[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=3&type=section&id=Item%201-%20Financial%20Statements) Financial statements show increased assets and sales, but operating income declined sharply due to legal and inventory charges, offset by investment gains [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets reflect increased total assets, liabilities, and stockholders' equity, driven by inventory and receivables - Total assets increased to **$2.90 billion** as of October 30, 2021, from **$2.75 billion** as of April 24, 2021, primarily driven by increases in Inventory (from **$736.8 million** to **$830.1 million**) and Receivables (from **$449.2 million** to **$481.8 million**)[9](index=9&type=chunk) - Total liabilities rose to **$1.89 billion** from **$1.79 billion**, mainly due to a significant increase in Accounts Payable from **$609.3 million** to **$773.2 million**[9](index=9&type=chunk) - Total stockholders' equity grew to **$1.01 billion** from **$964.7 million**, supported by retained earnings growth[9](index=9&type=chunk) [Condensed Consolidated Statements of Operations and Other Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Other%20Comprehensive%20Income) Statements of operations show sales growth but declining operating income, with year-to-date net income boosted by investment gains Q2 Fiscal 2022 vs Q2 Fiscal 2021 Performance (Three Months Ended) | Metric | Oct 30, 2021 ($) | Oct 24, 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1,649.2M | $1,553.2M | +6.2% | | Gross Profit | $326.4M | $320.4M | +1.9% | | Operating Income | $62.9M | $73.7M | -14.7% | | Net Income Attributable to Patterson | $48.3M | $54.1M | -10.7% | | Diluted EPS | $0.49 | $0.56 | -12.5% | YTD Fiscal 2022 vs YTD Fiscal 2021 Performance (Six Months Ended) | Metric | Oct 30, 2021 ($) | Oct 24, 2020 ($) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,264.0M | $2,799.0M | +16.6% | | Operating Income | $23.3M | $111.6M | -79.1% | | Gains on Investments | $87.8M | $0 | N/A | | Net Income Attributable to Patterson | $82.3M | $78.5M | +4.8% | | Diluted EPS | $0.84 | $0.82 | +2.4% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased, primarily driven by net income, partially offset by dividend payments during the six-month period - Total stockholders' equity increased from **$964.7 million** at April 24, 2021, to **$1.012 billion** at October 30, 2021[15](index=15&type=chunk) - The increase in equity was primarily driven by net income of **$81.7 million**, partially offset by dividends declared of **$51.2 million** during the six months ended October 30, 2021[15](index=15&type=chunk)[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements show significant cash used in operations, largely offset by investing activities, resulting in a net cash increase Cash Flow Summary (Six Months Ended) | Cash Flow Activity | Oct 30, 2021 ($) | Oct 24, 2020 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($539.0M) | ($423.0M) | | Net Cash Provided by Investing Activities | $607.6M | $394.9M | | Net Cash (Used in) Provided by Financing Activities | ($58.4M) | $86.6M | | Net Change in Cash | $10.9M | $61.5M | - Investing activities were a significant source of cash, primarily from the collection of deferred purchase price receivables (**$585.6 million**) and the sale of investments (**$57.2 million**)[17](index=17&type=chunk)[18](index=18&type=chunk) - Financing activities used cash mainly for dividend payments (**$50.4 million**) and repayment of revolving credit (**$10.0 million**)[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail an acquisition, significant investment sale gains, a legal settlement, and segment operating income performance - During Q1 FY2022, the company acquired Miller Vet Holdings, LLC for **$19.8 million** in cash, recording **$14.0 million** in identifiable intangibles and **$0.9 million** in goodwill[35](index=35&type=chunk) - In Q1 FY2022, the company sold a portion of its investment in Vetsource, resulting in aggregate pre-tax gains of **$87.8 million**, which includes cash and non-cash components[65](index=65&type=chunk)[22](index=22&type=chunk) - The company agreed to a **$63.0 million** settlement for a federal securities class action lawsuit. Insurers will contribute **$35.0 million**, resulting in a net expense of **$36.0 million** recorded in Q1 FY2022, with an additional **$8.0 million** gain from carrier reimbursement in Q2[78](index=78&type=chunk) Segment Operating Income (Six Months Ended) | Segment | Oct 30, 2021 ($) | Oct 24, 2020 ($) | | :--- | :--- | :--- | | Dental | $54.5M | $110.7M | | Animal Health | $49.9M | $35.0M | | Corporate | ($81.1M) | ($34.1M) | | **Total** | **$23.3M** | **$111.6M** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion highlights sales growth but a sharp operating income decline from inventory and legal charges, with liquidity supported by investing activities [Results of Operations - Quarter Ended October 30, 2021](index=23&type=section&id=Results%20of%20Operations%20-%20Quarter%20Ended%20October%2030,%202021) Quarterly results show consolidated net sales growth driven by Animal Health, but operating income declined due to higher expenses - Consolidated net sales for Q2 FY2022 increased **6.2%** to **$1.65 billion**. Internal sales, adjusting for currency and other factors, grew by approximately **8.3%**[104](index=104&type=chunk) - Dental segment sales decreased **1.5%** to **$622.2 million**, primarily due to lower sales of infection control products compared to the prior-year quarter[105](index=105&type=chunk) - Animal Health segment sales grew **12.4%** to **$1.03 billion**, driven by increased demand across all businesses and geographies[106](index=106&type=chunk) - Consolidated operating income fell to **$62.9 million** (**3.8%** of sales) from **$73.7 million** (**4.7%** of sales) in the prior year, mainly due to higher personnel and travel-related expenses[109](index=109&type=chunk) [Results of Operations - Six Months Ended October 30, 2021](index=25&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20October%2030,%202021) Six-month results show sales growth, but gross profit and operating income declined sharply due to inventory and legal charges, offset by investment gains - Consolidated net sales for the six-month period increased **16.6%** to **$3.26 billion**, with an estimated **4.1%** of this growth attributed to an extra week in the fiscal period[117](index=117&type=chunk) - Gross profit margin decreased by **200 basis points** to **18.5%**, primarily due to a **$49.2 million** charge for inventory donations[120](index=120&type=chunk)[102](index=102&type=chunk) - Operating expenses increased **25.6%** to **$580.9 million**, largely due to higher personnel costs and the impact of the Fiscal 2022 Legal Reserve (**$36.0 million** net expense)[121](index=121&type=chunk)[101](index=101&type=chunk) - Operating income decreased sharply to **$23.3 million** from **$111.6 million** in the prior year, impacted by the legal reserve and inventory donation charges[122](index=122&type=chunk) - Net other income was **$85.3 million**, compared to a net expense of **$7.8 million** in the prior year, driven by the **$87.8 million** gain on the Vetsource investment[126](index=126&type=chunk)[99](index=99&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity analysis shows net cash used in operations offset by investing activities, with sufficient cash and credit expected for fiscal 2022 - Net cash used in operating activities was **$539.0 million** for the six months ended October 30, 2021, primarily due to the impact of the Receivables Securitization Program and an increase in inventory[129](index=129&type=chunk) - Net cash provided by investing activities was **$607.6 million**, largely from **$585.6 million** in collections of deferred purchase price receivables and **$57.2 million** from the sale of investments[130](index=130&type=chunk) - As of October 30, 2021, the company had **$300.0 million** outstanding under its term loan and **$43.0 million** outstanding under its **$700.0 million** revolving credit facility[133](index=133&type=chunk)[134](index=134&type=chunk) - Management expects existing cash, credit availability, and collections to be sufficient to meet working capital needs for the remainder of fiscal 2022[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes in the company's market risk exposure have occurred since the 2021 Annual Report on Form 10-K - There have been no material changes in the company's market risk exposure since the last annual report filed on June 23, 2021[137](index=137&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204%20-%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[138](index=138&type=chunk) - No material changes to internal control over financial reporting were identified during the quarter ended October 30, 2021[139](index=139&type=chunk) [PART II - OTHER INFORMATION](index=28&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201%20-%20Legal%20Proceedings) The company is involved in various legal proceedings, accruing liabilities when probable and estimable, with further details in Note 11 - The company is subject to various lawsuits and investigations in the ordinary course of business[141](index=141&type=chunk) - For detailed information on legal proceedings, the report refers to Note 11 of the Condensed Consolidated Financial Statements[143](index=143&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A%20-%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2021 Annual Report on Form 10-K have occurred - No material changes to the risk factors disclosed in the 2021 Annual Report on Form 10-K have occurred[144](index=144&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) A **$500 million** share repurchase program is authorized, but no shares were repurchased in Q2 FY2022, with repurchases subject to credit agreement covenants - A **$500 million** share repurchase program is authorized through March 16, 2024[145](index=145&type=chunk) - No shares were repurchased during the second quarter of fiscal 2022[145](index=145&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206%20-%20Exhibits) This section lists exhibits filed with the Form 10-Q, including agreements, CEO/CFO certifications, and financial data in Inline XBRL format - Lists various agreements and required CEO/CFO certifications filed as exhibits[148](index=148&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED July 31, 2021. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-20572 _________________________________ ...

[PART I](index=3&type=section&id=PART%20I) [Item 1. Business](index=3&type=section&id=Item%201.%20BUSINESS) Patterson Companies is a value-added distributor in dental and animal health markets, adapting operations and cost controls in response to the COVID-19 pandemic - Patterson operates as a value-added specialty distributor in the dental and animal health supply markets across North America and the U.K., organized into two strategic business units: Patterson Dental and Patterson Animal Health[15](index=15&type=chunk) - The COVID-19 pandemic significantly impacted operations, leading to management adapting business practices, reducing non-critical expenditures, implementing compensation reductions and furloughs, and deferring payroll taxes to manage liquidity and costs[17](index=17&type=chunk)[18](index=18&type=chunk) Consolidated Net Sales by Segment (in millions) | Segment | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Dental | $2,327 | $2,102 | $2,192 | | Animal Health | $3,560 | $3,336 | $3,355 | | Corporate | $25 | $52 | $28 | | **Consolidated net sales** | **$5,912** | **$5,490** | **$5,575** | [Business Overview](index=3&type=section&id=Business%20Overview) The company's business strategy focuses on expanding as a leading value-added distributor by leveraging competitive strengths - The company's business strategy focuses on expanding as a leading value-added distributor by leveraging competitive strengths such as broad product offerings, strong customer relationships, efficient distribution, and technology integration[40](index=40&type=chunk) [The Specialty Distribution Markets We Serve](index=5&type=section&id=The%20Specialty%20Distribution%20Markets%20We%20Serve) The dental and animal health markets exhibit growth driven by demographic trends, technological advances, and increased spending - The North American dental supply market is characterized by growth driven by an aging population, technological advances, and demand for preventative and specialty services[28](index=28&type=chunk) - The global animal health market is growing, with the companion animal segment driven by increased pet ownership and spending, and the production animal segment influenced by global demand for protein, though it is subject to market volatility[31](index=31&type=chunk)[32](index=32&type=chunk) [Competition](index=6&type=section&id=Competition) The company faces significant competition from national, regional, and online distributors in both dental and animal health markets - In the dental market, key competitors include Henry Schein, Inc. and Benco Dental Supply Company[35](index=35&type=chunk) - In the animal health market, primary competitors are AmerisourceBergen/MWI Animal Health and Covetrus, Inc., with increasing competition from online retailers like Amazon and Chewy.com[36](index=36&type=chunk) [Business Segments - Products, Services and Sources of Supply](index=7&type=section&id=Business%20Segments%20-%20Products%2C%20Services%20and%20Sources%20of%20Supply) The company's business segments, Dental and Animal Health, exhibit distinct sales mixes and significant supplier concentration Dental Segment Sales Mix | Category | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Consumable | 56% | 54% | 55% | | Equipment and software | 31% | 32% | 32% | | Value-added services and other | 13% | 14% | 13% | Animal Health Segment Sales Mix | Category | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Consumable | 96% | 97% | 97% | | Equipment and software | 3% | 2% | 2% | | Value-added services and other | 1% | 1% | 1% | - Both segments have considerable concentration with key suppliers. In fiscal 2021, the top ten vendors accounted for approximately **57%** of the Dental segment's cost of sales and **70%** of the Animal Health segment's cost of sales[42](index=42&type=chunk)[44](index=44&type=chunk) [Governmental Regulation](index=10&type=section&id=Governmental%20Regulation) The company operates under extensive U.S. and foreign regulations, including those for pharmaceuticals, controlled substances, and data privacy - The company is subject to extensive regulation by