our
business.

In addition, there has been consumer concern and consumer activism with respect to the use of antibiotics and growth

promotants in animal feed. A sustained campaign of negative press resulting from media or consumer advocacy groups,
industry litigation, loss of export markets or other factors could adversely affect the public’s perception of the industry as a
whole, or lead to reluctance by consumers to buy protein or other products. Concern over the impact of growth promotants on
animal welfare could result in the removal from the market of products in that category, adversely impacting our sales. In
addition, heightened consumer concern over the use of antibiotics and growth promotants in animal feed could result in
increased government regulation in response to that concern. Any such event may affect the growth of the production animal
market and lead to a decrease in the sales of the products we distribute, which could have a material adverse effect on our
business, financial condition and results of operations.

From time to time, we experience changes in customer and product mix that affect gross margin. Changes in customer

and product mix result primarily from business acquisitions, changes in customer demand, customer acquisitions, selling and
marketing activities and competition. There can be no assurance that we will be able to maintain historical gross margins in the
future.

Our business may be directly and indirectly affected by the cyclicality of the livestock market, including the effect of poor or
unusual weather conditions, that could reduce demand for the production animal products we distribute.

Poor or unusual weather conditions can significantly affect the purchasing decisions of our production animal

customers. The timing and quantity of rainfall are two of the most important factors in agricultural production. Drought can
affect the availability and price of feed for livestock. Faced with a reduction in readily available feed or an increase in costs for
such feed, our customers may decide to reduce herd size, which would ultimately decrease the demand for the products we
distribute, including micro feed ingredients, animal health products, dairy sanitation solutions, as well as the development and
implementation of systems for feed, health, information and production animal management.

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The outbreak of an infectious disease within either the production animal or companion animal population could have a
significant adverse effect on our business and our results of operations.

An outbreak of disease affecting animals, such as foot-and-mouth disease, porcine epidemic diarrhea virus, Newcastle

disease, avian flu or bovine spongiform encephalopathy, commonly referred to as “mad cow disease,” could result in the
widespread destruction of affected animals and consequently result in a reduction in demand for animal health products. In
addition, outbreaks of these or other diseases or concerns of such diseases could create adverse publicity that may have a
material adverse effect on consumer demand for meat, dairy and poultry products, and, as a result, on our customers’ demand
for the products we distribute. It could also harm export markets for such products and lead to increased government regulation.
The outbreak of a disease among the companion animal population which could cause a reduction in the demand for
companion animals could also adversely affect our business.

An adverse change in supplier rebates could negatively affect our business.

The terms on which we purchase or sell products from many suppliers of animal health products may entitle us to

receive a rebate based on the attainment of certain growth goals. Suppliers may reduce or eliminate rebates offered under their
programs, or increase the growth goals or other conditions we must meet to earn rebates to levels that we cannot achieve.
Increased competition either from generic or equivalent branded products could result in us failing to earn rebates that are
conditioned upon achievement of growth goals. Additionally, factors outside of our control, such as customer preferences,
consolidation of suppliers or supply issues, can have a material impact on our ability to achieve the growth goals established by
our suppliers, which may reduce the amount of rebates we receive. The occurrence of any of these events could have an
adverse impact on our results of operations.

The formation of group purchasing organizations (“GPO”) or provider networks may place us at a competitive
disadvantage.

The formation of GPOs and provider networks may shift purchasing decisions to entities or persons with whom we do

not have a historical relationship. This may threaten our ability to compete effectively, which would in turn negatively impact
our financial results. Although we are seeking to obtain access to lower prices demanded by GPO contracts or other contracts,
and develop relationships with provider networks and new GPOs, we cannot assure that such terms will be obtained or
contracts will be executed.

Increases in over-the-counter sales of companion animal products, or sales of companion animal products from non-
veterinarian sources, could adversely affect our business.

Animal health products are becoming increasingly available to consumers at competitive prices from sources other

than veterinarians, including human health product pharmacies, Internet pharmacies and big-box retailers. Any increase
competition from such channels could have a material adverse effect on our business, financial condition or results of
operations.

Our international operations are subject to inherent risks that could adversely affect our operating results.

There are a number of risks inherent in foreign operations, including complex regulatory requirements, staffing and

management complexities, import and export costs, other economic factors and political considerations, all of which are subject
to unanticipated changes. Additionally, foreign operations expose us to foreign currency fluctuations. Because our financial
statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies
will have an impact on our income. Currency exchange rate fluctuations may adversely affect our results of operations and
financial condition. Furthermore, we generally do not hedge translation exposure with respect to foreign operations.

The U.S. Health Care Reform Law could materially adversely affect our business.

Provisions of the U.S. Health Care Reform Law could have a material adverse effect on our business. Additionally,
further federal and state proposals for health care reform in the U.S. are likely, and foreign government authorities may also
adopt reforms of their health systems. We cannot predict what further reform proposals, if any, will be adopted, when they may
be adopted, or what impact they may have on us.

Reporting and disclosure obligations under the Physician Payment Sunshine Act provisions of the Health Care Reform Law
increase the cost of our regulatory compliance.

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The Physician Payment Sunshine Act imposes reporting and disclosure requirements for drug and device

manufacturers with regard to payments or other transfers of value made to certain practitioners (including physicians, dentists
and teaching hospitals), and for such manufacturers and for group purchasing organizations, with regard to certain ownership
interests held by physicians in the reporting entity. Under the Physician Payment Sunshine Act we are required to collect and
report detailed information regarding certain financial relationships we have with physicians, dentists and teaching hospitals.
We may also be required to report under certain state transparency laws that address circumstances not covered by the
Physician Payment Sunshine Act, and some of these state laws, as well as the federal law, can be ambiguous. We are also
subject to foreign regulations requiring transparency of certain interactions between suppliers and their customers. Our
compliance with these new rules imposes additional costs on us.

Failure to comply with existing and future U.S. and foreign laws and regulatory requirements could subject us to claims or
otherwise harm our business.

Our business is subject to requirements under various local, state, federal and international laws and regulations

applicable to the distribution of pharmaceuticals and medical devices, and human cells, tissue and cellular and tissue-based
products, also known as HCT/P products, and animal feed and supplements. Among other things, such laws, and the regulations
promulgated thereunder:

•

regulate the storage and distribution, labeling, packaging, handling, reporting, record keeping, introduction,
manufacturing and marketing of drugs, HCT/P products and medical devices;

subject us to inspection by the FDA and the DEA;

regulate the storage, transportation and disposal of certain of our products that are considered hazardous
materials;

require us to advertise and promote our drugs and devices in accordance with applicable FDA requirements;

require registration with the FDA and the DEA and various state agencies;

require record keeping and documentation of transactions involving drug products;

require us to design and operate a system to identify and report suspicious orders of controlled substances to
the DEA;

require us to manage returns of products that have been recalled and subject us to inspection of our recall
procedures and activities; and

impose reporting requirements if a pharmaceutical, HCT/P product or medical device causes serious illness,
injury or death.

Applicable federal, state, local and foreign laws and regulations also may require us to meet various standards relating

to, among other things, licensure or registration, sales and marketing practices, product integrity and supply tracking to the
manufacturer of the product, personnel, privacy and security of health or other personal information, installation, maintenance
and repair of equipment, and the importation and exportation of products. Our business also is subject to requirements of
similar and other foreign governmental laws and regulations affecting our operations abroad.

The failure to comply with any of these regulations, or new interpretations of existing laws and regulations, or the

imposition of any additional laws and regulations, could materially adversely affect our business. Allegations by a
governmental body that we have not complied with these laws could have a material adverse effect on our business. If it is
determined that we have not complied with these laws, we are potentially subject to penalties including warning letters, civil
and criminal penalties, mandatory recall of product, seizure of product and injunction, consent decrees, and suspension or
limitation of product sale and distribution. If we enter into settlement agreements to resolve allegations of non-compliance, we
could be required to make settlement payments or be subject to civil and criminal penalties, including fines and the loss of
licenses. Non-compliance with government requirements could adversely affect our ability to participate in federal and state
government health care programs, and damage our reputation.

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If we fail to comply with laws and regulations relating to health care fraud or other laws and regulations, we could suffer
penalties or be required to make significant changes to our operations, which could materially adversely affect our business.

We are subject to federal and state (and similar foreign) health care fraud and abuse, referral and reimbursement laws

and regulations. Some of these laws, referred to as “false claims laws,” prohibit the submission or causing the submission of
false or fraudulent claims for reimbursement to federal, state and other health care payers and programs. Other laws, referred to
as “anti-kickback laws,” prohibit soliciting, offering, receiving or paying remuneration in order to induce the referral of a
patient or ordering, purchasing, leasing or arranging for or recommending ordering, purchasing or leasing, of items or services
that are paid for by federal, state and other health care payers and programs. Health care fraud measures may implicate, for
example, our relationships with pharmaceutical manufacturers, our pricing and incentive programs for physician and dental
practices, and our dental and physician practice management products that offer billing-related functionality.

If we fail to comply with laws and regulations relating to the confidentiality of sensitive personal information or standards
in electronic health data transmissions, we could be required to make significant changes to our products, or incur
substantial fines, penalties or other liabilities.

Our dental practice management products include electronic information technology systems that store and process

personal health, clinical, financial and other sensitive information of individuals. These information technology systems may be
vulnerable to breakdown, wrongful intrusions, data breaches and malicious attack, which could require us to expend significant
resources to eliminate these problems and address related security concerns, and could involve claims against us by private
parties and/or governmental agencies. For example, we are directly or indirectly subject to numerous federal, state, local and
foreign laws and regulations that protect the privacy and security of such information, such as HIPAA. HIPAA requires, among
other things, the implementation of various recordkeeping, operational, notice and other practices intended to safeguard that
information, limit its use to allowed purposes and notify individuals in the event of privacy and security breaches. Failure to
comply with these laws and regulations could expose us to breach of contract claims, substantial fines, penalties and other
liabilities and expenses, costs for remediation and harm to our reputation. Also, evolving laws and regulations in this area could
restrict the ability of our customers to obtain, use or disseminate patient information, or could require us to incur significant
additional costs to re-design our products in a timely manner to reflect these legal requirements, either of which could have a
material adverse effect on our results of operations.

Risks generally associated with our information systems and cyber-security attacks could adversely affect our results of
operations.

We rely on information systems (“IS”) in our business to obtain, rapidly process, analyze and manage data to, among

other things:

•

facilitate the purchase and distribution of thousands of inventory items through numerous fulfillment centers;

receive, process and ship orders on a timely basis;

accurately bill and collect from thousands of customers;

process payments to suppliers; and

provide products and services that maintain certain of our customers’ electronic medical or dental records
(including protected health information of their human patients).

Our IS are vulnerable to natural disasters, power losses, computer viruses, telecommunication failures and other

problems. In addition, information security risks have generally increased in recent years. Increased IS security threats and
more sophisticated computer crime, including advanced persistent threats, pose a potential risk to the security of our IS,
customers and other business partners, as well as the confidentiality, availability, and integrity of our data, customers and other
business partners. A cyber-security attack that bypasses our IS security causing an IS security breach may lead to a material
disruption of our IS and/or the loss of business information, which could adversely affect our business. These risks may
include, among others, the following:

•

future results could be adversely affected due to the theft, destruction, loss, misappropriation or release of
confidential data or intellectual property;

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•

operational or business delays resulting from the disruption or damage of IS and subsequent clean-up and
mitigation activities, including our ability to process orders, maintain proper levels of inventories, collect
accounts receivable and disburse funds;

negative publicity resulting in reputation or brand damage with our customers, suppliers or industry peers;
and

lawsuits for, or regulatory proceedings relating to, a breach of personal financial and health information
belonging to our customers and their patients.

We also deliver Internet-based services and, accordingly, depend on our ability and the ability of our customers access
the Internet. In the event of any difficulties, outages or delays by Internet service providers, we may be impeded from providing
such services, which may have a material adverse effect on our business and our reputation.

Our results of operations and cash flows could be adversely affected if our IS are interrupted, damaged by unforeseen

events, incur cyber-security attacks or fail for any extended period of time. If our business continuity plans do not provide
effective alternative processes on a timely basis, we may suffer interruptions in our ability to manage or conduct our operations,
which may adversely affect our business. We may need to expend additional resources in the future to continue to protect
against, or to address problems caused by, any business interruptions or data security breaches.

Breaches of information systems security could damage our reputation, disrupt operations, increase costs and/or decrease
revenues.

We collect and store confidential information from customers so that they may, among other things, purchase products

or services, enroll in promotional programs, register on our websites or otherwise communicate or interact with us. We also
acquire and retain information about suppliers, employees and others in the normal course of business. We may be unable to
protect sensitive data and/or the integrity of our IS. In addition, compliance with evolving privacy and information security
laws and standards may result in significant additional expense due to increased investment in technology and the development
of new operational processes. We could be subject to liability for failure to comply with these laws and standards, failure to
protect information, or failure to respond appropriately to an incident or misuse of information, including use of information for
unauthorized marketing purposes.

The products we sell are subject to market and technological obsolescence; our software products may contain undetected
errors or bugs when released.

Some of the products we distribute are subject to technological obsolescence outside of our control, since we do not
manufacture the majority of the products we sell. If our customers discontinue purchasing a given product, we might have to
record expense related to the diminution in value of inventories we have in stock, and depending on the magnitude, that
expense could adversely impact our operating results.

Furthermore, we cannot be sure that we will be successful in introducing and marketing new software, software

enhancements, or e-services, or that such software, software enhancements and e-services will be released on time or accepted
by the market. Our software and applicable e-services products, like software products generally, may contain undetected errors
or bugs when introduced, or as new versions are released. We cannot be sure that future problems with post-release software
errors or bugs will not occur. Any such defective software may result in increased expenses related to the software and could
adversely affect our relationships with the customers using such software, as well as our reputation. We do not have any patents
on our software or e-services, and rely upon copyright, trademark and trade secret laws, as well as contractual and common-law
protections. We cannot provide assurance that such legal protections will be available or enforceable to protect our software or
e-services products.

Volatility in the financial markets could adversely affect our operating results and financial condition.

Volatility and other disruptions in the financial markets could adversely affect the cost and availability of credit to us,
as well as the cost of, and ability to sell, finance contracts we receive from customers to outside financial institutions. Reduced
access to capital for our customers limits the amount of investment that they can make in their businesses, and with limited
investment by the customer, our revenue from equipment sales could be adversely affected.

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The market price for our common stock may be highly volatile.

The market price for our common stock may be highly volatile. A variety of factors may have a significant impact on

the market price of our common stock, including:

•

the publication of earnings estimates or other research reports and speculation in the press or investment
community;

changes in our industry and competitors;

changes in government or legislation;

our financial condition, results of operations and cash flows and prospects;

stock repurchases;

any future issuances of our common stock, which may include primary offerings for cash, stock splits,
issuances in connection with business acquisitions, issuances of restricted stock/units and the grant or
exercise of stock options from time to time;

general market and economic conditions; and

any outbreak or escalation of hostilities in areas where we do business.

In addition, the NASDAQ Stock Market can experience extreme price and volume fluctuations that can be unrelated

or disproportionate to the operating performance of the companies listed on NASDAQ. Broad market and industry factors may
negatively affect the market price of our common stock, regardless of actual operating performance. In the past, following
periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted
against companies. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s
attention and resources, which could have a material adverse effect on our business.

Our future success depends on our leadership development and succession planning.

Our success depends, in large part, on our ability to recruit skilled personnel, and then identify and train our personnel

to transition into key roles to support the long-term growth of our business. While our Board of Directors and management
actively monitor our succession plans and processes, our business could suffer if we lose key personnel unexpectedly. In
addition, competition for senior management is intense and we may not be successful in attracting and retaining key personnel.

If we experience significant disruptions in our operations during our enterprise resource planning implementation, our
business may be adversely affected.

We depend on our information technology systems for the efficient functioning of our business, including accounting,

data storage, purchasing and inventory management. We are working on implementing a new enterprise resource planning
system (“ERP”) across our significant operating locations. We expect that the ERP will take three to four years to implement
and will require the investment of significant human and financial resources. During implementation, we may encounter
difficulties in operating our business, which could disrupt our operations, including our ability to timely ship and track
customer orders, determine inventory requirements, manage our supply chain, and otherwise adequately service our customers,
and lead to increased costs and other difficulties. If we experience significant disruptions during our ERP implementation, we
may not be able to repair our systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the
efficiency of our entire operation and have a material adverse effect on our operating results and cash flows.

We may be required to record a significant charge to earnings if our goodwill or other intangible assets become impaired.

Our balance sheet includes goodwill and other identifiable intangible assets. If impairment of our goodwill or other

identifiable intangible assets is determined, we may be required to record a significant charge to earnings in the period of such
determination under U.S. generally accepted accounting principles (GAAP).

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Our credit agreement contains restrictive covenants, which limit our business and financing activities.

In order to fund our financial obligations in connection with the Animal Health International, Inc. acquisition, we
entered into a credit agreement, which includes customary covenants that impose restrictions on our business and financing
activities, subject to certain exceptions or the consent of our lenders, including, among other things, limits on our ability to
incur additional debt, create liens, enter into merger, acquisition and divestiture transactions, pay dividends and engage in
transactions with affiliates. The credit agreement contains certain customary affirmative covenants, including a requirement
that we maintain a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio, and customary
events of default. Our ability to comply with these covenants may be adversely affected by events beyond our control,
including economic, financial and industry conditions. A breach of the credit agreement covenants may result in an event of
default, which could allow our lenders to terminate the commitments under the credit agreement, declare all amounts
outstanding under the credit agreement (if any), together with accrued interest, to be immediately due and payable and exercise
other rights and remedies. If this occurs, we may not be able to refinance the accelerated indebtedness on acceptable terms, or
at all, or otherwise repay the accelerated indebtedness.

Audits by tax authorities could result in additional tax payments for prior periods, and tax legislation could materially
adversely affect our financial results and tax liabilities.

The amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and local tax authorities and by

non-U.S. tax authorities. If these audits result in assessments different from our reserves, our future results may include
unfavorable adjustments to our tax liabilities.

We are subject to the tax laws and regulations of the U.S. federal, state and local governments, as well as foreign

jurisdictions. From time to time, various legislative initiatives may be proposed that could materially adversely affect our tax
positions. There can be no assurance that our effective tax rate will not be materially adversely affected by legislation resulting
from these initiatives. In addition, tax laws and regulations are extremely complex and subject to varying interpretations.
Although we believe that our historical tax positions are sound and consistent with applicable laws, regulations and existing
precedent, they can be no assurance that our tax positions will not be challenged by relevant tax authorities or that we would be
successful in any such challenge.

