PATTERSON COMPANIES, INC. (Form: 8-K, Received: 03/01/2018 08:02:35)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)

March 1, 2018

PATTERSON COMPANIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

0-20572

41-0886515

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

1031 Mendota Heights Road

St. Paul, Minnesota 55120

(Address of Principal Executive Offices, including Zip Code)

(651) 686-1600

(Registrant’s Telephone Number, including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

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

Item 2.02

Results of Operations and Financial Condition

On March 1, 2018, Patterson Companies, Inc. (the “Company”) issued a press release with respect to, among other things, its financial results for the third quarter of fiscal year 2018 ended January 27, 2018 and guidance for fiscal 2018. A copy of the press release is furnished as Exhibit 99 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b), (c) and (e) On March 1, 2018, the Company announced that Ann B. Gugino has transitioned from her role as the Company’s Executive Vice President, Chief Financial Officer and Treasurer, effective immediately, and that Dennis Goedken, the Company’s Controller, has been appointed by the Company’s Board of Directors (the “Board”) to serve as the Company’s Interim Chief Financial Officer and Treasurer while the Company conducts a search for a successor. The Company has retained an executive search firm to begin an immediate search for a permanent replacement.

Mr. Goedken, age 55, has spent more than 12 years with Patterson having served as the Corporate Controller since 2012, and as Patterson’s Assistant Controller from 1991-1998. During his tenure, Mr. Goedken was integrally involved in internal audit, taking the company public, and various divestitures and acquisitions. Mr. Goedken currently leads the accounting team and oversees preparation of all SEC filings. Previously, Mr. Goedken has held senior finance leadership positions with Ceridian HCM, Inc. and Lifetouch Inc. There are no familial relationships between Mr. Goedken and any other director or executive officer of the Company. There are no transactions in which Mr. Goedken has an interest requiring disclosure under Item 404(a) of Regulation S-K.

In connection with the transition, Ms. Gugino and the Company entered into a Transition Agreement, dated March 1, 2018, which is filed as Exhibit 10 to this Current Report on Form 8-K and is incorporated by reference herein. Under the terms of the agreement, Ms. Gugino will serve in a non-officer Special Advisor capacity through July 31, 2018 during which period she has agreed to be available to the Company to advise on certain matters at its sole request. On July 31, 2018, Ms. Gugino’s employment with the Company will end (the “Separation Date”). The period between March 1, 2018 and the Separation Date or Ms. Gugino’s earlier termination date is the “Transition Period.” Ms. Gugino will remain subject to termination for cause during the Transition Period. Ms. Gugino has also agreed to certain non-compete and non-solicit provisions described below.

During the Transition Period, conditioned upon Ms. Gugino’s continued employment during that time, she will (a) continue to be paid her current annualized salary of $430,500, (b) remain eligible to receive non-equity incentive plan compensation for the fiscal year ending April 28, 2018 under the Company’s Management Incentive Compensation Plan, (c) continue to vest in her existing equity awards, and (d) remain eligible to participate in the Company’s Capital Accumulation Plan, the Company’s Employee Stock Ownership Plan and the Company’s other employee benefit plans, subject to plan terms. Upon signing a separation and release agreement at the end of the Transition Period, unless she has been terminated for cause, Ms. Gugino will receive a severance payment of $648,000 (the “Severance Payment”), which will be paid in installments of varying amounts over the course of the non-competition provision described below. If Ms. Gugino materially breaches any provision of the Transition Agreement or her employment is terminated by the Company prior to the Separation Date with cause, payment obligations to Ms. Gugino cease and she would be obligated to repay to the Company all moneys paid to her to which she would not otherwise be entitled absent the Transition Agreement. Among the commitments entered into in the Transition Agreement, Ms. Gugino has agreed to post-employment non-compete and non-solicitation provisions through January 31, 2020, as well as a non-disclosure provision.

If Ms. Gugino is terminated for cause prior to the Separation Date, she has acknowledged and agreed that, despite being ineligible to receive the Severance Payment, she will nevertheless remain bound by these and her other commitments contained in the Transition Agreement.

Mr. Goedken will continue to receive his annual base salary of $198,395. He remains eligible to participate in the Company’s employee benefit plans, subject to plan terms. He also will be eligible for a discretionary bonus in cash or equity at the end of his interim service.

Item 7.01

Regulation FD Disclosure.

The press release referred to under Item 2.02 and attached hereto as Exhibit 99 contains information regarding the Chief Financial Officer transition disclosed under Item 5.02. The information contained in this Current Report on Form 8-K under Items 2.02 and 7.01, including the accompanying Exhibit 99, is being furnished pursuant to Item 2.02 and Item 7.01 of Form 8-K promulgated by the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be “filed” with the SEC for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits



10		Transition Agreement by and between Patterson Companies, Inc. and Ann B. Gugino, dated March 1, 2018.

99		Press Release of Patterson Companies, Inc., dated March 1, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	PATTERSON COMPANIES, INC.