U.S. and foreign bodies, including the FDA and DEA, covering the distribution of pharmaceuticals and medical devices, controlled substances, and supply chain security (DSCSA)[55](index=55&type=chunk)[57](index=57&type=chunk)[60](index=60&type=chunk) - Subsidiary Animal Health International pleaded guilty to a misdemeanor for non-compliance with federal law on prescription animal health product sales, resulting in a **$52.8 million** fine and forfeiture[65](index=65&type=chunk) - The company must comply with evolving data privacy laws such as HIPAA, GDPR (Europe), and the CCPA/CPRA (California), which govern the handling of sensitive personal and health information[74](index=74&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) [Human Capital](index=15&type=section&id=Human%20Capital) As of April 24, 2021, the company employed approximately 7,800 full-time individuals, with reported diversity metrics for its U.S. workforce and management - As of April 24, 2021, the company had approximately **7,800** full-time employees[87](index=87&type=chunk) - As of April 24, 2021, **40.9%** of the U.S. workforce and **37.8%** of management was female. **20.4%** of the U.S. workforce and **13.4%** of management was ethnically diverse[89](index=89&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20RISK%20FACTORS) Key risks include the COVID-19 pandemic, intense competition, supply chain reliance, regulatory compliance, cybersecurity, and potential goodwill impairment - The COVID-19 pandemic poses a significant risk, with potential adverse effects on operations, supply chains, and customer demand, the full impact of which remains uncertain[103](index=103&type=chunk)[104](index=104&type=chunk)[107](index=107&type=chunk) - The dental and animal health supply markets are highly competitive and consolidating, which could pressure sales and profitability. Competition comes from national, regional, and online distributors, as well as manufacturers selling directly to end-users[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Failure to comply with numerous U.S. and foreign laws, particularly those governing pharmaceuticals and controlled substances, could result in significant penalties. A subsidiary recently incurred a **$52.8 million** fine and forfeiture for non-compliance[143](index=143&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - In fiscal 2020, the company recorded goodwill impairment charges totaling **$675.1 million**, eliminating all goodwill in the Animal Health segment. Future impairment of the Dental segment's goodwill remains a risk[167](index=167&type=chunk) [Item 1B. Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company has no unresolved staff comments from the SEC - None[168](index=168&type=chunk) [Item 2. Properties](index=28&type=section&id=Item%202.%20PROPERTIES) Patterson owns its principal offices and most distribution facilities, with its subsidiary operating 13 U.S. fulfillment centers, while also leasing various other facilities - The company owns its principal executive offices in St. Paul, Minnesota, and the majority of its distribution facilities[169](index=169&type=chunk) - Patterson Logistics Services, Inc. (PLSI) operates **13** fulfillment centers in the U.S., totaling **1.0 million square feet**, of which approximately **90%** is owned[170](index=170&type=chunk)[171](index=171&type=chunk) [Item 3. Legal Proceedings](index=29&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) Legal proceedings information is detailed in Note 16 of the Consolidated Financial Statements under Item 8 - For a discussion of Legal Proceedings, see Note 16 - Litigation of the Notes to the Consolidated Financial Statements included under Item 8[174](index=174&type=chunk) [Item 4. Mine Safety Disclosures](index=29&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[175](index=175&type=chunk) [PART II](index=30&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=30&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Patterson's common stock trades on NASDAQ, declared a $0.26 quarterly dividend, and authorized a new $500 million share repurchase program in fiscal 2021 - The company's common stock trades on the NASDAQ Global Select Market under the symbol "**PDCO**"[178](index=178&type=chunk) - A quarterly cash dividend of **$0.26 per share** was declared throughout fiscal 2021[179](index=179&type=chunk) - On March 16, 2021, the Board authorized a new **$500 million** share repurchase program. No shares were repurchased under this plan during fiscal 2021[181](index=181&type=chunk) [Item 6. Selected Consolidated Financial Data](index=31&type=section&id=Item%206.