We are exposed to the risk of changes in interest rates.

Our balance sheet includes certain non-current assets that are sensitive to movements in short-term interest rates. The
variable rates are comprised of both LIBOR and commercial paper rates plus a spread and reset on certain dates, as set forth in
the respective agreements. In addition, our balance sheet includes fixed rate long-term debt, whose fair value could be
adversely affected by movements in interest rates. We finance purchases by our customers using finance contracts that are
issued at fixed interest rates, and sell these contracts under various funding arrangements that are priced using variable interest
rates. Sudden and dramatic changes in the interest rates within relevant markets could adversely affect our results of operations.

Our governing documents, other documents to which we are a party, and Minnesota law may discourage takeovers and
business combinations that our shareholders might consider to be in their best interests.

Anti-takeover provisions of our articles of incorporation, bylaws, and Minnesota law could diminish the opportunity

for shareholders to participate in acquisition proposals at a price above the then current market price of our common stock. For
example, while we have no present plans to issue any preferred stock, our Board of Directors, without further shareholder
approval, may issue up to approximately 30 million shares of undesignated preferred stock and fix the powers, preferences,
rights and limitations of such class or series, which could adversely affect the voting power of our common stock. Further, as a
Minnesota corporation, we are subject to provisions of the Minnesota Business Corporation Act, or MBCA, regarding “control
share acquisitions” and “business combinations.” We may, in the future, consider adopting additional anti-takeover measures.
The authority of our Board of Directors to issue undesignated preferred stock and the anti-takeover provisions of the MBCA, as
well as any future anti-takeover measures adopted by us, may, in certain circumstances, delay, deter or prevent takeover
attempts and other changes in control of our company not approved by our Board of Directors.

In addition, our Amended and Restated Equity Incentive Plan provides that awards issued under that plan are fully
vested and all restrictions on the awards lapse in the event of a change in control, as defined in such plan. Additionally, our
Capital Accumulation Plan provides that on an event of acceleration, as defined in the plan, the restrictions on shares of
restricted stock lapse and such stock becomes fully vested. An event of acceleration occurs if (a) a person has acquired a
beneficial ownership interest in 30% or more of the voting power of our company, (b) a tender offer is made to acquire 30% or
more of our company, (c) a solicitation subject to Rule 14a-11 of the Exchange Act relating to the election or removal of 50%
23

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or more of our Board of Directors occurs, or (d) our shareholders approve a merger, consolidation, share exchange, division or
sale of our company’s assets. Furthermore, if the surviving or acquiring company in a change in control does not assume our
company’s outstanding incentive awards or provide for their equivalent substitutes, our 2015 Omnibus Incentive Plan provides
for accelerated vesting of incentive awards following a change in control upon the termination of the employee’s service and in
certain other circumstances, provided such event occurs within two years of a change in control.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

We own our principal executive offices in St. Paul, Minnesota, and the majority of our distribution and manufacturing

facilities. Leases of other distribution, manufacturing and administrative facilities generally are on a long-term basis, expiring
at various times, with options to renew for additional periods. Most sales offices are leased for varying and usually shorter
periods, with or without renewal options. We believe our properties are in good operating condition and are suitable for the
purposes for which they are being used.

Patterson Logistics Services

The majority of assets we use to distribute product are owned and operated by Patterson Logistics Services, Inc.
(“PLSI”), a wholly-owned subsidiary, which operates the distribution function for the benefit of our dental and animal health
supply segments in the U.S. PLSI also advises on the operations of our fulfillment centers outside of the U.S., but these
properties are not owned by PLSI. In addition, PLSI operates fulfillment centers pursuant to the transition services agreement
discussed under Discontinued Operations in Part I, Item 1.

As of April 30, 2016, PLSI operated the following 15 fulfillment centers (eight primary centers) totaling 1.1 million

square feet:

•

two dental fulfillment centers (Hawaii and Texas);

four animal health fulfillment centers (Alabama, Colorado and Texas (two));

seven fulfillment centers that distribute dental and animal health products (California, Florida, Indiana, Iowa,
Pennsylvania, South Carolina and Washington); and

two fulfillment centers pursuant to the transition services agreement.

Approximately 90% of the PLSI fulfillment center space is owned.

Dental Supply

In addition to the locations operated by PLSI, Patterson Dental utilizes an owned location in Illinois to manufacture and

ship printed office products. Dental supply operations in Canada are supported by fulfillment centers located in Quebec and
Alberta. This segment is headquartered in our principal executive offices, and maintains sales and administrative offices at
approximately 80 locations across 40 states in the U.S. and 10 locations in Canada, the majority of which are leased. In
addition, this segment operates the Patterson Technology Center, a state-of-the-art, 100,000 square-foot facility in Effingham,
Illinois.

Animal Health Supply

In addition to the locations operated by PLSI, Patterson Animal Health has approximately 100 properties located in the
U.S. and Canada, the majority of which are leased. In the U.S., these properties are in 68 locations across 27 states, and comprise
fulfillment centers, storage locations, sales and administrative offices, retail stores and call centers. In Canada, animal health
supply operations are supported by two fulfillment centers located in Alberta and Ontario. The segment’s operations in the U.K.
are supported by a primary distribution facility in Stoke-on-Trent and an additional nine depots used as secondary distribution
points throughout the U.K. The headquarters for the animal health supply segment are located in a leased office in Greeley,
Colorado.

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Item 3. 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.
Plaintiff has not specified a damage amount in its complaint. We intend to defend ourselves against the action vigorously. We
do not anticipate that this matter will have a material adverse effect on our financial condition.

Beginning in January 2016, purported class action complaints were filed against defendants Henry Schein, Inc., Benco
Dental Supply Co. 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, the “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 persons who purchased dental supplies or equipment in the U.S. directly
from any of the defendants, or non-defendant Burkhart Dental Supply Company, Inc., since August 31, 2008. In the
consolidated class action complaint, putative class representatives allege a nationwide agreement among Henry Schein, Benco,
Patterson and Burkhart 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. Putative class representatives have not specified a damage
amount in their complaint. While the outcome of litigation is inherently uncertain, we believe the consolidated class action
complaint is without merit, and we intend to vigorously defend ourselves in this litigation.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Patterson’s common stock trades on the NASDAQ Global Select Market® under the symbol “PDCO.”

The following table sets forth the range of high and low sale prices for Patterson’s common stock for each full quarterly

period within the two most recent fiscal years. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.

Fiscal 2016

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Fiscal 2015

First Quarter
Second Quarter
Third Quarter
Fourth Quarter

Holders

High

Low

Dividends
per share

50.94
53.07
48.87
46.64

41.93
42.61
51.49
51.48

45.32
42.62
38.51
40.17

37.03
38.04
41.43
47.22

0.22
0.22
0.22
0.24

0.20
0.20
0.20
0.22

On June 20, 2016, the number of holders on record of common stock was 1,962. The transfer agent for Patterson’s
common stock is Wells Fargo Bank, N.A., 161 North Concord Exchange, South St. Paul, Minnesota, 55075-0738, telephone:
(651) 450-4064.

Dividends

In fiscal 2016, a quarterly cash dividend of $0.22 per share was paid throughout the year, except in the fourth quarter
when the dividend was increased to $0.24 per share. We expect to continue to pay a quarterly cash dividend for the foreseeable
future; however, the payment of dividends is within the discretion of our Board of Directors and will depend upon our earnings,
capital requirements, operating results and financial condition among other factors.

Securities Authorized for Issuance Under Equity Compensation Plans

For information relating to securities authorized for issuance under equity compensation plans, see Part III, Item 12.

Purchases of Equity Securities by the Issuer

In March 2013, Patterson’s Board of Directors approved a share repurchase plan by which up to 25,000,000 shares may
be purchased in open market transactions through March 19, 2018. As of April 30, 2016, 16,497,259 shares remain available
under the current repurchase authorization. No shares were repurchased during the fourth quarter of fiscal 2016.

Performance Graph

The graph below compares the cumulative total shareholder return on $100 invested at the market close on April 30,

2011, through April 30, 2016, with the cumulative return over the same time period on the same amount invested in the S&P
500 Index and a Peer Group Index, consisting of six companies (including our company) based on the same Standard Industrial
Classification Code.* The chart below the graph sets forth the actual numbers depicted on the graph.

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Patterson Companies, Inc.
S&P 500
Peer Group

Fiscal Year Ending

4/30/2011

4/28/2012

4/27/2013

4/26/2014

4/25/2015

4/30/2016

100.00
100.00
100.00

99.51
105.16
97.87

111.53
121.27
110.43

123.81
145.85
131.91

148.56
169.15
158.32

136.30
168.63
174.96

The current composition of SIC Code 5047 – Wholesale – Medical, Dental & Hospital Equipment & Supplies – is as
follows: Fuse Medical, Inc., Henry Schein, Inc., Millennium Healthcare, Inc., Owens & Minor, Inc., Cerebain Biotech
Corp. and Patterson Companies, Inc.

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Item 6. SELECTED CONSOLIDATED FINANCIAL DATA

(In thousands, except per share amounts)

Statement of Income Data (1):
Net sales
Cost of sales
Gross profit
Operating expenses
Operating income
Other expense, net
Income from continuing operations
before taxes

Income tax expense
Net income from continuing operations
Net income from discontinued
operations

Net income
Diluted earnings per share:
Continuing operations
Discontinued operations (2)
Net diluted earnings per share
Weighted average shares and potentially
dilutive shares outstanding
Dividends per common share
Balance Sheet Data:
Working capital
Total assets (3)
Total long-term debt (3)
Stockholders’ equity

April 30,
2016 (4)

April 25,
2015

April 26,
(5)
2014

April 27,
2013

April 28,
2012

Fiscal Year Ended

5,386,703
4,063,955
1,322,748
975,035
347,713
(46,020)

301,693
116,009
185,684

1,500
187,184

1.90
0.01
1.91

97,902
0.90

918,206
3,520,804
1,022,155
1,441,746

3,910,865
2,850,316
1,060,549
755,963
304,586
(30,268)

274,318
94,235
180,083

43,178
223,261

1.81
0.43
2.24

99,694
0.82

995,540
2,945,248
722,542
1,514,123

3,585,141
2,566,444
1,018,697
724,971
293,726
(32,463)

261,263
89,931
171,332

29,280
200,612

1.69
0.28
1.97

101,643
0.68

872,254
2,863,191
723,514
1,471,664

3,135,215
2,138,468
996,747
711,532
285,215
(33,670)

251,545
86,629
164,916

45,356
210,272

1.59
0.44
2.03

103,807
0.58

912,817
2,679,862
723,084
1,394,455

3,022,321
2,060,220
962,101
683,154
278,947
(28,563)

250,384
87,524
162,860

49,955
212,815

1.47
0.45
1.92

110,846
0.50

873,865
2,736,889
722,521
1,375,202

See the Notes to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

(1)

(2)

(3)

(4)

(5)

Statement of Income Data has been restated to present the results of Patterson Medical as discontinued operations for all
periods presented. See Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Fiscal 2014 includes a pre-tax restructuring charge of $15.4 million, or $0.13 per diluted share on an after-tax basis,
related to the Medical Restructuring described in Item 7 Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Prior year balances have been revised to reflect the impact of adopting ASU No. 2015-03, Simplifying the Presentation
of Debt Issuance Costs.
In June 2015, we acquired Animal Health International, Inc. Prior to our acquisition, Animal Health International, Inc.
generated sales and earnings before interest, income taxes, depreciation and amortization of $1.5 billion and $68 million,
respectively, during the 12 months ended March 2015. In connection with this acquisition, we incurred pre-tax
transaction costs of $13.7 million, or $0.11 per diluted share from continuing operations on an after-tax basis. See Note 4
to the Consolidated Financial Statements for additional information. Also in fiscal 2016, we approved a one-time
repatriation of approximately $200.0 million of foreign earnings. This one-time repatriation reduced the overall cost of
funding the acquisition of Animal Health International, Inc. In addition, certain foreign cash at Patterson Medical was
required to be repatriated as part of the sale transaction. The continuing operations tax impact of $12.3 million from the
repatriation was recorded during fiscal 2016. See Note 13 to the Consolidated Financial Statements for additional
information.
In August 2013, we acquired National Veterinary Services Limited ("NVS"), which had revenues of more than
£315 million, or approximately $493 million, in its fiscal year ended June 30, 2013 prior to acquisition. NVS results
beginning on the date of the acquisition are included in continuing operations. See Item 7 Management’s Discussion and
Analysis of Financial Condition and Results of Operations.

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview

Our financial information for fiscal 2016 is summarized in this Management’s Discussion and Analysis and the

Consolidated Financial Statements and related Notes. The following background is provided to readers to assist in the review of
our financial information.

Through fiscal 2015, Patterson had traditionally operated a specialty distribution business in three markets: dental supply,

veterinary supply and rehabilitation supply. In fiscal 2016, we acquired Animal Health International, Inc. and divested our
wholly-owned subsidiary Patterson Medical Holdings, Inc. (“Patterson Medical”), the entity through which we operated the
rehabilitation supply business. As a result of these two transactions, we now operate in two complementary markets: dental and
animal health. While our dental business remains the same, our animal health business now consists of both companion animal
and production animal lines of business. We classified the results of operations of Patterson Medical as discontinued operations
for all periods presented in the consolidated statements of income. The assets and liabilities of Patterson Medical were reflected
as held for sale in the consolidated balance sheets as of April 25, 2015.

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, its gross margin is substantially lower due generally to the low
margins on the pharmaceutical products that are distributed.

We operate with a 52-53 week accounting convention with our fiscal year ending on the last Saturday in April. Fiscal
years 2014, 2015 and 2016 ended on April 26, 2014, April 25, 2015 and April 30, 2016, respectively. Fiscal years 2014 and
2015 consisted of 52 weeks, while fiscal year 2016 consisted of 53 weeks. Fiscal year 2017 will end on April 29, 2017 and will
consist of 52 weeks.

We believe there are several important aspects of Patterson’s 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, 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.

The following significant activities occurred in fiscal 2016:

Animal Health International, Inc. Acquisition. In June 2015, we completed the acquisition of Animal Health International,
Inc., a leading production animal health distribution company in the U.S. Prior to our acquisition, Animal Health International,
Inc. generated sales and earnings before interest, income taxes, depreciation and amortization of $1.5 billion and $68 million,
respectively, during the 12 months ended March 2015. Our acquisition more than doubled the revenue of our legacy animal health
business, which was previously focused on the companion animal market. Our animal health business now offers an expanded
range of products and services to a broader base of customers in North America and the U.K. During fiscal 2016, we incurred
$10.4 million, or $0.11 per diluted share, on an after-tax basis, of transaction costs related to the acquisition of Animal Health
International, Inc. See Note 4 to the Consolidated Financial Statements for information regarding the acquisition of Animal Health
International, Inc.

Patterson Medical Holdings, Inc. Sale. In August 2015, we sold all of the outstanding shares of common stock of Patterson
Medical Holdings, Inc. for $717 million in cash to Madison Dearborn Partners. See Note 5 to the Consolidated Financial Statements
for additional information.

Cash Repatriation. In fiscal 2016, we approved a one-time repatriation of approximately $200.0 million of foreign
earnings. This one-time repatriation reduced the overall cost of funding the acquisition of Animal Health International, Inc. In
addition, certain foreign cash at Patterson Medical was required to be repatriated as part of the sale transaction. The continuing
operations tax impact of $12.3 million from the repatriation was recorded during fiscal 2016. See Note 13 to the Consolidated
Financial Statements for additional information.

Results of Operations

The following table summarizes our results from continuing operations as a percent of sales from continuing operations:

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Net sales
Cost of sales
Gross profit
Operating expenses
Operating income from continuing operations
Other income (expense)
Income from continuing operations before taxes
Income tax expense
Net income from continuing operations

Fiscal 2016 Compared to Fiscal 2015

Continuing Operations

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

100.0%
75.4
24.6
18.1
6.5
(0.9)
5.6
2.2
3.4%

100.0%
72.9
27.1
19.3
7.8
(0.8)
7.0
2.4
4.6%

100.0%
71.6
28.4
20.2
8.2
(0.9)
7.3
2.5
4.8%

Net Sales. Consolidated net sales in fiscal 2016 were $5,386.7 million, an increase of 37.7% from $3,910.9 million in fiscal
2015. The growth in sales includes a 35.7% contribution from acquisitions and a 1.8% unfavorable impact of changes in foreign
currency exchange rates.

Dental segment sales rose 2.5% to $2,476.2 million in fiscal 2016 from $2,415.0 million in fiscal 2015. The growth included
a 1.3% unfavorable impact from changes in foreign currency exchange rates. Consumable sales increased 4.5%. Dental equipment
and software sales decreased 1.4%, driven by a 1.3% unfavorable impact from changes in foreign currency exchange rates. Other
dental sales, consisting primarily of technical service parts and labor, software support services and artificial teeth, increased 4.7%
in fiscal 2016.

Animal Health segment sales grew 96.5% to $2,862.2 million in fiscal 2016 from $1,456.6 million in fiscal 2015. Our
acquisition of Animal Health International, Inc. in fiscal 2016 drove most of the increase in sales, contributing $1,396.1 million
in sales in fiscal 2016. Consumables increased 101.4%, driven almost entirely by sales from Animal Health International, Inc.
Equipment and software sales increased 7.2%, and other sales increased 17.3%, with both increases driven by organic growth and
partially offset by unfavorable impacts from changes in foreign currency exchange rates.

Gross Profit. Consolidated gross profit margin decreased 250 basis points from the prior year to 24.6%. The decrease in
gross profit margin was predominantly the result of the inclusion of sales and cost of sales from Animal Health International, Inc.
in our results, as that business traditionally has lower gross margins than our historical businesses.

Operating Expenses. Consolidated operating expenses for fiscal 2016 were $975.0 million, a 29.0% increase from the
prior year of $756.0 million. Operating expenses mainly increased due to the acquisition of Animal Health International, Inc. and
transaction-related costs. The consolidated operating expense ratio of 18.1% decreased 120 basis points from the prior year,
primarily due to the acquisition of Animal Health International, Inc., which has a lower operating expense ratio than our other
business.

Operating Income from Continuing Operations. Operating income from continuing operations was $347.7 million, or
6.5% of net sales, in fiscal 2016, compared to $304.6 million, or 7.8% of sales, in fiscal 2015. The decrease in operating income
as a percent of net sales was mainly due to the inclusion of results of Animal Health International, Inc. and transaction-related
costs.