Date: March 1, 2018	By:	/s/ Les B. Korsh
		Les B. Korsh
		Vice President, General Counsel and Secretary

Exhibit 10

TRANSITION AGREEMENT

This Transition Agreement (“Agreement”) is between Patterson Companies, Inc., on behalf of itself, its affiliated and related entities, and any of their respective direct or indirect subsidiaries (collectively referred to herein as the “Company” or “Patterson”), and Ann B. Gugino (referred to herein as “Executive”) (Patterson and Executive are collectively referred to herein as “Parties”). This Agreement is effective fifteen (15) days from the date on which it is signed by all Parties hereto (“Effective Date”).

WHEREAS, Executive is employed as Patterson’s Executive Vice President, Chief Financial Officer and Treasurer;

WHEREAS, the Parties have reached a mutual agreement by which Executive’s employment with Patterson will end effective July 31, 2018;

WHEREAS, the Parties agree that in the interim prior to Executive’s separation Executive will remain employed at Patterson; and

WHEREAS, the Parties desire to set forth the terms under which Executive will be employed prior to her separation;

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, it is hereby agreed by and between the Parties as follows:

I.	EMPLOYMENT TRANSITION AND SEPARATION

Transition Date . Executive will transition from her current position as Executive Vice President, Chief Financial Officer and Treasurer to Special Advisor effective March 1, 2018 (the “Transition Date”). As of the Transition Date, Executive agrees to resign from any and all officer and director positions she then holds with the Company. In her role as Special Advisor, Executive will perform special project consulting on an as-needed basis, as reasonably requested by the Company.

Separation Date . Executive’s employment at Patterson as Special Advisor will end effective July 31, 2018 (the “Separation Date”). The period between the date of Executive’s execution of this Agreement and the Separation Date or earlier termination date shall be referred to as the “Transition Period.” Executive remains subject to termination for Cause (as defined herein) during the Transition Period.

II.

TRANSITION PERIOD

The following terms shall apply during the Transition Period, conditioned upon Executive’s continued employment during that time:

Salary . Executive shall be paid her current salary during the Transition Period. Executive shall receive no salary after the Transition Period.

Non-Equity Incentive Plan Compensation . Executive shall remain eligible to receive non-equity incentive plan compensation for the fiscal year ending April 28, 2018 under the Company’s Management Incentive Compensation Plan. Executive shall not receive any other additional non-equity incentive plan compensation.

Health and Welfare Benefits . All health and welfare benefits applicable to Executive shall continue in effect subject to plan terms during the Transition Period. Thereafter, Executive shall be permitted to elect to continue health coverage then in effect under Patterson’s plan pursuant to COBRA, 26 U.S.C. § 9801 et seq.; provided, however, that the cost of any such coverage shall be at Executive’s expense. In addition, Executive shall be permitted to continue her coverage under the Company’s group life insurance policy, and then convert that coverage to an individual policy, subject to the terms of the group policy and applicable law, and she shall be responsible for the premiums on such continued and converted coverage.

Restricted Stock Awards/Restricted Stock Units . Executive’s unvested Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”) under the Company’s Amended and Restated Equity Incentive Plan and the Company’s 2015 Omnibus Incentive Plan (collectively, the “Equity Incentive Plans”) shall continue to vest during the Transition Period. Pursuant to the terms of the Executive’s Restricted Stock Award Agreements and Restricted Stock Unit Award Agreements, Executive agrees that any RSAs and RSUs that have not vested on or prior to the end of the Transition Period are forfeited and cancelled. For avoidance of doubt, Executive shall not receive any additional RSAs or RSUs during the Transition Period.

Capital Accumulation Plan . Company and Executive agrees that Section 5(g)(iii) of the Company’s Capital Accumulation Plan (“CAP”) applies as of the Separation Date or earlier termination date.

Employee Stock Ownership Plan (ESOP) . Company and Executive agree that Executive will be eligible for allocations in accordance with the terms of the Patterson Companies, Inc. Employee Stock Ownership Plan.

Performance Stock Units . Executive’s unvested Performance Stock Units (“PSUs”) under the Company’s Equity Incentive Plans shall continue to vest, subject to achievement of required performance metrics, during the Transition Period. Pursuant to the terms of Executive’s Performance Stock Unit Award Agreements, Executive agrees that any PSUs that have not vested on or prior to the end of the Transition Period are forfeited and cancelled. For avoidance of doubt, Executive shall not receive any additional PSUs.

Non-Qualified Stock Options . Executive’s unvested Non-Qualified Stock Options (“NQSOs”) under the Company’s Equity Incentive Plans shall continue to vest during the Transition Period. For avoidance of doubt, all outstanding NQSOs held by Executive as of the end of the Transition Period will, to the extent exercisable as of such date, remain exercisable for a period of 90 days after such date (but in no event after the expiration date of any such NQSO). Pursuant to the terms of Executive’s Non-Qualified Stock Option Award Agreements, Executive agrees that any NQSOs that have not vested on or prior to the end of the Transition Period are forfeited and cancelled. For avoidance of doubt, Executive shall not receive any additional NQSOs.

Company Car . On or prior to the end of the Transition Period, Executive may purchase for her personal use the vehicle which the Company has been leasing for her (such date of purchase, the “Transfer Date”). Upon payment to the Company by Executive of the depreciated value of the vehicle, the Company will arrange for the transfer of title to Executive effective as of the Transfer Date. Executive shall be responsible for all applicable taxes and transfer title fees. Executive acknowledges and agrees that as of the Transfer Date the Company shall no longer insure or maintain the vehicle.