%20SELECTED%20CONSOLIDATED%20FINANCIAL%20DATA) This item is not applicable - Not applicable[185](index=185&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Fiscal 2021 saw consolidated net sales grow 7.7% to $5.9 billion, with operating income recovering to $210.6 million, and liquidity managed through operating cash flows and credit facilities Fiscal 2021 vs. Fiscal 2020 Key Financials | Metric | FY 2021 | FY 2020 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $5,912.1M | $5,490.0M | +7.7% | | Gross Profit Margin | 20.4% | 21.8% | -140 bps | | Operating Income (Loss) | $210.6M | ($572.1M) | N/A | | Net Income (Loss) | $156.0M | ($588.4M) | N/A | | Diluted EPS | $1.61 | ($6.25) | N/A | - The significant improvement in operating income from fiscal 2020 was driven by the absence of the prior year's **$675.1 million** goodwill impairment charge, as well as lower legal fees, travel expenses, and personnel costs in fiscal 2021[206](index=206&type=chunk) - Net cash used in operating activities was **$730.5 million** in fiscal 2021, primarily due to the impact of the Receivables Securitization Program, where collections of the deferred purchase price are classified under investing activities[194](index=194&type=chunk)[213](index=213&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Fiscal 2021 consolidated net sales increased 7.7% to $5.91 billion, driven by growth in both Dental and Animal Health segments, despite a decrease in gross profit margin - Fiscal 2021 consolidated net sales increased **7.7%** to **$5.91 billion**. Dental segment sales grew **10.7%**, driven by a **15.2%** increase in consumables. Animal Health segment sales grew **6.7%**, led by the companion animal business[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Consolidated gross profit margin decreased by **140 basis points** to **20.4%**, negatively impacted by inventory adjustments for infection control products in the Dental segment and lower transactional margins in the Animal Health segment[204](index=204&type=chunk) - Operating expenses decreased **9.3%** to **$992.5 million**, primarily due to lower legal fees and settlements, reduced travel, and temporary cost-saving measures on personnel costs implemented in response to COVID-19[205](index=205&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company manages liquidity through operating cash flows, a receivables securitization program, and credit facilities, with significant cash used in operations in fiscal 2021 Cash Flow Summary (in millions) | Cash Flow Activity | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | ($730.5) | ($243.5) | $48.2 | | Net Cash Provided by Investing Activities | $810.7 | $499.1 | $340.7 | | Net Cash Used in Financing Activities | ($22.6) | ($271.2) | ($355.2) | - In February 2021, the company entered into a new Credit Agreement, consolidating previous facilities into a **$700.0 million** revolving credit facility and a **$300.0 million** term loan facility, maturing in February 2024[220](index=220&type=chunk) - As of April 24, 2021, the company had **$143.2 million** in cash and cash equivalents, with **$86.1 million** held in foreign bank accounts intended for permanent reinvestment[223](index=223&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting estimates include revenue recognition, inventory valuation, and impairment testing for goodwill and other intangible assets, with a significant goodwill impairment recorded in fiscal 2020 - Key estimates include revenue recognition (allowances for returns, rebates), inventory valuation (LIFO method, obsolescence reserves), and impairment testing for goodwill and other intangible assets[240](index=240&type=chunk)[243](index=243&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) - In fiscal 2020, the company recorded a total of **$675.1 million** in non-cash goodwill impairment charges for the Animal Health reporting unit, driven by reduced future cash flow estimates and the impacts of COVID-19[251](index=251&type=chunk)[252](index=252&type=chunk)[254](index=254&type=chunk) - The annual goodwill and indefinite-lived intangible asset impairment test for fiscal 2021, conducted in the fourth quarter, resulted in no impairment[250](index=250&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces market risks from foreign currency fluctuations and interest rate changes, with potential impacts on net sales and pre-tax income - The company is exposed to foreign currency risk from transactions in Canadian Dollars and British Pounds. A hypothetical **10%** change in the USD exchange rate would impact net sales by approximately **$94.1 million** and pre-tax income by about **$3.0 million** for fiscal 2021[267](index=267&type=chunk) - Interest rate risk exists due to variable-rate debt under the Credit Agreement. A **100 basis point** change in interest rates is estimated to have a **$3.5 million** annual impact on pre-tax income[268](index=268&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section provides audited consolidated financial statements for the three years ended April 24, 2021, with key figures and an unqualified auditor's report Consolidated Balance Sheet Highlights (in thousands) | Account | April 24, 2021 | April 25, 2020 | | :--- | :--- | :--- | | Total current assets | $1,615,929 | $1,542,765 | | Total assets | $2,751,511 | $2,715,350 | | Total current liabilities | $1,089,666 | $1,074,898 | | Total liabilities | $1,786,840 | $1,878,906 | | Total stockholders' equity | $964,671 | $836,444 | Consolidated Statement of Operations Highlights (in thousands) | Account | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net sales | $5,912,066 | $5,490,011 | $5,574,523 | | Gross profit | $1,203,130 | $1,197,410 | $1,190,775 | | Operating income (loss) | $210,607 | ($572,119) | $137,716 | | Net income (loss) attributable to Patterson | $155,981 | ($588,446) | $83,628 | - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the financial statements and on the effectiveness of internal control over financial reporting. The impairment of capitalized development costs for software was identified as a critical audit matter[273](index=273&type=chunk)[281](index=281&type=chunk)[288](index=288&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=75&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants regarding financial disclosure - None[452](index=452&type=chunk) [Item 9A. Controls and Procedures](index=77&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of April 24, 2021, affirmed by an unqualified audit report - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the fiscal year (April 24, 2021)[455](index=455&type=chunk) - Management's assessment concluded that internal control over financial reporting was effective as of April 24, 2021. The independent registered public accounting firm, Ernst & Young LLP, issued an unqualified report on this assessment[457](index=457&type=chunk) [Item 9B. Other Information](index=76&type=section&id=Item%209B.%20OTHER%20INFORMATION) The company reports no other information for this item - None[460](index=460&type=chunk) [PART III](index=78&type=section&id=PART%20III) This section incorporates information by reference from the 2021 Proxy Statement, covering directors, executive officers, corporate governance, and compensation [Item 10. Directors, Executive Officers and Corporate Governance](index=78&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2021 Proxy Statement[462](index=462&type=chunk) - The company has adopted a Code of Conduct, which is available on its website[463](index=463&type=chunk) [Item 11. Executive Compensation](index=78&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Executive and director compensation details are incorporated by reference from the 2021 Proxy Statement - Information regarding executive and director compensation is incorporated by reference from the 2021 Proxy Statement[464](index=464&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=78&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Security ownership and equity compensation plan information is incorporated by reference from the 2021 Proxy Statement - Information on security ownership and equity compensation plans is incorporated by reference from the 2021 Proxy Statement[465](index=465&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=78&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information on related party transactions and director independence is incorporated by reference from the 2021 Proxy Statement - Information on related transactions and director independence is incorporated by reference from the 2021 Proxy Statement[466](index=466&type=chunk) [Item 14. Principal Accountant Fees and Services](index=78&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Details on principal accountant fees and pre-approval policies are incorporated by reference from the 2021 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement[467](index=467&type=chunk) [PART IV](index=79&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=79&type=section&id=Item%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements, schedules, and all exhibits filed with the Form 10-K, including corporate governance and debt agreements - This item lists the financial statements included in Part II, Item 8, and the financial statement schedule Schedule II – Valuation and Qualifying Accounts[469](index=469&type=chunk)[470](index=470&type=chunk) - A comprehensive list of exhibits filed with the report is provided, including articles of incorporation, bylaws, material contracts, and certifications[471](index=471&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk) [Item 16. Form 10-K Summary](index=83&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) The company indicates there is no Form 10-K summary - None[476](index=476&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________ FORM 10-Q ____________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED January 23, 2021. ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-20572 ______________________________ ...