Other Income (Expense), Net. Net other expense was $46.0 million in fiscal 2016, compared to $30.3 million in fiscal
2015. The increase was mainly due to increased interest expense related to the credit agreement entered into in connection with
the acquisition of Animal Health International, Inc., including $5.2 million of accelerated debt issuance cost amortization incurred
in fiscal 2016 as a result of early repayment of debt.

Income Tax Expense. The effective income tax rate was 38.5% in fiscal 2016 and 34.4% in fiscal 2015. The increase in
the rate was primarily due to the current year impact of cash repatriation and the impact of the transaction-related costs incurred
related to the acquisition of Animal Health International, Inc.

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Net Income and Earnings Per Share from Continuing Operations. Net income from continuing operations increased
3.1% to $185.7 million in fiscal 2016, compared to $180.1 million in the prior year. Earnings per diluted share from continuing
operations were $1.90 in fiscal 2016 compared to $1.81 in the prior year. Weighted average diluted shares in fiscal 2016 were
97,902,000 compared to 99,694,000 in the prior year. The decrease in the weighted average shares was primarily due to share
repurchase activity. The fiscal 2016 cash dividend was $0.90 per common share compared to $0.82 in the prior year.

Discontinued Operations

Net income from discontinued operations was $1.5 million in fiscal 2016, compared to $43.2 million in fiscal 2015. The
decrease was primarily due to there being twelve months of operations in the prior year as compared to less than four months of
operations in fiscal 2016, as well as by transaction-related costs related to the sale of Patterson Medical, which reduced income
before taxes from discontinued operations by $10.5 million in fiscal 2016 as compared to fiscal 2015.

Fiscal 2015 Compared to Fiscal 2014

Continuing Operations

Net Sales. Consolidated net sales in fiscal 2015 were $3,910.9 million, an increase of 9.1%, from $3,585.1 million in fiscal
2014. The growth in sales includes a 6.1% contribution from acquisitions and a 1.0% unfavorable impact of changes in foreign
currency translation rates.

Dental segment sales in fiscal 2015 rose 2.8% to $2,415.0 million from $2,348.4 million in fiscal 2014. The growth included
a 0.2% contribution from acquisitions and a 0.8% unfavorable impact from changes in foreign currency translation rates.
Consumable sales increased 2.6%. Dental equipment and software sales increased 2.9% in fiscal 2015 to $818.3 million with
strong contributions from both basic equipment and technology sales, led by new users of CEREC CAD/CAM systems. Other
dental sales, consisting primarily of technical service parts and labor, software support services and artificial teeth, increased 3.5%
in fiscal 2015.

Animal Health segment sales grew 21.1% to $1,456.6 million in fiscal 2015. The acquisition of NVS in fiscal 2014 was
responsible for 17.1 percentage points of such growth over the prior year. Consumables increased 2.9%, equipment and software
sales increased 5.5% and other increased 1.5%. We believe that our equipment and technology strategy, which includes enhancing
our infrastructure and becoming a national technical service provider, drove the increases in equipment, software and services.

Gross Profit. Consolidated gross profit margin decreased 130 basis points from the prior year to 27.1%. The NVS acquisition
accounted for almost all of the basis point decrease, resulting in comparable gross margins being flat year over year for our historical
business.

Operating Expenses. The consolidated operating expense ratio of 19.3% decreased 90 basis points from the prior year
ratio of 20.2%. The decrease in the operating expense ratio is primarily attributable to the NVS acquisition, as NVS has a lower
operating expense ratio as compared to our historical business.

Operating Income from Continuing Operations. Operating income from continuing operations was $304.6 million, or

7.8% of net sales, in fiscal 2015, compared to $293.7 million, or 8.2% of net sales, in fiscal 2014.

Other Income (Expense), Net. Net other expense was $30.3 million in fiscal 2015, a decrease of $2.2 million from the

prior year, driven primarily by a reduction in interest expense of $2.0 million.

Income Tax Expense. The effective income tax rate was 34.4% in both fiscal 2015 and fiscal 2014.

Net Income and Earnings Per Share from Continuing Operations. Net income from continuing operations increased
5.1% to $180.1 million in fiscal 2015, compared to $171.3 million in the prior year. The increase is mainly driven by increased
sales. Earnings per diluted share from continuing operations were $1.81 in fiscal 2015 compared to $1.69 in the prior year. Weighted
average diluted shares in fiscal 2015 were 99,694,000 compared to 101,643,000 in the prior year. The decrease in the weighted
average shares was primarily due to share repurchase activity. The fiscal 2015 cash dividend was $0.82 per common share compared
to $0.68 in the prior year.

Discontinued Operations

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Net income from discontinued operations was $43.2 million in fiscal 2015, compared to $29.3 million in fiscal 2014.

The increase was primarily due to restructuring charges that reduced net income by $13.3 million in fiscal 2014.

Liquidity and Capital Resources

Patterson’s operating cash flow has been our principal source of liquidity in the last three fiscal years. During each of these
fiscal years, we used our revolving credit facility periodically as a source of liquidity in addition to operating cash flow. Net cash
provided by operating activities was $156.3 million in fiscal 2016, compared to $262.7 million in fiscal 2015 and $195.8 million
in fiscal 2014. Our cash flows from operating activities are primarily driven by net income from continuing operations, partially
offset by uses of cash within discontinued operations of $38.5 million.

Net cash flows used in investing activities were $400.6 million in fiscal 2016, compared to $9.6 million and $283.8 million
in fiscal 2015 and 2014, respectively. Capital expenditures were $79.4 million, $60.7 million and $34.0 million in fiscal years
2016, 2015 and 2014, respectively. Significant expenditures in each year included investments in our information technology
initiatives. We expect to use a total of approximately $50 million to $70 million for capital expenditures in fiscal 2017, with our
main investment in our information technology initiatives. Fiscal 2016 includes the purchase of Animal Health International, Inc.
for $1,106.6 million, which was partially offset by the receipt of net cash proceeds of $714.4 million from completion of the sale
of Patterson Medical. Fiscal years 2016 and 2015 include the sale of securities of $48.7 million and $40.8 million, respectively.
Fiscal 2014 includes cash used for acquisitions of $145.8 million and cash used for purchases of time deposits of $99.7 million.

In June 2015, we entered into a credit agreement (the “Credit Agreement”), under which the lenders provided us with senior
unsecured lending facilities of up to $1.5 billion, consisting of a $1.0 billion unsecured term loan and a $500 million unsecured
revolving line of credit. The Credit Agreement expires in fiscal 2021. Also in June 2015, our previous $300 million credit facility,
which was due to expire in December 2016, was terminated and replaced by the revolving line of credit under the Credit Agreement.
At April 30, 2016, $317.6 million was outstanding under the unsecured term loan at an interest rate of 1.81%, and $20.0 million
was outstanding under our current revolving line of credit at an interest rate of 3.875%. There were no outstanding borrowings
under our current or previous revolving lines of credit at April 25, 2015.

In fiscal 2015, we entered into a Note Purchase Agreement, under which we issued fixed rate Senior Notes in an aggregate
principal amount of $250.0 million at an interest rate of 3.48% per annum, due March 2025. The proceeds were used to repay
$250.0 million of Senior Notes that came due in March 2015. Also in fiscal 2015, a cash payment of $29.0 million was made to
settle an interest rate swap. We originally entered into this swap in January 2014 to hedge interest rate fluctuations in anticipation
of refinancing the Senior Notes that came due on in March 2015.

Total dividends paid in fiscal years 2016, 2015 and 2014 were $90.6 million, $81.8 million and $85.7 million, respectively.
We expect to continue to pay a quarterly cash dividend for the foreseeable future. In addition, during fiscal 2016, we repurchased
4.4 million shares of common stock for $200.0 million. In fiscal 2015, we repurchased 1.2 million shares of common stock for
$47.5 million. In fiscal 2014, we repurchased approximately 2.4 million shares of common stock for approximately $96.5 million.
Under a share repurchase plan authorized by the Board of Directors in March 2013, Patterson may repurchase up to 25.0 million
shares of its common stock. This authorization remains in effect through March 19, 2018. As of April 30, 2016, approximately
16.5 million shares remain available under the current repurchase authorization.

We have $137.5 million in cash and cash equivalents as of April 30, 2016, of which $49.8 million is in foreign bank accounts.
See Note 13 to the Consolidated Financial Statements for further information regarding our intention to permanently reinvest these
funds. Included in cash and cash equivalents as of April 30, 2016 is $27.2 million of cash collected from previously sold customer
financing arrangements that have not yet been settled with the third party. See Note 7 to the Consolidated Financial Statements
for further information. 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 anticipated expansion plans and strategic initiatives
over the next fiscal year.

We expect to continue to obtain liquidity from the sale of equipment finance contracts. Patterson sells a significant portion
of our finance contracts (see below) to a commercial paper funded conduit managed by a third party bank, and as a result, commercial
paper is indirectly an important source of liquidity for Patterson. Patterson is allowed to participate in the conduit due to the
quality of our finance contracts and our financial strength. Cash flows could be impaired if our financial strength diminishes to
a level that precluded us from taking part in this facility or other similar facilities. Also, market conditions outside of our control
could adversely affect the ability for us to sell the contracts.

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Customer Financing Arrangements

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 our sponsored program, equipment
purchased by customers with strong credit may be financed up to a maximum of $500,000 for any one customer. We generally
sell our customers’ financing contracts to outside financial institutions in the normal course of our business. 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 The Bank of Tokyo-Mitsubishi UFJ, Ltd. serving as the agent. We utilize a special purpose entity (“SPE”), PDC Funding,
a consolidated, wholly owned subsidiary, to fulfill a requirement of participating in the commercial paper conduit. We receive
the proceeds of the contracts upon sale. The capacity under the agreement at April 30, 2016 was $575 million.

Second, we also maintain an agreement with Fifth Third Bank whereby the bank purchases customers’ financing

Our financing business is described in further detail in Note 7 to the Consolidated Financial Statements.

Contractual Obligations

A summary of our contractual obligations as of April 30, 2016 follows (in thousands):

Long-term debt principal
Long-term debt interest
Operating leases
Total

Payments due by year

Total
1,042,625
186,959
72,925
1,302,509

Less than
1 year

1-3 years

3-5 years

More than
5 years

16,500
34,434
22,891
73,825

267,750
58,983
28,023
354,756

243,375
41,598
15,141
300,114

515,000
51,944
6,870
573,814

As of April 30, 2016 our gross liability for uncertain tax positions, including interest and penalties, was $15.0 million.
We are not able to reasonably estimate the amount by which the liability will increase or decrease over an extended period of
time or whether a cash settlement of the liability will be required. Therefore, these amounts have been excluded from the
schedule of contractual obligations.

For a more complete description of our contractual obligations, see Notes 8 and 12 to the Consolidated Financial

Statements.

Outlook

For the past several years, we have grown revenue and earnings by: delivering value-added, full-service capabilities;
enhancing customer service through technology; further improving operating efficiencies; and expanding both organically and
through acquisitions. Patterson’s strategy will remain focused on the initiatives above, as well as our current efforts to broaden
our view of our markets and focus on our core strengths in our Dental and Animal Health businesses. We believe this
combination of strategies will further optimize our operational platform, expand our growth profile and position Patterson to
capitalize on the growth opportunities before us. With strong operating cash flow and available credit capacity, we are confident
that we will be able to financially support our future growth.

Asset Management

The following table summarizes our accounts receivable days sales outstanding (“DSO”) and average annual inventory

turnover for the past three fiscal years:

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DSO (1)
Inventory turnover

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

49
7.1

48
6.2

46
7.2

Calculation includes approximately $18 million, $12 million and $7 million as of April 30, 2016, April 25, 2015 and

(1)
April 26, 2014, respectively, of receivables from finance contracts received from customers related to certain financing
promotions.

Foreign Operations

We derive foreign sales from Dental operations in Canada, and Animal Health operations in Canada and the U.K.
Fluctuations in currency exchange rates have not significantly impacted earnings, as these fluctuations impact sales, cost of sales
and operating expenses. However, changes in exchange rates adversely affected net sales by $69.4 million, $37.1 million, and
$12.8 million in fiscal years 2016, 2015 and 2014, respectively. Changes in currency exchange rates are a risk accompanying
foreign operations, but this risk is not considered material with respect to our consolidated operations.

Critical Accounting Policies and Estimates

Patterson has adopted various accounting policies to prepare our consolidated financial statements in accordance with

accounting principles generally accepted in the U.S. Management believes that our policies are conservative and our
philosophy is to adopt accounting policies that minimize the risk of adverse events having a material impact on recorded assets
and liabilities. However, the preparation of financial statements requires the use of estimates and judgments regarding the
realization of assets and the settlement of liabilities based on the information available to management at the time. Changes
subsequent to the preparation of the financial statements in economic, technological and competitive conditions may materially
impact the recorded values of Patterson’s assets and liabilities. Therefore, the users of the financial statements should read all
the notes to the Consolidated Financial Statements and be aware that conditions currently unknown to management may
develop in the future. This may require a material adjustment to a recorded asset or liability to consistently apply to our
significant accounting principles and policies that are discussed in Note 1 to the Consolidated Financial Statements. The
financial performance and condition of Patterson may also be materially impacted by transactions and events that we have not
previously experienced and for which we have not been required to establish an accounting policy or adopt a generally
accepted accounting principle.

Revenue Recognition – Revenues are generated from the sale of consumable products, equipment, software products and

services, technical service parts and labor, freight and delivery charges, and other sources. Revenues are recognized when
persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or
determinable, and there is reasonable assurance of collection of the sale. 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. In addition to revenues generated from the distribution of consumable products under conventional arrangements
(buy/sell agreements) where the full market value of the product is recorded as revenue, the animal health segment may earn a
small amount of commission income for services provided under agency agreements with certain pharmaceutical
manufacturers. The services generally consist of detailing the product and taking the customer’s order. The agency agreement
contrasts to a buy/sell agreement in that the animal health segment does not purchase and handle the product or bill and collect
from the customer in an agency relationship with a vendor.

Consumable product 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. Commissions under agency agreements are recorded when the
services are provided.

Equipment and software product revenues are recognized upon delivery and, if necessary, installation. In those
circumstances where terms of the sale are FOB shipping point, revenues are recognized when products are transferred to the
shipping carrier. Revenue derived from post contract customer support for software is deferred and recognized ratably over the
period in which the support is provided. Patterson provides financing for select equipment and software sales. Revenue is
recorded at the present value of the finance contract, with discount, if any, and interest income recognized over the life of the
finance contract as other income, net in our consolidated statement of income. See Note 7 to the Consolidated Financial
Statements for more information regarding customer financing.

Other revenue, including freight and delivery charges and technical service parts and labor, is recognized when the

related product revenue is recognized or when the product or services are provided to the customer.

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The receivables that result from the recognition of revenue are reported net of the related allowances discussed above.
Patterson maintains 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.

Patterson has a relatively large, dispersed customer base and no single customer accounts for more than 1% of
consolidated net sales. In addition, the equipment sold to customers under finance contracts generally serves as collateral for
the contract and the customer provides a personal guarantee as well.

Patterson Advantage Loyalty Program – Patterson Dental provides a point-based awards program to qualifying

customers involving the issuance of “Patterson Advantage dollars” which can be used toward equipment and technology
purchases. The program was initiated in January 2009 and runs on a calendar year schedule. Patterson Advantage dollars earned
during a program year expire one year after the end of the program year. The cost and corresponding liability associated with
the program is recognized as contra-revenue in accordance with ASC Topic 605-50, “Revenue Recognition-Customer
Payments and Incentives.” As of April 30, 2016, we believe we have sufficient experience with the program to reasonably
estimate the amount of Patterson Advantage dollars that will not be redeemed and thus have recorded a liability for 87% of the
maximum potential amount that could be redeemed. We use the redemption recognition method, and we recognize the
estimated value of unused Patterson Advantage dollars as redemptions occur. Breakage recognized was immaterial to all
periods presented.

Inventory and Reserves – Inventory consists primarily of merchandise held for sale and is stated at the lower of cost or
market. Cost is determined using the last-in, first-out ("LIFO") method for all inventories, except for foreign inventories and
manufactured inventories, which are valued using the first-in, first-out ("FIFO") method. We continually assess the valuation of
inventories and reduce the carrying value of those inventories that are obsolete or in excess of forecasted usage to estimated
realizable value. Estimates are made of the net realizable value of such inventories based on analyses and assumptions
including, but not limited to, historical usage, future demand and market requirements.

Goodwill and Other Indefinite-Lived Intangible Assets – Goodwill represents the excess of cost over the fair value of
identifiable net assets of businesses acquired. We have three reporting units as of April 30, 2016, which are the same as our
reportable segments. Other indefinite-lived intangible assets include copyrights, trade names and trademarks.

We evaluate goodwill at least annually. If we determine that the fair value of the reporting unit may be less than its
carrying amount, we evaluate goodwill using a two-step impairment test. Otherwise, we conclude that no impairment is
indicated and we do not perform the two-step impairment test. In fiscal 2016, we determined it was appropriate to perform a
two-step impairment test.

The first step of the goodwill impairment test compares the book value of a reporting unit, including goodwill, with its
fair value, as determined by its discounted cash flows. If the book value of a reporting unit exceeds its fair value, the second
step of the impairment test is performed to determine the amount of goodwill impairment loss to be recorded. The
determination of fair value involves uncertainties because it requires management to make assumptions and to apply judgment
to estimate industry and economic factors and the profitability of future business strategies. Patterson conducts impairment
testing based on current business strategy in light of present industry and economic conditions, as well as future expectations.
Additionally, in assessing goodwill for impairment, the reasonableness of the implied control premium is considered based on
market capitalizations and recent market transactions.

Other indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its

fair value. If the carrying value exceeds fair value, an impairment loss is recognized in an amount equal to the excess. The
determination of fair value involves assumptions, including projected revenues and gross profit levels, as well as consideration
of any factors that may indicate potential impairment.

In the fourth quarter of fiscal 2016, management completed its annual goodwill and other indefinite-lived intangible asset

impairment tests and determined there was no impairment and that none of our reporting units are at risk of failing step 1.

Long-Lived Assets – Long-lived assets, including definite-lived intangible assets, are evaluated for impairment whenever
events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated
undiscounted future cash flows derived from such assets. Our definite-lived intangible assets primarily consist of an exclusive
distribution agreement and customer lists. When impairment exists, the related assets are written down to fair value.

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Income Taxes – We are subject to income taxes in both the U.S. and numerous foreign jurisdictions. Significant

judgments are required in determining the consolidated provision for income taxes.