Severance Payment . In exchange for the terms of a separation agreement in substantially the form attached hereto as Exhibit A (“Separation Agreement”) to be entered into at the end of the Transition Period, Executive shall receive, unless Executive has been terminated for Cause, a severance payment in the amount of $648,000. This total severance amount shall be paid to Executive in installments of $75,000 for each of the first five months and $21,000 for each of the next thirteen months pursuant to the Company’s regular payroll dates and procedures during the period between the effective date of the Separation Agreement and January 31, 2020. Said payments will commence no later than 60 days after the Separation Date provided that Executive has signed and not rescinded the Separation Agreement.

Acknowledgment . Executive acknowledges that the consideration provided in this Agreement is good and valuable consideration in exchange for the Agreement, and includes payments and benefits to which she is not otherwise entitled.

Withholding . Patterson shall withhold from the compensation payable to Executive under this Section II all appropriate deductions necessary for Patterson to satisfy its withholding obligations under federal, state and local income and employment tax laws.

Cause Defined . “Cause” as used herein means: (a) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to and injurious to the Company; (b) any unlawful or criminal activity of a serious nature; (c) any intentional and deliberate breach of a duty or duties

that, individually or in the aggregate, are material in relation to Executive’s overall duties; (d) any material breach by Executive of any employment, service, confidentiality, non-compete or non-solicitation agreement entered into with the Company; or (e) any misconduct requiring the Company to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws.

III.

EXECUTIVE AGREEMENTS

In exchange for the payments and benefits promised to Executive in this Agreement, Executive agrees as follows:

Non-Encouragement Provision . Executive agrees that she will not instigate, cause, advise or encourage any other persons, groups of persons, corporations, partnerships or any other entity to file litigation against the Company.

Litigation Hold . Executive agrees that during her employment with the Company she was provided with, and became subject to, one or more Company-issued litigation hold notices directing her to preserve specific categories of documents and electronically stored information (“ESI”) that may be potentially relevant to an existing or threatened legal action (“Potential Evidence”). Executive represents and warrants that she will make reasonable and good faith efforts to preserve all Potential Evidence in Executive’s possession, custody or control during the Transition Period and following her employment with the Company. This commitment to preserve Potential Evidence shall extend to any and all ESI (and its metadata) existing on: (1) any free-standing or networked computer or server in Executive’s personal possession, including any laptop, mobile phone, tablet, digital music device or digital camera and (2) any device that may store ESI, including internal and external hard or flash disk drives, as well as any optical or magnetic media. Executive further represents and warrants that she will make best efforts to cooperate with the Company in connection with any legal obligation that the Company may have in the future to obtain, review and produce any Potential Evidence in Executive’s possession, custody or control.

Cooperation in Pending or Transitional Matters . Through January 31, 2020, Executive shall make herself reasonably available to the Company to answer questions, provide information and otherwise cooperate with the Company in any pending or transitional matters on which she may have worked or about which she may have personal knowledge. Executive agrees to cooperate fully with the Company, including its attorneys, managers and accountants, in connection with any transitional matters, potential or actual litigation, or other real or potential disputes, which directly or indirectly involve the Company. The Company shall reimburse Executive for reasonable expenses incurred by Executive in connection with such cooperation provided that the Company has given prior written approval for Executive to incur such expense.

Non-competition and Notification . During the Transition Period and through January 31, 2020, Executive agrees not to directly or indirectly engage in, be interested in, or be employed by, anywhere in the United States, Canada or the United Kingdom, any direct competitor of the Company (including, without limitation, Henry Schein, Inc., Benco Dental Supply Company, Burkhart Dental Supply Co., and Amazon.com, Inc.) or any other business which offers, markets or sells any service or product that competes directly with any services or products of the Company, except with written consent of the Company, which consent will not be unreasonably withheld. By way of example, but not by way of limitation, “any service or product that competes directly with any services or products of the Company” includes dental services, dental products, animal health services and animal health products. For purposes of this provision, Executive shall be deemed to be interested in a business if she is engaged or interested in that business as a stockholder, director, officer, employee, salesperson, sales representative, agent, partner, individual proprietor, consultant, or otherwise, but not if such interest is limited solely to the ownership of 2% or less of the equity or debt securities of any class of a corporation whose shares are listed for trading on a national securities exchange or traded in the over-the-counter market.

In the event that Executive obtains new employment on or prior to January 31, 2020, Executive shall: (i) disclose this Agreement to her new employer prior to beginning the employment; and (ii) notify the Company of the identity of her new employer within seven (7) days after accepting any offer of employment by sending a written notification to the Company.

Executive agrees that the foregoing restrictions are in consideration of the payments received by Executive in accordance with this Agreement and that the restrictions are reasonable and necessary for the purpose of protecting Patterson’s legitimate business interests. Executive agrees that the scope of the business of the Company is independent of the location (such that it is not practical to limit the restrictions contained herein to a specific state, city or part thereof) and therefore acknowledges and agrees that the geographic scope of this restriction throughout the United States, Canada and the United Kingdom is reasonable and necessary.

Executive further agrees that the remedy of damages at law for breach by Executive of any of the covenants and obligations contained in this Agreement is an inadequate remedy. In recognition of the irreparable harm that a violation by Executive of the covenants and obligations in this Agreement would cause Patterson, or any company with which Patterson has a business relationship, Executive agrees that if she breaches or proposes to breach, any provision of this Agreement, Patterson shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach or proposed breach without showing or proving any actual damage to Patterson, it being understood by Executive and Patterson that both damages and equitable relief shall be proper modes of relief and are not to be considered alternative remedies.

No Solicitation of Executives . Executive further agrees that during the Transition Period and through January 31, 2020, she shall not directly or indirectly, whether individually or as an owner, agent, representative, consultant or employee, participate or assist any individual or business entity to solicit, employ or conspire with others to employ any of the Company’s employees. The term “employ” for purposes of this section means to enter into an arrangement for services as a full-time or part-time employee, independent contractor, agent or otherwise.

Confidential Information . Executive acknowledges that in the course of her employment with the Company, she has had access to Confidential Information. “Confidential Information” includes but is not limited to information not generally known to the public, in spoken, printed, electronic or any other form or medium relating directly or indirectly to: business processes, practices, policies, plans, documents, operations, services and strategies; contracts, transactions, and potential transactions; negotiations and pending negotiations; proprietary information, trade secrets and intellectual property; supplier and vendor agreements, strategies, plans and information; financial information and results, accounting information and records; legal strategies and information; marketing plans and strategies; pricing strategies; personnel information and staffing and succession planning practices and strategies; internal controls and security policies, strategies and procedures; and/or other confidential business information that she has learned, received or used at any time during her employment with Patterson whether or not such information has been previously identified as confidential or proprietary.

The Confidential Information may be contained in written materials, such as documents, files, reports, manuals, drawings, diagrams, blueprints and correspondence, as well as computer hardware and software, and electronic or other form or media. It may also consist of unwritten knowledge, including ideas, research, processes, plans, practices and know-how.

Confidential Information does not include information that is in the public domain or information generally known in the trade, other than as a result of a disclosure by or through Executive in violation of this Agreement or by another person in breach of a confidentiality obligation. Further, information that Executive acquired completely independently of her employment with Patterson is not considered to be Confidential Information.

Executive agrees that she shall not, at any time, disclose or otherwise make available Confidential Information to any person, company or other party. Further, Executive shall not use or disclose any Confidential Information at any time without Patterson’s prior written consent. This Agreement shall not limit any obligations Executive has under any confidentiality agreement or applicable law.

Company Property and Return of Property . Executive acknowledges that as of the end of the Transition Period, she will return her Patterson-issued cellular phone and her Patterson-issued computer to the Company for processing. Within 21 days after the Transition Period, she will return all originals and copies of any documents, materials or property of Patterson, whether generated by her or any other person on her behalf or on behalf of Patterson or its vendors. All documents, files, records, reports, policies, training materials, communications

materials, lists and information, e-mail messages, products, keys and access cards, cellular phones, computers, other materials, equipment, physical and electronic property, whether or not pertaining to Confidential Information, which were furnished to Executive by the Company, purchased or leased at the expense of the Company, or produced by the Company or Executive in connection with Executive’s employment will be and remain the sole property of the Company, except as otherwise provided herein. All copies of property, whether in tangible or intangible form, are also the property of the Company. Executive agrees that she will not retain any paper or electronic copies of these documents and materials.

Executive agrees that Patterson may open all mail (including but not limited to regular mail, electronic mail and voicemail) delivered to the Company and addressed to her.

General Waiver and Release by Executive . As a material inducement to the Company to enter into this Agreement, and in consideration of the Company’s promise to make the payments set forth in this Agreement, Executive hereby knowingly and voluntarily releases Patterson, its affiliated and related entities, and any of their respective direct or indirect subsidiaries, and its and their respective officers, employees, agents, insurers, representatives, counsel, shareholders, directors, successors and assigns (“Releasees”) from all liability for damages or claims of any kind arising out of any actions, decisions, or events occurring through the date of Executive’s execution of this Agreement.

Executive understands that she is giving up any and all claims, complaints, causes of action or demands of any kind that she has or may have for claims arising under or based on Title VII of the Civil Rights Act, the Equal Pay Act, Executive Order 11246, the Americans with Disabilities Act, The Genetic Information Nondiscrimination Act of 2008, the Employee Retirement Income Security Act (“ERISA”) with respect to unvested benefits, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the Uniform Services Employment and Reemployment Rights Act, the Minnesota Human Rights Act, any other state or local antidiscrimination, civil rights and human rights statutes, or any other federal state or local law which claims can be properly released through this Agreement. Executive further understands that this release extends to but is not limited to all claims that she has or may have for wrongful discharge, breach of contract, promissory estoppel or breach of an express or implied promise, misrepresentation or fraud, retaliation, infliction of emotional distress, defamation, or otherwise based on any theory arising from or related to her employment or separation of her employment with Patterson, or any other fact or matter occurring prior to her execution of this Agreement. Executive recognizes and understands that this Agreement does not seek to release claims that may not by law or otherwise be released, including but not limited to claims under the Fair Labor Standards Act, workers compensation or unemployment statutes, False Claims Act claims (Qui Tam), claims for vested rights under ERISA, and Executive’s right, pursuant to applicable law and the Company’s articles and bylaws, to seek to be defended and indemnified by the Company in the event a claim is asserted against her for acts that arose within the course and scope of her employment .