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax

determination is uncertain. As a result, we recognize tax liabilities based on estimates of whether additional taxes and interest
will be due. These tax liabilities are recognized when, despite our belief that our tax return position is supportable, we believe
that certain positions may not be fully sustained upon review by tax authorities. We believe that our accruals for tax liabilities
are adequate for all open audit years based on our assessment of many factors including past experience and interpretations of
tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future
events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will
impact income tax expense in the period in which such determination is made and could materially affect our financial results.

Valuation allowances are established for deferred tax assets if, after assessment of available positive and negative
evidence, it is more likely than not that the deferred tax asset will not be fully realized. The valuation allowance reflected in the
footnote disclosure relates primarily to foreign tax credit carryovers generated in fiscal 2016.

Self-insurance – Patterson is self-insured for certain losses related to general liability, product liability, automobile,
workers’ compensation and medical claims. We estimate our liabilities based upon an analysis of historical data and actuarial
estimates. While current estimates are believed reasonable based on information currently available, actual results could differ
and affect financial results due to changes in the amount or frequency of claims, medical cost inflation or other factors.
Historically, actual results related to these types of claims have not varied significantly from estimated amounts.

Stock-based Compensation – We recognize stock-based compensation based on certain assumptions including inputs
within valuation models, estimated forfeitures and estimated performance outcomes. These assumptions require subjective
judgment and changes in the assumptions can materially affect fair value estimates. Management assesses the assumptions and
methodologies used to estimate forfeitures and to calculate estimated fair value of stock-based compensation on a regular basis.
Circumstances may change, and additional data may become available over time, which could result in changes to these
assumptions and methodologies and thereby materially impact the fair value determination or estimates of forfeitures. If factors
change and we employ different assumptions, the amount of compensation expense associated with stock-based compensation
may differ significantly from what was recorded in the current period.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to market risk consisting of foreign currency rate fluctuations and changes in interest rates.

Patterson is exposed to foreign currency exchange rate fluctuations in our operating statement due to transactions

denominated primarily in Canadian Dollars and British Pounds. Although Patterson is not currently involved with foreign
currency hedge contracts, we continually evaluate our foreign currency exchange rate risk and the different mechanisms for use
in managing such risk. A hypothetical 10% change in the value of the U.S. dollar in relation to our most significant foreign
currency exposures would have reduced fiscal 2016 net sales by approximately $84 million. This amount is not indicative of
the hypothetical net earnings impact due to the partially offsetting impact of the currency exchange movements on cost of sales
and operating expenses. Patterson estimates that if foreign currency exchange rates changed by 10% during the year, the annual
impact would have been approximate $3 million to earnings before income taxes.

During fiscal 2016, we entered into the Credit Agreement under which the lenders provided Patterson with senior
unsecured lending facilities of up to $1.5 billion, consisting of a $1.0 billion unsecured term loan and a $500 million unsecured
revolving line of credit. Interest on borrowings under the Credit Agreement is variable. Due to the interest rate being variable,
fluctuations in interest rates may impact our earnings. Based on our current level of debt, we estimate that a 100 basis point
change in the LIBOR rate would have a $3.2 million impact on our income from continuing operations before taxes on an
annualized basis.

Patterson’s earnings are also affected by fluctuations in short-term interest rates through the investment of cash balances

and the practice of selling fixed rate equipment finance contracts under agreements with both a commercial paper conduit and a
bank that provide for pricing based on variable interest rates.

When considering the exposure under the agreements whereby Patterson sells equipment finance contracts to both a
commercial paper conduit and bank, Patterson has the ability to select pricing based on interest rates ranging from 30 day
LIBOR up to twelve month LIBOR. In addition, the majority of the portfolio of installment contracts generally turns over in

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less than 48 months, and Patterson can adjust the rate we charge on new customer contracts at any time. Therefore, in times
where the interest rate markets are not rapidly increasing or decreasing, the average interest rate in the portfolio generally
moves with the interest rate markets and thus would parallel the underlying interest rate movement of the pricing built into the
sale agreements. In calculating the gain on the contract sales, we use an interest rate curve that approximates the maturity
period of the then-outstanding contracts. If increases in the interest rate markets occur, the average interest rate in our contract
portfolio may not increase at the same rate, resulting in a reduction of gain on the contracts sales as compared to the gain that
would be realized if the average interest rate in our portfolio were to increase at a more similar rate to the interest rate markets.

Patterson estimates that if interest rates changed by 10% during the year, the annual impact would have been less than $1

million to earnings before income taxes.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Patterson Companies, Inc.

We have audited Patterson Companies, Inc.’s internal control over financial reporting as of April 30, 2016, based on criteria
established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). Patterson Companies, Inc.’s management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting appearing
in Item 9A, Controls and Procedures, of this Annual Report on Form 10-K. Our responsibility is to express an opinion on the
company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal
controls of Animal Health International, Inc., which is included in the fiscal 2016 consolidated financial statements of Patterson
Companies, Inc. and constituted $1,432 million of total assets, as of April 30, 2016 and $1,396 million and $37 million of
revenues and operating income, respectively, for the year then ended. Our audit of internal control over financial reporting of
Patterson Companies, Inc. also did not include an evaluation of the internal control over financial reporting of Animal Health
International, Inc.

In our opinion, Patterson Companies, Inc. maintained, in all material respects, effective internal control over financial reporting
as of April 30, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
the consolidated balance sheets of Patterson Companies, Inc. as of April 30, 2016 and April 25, 2015, and the related
consolidated statements of income and other comprehensive income, changes in stockholders’ equity, and cash flows for each

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of the three years in the period ended April 30, 2016, and our report dated June 29, 2016 expressed an unqualified opinion
thereon.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
June 29, 2016

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders
Patterson Companies, Inc.

We have audited the accompanying consolidated balance sheets of Patterson Companies, Inc. as of April 30, 2016 and April 25,
2015, and the related consolidated statements of income and other comprehensive income, changes in stockholders’ equity, and
cash flows for each of the three years in the period ended April 30, 2016. Our audits also included the financial statement
schedule listed in the Index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Patterson Companies, Inc. at April 30, 2016 and April 25, 2015, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended April 30, 2016, in conformity with U.S. generally accepted
accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States),
Patterson Companies, Inc.’s internal control over financial reporting as of April 30, 2016, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated June 29, 2016 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
June 29, 2016

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ASSETS
Current assets:

PATTERSON COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)

Cash and cash equivalents
Short-term investments
Receivables, net of allowance for doubtful accounts of $12,008 and $7,678

Inventory
Prepaid expenses and other current assets
Current assets held for sale
Total current assets
Property and equipment, net
Long-term receivables, net
Goodwill
Identifiable intangibles, net
Other non-current assets
Long-term assets held for sale
Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued payroll expense
Other accrued liabilities
Current maturities of long-term debt
Borrowings on revolving credit
Current liabilities held for sale
Total current liabilities

Long-term debt
Deferred income taxes
Other non-current liabilities
Long-term liabilities held for sale
Total liabilities

Stockholders’ equity:

Common stock, $.01 par value: 600,000 shares authorized; 99,107 and 103,278 shares
issued and outstanding

Additional paid-in capital
Accumulated other comprehensive income (loss)
Retained earnings
Unearned ESOP shares

Total stockholders’ equity
Total liabilities and stockholders’ equity

See accompanying notes

April 30, 2016

April 25, 2015

137,453
—
796,693
722,140
91,255
—
1,747,541
293,315
88,248
816,592
509,297
65,811
—
3,520,804

566,253
75,448
151,134
16,500
20,000
—
829,335
1,022,155
206,896
20,672
—
2,079,058

347,260
53,372
586,263
408,422
59,561
118,347
1,573,225
204,133
71,686
299,924
125,025
35,461
635,794
2,945,248

323,294
72,464
142,611
—
—
39,316
577,685
722,542
41,413
40,071
49,414
1,431,125

991
48,477
(67,964)
1,529,158
(68,916)
1,441,746
3,520,804

1,033
21,026
(60,346)
1,630,148
(77,738)
1,514,123
2,945,248

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PATTERSON COMPANIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
AND OTHER COMPREHENSIVE INCOME
(In thousands, except per share amounts)

Net sales
Cost of sales
Gross profit
Operating expenses
Operating income from continuing operations
Other income (expense):
Other income, net
Interest expense

Income from continuing operations before taxes
Income tax expense
Net income from continuing operations
Net income from discontinued operations
Net income
Basic earnings per share:

Continuing operations

Discontinued operations

Net basic earnings per share

Diluted earnings per share:
Continuing operations
Discontinued operations

Net diluted earnings per share

Weighted average shares:

Basic
Diluted

Dividends declared per common share
Comprehensive income

Net income
Foreign currency translation gain (loss)
Cash flow hedges, net of tax

Comprehensive income

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

5,386,703
4,063,955
1,322,748
975,035
347,713

4,045
(50,065)
301,693
116,009
185,684
1,500
187,184

1.91

0.02

1.93

1.90
0.01
1.91

97,222
97,902
0.90

187,184
(9,552)
1,934
179,566

3,910,865
2,850,316
1,060,549
755,963
304,586

3,425
(33,693)
274,318
94,235
180,083
43,178
223,261

1.82

0.44

2.26

1.81
0.43
2.24

98,989
99,694
0.82

223,261
(73,271)
(12,445)
137,545

3,585,141
2,566,444
1,018,697
724,971
293,726

3,250
(35,713)
261,263
89,931
171,332
29,280
200,612

1.70

0.29

1.99

1.69
0.28
1.97

100,727
101,643
0.68

200,612
6,059
(5,854)
200,817

See accompanying notes

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PATTERSON COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(In thousands)

Common Stock

Number

Amount

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings

Unearned
ESOP
Shares

Total

105,570

1,056

— $

25,165

$1,463,358

6,059
(5,854)
—

—

25,370
(73,271)
(12,445)
—

—

—
(60,346)
(9,552)
1,934

—

200,612
(72,413)

—
(60,359)
—

—

1,531,198

—

223,261
(82,531)

—
(41,780)
—

—

1,630,148

—

187,184
(88,218)

—
—
— (199,956)
—
—

—

$ (95,124) $1,394,455
6,059
(5,854)
200,612
(72,413)

—

9,180
(85,944)
—

—

8,206
(77,738)
—

—

27,468
(96,486)
8,643

9,180

1,471,664
(73,271)
(12,445)
223,261
(82,531)

11,336
(47,539)
15,442

8,206

1,514,123
(9,552)
1,934

187,184
(88,218)

—
12,877
— (200,000)
14,576
—

—

—
(67,964) $1,529,158

8,822

8,822
$ (68,916) $1,441,746

Balance at April 27, 2013

Foreign currency translation

Cash flow hedges

Net income

Dividends declared

Common stock issued and
related tax benefits

Repurchase of common stock

Stock based compensation

ESOP activity

—

749

(2,354)

—

(23)

—

Balance at April 26, 2014

103,965

1,040

Foreign currency translation

Cash flow hedges

Net income

Dividends declared

Common stock issued and
related tax benefits

Repurchase of common stock

Stock based compensation

ESOP activity

—

507

(1,194)

—

(12)

—

27,461
(36,104)
8,643

—

11,331
(5,747)
15,442

—

Balance at April 25, 2015

103,278

1,033

21,026

Foreign currency translation

Cash flow hedges

Net income

Dividends declared

Common stock issued and
related tax benefits

Repurchase of common stock

Stock based compensation

ESOP activity

—

208

(4,379)

—

(44)

—

12,875

—

14,576

—

Balance at April 30, 2016

99,107

991

48,477

See accompanying notes

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PATTERSON COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Operating activities:
Net income
Net income from discontinued operations

Net income from continuing operations

Adjustments to reconcile net income from continuing operations to net
cash provided by operating activities:

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

187,184
1,500

185,684

223,261
43,178

180,083

200,612
29,280

171,332

Depreciation
Amortization
Bad debt expense
Non-cash employee compensation
Accelerated amortization of debt issuance costs on early
retirement of debt

Excess tax benefits from stock-based compensation
Deferred income taxes
Change in assets and liabilities net of acquired:

Receivables
Inventory
Accounts payable
Accrued liabilities
Long term receivables
Other changes from operating activities, net

Net cash provided by operating activities- continuing operations

Net cash provided by (used in) operating activities- discontinued
operations

Net cash provided by operating activities

Investing activities:

Additions to property and equipment
Acquisitions and equity investments, net of cash assumed
Proceeds from sale of securities
Purchase of investments
Other investing activities

Net cash used in investing activities- continuing operations

Net cash provided by investing activities- discontinued operations

Net cash used in investing activities

Financing activities:

Dividends paid
Repurchases of common stock
Proceeds from issuance of long-term debt
Debt issuance costs
Retirement of long-term debt
Settlement of swap
Draw on revolver
Common stock issued, net
ESOP activity
Excess tax benefits from stock-based compensation
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash

34,315
48,068
8,246
28,851

5,153
(2,656)
(16,034)

(57,249)
(118,351)
119,690
(4,055)
(38,882)
2,093
194,873

(38,544)
156,329

(79,354)
(1,106,583)
48,744
—
22,320
(1,114,873)
714,239
(400,634)

(90,597)
(200,000)
1,000,000
(11,600)
(682,375)
—
20,000
4,825
(133)
2,749
42,869
(8,371)

23,768
20,755
2,546
23,070

—
(255)
460

(40,696)
(21,754)
10,286
42,555
814
(36,568)
205,064

57,627
262,691

(60,662)
(10,515)
40,775
(543)
18,035
(12,910)
3,311
(9,599)

(81,760)
(47,539)
250,000
—
(250,000)
(29,003)
—
7,300
(188)
255
(150,935)
(19,805)

23,843
18,603
2,544
16,932

—
(1,290)
5,533

(49,784)
(41,501)
13,828
15,828
(5,108)
(22,543)
148,217

47,619
195,836

(34,041)
(145,815)
—
(99,672)
(4,436)
(283,964)
200
(283,764)

(85,657)
(96,486)
—
—
—
—
—
20,217
435
1,290
(160,201)
7,809

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Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

Supplemental disclosures:
Income taxes paid
Interest paid

(209,807)
347,260
137,453

151,662
37,883

82,352
264,908
347,260

110,909
34,076

(240,320)
505,228
264,908

108,374
34,933

See accompanying notes

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PATTERSON COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

April 30, 2016
(Dollars, except per share amounts, and shares in thousands)

1. Summary of Significant Accounting Policies

Description of Business

Patterson Companies, Inc. (referred to herein as “Patterson” or in the first person notations “we,” “our,” and “us”) is a

value-added specialty distributor serving the U.S. and Canadian dental supply and the U.S., Canadian and U.K. animal health
supply markets. Patterson has three reportable segments: Dental, Animal Health and Corporate.

Basis of Presentation

The consolidated financial statements include the accounts of our wholly owned subsidiaries. Intercompany transactions
and balances have been eliminated in consolidation. The respective assets of PDC Funding Company, LLC and PDC Funding
Company II, LLC would be available first and foremost to satisfy the claims of their respective creditors. There are no known
creditors of PDC Funding Company, LLC or PDC Funding Company II, LLC.

Fiscal Year End

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Cash and Cash Equivalents

Cash equivalents consist primarily of investments in money market funds and government securities. The maturity of

these securities at the time of purchase is 90 days or less. All cash and cash equivalents are classified as available-for-sale and
carried at fair value, which approximates cost.

Inventory

Inventory consists of merchandise held for sale and is stated at the lower of cost or market. Cost is determined using the

last-in, first-out ("LIFO") method for all inventories, except for foreign inventories, which are valued using the first-in, first-out
("FIFO") method. Inventories valued at LIFO represent 84% and 79% of total inventories at April 30, 2016 and April 25, 2015,
respectively.

The accumulated LIFO reserve was $76,501 at April 30, 2016 and $73,381 at April 25, 2015. We believe that inventory

replacement cost exceeds the inventory balance by an amount approximating the LIFO reserve.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated on the straight-line method over estimated useful
lives of up to 39 years for buildings or the expected remaining life of purchased buildings, the term of the lease for leasehold
improvements, 3 years for laptops, 5 years for computer hardware and software, and 5 to 10 years for office furniture and
equipment.

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Goodwill and Other Indefinite-Lived Intangible Assets

Goodwill represents the excess of cost over the fair value of identifiable net assets of businesses acquired. We have three

reporting units as of April 30, 2016, which are the same as our reportable segments. Other indefinite-lived intangible assets
include copyrights, trade names and trademarks.

The first step of the goodwill impairment test compares the book value of a reporting unit, including goodwill, with its

fair value, as determined primarily by its discounted cash flows. If the book value of a reporting unit exceeds its fair value, the
second step of the impairment test is performed to determine the amount of goodwill impairment loss to be recorded. The
determination of fair value involves uncertainties because it requires management to make assumptions and to apply judgment
to estimate industry and economic factors and the profitability of future business strategies. Patterson conducts impairment
testing based on current business strategy in light of present industry and economic conditions, as well as future expectations.
Additionally, in assessing goodwill for impairment, the reasonableness of the implied control premium is considered based on
market capitalizations and recent market transactions.

Other indefinite-lived intangible assets are assessed for impairment by comparing the carrying value of an asset with its

In the fourth quarter of fiscal 2016, management completed its annual goodwill and other indefinite-lived intangible asset

impairment tests and determined there was no impairment and that none of our reporting units are at risk of failing step 1.

Long-Lived Assets

Long-lived assets, including definite-lived intangible assets, are evaluated for impairment whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future
cash flows derived from such assets. Our definite-lived intangible assets primarily consist of an exclusive distribution
agreement and customer lists. When impairment exists, the related assets are written down to fair value. No impairment was
recognized in the periods presented.

Financial Instruments

We account for derivative financial instruments under the provisions of Accounting Standards Codification ("ASC")

Topic 815, “Derivatives and Hedging.” Our use of derivative financial instruments is generally limited to managing well-
defined interest rate risks. We do not use financial instruments or derivatives for any trading purposes.

Revenue Recognition

Revenues are generated from the sale of consumable products, equipment, software products and services, technical
service parts and labor, freight and delivery charges, and other sources. Revenues are recognized when persuasive evidence of
an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, and there is
reasonable assurance of collection of the sale. 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. In
addition to revenues generated from the distribution of consumable products under conventional arrangements (buy/sell
agreements) where the full market value of the product is recorded as revenue, the animal health segment may earn a small
amount of commission income for services provided under agency agreements with certain pharmaceutical manufacturers. The
services generally consist of detailing the product and taking the customer’s order. The agency agreement contrasts to a buy/sell
agreement in that the animal health segment does not purchase and handle the product or bill and collect from the customer in
an agency relationship with a vendor.

Consumable product 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. Commissions under agency agreements are recorded when the
services are provided.

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shipping carrier. Revenue derived from post contract customer support for software is deferred and recognized ratably over the
period in which the support is provided. Patterson provides financing for select equipment and software sales. Revenue is
recorded at the present value of the finance contract, with discount, if any, and interest income recognized over the life of the
finance contract as other income, net in our consolidated statement of income. See Note 7 for more information regarding
customer financing.

Other revenue, including freight and delivery charges and technical service parts and labor, is recognized when the

related product revenue is recognized or when the product or services are provided to the customer.

Patterson has a relatively large, dispersed customer base and no single customer accounts for more than 10% of
consolidated net sales. In addition, the equipment sold to customers under finance contracts generally serves as collateral for
the contract and the customer provides a personal guarantee as well.

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

Patterson Advantage Loyalty Program

The Dental segment provides a point-based awards program to qualifying customers involving the issuance of “Patterson

Advantage dollars” which can be used toward equipment and technology purchases. The program was initiated on January 1,
2009 and runs on a calendar year schedule. Patterson Advantage dollars earned during a program year expire one year after the
end of the program year. The cost and corresponding liability associated with the program are recognized as contra-revenue in
accordance with ASC Topic 605-50, “Revenue Recognition-Customer Payments and Incentives.” As of April 30, 2016, we
believe we have sufficient experience with the program to reasonably estimate the amount of Patterson Advantage dollars that
will not be redeemed and thus have recorded a liability for 87% of the maximum potential amount that could be redeemed. We
use the redemption recognition method and we recognize the estimated value of unused Advantage dollars as a percentage of
Patterson Advantage dollars earned. Breakage recognized was immaterial to all periods presented.

Freight and Delivery Charges

Freight and delivery charges are included in cost of sales in the consolidated statements of income.

Advertising

We expense all advertising and promotional costs as incurred, except for direct marketing expenses, which are expensed

over the shorter of the life of the asset or one year. Total advertising and promotional expenses were $12,113, $10,181 and
$10,471 for fiscal years 2016, 2015 and 2014, respectively. There were no deferred direct-marketing expenses included in the
consolidated balance sheets as of April 30, 2016 and April 25, 2015.

Income Taxes

The liability method is used to account for income tax expense. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Valuation allowances are established for deferred tax assets if, after assessment of available positive and negative

evidence, it is more likely than not that the deferred tax asset will not be fully realized.

Employee Stock Ownership Plan ("ESOP")

Compensation expense related to our defined contribution ESOP is computed based on the shares allocated method.

Self-insurance

Patterson is self-insured for certain losses related to general liability, product liability, automobile, workers’ compensation

and medical claims. We estimate our liabilities based upon an analysis of historical data and actuarial estimates. While current

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estimates are believed reasonable based on information currently available, actual results could differ and affect financial
results due to changes in the amount or frequency of claims, medical cost inflation or other factors. Historically, actual results
related to these types of claims have not varied significantly from estimated amounts.

Stock-based Compensation

We recognize stock-based compensation expense based on estimated grant date fair values. The grant date fair value of

stock options and stock purchases made through our Employee Stock Purchase Plan and our Capital Accumulation Plan are
estimated using the Black-Scholes option pricing valuation model. The grant date fair value of performance stock units that
vest upon meeting certain market conditions is estimated using the Monte Carlo valuation model. These valuations require
estimates to be made including expected stock price volatility which considers historical volatility trends, implied future
volatility based on certain traded options and other factors. We estimate the expected life of awards based on several factors,
including types of participants, vesting schedules, contractual terms and various factors surrounding exercise behavior of
different groups.

The grant date fair value of time-based restricted stock awards and restricted stock units is calculated based on the closing

price of our common stock on the date of grant.

Compensation expense for all share-based payment awards is recognized over the requisite service period (or to the

date a participant becomes eligible for retirement, if earlier) for awards that are expected to vest.

Comprehensive Income

Comprehensive income is computed as net income plus 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
(benefit) related to cash flow hedge losses was $883, $(10,843) and $0 for the fiscal years ended April 30, 2016, April 25, 2015
and April 26, 2014, respectively.

Earnings Per Share

The amount of basic earnings per share is computed by dividing net income by the weighted average number of

outstanding common shares during the period. The amount of diluted earnings per share is computed by dividing net income by
the weighted average number of outstanding common shares and common share equivalents, when dilutive, during the period.

The following table sets forth the denominator for the computation of basic and diluted earnings per share. There were no

material adjustments to the numerator.

Fiscal Year Ended

April 30, 2016

April 25, 2015

April 26, 2014

Denominator

Denominator for basic earnings per share – weighted average shares
Effect of dilutive securities – stock options, restricted stock and stock
purchase plans

Denominator for diluted earnings per share – adjusted weighted average
shares

97,222

98,989

100,727

680

705

916

97,902

99,694

101,643

Potentially dilutive securities representing 765, 147 and 39 shares for fiscal years 2016, 2015 and 2014, respectively,

were excluded from the calculation of diluted earnings per share because their effects were anti-dilutive.

Recent 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)” and issued subsequent amendments to the initial guidance
in August 2015, March 2016, April 2016 and May 2016 within ASU 2015-04, ASU 2016-08, ASU 2016-10 and ASU 2016-12,
respectively.

This ASU 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. In July 2015, the FASB

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deferred the effective date of this pronouncement by one year to December 15, 2017 for interim and annual reporting periods
beginning after that date. Early adoption is permitted, but not before the original effective date, which for annual periods was
December 15, 2016. We are evaluating the impact of adopting this pronouncement.

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs (Topic 835-30)."

This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct
deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement
guidance for debt issuance costs are not affected by this ASU. In August 2015, the FASB issued ASU 2015-15, which clarified
that debt issuance costs related to line-of-credit arrangements could continue to be presented as an asset and be subsequently
amortized over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the
arrangement. We early adopted ASU 2015-03 in the fourth quarter of fiscal year 2016 and reclassified $3,970 and $2,458 of
debt issuance costs as a direct deduction to our long term debt at April 30, 2016 and April 25, 2015, respectively.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330), Simplifying the Measurement of Inventory.”

ASU 2015-11 requires inventory measured using any method other than LIFO or the retail inventory method to be subsequently
measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Subsequent measurement of
inventory using the LIFO and retail inventory method is unchanged. We are required to adopt the new pronouncement in the
first quarter of fiscal 2018, and plan to do so at that time. Early adoption is permitted. We are evaluating the effect of adopting
this pronouncement, but do not, at this time, anticipate a material impact to our financial statements once implemented.

In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805), Simplifying the
Accounting for Measurement-Period Adjustments.” This ASU requires that an acquirer recognize adjustments to provisional
amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are
determined. The amendments in this ASU require an entity to present separately on the face of the income statement or disclose
in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in
previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. We are
required to adopt the new pronouncement in the first quarter of fiscal 2017, with early adoption permitted. We are evaluating
the effect of adopting this pronouncement, but do not, at this time, anticipate a material impact to our financial statements once
implemented.

In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of
Income Taxes.” This ASU eliminates the requirement for an entity to separate deferred income tax liabilities and assets into
current and non-current amounts in a classified balance sheet. This ASU requires that deferred tax liabilities and assets be
classified as non-current in the classified balance sheet. We early adopted the ASU in the fourth quarter of 2016 with a
prospective application and prior period amounts were not reclassified. The ASU did not have a material impact on our
financial statements.

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 are required to adopt the ASU in the first quarter of fiscal 2019, with early
adoption permitted. We are evaluating the impact of adopting this pronouncement.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU 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 the ASU in the first quarter of fiscal 2020, with early adoption
permitted. We are evaluating the impact of adopting this pronouncement.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to

Employee Share-Based Payment Accounting." This ASU eliminates the APIC pool concept and requires that excess tax
benefits and tax deficiencies be recorded in the income statement when awards are settled. The ASU also addresses
simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax
withholding requirements. We are required to adopt the new pronouncement in the first quarter of fiscal 2018. We are
evaluating the impact of adopting this pronouncement.

2. Cash and Cash Equivalents

At April 30, 2016 and April 25, 2015, cash and cash equivalents consisted of the following:

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Cash on hand
Money market funds

Total

Cash on hand is generally in interest earning accounts.

April 30, 2016

April 25, 2015

122,844
14,609
137,453

256,691
90,569
347,260

3. Goodwill and Other Intangible Assets

The changes in the carrying value of goodwill for each of our reportable segments for the fiscal year ended April 30,

2016 are as follows:

Dental
Animal Health
Corporate
Total

Balance at
April 25, 2015
139,449
$
160,475
—
299,924

Acquisition
Activity
and
Divestitures

Other
Activity

— $

517,965
—
517,965

Balance at
April 30, 2016
139,129
677,463
—
816,592

(320) $
(977)
—
(1,297) $

The increase in the acquisition activity column reflects the purchase price allocation for the acquisition of Animal Health

International, Inc. The other activity column is comprised primarily of the impact from foreign currency translation.

Balances of other intangible assets, excluding goodwill, are as follows:

Unamortized – indefinite lived:
Copyrights, trade names and trademarks
Amortized:

Distribution agreement, customer lists and other
Less: Accumulated amortization

Net amortized intangible assets

Total identifiable intangible assets, net

April 30, 2016

April 25, 2015

29,900

17,600

641,236
(161,839)
479,397
509,297

221,359
(113,934)
107,425
125,025

In 2006, we extended our exclusive North American distribution agreement with Dentsply Sirona, Inc. (“Sirona”), for
Sirona’s CEREC dental restorative system. We paid a $100,000 distribution fee to extend the agreement for a 10-year period
that began in October 2007, which is included in identifiable intangibles, net in the consolidated balance sheet. The
amortization of the distribution agreement fee is recorded over the expected life, with amortization based on estimates of the
pattern in which the economic benefits of the fee are expected to be realized, consisting primarily of revenues generated from
the sale of CEREC dental restorative systems. Amortization expense in any year may differ significantly from other years. In
fiscal 2013, we expanded our exclusive distribution relationship with Sirona to add Sirona imaging products to our exclusive
offerings, as well as add mechanisms to adjust the exclusivity term depending on performance. No additional monies were
exchanged as part of this expanded relationship. This is not a “take-or-pay” contract.

With respect to the amortized intangible assets, future amortization expense is expected to approximate $52,911, $51,568,

$49,597, $38,040 and $35,107 for fiscal years 2017, 2018, 2019, 2020 and 2021, respectively. Actual amounts of amortization
expense may differ from estimated amounts due to additional intangible asset acquisitions, actual revenues generated from the
sale of CEREC dental restorative systems, changes in foreign currency exchange rates, impairment of intangible assets,
accelerated amortization of intangible assets and other events.

4. Acquisitions

During our first fiscal quarter of 2016, we completed the acquisition of Animal Health International, Inc., a leading

production animal health distribution company in the U.S. This acquisition more than doubled the revenue previously
attributable to our animal health business, which was previously focused on the companion animal health market. Our animal
health business now offers an expanded range of products and services to a broader base of customers in North America and the

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U.K. Under terms of the merger agreement, we acquired all of Animal Health International, Inc.’s stock for $1,106,583 in cash,
net of cash assumed.

In connection with the acquisition, we entered into a credit agreement consisting of a $1,000,000 unsecured term loan and

a $500,000 unsecured cash flow revolving line of credit, described further in Note 8 to the Consolidated Financial Statements.

The acquisition has been accounted for in accordance with ASC 805, Business Combinations, with identifiable assets
acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. A valuation of the assets and
liabilities from the business acquisition was performed utilizing cost, income and market approaches resulting in $588,618
allocated to identifiable net assets.

The following table summarizes the total purchase price consideration and the fair value amounts recognized for the

assets acquired and liabilities assumed related to the acquisition, as of the acquisition date:

Total purchase price consideration

Receivables

Inventory

Prepaid expenses and other current assets

Property and equipment

Identifiable intangibles

Other long-term assets

Total assets acquired

Accounts payable

Accrued liabilities and other current liabilities

Deferred tax liability

Total liabilities assumed

Identifiable net assets acquired

Goodwill

Net assets acquired

$ 1,106,583

161,427

195,367

35,320

47,405
434,300

38,300

912,119

122,129

21,227

180,145

323,501

588,618

517,965

$ 1,106,583

As a result of recording the stepped up fair market basis for GAAP purposes, but receiving primarily carryover basis for

tax purposes in the acquisition, we recorded a deferred tax liability of $180,145.

The goodwill of $517,965 resulting from the acquisition reflects the excess of our purchase price over the fair value of

the net assets acquired. The goodwill recorded as part of the acquisition primarily reflects the value of the assembled
workforce, cost synergies, and the potential to integrate and expand existing product lines. We allocated all of the goodwill to
our Animal Health reporting segment. None of the goodwill recognized is deductible for income tax purposes, and as such, no
deferred taxes have been recorded related to goodwill.

Revenues of $1,396,118 and operating income of $37,230 attributable to the acquisition are included in our consolidated

statement of income for the fiscal year ended April 30, 2016. Included in operating income for the fiscal year ended April 30,
2016 is amortization expense of $28,112 related to the identifiable intangible assets acquired in the transaction.

The following summarizes the intangible assets acquired, excluding goodwill. Intangible assets are amortized using

methods that approximate the pattern of economic benefit provided by the utilization of the assets.

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Unamortized – indefinite lived:

Trade names

Amortized:

Customer relationships

Trade names

Developed technology and other

Total amortized intangible assets

Total identifiable intangible assets

Gross Carrying
Value

Weighted
Average Life
(years)

12,300

indefinite

291,900

111,400

18,700

422,000

434,300

15.0

10.0

12.2

13.6

The following unaudited pro forma financial results for the combined results of Patterson and Animal Health

International, Inc. for the fiscal years ended April 30, 2016 and April 25, 2015 assume the acquisition occurred on April 27,
2014. The unaudited pro forma financial results may not be indicative of the results that would have occurred had the
acquisition been completed as of April 27, 2014, nor are they indicative of future results of operations.

Pro forma net sales

Pro forma net income from continuing operations

Fiscal Years Ended

April 30,
2016

April 25,
2015

5,579,739

5,452,056

193,794

176,744

Pro forma net income from continuing operations for the fiscal year ended April 30, 2016 includes $12,300 of income tax

expense related to the repatriation of foreign earnings, described further in Note 13 to the Consolidated Financial Statements.

In August 2013, we completed the acquisition of all the outstanding stock of National Veterinary Services Limited

(“NVS”) from Dechra Pharmaceuticals, PLC. NVS is the largest veterinary products distributor in the U.K. Total cash
consideration paid for NVS was $142,693. Operating results for this acquisition are included in the Animal Health reporting
segment. The acquisition contributed net sales of $419,340 to the segment during fiscal year 2014.

A listing of acquisitions completed during the periods covered by these financial statements is presented below. We

acquired 100% of all companies listed.

Entity
Fiscal 2016:
Animal Health International, Inc.
Fiscal 2015:
Holt Dental Supply

C.A.P.L. Limited and Abbey Veterinary Services
Fiscal 2014:
Mercer Mastery

National Veterinary Services Limited

Segment

Animal Health

Dental

Animal Health

Dental

Animal Health

5. Discontinued Operations

In August 2015, we sold all of the outstanding shares of common stock of Patterson Medical Holdings, Inc., our wholly
owned subsidiary responsible for our rehabilitation supply business known as Patterson Medical (“Patterson Medical”), for
$716,886 in cash to Madison Dearborn Partners. As additional consideration for the shares of Patterson Medical, we obtained a
number of common units of the parent company of the buyer equal to 10% of the common units outstanding at closing. Unlike
the other common units, these units will only become entitled to begin participating in distributions to the common unit holders
at such time, if any, as the Madison Dearborn Partners’ investor cash inflows equal or exceed 2.5 times the Madison Dearborn
Partners’ investor cash outflows. These units are non-transferable. We recorded a pre-tax gain of $24,328 on the sale of Patterson
Medical during the fiscal year ended April 30, 2016 within discontinued operations in the consolidated statements of income.

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In connection with the above described transaction, we also entered into a transition services agreement with our former

subsidiary, pursuant to which Patterson Medical, as owned by Madison Dearborn Partners, is paying us to provide, among other
things, certain information technology, distribution, facilities, finance, tax and treasury, and human resources services for up to
24 months after closing.

As of April 30, 2016, we classified Patterson Medical’s results of operations as discontinued operations for all periods
presented in the consolidated statements of income. The assets and liabilities of Patterson Medical were reflected as held for
sale in the consolidated balance sheet as of April 25, 2015. The operations and cash flows of Patterson Medical have been
eliminated from our continuing operations, which were previously recorded as the rehabilitation supply reportable segment.

The following summarizes the assets and liabilities of Patterson Medical as of April 25, 2015:

Assets held for sale

Receivables, net of allowance for doubtful accounts

Inventory

Prepaid expenses and other current assets

Property and equipment, net

Goodwill

Identifiable intangibles, net

Other long-term assets

Total assets held for sale

Liabilities held for sale

Accounts payable

Accrued liabilities and other current liabilities

Long-term liabilities

Total liabilities held for sale

April 25, 2015

57,876

48,265

12,206

22,672

537,175

74,804

1,143

754,141

26,341

12,975

49,414

88,730

The following summarizes the results of operations of our discontinued Patterson Medical operations for the periods

presented:

Net sales

Cost of sales

Operating expenses

Gain on sale

Other expense

Income before taxes

Income tax expense

Fiscal Year Ended

April 30,
2016 (a)

April 25,
2015

April 26,
2014

168,504

464,155

107,359

54,954
(24,328)
150

30,369

28,869

286,498

108,816

—

488

68,353

25,175

478,574

298,993

127,551

—

381

51,649

22,369

29,280

Net income from discontinued operations

1,500

43,178

(a)

Includes activity up until the sale date of August 28, 2015.

Operating expenses for the fiscal year ended April 30, 2016 include professional fees of $13,692 incurred in connection
with the sale of Patterson Medical. Depreciation and amortization were ceased during the fiscal year ended April 30, 2016 in
accordance with accounting for discontinued operations. Income taxes have been allocated to Patterson Medical based on the
accounting requirements for presenting discontinued operations. Income taxes as a percent of income before taxes for the fiscal
year ended April 30, 2016 are higher than in the prior periods as a result of the requirement to calculate the tax due on the sale
of Patterson Medical including certain basis differences that were appropriately not previously recognized for financial
reporting purposes.

6. Property and Equipment

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Property and equipment consisted of the following items:

Land
Buildings
Leasehold improvements
Furniture and equipment
Computer hardware and software
Construction-in-progress (1)

Accumulated depreciation

Property and equipment, net

April 30, 2016

April 25, 2015

11,585
111,386
26,291
169,110
141,727
95,450
555,549
(262,234)
293,315

10,390
109,064
17,905
130,348
115,580
51,800
435,087
(230,954)
204,133

(1)

Includes $88,696 and $43,601 of capitalized software as of April 30, 2016 and April 25, 2015, respectively.