Class Action Waiver . Any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, including the breach, termination or validity thereof, shall be finally resolved by arbitration. The tribunal shall have the power to rule on any challenge to its own jurisdiction or to the validity or enforceability of any portion of the agreement to arbitrate. The Parties agree to arbitrate solely on an individual basis, and that this agreement to arbitrate does not permit class arbitration or any claims brought as a plaintiff or class member in any class or representative arbitration proceeding. The arbitral tribunal may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class proceeding. In the event the prohibition on class arbitration is deemed invalid or unenforceable, then the remaining portions of the arbitration agreement will remain in force.

No Waiver of Rights . Executive understands this release does not apply to any claims or rights that the law does not allow to be waived, any claims or rights that may arise after the date that she signs this release, or any claims for breach of this Agreement. Moreover, nothing in this release including but not limited to the release of claims, the promise not to sue, the confidentiality obligations, and the return of property provision generally prevents Executive, without providing prior notice to the Company, from filing a charge or complaint with or from participating in an investigation or proceeding conducted by or contacting or communicating with the EEOC, NLRB, SEC, FINRA, or any other federal, state or local agency charged with the enforcement of any laws, although by signing this release Executive is waiving her right to individual relief based on claims asserted in such a charge or complaint or receipt of any award for providing information to such governmental agency, except where such a waiver is prohibited under SEC rules or other applicable law.

Reasonable and Necessary . Executive acknowledges that she is a key employee of the Company and that Executive participates in and contributes to key phases of the Company’s operations. Executive agrees that the covenants provided for in this Section III are reasonable and necessary to protect the Company and its confidential information, goodwill and other legitimate business interests and, without such protection, the Company’s relationships and competitive advantage would be materially adversely affected. Executive agrees that the provisions of this Section III are an essential inducement to the Company to enter into this Agreement and they are in addition to, rather than in lieu of, any similar or related covenants to which Executive is a party or by which she is bound. Executive further acknowledges that the restrictions contained in this Section III shall not impose an undue hardship on her since she has general business skills which may be used in industries other than that in which the Company conducts its business and shall not deprive Executive of her livelihood. In exchange for Executive agreeing to be bound by these reasonable and necessary covenants, the Company is providing Executive with the benefits as set forth in this Agreement, including

without limitation the compensation set forth in Section II. Employee acknowledges and agrees that these benefits constitute full and adequate consideration for her obligations hereunder and will be provided only if she signs and does not rescind this Agreement. Executive further acknowledges and agrees that in the event Executive is terminated for Cause prior to the Separation Date, and therefore will not be paid the severance set forth in Section II(J), she remains bound by the provisions of this Section III. In the event Executive breaches the terms of this Section III, the severance and other payments made to Executive hereunder are subject to cessation and repayment as set forth in Section V(A) of this Agreement.

IV.

ACCEPTANCE AND RESCISSION PERIOD

By executing the Agreement below, Executive confirms and acknowledges that she has reviewed the information about the offer described above and given to her as part of this Agreement. Executive further acknowledges that she has been granted twenty-one (21) days from the date she received this Agreement within which to consider this Agreement. Executive further acknowledges that by virtue of being presented with this Agreement, she is hereby advised in writing to consult with legal counsel prior to executing this Agreement. Executive acknowledges that if she executes this Agreement prior to the expiration of twenty-one (21) days, or chooses to forgo the advice of legal counsel, she has done so freely and knowingly, and she waives any and all future claims that such action or actions would affect the validity of this Agreement. Executive acknowledges that any changes made to this Agreement after its first presentation to her, whether material or immaterial, do not re-start the tolling of this twenty-one (21) day period.

Executive may cancel this Agreement at any time on or before the fifteenth (15th) day following the date on which she signs the Agreement to assert alleged claims under the Minnesota Human Rights Act. Executive also may cancel this Agreement at any time on or before the seventh (7th) day following the date on which she signs the Agreement to assert alleged claims under the Age Discrimination of Employment Act. To be effective, the decision to cancel must be in writing and delivered to the Company, personally or by certified mail, to the attention of the General Counsel, Patterson Companies, Inc., 1031 Mendota Heights Road, St. Paul, MN 55120 on or before the applicable fifteenth (15th) or seventh (7 ^th ) day after she signs the Agreement. If the release provisions of Section III are held invalid for any reason whatsoever, Executive agrees to return any consideration received under the terms of the Agreement to which she is not otherwise entitled absent this Agreement and that the Company is released from any obligations under the Agreement. By accepting the payments described in Section II of this Agreement, Executive acknowledges that the revocation periods have expired and that she did not revoke this Agreement.

V.	GENERAL PROVISIONS

Effect of Breach/Early Termination for Cause . In the event that the Company determines after consultation with legal counsel that Executive has materially breached any provision of this Agreement or her employment is terminated by the Company prior to the Separation Date for Cause, Executive agrees that all payments yet to be paid under this Agreement shall immediately cease and be

forfeited and Executive will immediately repay all moneys paid to her under this Agreement to which she is not otherwise entitled absent this Agreement; provided, however, that Executive will be entitled to resumption of payments and repayment of recollected amounts if an arbitrator or court subsequently issues a final determination ordering the same. Executive further agrees that she shall be obligated to reimburse the Company for its attorneys’ fees and costs incurred if necessary in collecting the money and successfully enforcing the terms of this Section V(A).