7. 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 our sponsored program, equipment
purchased by customers with strong credit may be financed up to a maximum of $500 for any one customer. 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 The Bank of Tokyo-Mitsubishi UFJ, Ltd. serving as the agent. We utilize a special purpose entity (“SPE”), PDC
Funding, a consolidated, wholly owned subsidiary, to fulfill a requirement of participating in the commercial paper conduit. We
receive the proceeds of the contracts upon sale. At least 9% 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. The
capacity under the agreement at April 30, 2016 was $575,000.

Second, we also maintain an agreement with Fifth Third Bank whereby the bank purchases customers’ financing

contracts. We established another SPE, PDC Funding II, a consolidated, wholly owned subsidiary, which sells financing
contracts to the bank. We receive the proceeds of the contracts upon sale. At least 10% 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. The capacity under the agreement at April 30, 2016 was $100,000.

We retain servicing responsibilities under both agreements, 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 a deferred purchase price receivable,
which is paid to the SPE as payments on the receivables are collected 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 deferred purchase price
receivables received at time of transfer is recognized as a gain on sale of the related receivables and recorded in net sales in the
consolidated statements of income. Expenses incurred related to customer financing activities were recorded in operating
expenses in our consolidated statements of income.

During fiscal 2016, 2015 and 2014, we sold $359,646, $312,303 and $282,698, respectively, of contracts under these

arrangements to outside institutions. We recorded net sales in the consolidated statements of income of $30,123, $21,668 and
$15,865 during fiscal 2016, 2015 and 2014, respectively, related to these contracts sold.

Included in cash and cash equivalents in the consolidated balance sheets are $27,186 and $29,863 as of April 30, 2016
and April 25, 2015, respectively, which represent cash collected from previously sold customer financing arrangements that
have not yet been settled with the third party. Included in current receivables in the consolidated balance sheets are $87,406, net
of unearned income of $1,768, and $88,470, net of unearned income of $4,197, as of April 30, 2016 and April 25, 2015,
respectively, of finance contracts we have not yet sold. A total of $600,961 of finance contracts receivable sold under the

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agreements was outstanding at April 30, 2016. The deferred purchase price under the arrangements was $108,837 and $89,588
as of April 30, 2016 and April 25, 2015, respectively. Since the internal financing program began in 1994, bad debt write-offs
have amounted to less than 1% of the loans originated.

The agreements require us to maintain a minimum current ratio and maximum leverage ratio. We were in compliance

with those covenants at April 30, 2016.

8. Debt

In April 2015, the FASB issued ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs (Topic
835-30)." This ASU requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a
direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We have adopted ASU 2015-03
in the fourth quarter of fiscal 2016 and reclassified $3,970 and $2,458 of debt issuance costs from other non-current assets to
long-term debt in our consolidated balance sheets as of April 30, 2016 and April 25, 2015, respectively.

Our long-term debt consists of the following:

Interest Rate

April 30, 2016

April 25, 2015

Carrying Value

Senior notes due fiscal 2018 1
Senior notes due fiscal 2019 2
Senior notes due fiscal 2022 2
Senior notes due fiscal 2024 2
Senior notes due fiscal 2025 3
Term loan due fiscal 2021 4
Less: Deferred debt issuance costs

Total debt

Less: Current maturities of long-term debt

Long-term debt

5.75% $

150,000

2.95%

3.59%

3.74%

3.48%

1.81%

60,000

165,000

100,000

250,000

317,625
(3,970)
1,038,655
(16,500)
1,022,155

150,000

60,000

165,000

100,000

250,000

—
(2,458)
722,542

—

1.
2.
3.
4.

Issued in March 2008.
Issued in December 2011.
Issued in March 2015.
Issued in June 2015. Interest rate is LIBOR plus 1.375% as of April 30, 2016.

Expected future principal payments for our long-term debt are as follows as of April 30, 2016:

Fiscal Year
2017

2018

2019

2020

2021

Thereafter

Total

722,542

16,500

174,750

93,000

33,000

210,375

515,000

1,042,625

In June 2015, we entered into a credit agreement with The Bank of Tokyo-Mitsubishi UFJ, Ltd. ("BTMU"), as

administrative agent, and Bank of America, N.A., as syndication agent (the “Credit Agreement”). Pursuant to the Credit
Agreement, the lenders provided us with senior unsecured lending facilities of up to $1,500,000, consisting of a $1,000,000
unsecured term loan and a $500,000 unsecured revolving line of credit. Interest on borrowings under the Credit Agreement is
variable and is determined at our option as LIBOR plus a spread, which can range from 1.125% to 2.000%, or the BTMU
prime rate plus a spread, which can range from 0.125% to 1.000%. These spreads, as well as a commitment fee on the unused
portion of the facility, are based on our leverage ratio, as defined in the Credit Agreement. The term loan and revolving credit
facilities will mature no later than June 2020.

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Upon certain significant asset dispositions, we agreed to use proceeds from such dispositions to effect prepayment of
outstanding loan balances under the Credit Agreement. On August 28, 2015, we completed the sale of Patterson Medical, as
described further in Note 5 to the Consolidated Financial Statements. As a result of this sale, $670,000 was repaid on the
original outstanding $1,000,000 unsecured term loan. We recorded $5,153 of accelerated debt issuance cost amortization within
interest expense concurrent with this early repayment of debt. Additionally, principal payments of $12,375 were made during
the fiscal year ended April 30, 2016. As of April 30, 2016, $317,625 was outstanding under the unsecured term loan at an
interest rate of 1.81%.

In June 2015, our previous $300,000 credit facility, which was due to expire in December 2016, was terminated and
replaced by the revolving line of credit under the Credit Agreement. As of April 30, 2016, $20,000 was outstanding under our
current revolving line of credit at an interest rate of 3.875%. There were no outstanding borrowings under the previous facility
at April 25, 2015.

We are subject to various financial covenants under our debt agreements including the maintenance of leverage and
interest coverage ratios. In the event of our default, any outstanding obligations may become due and payable immediately. We
met the covenants under our debt agreements as of April 30, 2016.

9. Derivative Financial Instruments

We are a party to certain offsetting and identical interest rate cap agreements. These interest rate cap agreements are not
designated for hedge accounting treatment and were entered into to fulfill certain covenants of an equipment finance contracts
sale agreement between a commercial paper conduit managed by The Bank of Tokyo-Mitsubishi UFJ, Ltd. and PDC Funding.
On November 24, 2015, this sale agreement was amended on terms generally consistent with the expiring agreement. The
interest rate cap agreements provide a credit enhancement feature for the financing contracts sold by PDC Funding to the
commercial paper conduit.

The interest rate cap agreements are canceled and new agreements entered into periodically to maintain consistency
with the dollar maximum of the sale agreements and the maturity of the underlying financing contracts. As of April 30, 2016,
PDC Funding had purchased an interest rate cap from a bank with a notional amount of $575,000 and a maturity date of
November 2023. We sold an identical interest rate cap to the same bank.

Similar to the above agreements, PDC Funding II and Patterson entered into offsetting and identical interest rate cap
agreements with a notional amount of $100,000 in fiscal 2014. In August 2015, these agreements were terminated and replaced
with offsetting and identical interest rate cap agreements. The notional amount remained at $100,000 and the new maturity date
is July 2023.

In addition to the purchased and sold identical interest rate cap agreements described above, in May 2012 we entered into
an interest rate swap agreement with a bank to economically hedge the interest rate risk associated with a portion of the finance
contracts we had sold through the special purpose entities. This agreement expired in April 2015.

These interest rate contracts 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 a cash flow hedge, to hedge interest rate fluctuations in anticipation of refinancing the 5.17% senior notes due
March 25, 2015 with a loan for $250,000 and a term of ten years. This note was repaid on March 25, 2015 and replaced with
new $250,000 3.48% 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 will be recognized as interest
expense over the life of the related debt.

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

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Derivative type
Assets:

Interest rate contracts

Liabilities:

Interest rate contracts

Classification

April 30, 2016

April 25, 2015

Other non-current assets

Other non-current liabilities

816

1,255

The following tables present the pre-tax effect of derivative instruments in cash flow hedging relationships on the

consolidated statements of income and other comprehensive income ("OCI"):

Derivatives in cash flow hedging relationships
Interest rate swap

April 30, 2016

April 25, 2015

April 26, 2014

— $

(23,343) $

(5,660)

Amount of Gain (Loss) Recognized in OCI on Derivatives (Effective
Portion)

Fiscal Year Ended

Amount of Gain (Loss) Reclassified from Accumulated Other
Comprehensive Loss into Income (Effective Portion)

Fiscal Year Ended

Derivatives in cash flow hedging relationships
Interest rate swap

Income statement location
Interest expense

April 30, 2016

April 25, 2015

April 26, 2014

(2,817) $

(56) $

194

We recorded no ineffectiveness during fiscal 2016, 2015 or 2014. As of April 30, 2016, the estimated pre-tax portion of
accumulated other comprehensive loss that is expected to be reclassified into earnings over the next twelve months is $2,809,
which will be recorded as an increase to interest expense.

10. 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:

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Assets:

Cash equivalents

Deferred purchase price receivable

Derivative instruments

Total assets

Liabilities:

Derivative instruments

Assets:

Cash equivalents

Deferred purchase price receivable

Derivative instruments

Total assets

Liabilities:

Derivative instruments

April 30, 2016

Total

Level 1

Level 2

Level 3

14,609

— $

108,837

816

124,262

816

—

14,609

— $

—

816

—

108,837

—

108,837

—

April 25, 2015

Total

Level 1

Level 2

Level 3

90,569

— $

89,588

1,255

181,412

1,255

—

90,569

—

1,255

— $

1,255

—

89,588

—

89,588

—

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.

Deferred purchase price receivable – We value the deferred purchase price 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 – Patterson’s derivative instruments consist of interest rate contracts 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 in fiscal years 2016, 2015 or 2014.

Our debt is not measured at fair value in the consolidated balance sheets. The estimated fair value of our debt as of
April 30, 2016 and April 25, 2015 was $1,064,752 and $746,685, respectively, as compared to a carrying value of $1,038,655
and $722,542 at April 30, 2016 and April 25, 2015, 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 April 30, 2016 and April 25, 2015.

11. Securities

On October 25, 2013, we invested in three time deposits with total principal of $110,000 Canadian. On October 24, 2014,

time deposits with a principal value of $45,000 Canadian matured with a value of $45,436 Canadian. The remaining time
deposits with a principal value of $65,000 Canadian matured on October 28, 2015 with a value of $67,031 Canadian. Our time
deposit securities were classified as held-to-maturity securities as of April 25, 2015, as we had both the intent and ability to
hold them until maturity. As of April 25, 2015, these securities had a carrying value of $53,372 and were recorded in the
consolidated balance sheet as short-term investments. They were carried at cost, adjusted for accrued interest and amortization.
The carrying value was not materially different than fair value. The fair value was determined based on a discounted cash flow
analysis using unobservable inputs (i.e. level 3 inputs), which included 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 have resulted in a materially lower fair value estimate. The interrelationship between these inputs was insignificant.

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12. Lease Commitments

Patterson leases facilities for its branch office locations, a few small distribution facilities, and certain equipment. These

leases are accounted for as operating leases. Future minimum rental payments under noncancelable operating leases are as
follows at April 30, 2016:

2017
2018
2019
2020
2021
Thereafter
Total

22,891
16,620
11,403
8,777
6,364
6,870
72,925

Rent expense was $23,315, $16,909 and $16,410 for the years ended April 30, 2016, April 25, 2015 and April 26, 2014,

respectively.

13. Income Taxes

The components of income from continuing operations before taxes are as follows:

Income from continuing operations before taxes

United States

International

Total

April 30,
2016

Fiscal Year Ended

April 25,
2015

April 26,
2014

270,501

31,192

301,693

235,421

38,897

274,318

230,486

30,777

261,263

Significant components of income tax expense are as follows:

Current:

Federal
Foreign
State

Total current

Deferred:

Federal
Foreign
State

Total deferred

Income tax expense

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

105,104
11,690
15,249
132,043

(14,308)
323
(2,049)
(16,034)
116,009

73,004
11,764
9,007
93,775

497
44
(81)
460
94,235

66,747
8,954
8,697
84,398

5,225
(260)
568
5,533
89,931

As of April 30, 2016, we adopted ASU 2015-17, which simplifies the balance sheet presentation of deferred taxes that

requires that deferred tax assets and liabilities be classified as non-current. The pronouncement is being applied prospectively.
See Note 1 to the Consolidated Financial Statements. Deferred tax assets and liabilities are included in prepaid expenses and
other current assets (as of April 25, 2015 only) and other non-current assets and deferred income taxes on the consolidated
balance sheets. Significant components of Patterson’s deferred tax assets (liabilities) as of April 30, 2016 and April 25, 2015 are
as follows:

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Deferred tax assets:

Capital accumulation plan
Inventory related items
Bad debt allowance
Stock based compensation expense
Interest rate swap
Foreign tax credit
Net operating loss carryforwards
Other

Gross deferred tax assets

Less: Valuation allowance

Total net deferred tax assets
Deferred tax liabilities
LIFO reserve
Amortizable intangibles
Goodwill
Property, plant, equipment

Total deferred tax liabilities
Deferred net long-term income tax liability

April 30,
2016

April 25,
2015

5,898
6,776
2,649
9,985
9,749
9,300
363
11,979
56,699
(14,007)
42,692

(21,294)
(156,782)
(57,405)
(11,748)
(247,229)
(204,537) $

5,723
4,484
1,380
7,995
10,872
—
—
8,390
38,844
—
38,844

(19,173)
(2,310)
(52,140)
(4,695)
(78,318)
(39,474)

At April 30, 2016, we had certain U.S. foreign tax credits and state net operating loss assets. The foreign tax credit

will expire in 10 years and net operating losses have varying expiration dates. In addition to these carryforwards, we have
additional attribute deferred tax assets which would give rise to tax capital losses if triggered in the future. These losses have a
5 year carryforward period and can only be used against capital gain income. At this time, we believe that it is more likely than
not that the foreign tax credit and capital loss carryforward attributes totaling $14,007 will not be fully utilized prior to
expiration. As a result, a full valuation allowance has been established against these assets.

No provision has been made for U.S. federal income taxes on certain undistributed earnings of foreign subsidiaries that
we intend to permanently invest or that may be remitted substantially tax-free. The total undistributed earnings that would be
subject to federal income tax if remitted under existing law are approximately $102,411 as of April 30, 2016. Determination of
the unrecognized deferred tax liability related to these earnings is not practicable because of the complexities with its
hypothetical calculation. If a future distribution of these earnings is made, we will be subject to U.S. taxes and withholding
taxes payable to various foreign governments. A credit for foreign taxes already paid may be available to reduce the U.S. tax
liability.

In fiscal 2016, we approved a one-time repatriation of approximately $200,000 of foreign earnings. This one-time
repatriation reduced the overall cost of funding the acquisition of Animal Health International, Inc. In addition, certain foreign
cash at Patterson Medical was required to be repatriated as part of the sale transaction. The continuing operations tax impact
of $12,300 from the repatriation was recorded in fiscal 2016. We have previously asserted that our foreign earnings are
permanently reinvested. Except for the repatriations described above, there is no change in our on-going assertion.

Income tax expense varies from the amount computed using the U.S. statutory rate. The reasons for this difference and

the related tax effects are shown below:

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Tax at U.S. statutory rate
State tax provision, net of federal benefit
Effect of foreign taxes
Permanent differences
Tax on dividends, net of foreign tax credit
Other

Income tax expense

Fiscal Year Ended

April 30,
2016
105,593
7,364
(1,195)
(3,693)
12,300
(4,360)
116,009

April 25,
2015

April 26,
2014

96,012
6,479
(1,806)
(5,363)
—
(1,087)
94,235

91,442
6,554
(2,078)
(4,835)
—
(1,152)
89,931

We have accounted for the uncertainty in income taxes recognized in the financial statements in accordance with ASC

Topic 740, “Income Taxes”. This standard clarifies the separate identification and reporting of estimated amounts that could be
assessed upon audit. The potential assessments are considered unrecognized tax benefits, because, if it is ultimately determined
they are unnecessary, the reversal of these previously recorded amounts will result in a beneficial impact to our financial
statements.

As of April 30, 2016 and April 25, 2015, Patterson’s gross unrecognized tax benefits were $13,560 and $16,661,
respectively. If determined to be unnecessary, these amounts (net of deferred tax assets of $3,800 and $4,118, respectively,
related to the tax deductibility of the gross liabilities) would decrease our effective tax rate. The gross unrecognized tax benefits
are included in other long-term liabilities on the consolidated balance sheet.

A summary of the changes in the gross amounts of unrecognized tax benefits for the years ended April 30, 2016 and

April 25, 2015 is shown below:

Balance at beginning of period
Additions for tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Statute expirations
Settlements
Balance at end of period

April 30,
2016

April 25,
2015

16,661
1,794
560
(1,599)
(3,486)
(370)
13,560

17,256
2,516
44
(502)
(2,653)
—
16,661

We also recognize both interest and penalties with respect to unrecognized tax benefits as a component of income tax

expense. As of April 30, 2016 and April 25, 2015, we had recorded $1,438 and $1,760, respectively, for interest and penalties.
These amounts are also included in other long-term liabilities on the consolidated balance sheet. These amounts, net of related
deferred tax assets, if determined to be unnecessary, would decrease our effective tax rate. During the year ended April 30,
2016, we recorded as part of tax expense $258 related to an increase in our estimated liability for interest and penalties.

Patterson files income tax returns, including returns for our subsidiaries, with federal, state, local and foreign

jurisdictions. During fiscal 2016, the Internal Revenue Service (“IRS”) completed an audit of our fiscal years ended April 27,
2013 and April 26, 2014. The outcome of this audit did not have a material adverse impact on our financial statements. The
IRS has either examined or waived examination for all periods up to and including our fiscal year ended April 28, 2012,
resulting in these periods being closed. Periodically, state, local and foreign income tax returns are examined by various taxing
authorities. We do not believe that the outcome of these various examinations would have a material adverse impact on our
financial statements.

14. Segment and Geographic Data

Through fiscal 2015, Patterson was comprised of three reportable segments: dental supply, veterinary supply and
rehabilitation supply. In fiscal 2016, we reorganized our reportable segments as a result of our acquisition of Animal Health
International, Inc. and our divestiture of our wholly-owned subsidiary Patterson Medical Holdings, Inc., the entity through
which we operated the rehabilitation supply business. We now present three different reportable segments: Dental, Animal
Health and Corporate. Prior period segment results have been restated to conform to this revised current period presentation.

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Our Dental and Animal Health reportable business segments 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, formerly our Patterson Veterinary reportable segment, 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, which was previously included in our dental supply reporting segment through the end of fiscal 2015, 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 table presents information about our reportable segments:

Net sales

Dental
Animal Health
Corporate

Consolidated net sales

Operating income
Dental
Animal Health
Corporate

Consolidated operating income

Depreciation and amortization

Dental
Animal Health
Corporate

Consolidated depreciation and amortization

Total assets
Dental
Animal Health
Corporate

Total assets, excluding assets held for sale

Assets held for sale
Total assets

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

2,476,234
2,862,249
48,220
5,386,703

312,176
94,318
(58,781)
347,713

18,903
44,243
19,237
82,383

April 30,
2016

994,113
2,064,302
462,389
3,520,804
—
3,520,804

2,415,003
1,456,570
39,292
3,910,865

300,357
56,670
(52,441)
304,586

18,568
8,861
17,094
44,523

2,348,403
1,203,045
33,693
3,585,141

284,674
49,855
(40,803)
293,726

17,416
7,237
17,793
42,446

April 25,
2015

1,022,257
631,445
537,405
2,191,107
754,141
2,945,248

The following table presents sales information by product for each reportable segment:

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Consolidated

Consumable1
Equipment and software
Other 1

Total

Dental

Consumable1
Equipment and software
Other 1

Total
Animal Health

Consumable1
Equipment and software
Other 1

Total

Corporate

Consumable1
Equipment and software
Other 1

Total

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

4,153,921
857,001
375,781
5,386,703

1,378,886
806,993
290,355
2,476,234

2,775,035
50,008
37,206
2,862,249

2,697,581
865,013
348,271
3,910,865

1,319,407
818,342
277,254
2,415,003

1,378,174
46,671
31,725
1,456,570

2,418,201
839,152
327,788
3,585,141

1,285,459
795,132
267,812
2,348,403

1,132,742
44,020
26,283
1,203,045

— $
—
48,220
48,220

— $
—
39,292
39,292

—
—
33,693
33,693

1 Certain sales were reclassified from consumable to other in the current and prior periods.

The following table presents information by geographic area. No individual country, except for the U.S. and the U.K.,

generated sales greater than 10% of consolidated net sales. There were no material sales between geographic areas.

Net sales

United States

United Kingdom

Canada

Total

Property and equipment, net

United States

United Kingdom

Canada

Total

15. Stockholders’ Equity

Dividends

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

4,457,254

3,029,541

2,933,091

626,603

302,846

649,541

231,783

419,341

232,709

5,386,703

3,910,865

3,585,141

April 30,
2016

April 25,
2015

278,667

190,618

2,459

12,189

2,857

10,658

293,315

204,133

The following table presents our declared and paid cash dividends per share on our common stock for the past three

years. The dividend declared in the fourth quarter of fiscal 2014 was paid early in the subsequent quarter; all other dividends
were declared and paid in the same period. We expect to continue paying a quarterly cash dividend into the foreseeable future.

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Fiscal year
2016

2015

2014

Share Repurchases

Quarter

0.22

0.20

0.16

0.22

0.20

0.16

0.22

0.20

0.16

0.24

0.22

0.20

During fiscal 2016, we repurchased and retired 4,379 shares of our common stock for $200,000, or an average of $45.68

per share. During fiscal 2015, we repurchased and retired 1,194 shares of our common stock for $47,539, or an average of
$39.81 per share. During fiscal 2014, we repurchased and retired 2,354 shares of our common stock for $96,486, or an average
of $40.99 per share.

In March 2013, Patterson’s Board of Directors approved a share repurchase plan. Under the plan, up to 25,000 shares
may be repurchased in open market transactions through March 19, 2018. As of April 30, 2016, 16,497 shares remain available
under the current repurchase authorization.

Employee Stock Ownership Plan ("ESOP")

During 1990, Patterson’s Board of Directors adopted a leveraged ESOP. In fiscal 1991, under the provisions of the plan

and related financing arrangements, Patterson loaned the ESOP $22,000 (the “1990 note”) for the purpose of acquiring its then
outstanding preferred stock, which was subsequently converted to common stock. The Board of Directors determines the
contribution from the Company to the ESOP annually. The contribution is used to retire a portion of the debt, which triggers a
release of shares that are then allocated to the employee participants. Shares of stock acquired by the plan are allocated to each
participant who has completed 1000 hours of service during the plan year. In fiscal 2011, the final payment on the 1990 note
was made and all remaining shares were released for allocation to participants.

In fiscal 2002, Patterson’s ESOP and an ESOP sponsored by the Thompson Dental Company (“Thompson”) were used to

facilitate the acquisition and merger of Thompson into Patterson. The net result of this transaction was an additional loan of
$12,612 being made to the ESOP and the ESOP acquiring 666 shares of common stock. The loan bears interest at current rates
but principal did not begin to amortize until fiscal 2012. Beginning in fiscal 2012 and through fiscal 2020, an annual payment
of $200 plus interest is due and in fiscal 2020, a final payment of any outstanding principal and interest balance is due.
Prepayments of principal can be made at any time without penalty. Of the 666 shares issued in the transaction, 98 were
previously allocated to Thompson employees. The remaining 568 shares began to be allocated in fiscal 2004 as interest was
paid on the loan.

On September 11, 2006, we entered into a third loan agreement with the ESOP and loaned $105,000 (the “2006 note”) for

the sole purpose of enabling the ESOP to purchase shares of our common stock. The ESOP purchased 3,160 shares with the
proceeds from the 2006 note. Interest on the unpaid principal balance accrues at a rate equal to six-month LIBOR, with the rate
resetting semi-annually. Interest payments were not required during the period from and including September 11, 2006 through
April 30, 2010. On April 30, 2010, accrued and unpaid interest was added to the outstanding principal balance under the note,
with interest thereafter accruing on the increased principal amount. Unpaid interest accruing after April 30, 2010 is due and
payable on each successive April 30 occurring through September 10, 2026. Principal payments aren't due until September 10,
2026; however, prepayments can be made without penalty. In fiscal 2012, Patterson contributed $20,214 to the ESOP, which
then purchased 844 shares for allocation to the participants. No shares secured by the 2006 note were released prior to fiscal
2011.

Unearned ESOP shares are not considered outstanding for the computation of earnings per share until the shares are
committed for release to the participants. During fiscal 2016, 2015 and 2014, the compensation expense recognized related to
the ESOP was $11,953, $9,939 and $10,199, respectively.

At April 30, 2016, a total of 11,985 shares of common stock that have been allocated to participants remained in the
ESOP and had a fair market value of $519,531. Related to the shares from the Thompson transaction, committed-to-be-released
shares were 10 and suspense shares were 436. Finally, with respect to the 2006 note, committed-to-be-released shares were 259
and suspense shares were 1,783.

We anticipate the allocation of the remaining suspense, or unearned, shares to occur over a period of approximately 5 to

10 years. As of April 30, 2016, the fair value of all unearned shares held by the ESOP was $107,814. We will recognize an

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income tax deduction as the unearned ESOP shares are released. Such deductions will be limited to the ESOP’s original cost to
acquire the shares.

Dividends on allocated shares are passed through to the ESOP participants. Dividends on unallocated shares are used by

the ESOP to make debt service payments on the notes due to Patterson.

16. Stock-based Compensation

The consolidated statements of income for fiscal years 2016, 2015 and 2014 include pre-tax (after-tax) stock-based
compensation expense of $16,898 ($11,120), $13,958 ($9,171) and $8,041 ($5,416). Pre-tax expense is included in operating
expenses within the consolidated statements of income. Tax benefits associated with tax deductions in excess of recognized
stock-based compensation expense are presented as a financing cash inflow.

As of April 30, 2016, the total unrecognized compensation cost related to non-vested awards was $34,772, and it is

expected to be recognized over a weighted average period of approximately 2.3 years.

2015 Omnibus Incentive Plan

In September 2015, our shareholders approved the 2015 Omnibus Incentive Plan ("Incentive Plan"). The aggregate
number of shares of common stock that may be issued is 4,000. The Incentive Plan authorizes various award types to be issued
under the plan, including stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance
awards, non-employee director awards, cash-based awards and other stock-based awards. We issue new shares for stock option
exercises, restricted stock award grants and also for vesting of restricted stock units and performance stock units. Awards that
expire or are canceled without delivery of shares generally become available for reissuance under the plan.

At April 30, 2016, there were 3,784 shares available for awards under the Incentive Plan.

As a result of the approval of the Incentive Plan, awards are no longer granted under any prior equity incentive plan, but
all outstanding awards previously granted under such prior plans will remain outstanding and subject to the terms of such prior
plans. At April 30, 2016, there were 1,073 shares outstanding under prior plans.

Stock Option Awards

Stock options granted to employees expire no later than 10 years after the date of grant. Awards typically vest over 3 or 5

years.

The fair value of stock options granted was estimated as of the grant date using a Black-Scholes option-pricing model

with the following assumptions:

Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life (years)
Weighted average grant date fair value per share

The following is a summary of stock option activity:

Balance as of April 25, 2015

Granted
Exercised
Canceled

Balance as of April 30, 2016
Vested or expected to vest as of April 30, 2016
Exercisable as of April 30, 2016

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

1.8%
25.6%
2.1%
6.7

2.0%
26.3%
2.1%
7.0

1.8%
30.0%
1.5%
7.1

9.66

9.78

11.02

Number
of
Options

Weighted-
Average
Exercise
Price

Aggregate
Intrinsic
Value

338
923
(87)
(64)
1,110
1,046
49

$
$
$

36.22
55.39
36.49
39.03
52.09
52.17
35.22

$
$
$

1,402
1,279
402

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The weighted average remaining contractual lives of options outstanding and options exercisable as of April 30, 2016

were 8.6 and 4.3 years, respectively.

Related to stock options exercised, the intrinsic value, cash received and tax benefits realized were $901, $3,173 and

$854, respectively, in fiscal 2016; $290, $1,710 and $286, respectively, in fiscal 2015; and $1,722, $12,309 and $1,273,
respectively, in fiscal 2014.

Restricted Stock

Restricted stock awards and restricted stock units granted to employees generally vest over a five, seven or nine year

period. Certain restricted stock awards, which are held by branch managers, are subject to accelerated vesting provisions
beginning three years after the grant date, based on certain operating goals. Restricted stock awards are also granted to non-
employee directors annually and vest over 1 or 3 years. The grant date fair value of restricted stock awards and restricted stock
units is based on the closing stock price on the day of the grant. The total fair value of restricted stock awards and restricted
stock units that vested in fiscal 2016, 2015 and 2014 was $19,805, $8,474 and $6,831, respectively.

The following is a summary of restricted stock award activity:

Outstanding at April 25, 2015
Granted
Vested
Forfeitures
Outstanding at April 30, 2016

The following is a summary of restricted stock unit activity:

Outstanding at April 25, 2015

Granted

Vested

Forfeitures

Outstanding at April 30, 2016

Performance Unit Awards

Restricted Stock Awards

Weighted-
Average
Grant Date
Fair Value

34.39
48.91
33.33
36.34
38.18

1,168
191
(421)
(178)
760

Restricted Stock Units

Weighted-
Average
Grant Date
Fair Value

122

66
(6)
(111)
71

35.30

44.88

39.54

35.03

44.26

In fiscal 2015 and 2014, we granted performance unit awards, primarily to executive management, which are earned at
the end of a three year period if certain operating goals are met. Accordingly, we recognize expense over the requisite service
period based on the outcome that is probable for these awards. In fiscal 2016, we granted performance unit awards with a
market-based condition to certain executives. The number of shares to be received at vesting will range from 0% - 200% of the
target number of stock units based on Patterson's total shareholder return ("TSR") relative to the performance of companies in
the S&P Midcap 400 Index measured over a 3 year period. We estimate the grant date fair value of the TSR awards using the
Monte Carlo valuation model. The total fair value of performance unit awards that vested in fiscal 2016 was $2,966. No
performance unit awards vested in fiscal 2015 and 2014.

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The following is a summary of performance unit award activity at target:

Outstanding at April 25, 2015
Granted
Vested
Forfeitures and cancellations
Outstanding at April 30, 2016

Employee Stock Purchase Plan ("ESPP")

Performance Unit Awards

Weighted-
Average
Grant Date
Fair Value

205
87
(78)
(57)
157

38.91
54.55
37.70
40.69
47.56

We sponsor an ESPP under which a total of 6,750 shares have been reserved for purchase by employees. Eligible

employees may purchase shares at 85% of the lower of the fair market value of our common stock on the beginning of the
annual offering period, or on the end of each quarterly purchase period, which occur on March 31, June 30, September 30 and
December 31. The offering periods begin on January 1 of each calendar year and end on December 31 of each calendar year.
At April 30, 2016, there were 1,269 shares available for purchase under the ESPP.

We estimate the grant date fair value of shares purchased under our ESPP using the Black-Scholes option pricing

valuation model with the following weighted average assumptions:

Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life (years)
Weighted average grant date fair value per share

Capital Accumulation Plan ("CAP")

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

2.0%
21.1%
0.5%
0.6

1.6%
31.0%
0.1%
0.5

9.16

10.74

1.6%
31.0%
0.2%
0.5

9.46

We also sponsor an employee CAP. A total of 6,000 shares of common stock are reserved for issuance under the CAP.

Key employees of Patterson are eligible to participate by purchasing common stock through payroll deductions at 75% of the
price of the common stock at the beginning of or the end of the calendar year, whichever is lower. The shares issued are
restricted stock and are held in the custody of Patterson until the restrictions lapse. The restriction period is typically three years
from the beginning of the plan year, and shares are subject to forfeiture provisions. At April 30, 2016, 2,018 shares were
available for purchase under the CAP.

We estimate the grant date fair value of shares purchased under our CAP using the Black-Scholes option pricing

valuation model with the following weighted average assumptions:

Expected dividend yield
Expected stock price volatility
Risk-free interest rate
Expected life (years)
Weighted average grant date fair value per share

17. Litigation

Fiscal Year Ended

April 30,
2016

April 25,
2015

April 26,
2014

2.0%
19.7%
0.6%
1.0

1.6%
31.0%
0.3%
1.0

14.13

17.67

15.00

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
67

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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.
Plaintiff has not specified a damage amount in its complaint. We intend to defend ourselves against the action vigorously. We
do not anticipate that this matter will have a material adverse effect on our financial condition.

18. Quarterly Results (unaudited)

Quarterly results are determined in accordance with the accounting policies used for annual data and include certain items

based upon estimates for the entire year. All fiscal quarters include results for 13 weeks except for the quarter ended August 1,
2015, which included 14 weeks.

Revenues attributable to the acquisition of Animal Health International, Inc. are $403,580, $406,588, $414,028 and

$171,922 for the quarters ended April 30, 2016, January 30, 2016, October 31, 2015 and August 1, 2015, respectively.
Operating income attributable to the acquisition of Animal Health International, Inc. is $15,034, $9,827, $10,716 and $1,653
for the quarters ended April 30, 2016, January 30, 2016, October 31, 2015 and August 1, 2015, respectively.

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Net sales
Gross profit
Operating income from continuing operations
Net income from continuing operations
Net income (loss) from discontinued operations
Net income
Basic earnings (loss) per share:
Continuing operations
Discontinued operations

Net basic earnings per share

Diluted earnings (loss) per share:
Continuing operations
Discontinued operations

Net diluted earnings per share

Net basic earnings per share

Diluted earnings (loss) per share:
Continuing operations
Discontinued operations

Net diluted earnings per share

April 30,
(1)
2016
1,453,770
363,741
106,344
65,620
—
65,620

0.69
—
0.69

0.68
—
0.68

April 25,
2015
1,035,061
288,203
89,073
53,459
11,059
64,518

0.54
0.11
0.65

Quarter Ended

January 30,
2016
1,400,853
339,864
95,729
57,190
(750)
56,440

0.60
(0.01)
0.59

October 31,
2015
1,389,210
330,899
83,463
42,563
(7,142)
35,421

0.43
(0.07)
0.36

Quarter Ended

January 24,
2015
958,628
262,442
77,377
46,434
8,242
54,676

0.47
0.08
0.55

October 25,
2014
978,220
259,287
72,140
41,865
11,913
53,778

0.42
0.12
0.54

August 1,
2015
1,142,870
288,244
62,177
20,311
9,392
29,703

0.20
0.10
0.30

July 26,
2014
938,956
250,617
65,996
38,325
11,964
50,289

0.39
0.12
0.51

0.38
0.12
0.50

(1)

During the first quarter of fiscal 2016, we incurred $9,302, or $0.09 per diluted share from continuing operations on an
after-tax basis, of transaction costs related to the acquisition of Animal Health International, Inc. Also during the first
quarter of fiscal 2016, we approved a one-time repatriation of approximately $200,000 of foreign earnings. This one-
time repatriation reduced the overall costs of funding the acquisition of Animal Health International, Inc. In addition,
certain foreign cash at Patterson Medical was required to be repatriated as part of the sale transaction. The tax impact
of the repatriation recorded during the first quarter of fiscal 2016 was $11,800, or $0.12 per diluted per share from
continuing operations on an after-tax basis.

19. Accumulated Other Comprehensive Loss ("AOCL")

The following table summarizes the changes in AOCL as of April 30, 2016:

AOCL at April 25, 2015
Other comprehensive loss before reclassifications
Amounts reclassified from AOCL
AOCL at April 30, 2016

Cash Flow
Hedges

Currency
Translation
Adjustment

(18,668) $
—
1,934
(16,734) $

(41,678) $
(20,635)
11,083
(51,230) $

Total

(60,346)
(20,635)
13,017
(67,964)

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The amounts reclassified from AOCL during fiscal 2016 represent gains and losses on cash flow hedges, net of taxes of

$883, and amounts reclassified related to the divestiture of Patterson Medical of $11,083. The impact to the consolidated
statements of income was an increase to interest expense of $2,817.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Management’s Annual Report on Internal Control Over Financial Reporting

The management of Patterson Companies, Inc. (the “Company”) is responsible for establishing and maintaining

adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act of 1934. Our internal control system is designed to provide reasonable assurance to our management and Board of
Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.

Under the supervision and with the participation of our management, including our principal executive officer and
principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of April 30, 2016,
using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control - Integrated Framework (2013). Based on this assessment, management has concluded that our internal control over
financial reporting was effective as of April 30, 2016. Ernst & Young LLP, the independent registered public accounting firm
that audited our consolidated financial statements included in Item 8, Financial Statements and Supplementary Data, of this
Annual Report on Form 10-K, has issued an unqualified report on our internal control over financial reporting.