Knowing and Voluntary Execution . Executive acknowledges that this Agreement confirms the transition and separation of Executive’s employment with Patterson and that this Agreement is entered into knowingly and voluntarily with full recognition and acceptance of the consequences of such act. Executive agrees that the payments listed above exceed that to which she would otherwise have been entitled, and that the extra payment is in exchange for signing this Agreement. Executive further acknowledges that she has had an opportunity to consult with the attorneys of her choice to explain the terms of this Agreement and the consequences of signing it.

No Admission . This Agreement is not an admission by Patterson that it has acted wrongfully and Patterson disclaims any liability to Executive or any other person on the part of itself, its affiliated and related entities, and any of their respective direct or indirect subsidiaries, and its and their respective officers, employees, agents, insurers, representatives, counsel, shareholders, directors, successors and assigns.

Governing Law . This Agreement and the legal relations between the Parties shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota. If any part of this Agreement is construed to be in violation of the law, such part will be modified to achieve the objective of the Parties to the fullest extent permitted and the balance of this Agreement shall remain in full force and effect.

Entire Agreement . Executive and the Company each represent and warrant that no promise or inducement has been offered or made except as set forth and that the consideration stated is the sole consideration for this Agreement. This Agreement is a complete agreement and states fully all agreements, understandings, promises, and commitments between Executive and the Company as to the transition and separation of Executive’s employment. If any portion of this Agreement is held to be void and unenforceable by a court of competent jurisdiction, the waiver and release set forth in Section III of this Agreement shall nevertheless be binding upon the Parties and remain in full force and effect.

No Oral Amendments . This Agreement may not be changed except by an instrument in writing signed by the Parties.

Counterparts . The Parties agree that this Agreement may be executed in counterparts and each executed counterpart shall be as effective as a signed original. Photographic or faxed copies of such signed counterparts may be used in lieu of the originals for any purpose.

Successors and Assigns . The Parties agree that this Agreement shall be binding upon and inure to the benefit of all Parties and their respective representatives, predecessors, heirs, successors and assigns.

Defense to Future Claims . Executive agrees that in the event that any claim, suit or action shall be commenced by her against the Company arising out of any charge, claim or cause of action of any nature whatsoever, known or unknown, including, but not limited to, claims, suits or actions relating to her employment with Patterson or any prior agreement with Patterson, through this date, this Agreement shall constitute a complete defense to any such claims, suits or actions so instituted.

Section 409A . Notwithstanding any other provision of this Agreement to the contrary, the Parties agree that the payments hereunder shall be exempt from, or satisfy the applicable requirements, if any, of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) in a manner that will preclude the imposition of penalties described in Code Section 409A. Payments made pursuant to this Agreement are intended to satisfy the short-term deferral rule or separation pay exception within the meaning of Code Section 409A.

Executive’s termination of employment shall mean a “separation from service” within the meaning of Code Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall, to the maximum extent possible, be administered, interpreted and construed in a manner consistent with Code Section 409A; provided, that in no event shall the Company have any obligation to indemnify the Executive from the effect of any taxes under Code Section 409A. The parties intend that this Agreement will be administered in accordance with Section 409A of the Code and to the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with, or are exempt from, Section 409A of the Code. The parties agree to cooperate so that this Agreement may be amended, as may be necessary to fully comply with, or to be exempt from, Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

Acknowledgement . Executive affirms that she has read this Agreement and been advised that she has twenty-one (21) days from the date she received it to sign this Agreement, and that she has been advised in writing to consult with an attorney prior to signing this Agreement. Executive affirms that the provisions of this Agreement are understandable to her and she has entered into this Agreement freely and voluntarily.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF , the Parties have executed this Agreement by their signatures below.


Dated: March 1, 2018	/s/ Ann B. Gugino
	Ann B. Gugino

Dated: March 1, 2018	Patterson Companies, Inc.

	By:	/s/ Mark S. Walchirk
		Mark S. Walchirk
		Chief Executive Officer

EXHIBIT A

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is between Patterson Companies, Inc., on behalf of itself, its affiliated and related entities, and any of their respective direct or indirect subsidiaries (collectively referred to herein as the “Company” or “Patterson”), and Ann B. Gugino (referred to herein as “Employee”) (Patterson and Employee are collectively referred to herein as “Parties”). This Agreement is effective fifteen (15) days from the date on which it is signed by all Parties hereto (“Effective Date”).

WHEREAS, Employee has been employed as Patterson’s Special Advisor pursuant to the terms of the Transition Agreement dated March 1, 2018 (the “Transition Agreement”);

WHEREAS, Employee’s employment with the Company shall end effective July 31, 2018;

WHEREAS, the Parties desire to settle fully and finally all matters between them and ensure that Employee’s departure from the Company is amicable and that all matters, actual and/or potential, between the Company and Employee are fully and finally resolved; and

WHEREAS, as a condition to the Company’s payment to Employee of the severance payments and benefits set forth in the Transition Agreement, Employee is required to sign and not revoke a waiver and release agreement in a form acceptable to the Company;

I.	EMPLOYMENT SEPARATION

Separation Date . Effective July 31, 2018, Employee’s position as an employee of the Company shall hereby end (the “Separation Date”). As of the Separation Date, Employee hereby also resigns from any and all officer positions, if any, she then holds with the Company.