On June 16, 2015, we acquired Animal Health International, Inc., which was a privately-held company prior to the
acquisition. We are in the process of integrating Animal Health International, Inc.’s operations, and as permitted under SEC
regulations, we have excluded the operations of Animal Health International, Inc. from the scope of our Sarbanes-Oxley
Section 404 report on internal control over financial reporting for the fiscal year ended April 30, 2016. Animal Health
International, Inc. is included within the Animal Health segment of our consolidated financial statements for the fiscal year
ended April 30, 2016, including $1,432 million, $1,396 million, and $37 million of total assets, revenues, and operating
income, respectively. We are in the process of evaluating Animal Health International, Inc.’s internal controls and
implementing our internal control structure over the acquired operations, and we expect to complete this effort during fiscal
2017.

/s/ Scott P. Anderson
President and Chief Executive Officer

/s/ Ann B. Gugino
Executive Vice President, Chief Financial
Officer and Treasurer

The report of our independent registered public accounting firm on internal control over financial reporting is included

in Item 8 of this Annual Report on Form 10-K.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and our
Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Rules 13a-15 and 15d-15 of the Securities and Exchange Act of 1934 (the “Exchange Act”). Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of April 30, 2016. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the
Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by
Patterson in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls
and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is

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accumulated and communicated to our management, including our principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended April 30,

2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

9B. OTHER INFORMATION

None.

Table of Contents

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding the directors of Patterson is incorporated herein by reference to the descriptions set forth under the

caption “Proposal No. 1 Election of Directors” in Patterson’s Proxy Statement for its Annual Meeting of Shareholders to be
held on September 12, 2016 (the “2016 Proxy Statement”). Information regarding executive officers of Patterson is
incorporated herein by reference to Item 1 of Part I of this Form 10-K under the caption “Executive Officers of the Registrant.”
Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by
reference to the information set forth under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the
2016 Proxy Statement. The information called for by Item 10, as to the audit committee and the audit committee financial
expert, is set forth under the captions “Proposal No. 1 Election of Directors” and “Our Board of Directors and Committees” in
the 2016 Proxy Statement and such information is incorporated by reference herein.

Code of Ethics

We have adopted Principles of Business Conduct and Code of Ethics for our Chief Executive Officer, Chief Financial
Officer, Directors and all employees. Our Code of Ethics is available on our website (www.pattersoncompanies.com) under the
section “Investor Relations – Corporate Governance.” We intend to satisfy the disclosure requirement of Form 8-K regarding
an amendment to, or waiver from, a provision of our Code of Ethics by posting such information on our website at the address
and location specified above.

Item 11. EXECUTIVE COMPENSATION

Information regarding executive compensation and director compensation is incorporated herein by reference to the
information set forth under the captions “Non-Employee Director Compensation,” “Executive Compensation” and “Our Board
of Directors and Committees – Committee Responsibilities – Our Compensation Committee and Its Report” in the 2016 Proxy
Statement.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS

Information regarding the security ownership of certain beneficial owners and management is incorporated herein by

reference to the information set forth under the captions “Security Ownership of Certain Beneficial Owners and Management”
and “Equity Compensation Plan Information” in the 2016 Proxy Statement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information called for by Item 13 is incorporated herein by reference to the information set forth under the captions
“Certain Relationships and Related Transactions” and “Our Board of Directors and Committees” in the 2016 Proxy Statement.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information relating to principal accounting fees and services and pre-approval policies and procedures is set forth under
the caption “Proposal No. 3 Ratification of Selection of Independent Registered Public Accounting Firm – Principal Accountant
Fees and Services” in the 2016 Proxy Statement and such information is incorporated by reference herein.

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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)

1. Financial Statements.

PART IV

The following Consolidated Financial Statements and supplementary data of Patterson and its subsidiaries are
included in Part II, Item 8:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income and Other Comprehensive Income

Consolidated Statement of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2. Financial Statement Schedules.

The following financial statement schedule is filed herewith: Schedule II – Valuation and Qualifying Accounts

Schedules other than that listed above have been omitted because they are not applicable or the required
information is included in the financial statements or notes thereto.

3. Exhibits.

Exhibit

Document Description

3.1

3.2

4.1

10.1

10.2

10.3

10.4

10.5

10.6

Restated Articles of Incorporation (incorporated by reference to our Quarterly Report on Form 10-Q,
filed September 9, 2004 (File No. 000-20572)).

Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K, filed
December 13, 2013 (File No. 000-20572)).

Specimen form of Common Stock Certificate (incorporated by reference to our Quarterly Report on
Form 10-Q, filed September 9, 2004 (File No. 000-20572)).

Patterson Companies, Inc. Fiscal 2016 Incentive Plan (filed herewith).

Patterson Companies Capital Accumulation Plan (filed herewith).

2001 Non-Employee Director Stock Option Plan (incorporated by reference to our Annual Report on
Form 10-K, filed July 25, 2002 (File No. 000-20572)).

Patterson Companies, Inc. Amended and Restated Employee Stock Purchase Plan (incorporated by
reference to our Definitive Proxy Statement, filed August 7, 2012 (File No. 000-20572)).

Patterson Dental Company Amended and Restated Employee Stock Ownership Plan, effective May 1,
2001 (incorporated by reference to our Annual Report on Form 10-K, filed July 25, 2002 (File No.
000-20572)).

Stock Option Plan for Canadian Employees, effective June 13, 2000 (incorporated by reference to our
Quarterly Report on Form 10-Q, filed March 11, 2003 (File No. 000-20572)).

Table of Contents

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

Deferred Profit Sharing Plan for the Employees of Patterson Dental Canada Inc. (incorporated by
reference to our Definitive Proxy Statement, filed July 28, 2008 (File No. 000-20572)).

Patterson Companies, Inc. Amended and Restated Equity Incentive Plan (incorporated by reference to
our Definitive Proxy Statement, filed August 7, 2012 (File No. 000-20572)).

Patterson Companies, Inc. 2014 Sharesave Plan (incorporated by reference to our Definitive Proxy
Statement, filed August 5, 2014 (File No. 000-20572)).

2015 Omnibus Incentive Plan (incorporated by reference to our Definitive Proxy Statement, filed
August 7, 2015 (File No. 000-20572)).

ESOP Loan Agreement dated April 1, 2002 (incorporated by reference to our Annual Report on Form
10-K, filed July 24, 2003 (File No. 000-20572)).

Promissory Note dated April 1, 2002 between GreatBanc Trust Company, an Illinois corporation, not in
its individual or corporate capacity, but solely as trustee of the Thompson Dental Company Employee
Stock Ownership Plan and Trust and Thompson Dental Company (incorporated by reference to our
Annual Report on Form 10-K, filed July 24, 2003 (File No. 000-20572)).

ESOP Loan Agreement dated September 11, 2006 (incorporated by reference to our Current Report on
Form 8-K, filed September 12, 2006 (File No. 000-20572)).

ESOP Note dated September 11, 2006 (incorporated by reference to our Current Report on Form 8-K,
filed September 12, 2006 (File No. 000-20572)).

Note Purchase Agreement dated March 19, 2008 among Patterson Companies, Inc., Patterson Medical
Holdings, Inc., Patterson Medical Supply, Inc., Patterson Dental Holdings, Inc., Patterson Dental
Supply, Inc., Webster Veterinary Supply, Inc. and Webster Management, LP (incorporated by reference
to our Current Report on Form 8-K, filed March 24, 2008 (File No. 000-20572)).

Credit Agreement, dated December 1, 2011, among Patterson Companies, Inc., and JPMorgan Chase
Bank, N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and U.S. Bank NA, Wells Fargo Bank, NA, and
Bank of America, N.A. (incorporated by reference to our Current Report on Form 8-K, filed
December 6, 2011 (File No. 000-20572)).

Note Purchase Agreement, dated December 8, 2011, by and among Patterson Companies, Inc., Patterson
Medical Holdings, Inc., Patterson Medical Supply, Inc., Patterson Dental Holdings, Inc., Patterson
Dental Supply, Inc., Webster Veterinary Supply, Inc., Webster Management, LP (incorporated by
reference to our Current Report on Form 8-K, filed December 12, 2011 (File No. 000-20572)).

Note Purchase Agreement, dated March 23, 2015, by and among Patterson Companies, Inc., Patterson
Medical Holdings, Inc., Patterson Medical Supply, Inc., Patterson Dental Holdings, Inc., Patterson
Dental Supply, Inc., Patterson Veterinary Supply, Inc., and Patterson Management, LP (incorporated by
reference to our Current Report on Form 8-K, filed March 25, 2015 (File No. 000-20572)).

Commitment Letter, dated May 2, 2015, by and between Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Bank Of America, N.A., The Bank Of Tokyo-Mitsubishi UFJ, Ltd. and Patterson
Companies, Inc. (incorporated by reference to our Current Report on Form 8-K, filed May 4, 2015 (File
No. 000-20572)).

Credit Agreement dated as of June 16, 2015 by and among Patterson Companies, Inc., the lenders from
time to time parties thereto, Bank of Tokyo-Mitsubishi UFJ, Ltd., as administrative agent, and Bank of
America, N.A., as syndication agent (incorporated by reference to our Current Report on Form 8-K,
filed June 17, 2015 (File No. 000-20572)).

Table of Contents

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

31.1

31.2

32.1

32.2

Amended and Restated Contract Purchase Agreement dated August 12, 2011 among PDC Funding
Company II, LLC, Patterson Companies, Inc., and Fifth Third Bank (incorporated by reference to our
Current Report on Form 8-K, filed August 16, 2011 (File No. 000-20572)).

Receivables Sale Agreement, dated as May 10, 2002, by and among Patterson Dental Supply, Inc.,
Webster Veterinary Supply, Inc., and PDC Funding Company, LLC (incorporated by reference to our
Annual Report on Form 10-K, filed July 25, 2002 (File No. 000-20572)).

Amended and Restated Receivables Sales Agreement dated August 12, 2011 by and among Patterson
Dental Supply, Inc., Webster Veterinary Supply, Inc. and PDC Funding Company II, LLC incorporated
by reference to our Annual Report on Form 10-K, filed June 24, 2015 (File No. 000-20572)).

Third Amended and Restated Receivables Purchase Agreement dated December 3, 2010 between PDC
Funding Company, LLC, Patterson Companies, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd., New
York Branch (the “Bank”) and a commercial paper conduit managed by the Bank (incorporated by
reference to our Current Report on Form 8-K, filed December 8, 2010 (File No. 000-20572)).

Assignment and Assumption and Amendment No. 1 to Third Amended and Restated Receivables
Purchase Agreement dated December 20, 2010, by and among The Bank of Tokyo-Mitsubishi UFJ, Ltd.,
Victory Receivables Corporation, PDC Funding Company, LLC, Patterson Companies, Inc., Royal Bank
of Canada and Thunder Bay Funding, LLC (incorporated by reference to our Current Report on Form 8-
K, filed December 23, 2010 (File No. 000-20572)).

Agreement and Plan of Merger, dated May 2, 2015, by and among Patterson Companies, Inc., Rams
Merger Sub, Inc., Animal Health International, Inc. and Leonard Green & Partners, L.P. (incorporated
by reference to our Current Report on Form 8-K, filed May 4, 2015 (File No. 000-20572)).

Stock Purchase Agreement between Patterson Companies, Inc. and Lanai Holdings III, Inc. dated July 1,
2015 (incorporated by reference to our Current Report on Form 8-K, filed July 1, 2015 (File No.
000-20572)).

Employment Agreement between John Adent and Animal Health International, Inc., dated May 2, 2015
(filed herewith).

Subsidiaries (filed herewith).

Consent of Independent Registered Public Accounting Firm (filed herewith).

Certification of the Chief Executive Officer pursuant to Rules 13a-4(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

Certification of the Chief Financial Officer pursuant to Rule 13a-4(a) and 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

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 (filed herewith).

Table of Contents

101

(*)

(Filed Electronically) The following financial information from our Annual Report on Form 10-K for
fiscal 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the consolidated balance
sheets, (ii) the consolidated statements of income, (iii) the consolidated statements of cash flows, (iv)
the consolidated statements of changes in stockholders’ equity and (v) the notes to the consolidated
financial statements.(*)

The XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed “filed” for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that
section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of
1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

(b) See Schedule II.

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Pursuant to the requirements of section 13 or 15(d) 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.

SIGNATURES

Dated: June 29, 2016

PATTERSON COMPANIES, INC.
By /s/ Scott P. Anderson

Scott P. Anderson,
President, Chief Executive Officer and
Chairman of the Board

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Scott P. Anderson
Scott P. Anderson

/s/ Ann B. Gugino
Ann B. Gugino

/s/ John D. Buck

John D. Buck

/s/ Jody H. Feragen

Jody H. Feragen

/s/ Sarena S. Lin

Sarena S. Lin

/s/ Ellen A. Rudnick

Ellen A. Rudnick

/s/ Neil A. Schrimsher

Neil A. Schrimsher

/s/ Les C. Vinney

Les C. Vinney

/s/ James W. Wiltz

James W. Wiltz

Date
June 29, 2016

June 29, 2016

President, Chief Executive Officer and
Chairman of the Board)
(Principal Executive Officer & Chairman of
the Board of Directors)

Executive Vice President, Chief Financial
Officer and Treasurer (Principal Financial
and Accounting Officer)

Director

Table of Contents

SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS

PATTERSON COMPANIES, INC.
(In thousands)

Year ended April 30, 2016
Deducted from asset accounts:

Allowance for doubtful accounts
LIFO inventory adjustment
Inventory obsolescence reserve
Total inventory reserve

Year ended April 25, 2015
Deducted from asset accounts:

Allowance for doubtful accounts
LIFO inventory adjustment
Inventory obsolescence reserve
Total inventory reserve

Year ended April 26, 2014
Deducted from asset accounts:

Allowance for doubtful accounts
LIFO inventory adjustment
Inventory obsolescence reserve
Total inventory reserve

Balance at
Beginning
of Period

Charged to
Costs and
Expenses

Charged
to Other
Accounts

Deductions

Balance at
End of
Period

$
$

7,678
73,381
4,218
77,599

8,322
71,596
3,498
75,094

4,093
67,187
3,288
70,475

$
$

8,246
3,120
15,547
18,667

2,546
1,785
17,624
19,409

2,544
4,409
12,642
17,051

$
$

1,947

$
— $

1,550
1,550

5,863

$
— $

14,694
14,694

— $
— $
—
— $

3,190

$
— $

16,904
16,904

3,552

$
— $

391
391

1,867

$
— $

12,823
12,823

12,008
76,501
6,621
83,122

7,678
73,381
4,218
77,599

8,322
71,596
3,498
75,094

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Exhibit 10.1

Patterson Companies, Inc. Fiscal 2016 Incentive Plan.

INDEX TO EXHIBITS

Exhibit 10.2

Patterson Companies, Inc. Capital Accumulation Plan.

Exhibit 10.28

Employment Agreement between John Adent and Animal Health International, Inc., dated
May 2, 2015.

Exhibit 21

Exhibit 23

Exhibit 31.1

Exhibit 31.2

Exhibit 32.1

Exhibit 32.2

Exhibit 101

Subsidiaries.

Consent of Independent Registered Public Accounting Firm.

Certification of the Chief Executive Officer pursuant to Rules 13a-4(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.

Certification of the Chief Financial Officer pursuant to Rules 13a-4(a) and 15d-14(a), under
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.

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.

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.

(Filed Electronically) The following financial information from our Annual Report on Form
10-K for fiscal 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the
consolidated balance sheets, (ii) the consolidated statements of income, (iii) the consolidated
statements of cash flows, (iv) the consolidated statements of changes in stockholders’ equity
and (v) the notes to the consolidated financial statements.(*)

(*)

Our Strategic Intents

OUR STRATEGIC
INTENTS GUIDE
OUR FUTURE:

LEAD

our industries and customers
to new market breakthroughs

BROADEN

our view of the markets

DELIVER

best-in-class client experience

COMMIT

to talent excellence

LEVERAGE

our financial strength for market
advantage and shareholder value

Executive Officers

Scott P. Anderson
Chairman, President
and Chief Executive Officer

Ann B. Gugino
Executive Vice President,
Chief Financial Officer
and Treasurer

John E. Adent
Chief Executive Officer
Patterson Animal Health

Kelly A. Baker
Chief Human Resources Officer

Les B. Korsh
Vice President,
General Counsel and Secretary

Corporate Headquarters

Directors

1031 Mendota Heights Road
St. Paul, MN 55120-1419
651.686.1600
www.pattersoncompanies.com

Independent Auditors

Ernst & Young LLP
Minneapolis, MN

Legal Counsel

Briggs and Morgan, P.A.
Minneapolis, MN

Stock Transfer Agent

Wells Fargo Bank, N.A.
Mendota Heights, MN

Investor Relations Contact

John M. Wright
Vice President, Investor Relations

Annual Meeting

The annual meeting of shareholders will
be held at 4:30 p.m. on September 12, 2016,
at Patterson’s corporate headquarters,
1031 Mendota Heights Road, St. Paul, MN.

Form 10-K

Scott P. Anderson
Chairman, President and
Chief Executive Officer
Patterson Companies, Inc.

John D. Buck (L, A, G)
Chief Executive Officer
Whitefish Ventures, LLC

Jody H. Feragen (A, G)
Executive Vice President and
Chief Financial Officer
Hormel Foods Corp.

Sarena S. Lin (A, G)
President
Cargill Feed and Nutrition

Ellen A. Rudnick (C, F, G)
Senior Advisor
Polsky Center for Entrepreneurship
University of Chicago
Booth School of Business

Neil A. Schrimsher (C, F, G)
President and
Chief Executive Officer
Applied Industrial Technologies, Inc.

Les C. Vinney (C, F, G)
President and
Chief Executive Officer (retired)
STERIS Corporation

James W. Wiltz
President and
Chief Executive Officer (retired)
Patterson Companies, Inc.

Fiscal 2016 was a year of change and key
accomplishments. As we execute on our strategic
intents and optimize our portfolio, we are building
a stronger, more compelling future.

(L) Lead Director
(A) Member of Audit Committee
(C) Member of Compensation Committee
(G) Member of Governance and Nominating Committee
(F) Member of Finance and Corporate Development Committee

CORPORATEINFORMATIONANNUAL
REPORT
2016

1031 Mendota Heights Road
St. Paul, MN 55120-1419
651.686.1600
pattersoncompanies.com

STRONGFOUNDATION BOLDFUTURE