Separation . Effective on the Separation Date, Employee shall have no further rights deriving from Employee’s employment by the Company, and shall not be entitled to any further compensation or non-vested benefits, except as provided in this Agreement and/or in accordance with applicable law.

II.

CONSIDERATION

If Employee chooses to execute this Agreement, the Company will provide her with the following payments to which she would not be entitled absent her execution of this Agreement. Employee acknowledges and agrees that the consideration described in this Agreement shall be paid in the place of any amount to which he may have been entitled under any oral or written severance policy or plan at the Company.

Salary . Employee shall be paid her current salary through the Separation Date. Employee shall receive no salary after the Separation Date.

Non-Equity Incentive Plan Compensation . Employee shall remain eligible to receive non-equity incentive plan compensation for the fiscal year ending April 28, 2018 under the Company’s Management Incentive Compensation Plan. Employee shall not receive any other additional non-equity incentive plan compensation.

Health and Welfare Benefits . All health and welfare benefits applicable to Employee shall continue in effect until July 31, 2018. Beginning August 1, 2018, Employee shall be permitted to elect to continue health coverage then in effect under Patterson’s plan pursuant to COBRA, 26 U.S.C. § 9801 et seq.; provided, however, that the cost of any such coverage shall be at Employee’s expense. In addition, Employee shall be permitted to continue her coverage under the Company’s group life insurance policy, and then convert that coverage to an individual policy, subject to the terms of the group policy and applicable law, and she shall be responsible for the premiums on such continued and converted coverage.

Restricted Stock Awards/Restricted Stock Units . Employee’s unvested Restricted Stock Awards (“RSAs”) and Restricted Stock Units (“RSUs”) under the Company’s Amended and Restated Equity Incentive Plan and the Company’s 2015 Omnibus Incentive Plan (collectively, the “Equity Incentive Plans”) shall continue to vest through the Separation Date. Pursuant to the terms of the Employee’s Restricted Stock Award Agreements and Restricted Stock Unit Award Agreements, Employee agrees that any RSAs and RSUs that have not vested on or prior to the Separation Date are forfeited and cancelled. For avoidance of doubt, Employee shall not receive any additional RSAs or RSUs.

Capital Accumulation Plan . Company and Employee agrees that Section 5(g)(iii) of the Company’s Capital Accumulation Plan (“CAP”) applies.

Employee Stock Ownership Plan (ESOP) . Company and Employee agree that Employee will be eligible for allocations in accordance with the terms of the Patterson Companies, Inc. Employee Stock Ownership Plan.

Performance Stock Units . Employee’s unvested Performance Stock Units (“PSUs”) under the Company’s Equity Incentive Plans shall continue to vest, subject to achievement of required performance metrics, through the Separation Date. Pursuant to the terms of Employee’s Performance Stock Unit Award Agreements, Employee agrees that any PSUs that have not vested on or prior to the Separation Date are forfeited and cancelled. For avoidance of doubt, Employee shall not receive any additional PSUs.

Non-Qualified Stock Options . Employee’s unvested Non-Qualified Stock Options (“NQSOs”) under the Company’s Equity Incentive Plans shall continue to vest through the Separation Date. For avoidance of doubt, all outstanding NQSOs held by Employee as of the Separation Date will, to the extent exercisable

as of such date, remain exercisable for a period of 90 days after such date (but in no event after the expiration date of any such NQSO). Pursuant to the terms of Employee’s Non-Qualified Stock Option Award Agreements, Employee agrees that any NQSOs that have not vested on or prior to the Separation Date are forfeited and cancelled. For avoidance of doubt, Employee shall not receive any additional NQSOs.

Company Car . On or prior to the Separation Date, Employee may purchase for her personal use the vehicle which the Company has been leasing for her (such date of purchase, the “Transfer Date”). Upon payment to the Company by Employee of the depreciated value of the vehicle, the Company will arrange for the transfer of title to Employee effective as of the Transfer Date. Employee shall be responsible for all applicable taxes and transfer title fees. Employee acknowledges and agrees that as of the Transfer Date the Company shall no longer insure or maintain the vehicle.

Severance Payment . In exchange for the terms of this Agreement, Employee shall receive a severance payment in the amount of $648,000. This total severance amount shall be paid to Employee in installments of $75,000 for each of the first five months and $21,000 for each of the next thirteen months pursuant to the Company’s regular payroll dates and procedures during the period between the effective date of the Separation Agreement and January 31, 2020. Said payments will commence no later than 60 days after the Separation Date provided that Employee has signed and not rescinded this Agreement.

Acknowledgment . Employee acknowledges that the consideration provided in this Agreement is good and valuable consideration in exchange for the Agreement, and includes payments and benefits to which she is not otherwise entitled.

Withholding . Patterson shall withhold from the compensation payable to Employee under this Section II all appropriate deductions necessary for Patterson to satisfy its withholding obligations under federal, state and local income and employment tax laws.

III.

EMPLOYEE AGREEMENTS

In exchange for the payments and benefits promised to Employee in this Agreement, Employee agrees as follows:

Non-Encouragement Provision . Employee agrees that she will not instigate, cause, advise or encourage any other persons, groups of persons, corporations, partnerships or any other entity to file litigation against the Company.

Litigation Hold . Employee agrees that during her employment with the Company she was provided with, and became subject to, one or more Company-issued litigation hold notices directing her to preserve specific categories of documents and electronically stored information (“ESI”) that may be potentially relevant to an existing or threatened legal action (“Potential Evidence”).

Employee represents and warrants that she will make reasonable and good faith efforts to preserve all Potential Evidence in Employee’s possession, custody or control. This commitment to preserve Potential Evidence shall extend to any and all ESI (and its metadata) existing on: (1) any free-standing or networked computer or server in Employee’s personal possession, including any laptop, mobile phone, tablet, digital music device or digital camera and (2) any device that may store ESI, including internal and external hard or flash disk drives, as well as any optical or magnetic media. Employee further represents and warrants that she will make best efforts to cooperate with the Company in connection with any legal obligation that the Company may have in the future to obtain, review and produce any Potential Evidence in Employee’s possession, custody or control.

Cooperation in Pending or Transitional Matters . Through January 31, 2020, Employee shall make herself reasonably available to the Company to answer questions, provide information and otherwise cooperate with the Company in any pending or transitional matters on which she may have worked or about which she may have personal knowledge. Employee agrees to cooperate fully with the Company, including its attorneys, managers and accountants, in connection with any transitional matters, potential or actual litigation, or other real or potential disputes, which directly or indirectly involve the Company. The Company shall reimburse Employee for reasonable expenses incurred by Employee in connection with such cooperation provided that the Company has given prior written approval for Employee to incur such expense.

Non-competition and Notification . Through January 31, 2020, Employee agrees not to directly or indirectly engage in, be interested in, or be employed by, anywhere in the United States, Canada or the United Kingdom, any direct competitor of the Company (including, without limitation, Henry Schein, Inc., Benco Dental Supply Company, Burkhart Dental Supply Co., and Amazon.com, Inc.) or any other business which offers, markets or sells any service or product that competes directly with any services or products of the Company, except with written consent of the Company, which consent will not be unreasonably withheld. By way of example, but not by way of limitation, “any service or product that competes directly with any services or products of the Company” includes dental services, dental products, animal health services and animal health products. For purposes of this provision, Employee shall be deemed to be interested in a business if she is engaged or interested in that business as a stockholder, director, officer, employee, salesperson, sales representative, agent, partner, individual proprietor, consultant, or otherwise, but not if such interest is limited solely to the ownership of 2% or less of the equity or debt securities of any class of a corporation whose shares are listed for trading on a national securities exchange or traded in the over-the-counter market.

In the event that Employee obtains new employment on or prior to January 31, 2020, Employee shall: (i) disclose this Agreement to her new employer prior to beginning the employment; and (ii) notify the Company of the identity of her new employer within seven (7) days after accepting any offer of employment by sending a written notification to the Company.

Employee agrees that the foregoing restrictions are in consideration of the payments received by Employee in accordance with this Agreement and that the restrictions are reasonable and necessary for the purpose of protecting Patterson’s legitimate business interests. Employee agrees that the scope of the business of the Company is independent of the location (such that it is not practical to limit the restrictions contained herein to a specific state, city or part thereof) and therefore acknowledges and agrees that the geographic scope of this restriction throughout the United States, Canada and the United Kingdom is reasonable and necessary.

Employee further agrees that the remedy of damages at law for breach by Employee of any of the covenants and obligations contained in this Agreement is an inadequate remedy. In recognition of the irreparable harm that a violation by Employee of the covenants and obligations in this Agreement would cause Patterson, or any company with which Patterson has a business relationship, Employee agrees that if she breaches or proposes to breach, any provision of this Agreement, Patterson shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach or proposed breach without showing or proving any actual damage to Patterson, it being understood by Employee and Patterson that both damages and equitable relief shall be proper modes of relief and are not to be considered alternative remedies.

No Solicitation of Employees . Through January 31, 2020, she shall not directly or indirectly, whether individually or as an owner, agent, representative, consultant or employee, participate or assist any individual or business entity to solicit, employ or conspire with others to employ any of the Company’s employees. The term “employ” for purposes of this section means to enter into an arrangement for services as a full-time or part-time employee, independent contractor, agent or otherwise.

Confidential Information . Employee acknowledges that in the course of her employment with the Company, she has had access to Confidential Information. “Confidential Information” includes but is not limited to information not generally known to the public, in spoken, printed, electronic or any other form or medium relating directly or indirectly to: business processes, practices, policies, plans, documents, operations, services and strategies; contracts, transactions, and potential transactions; negotiations and pending negotiations; proprietary information, trade secrets and intellectual property; supplier and vendor agreements, strategies, plans and information; financial information and results, accounting information and records; legal strategies and information; marketing plans and strategies; pricing strategies; personnel information and staffing and succession planning practices and strategies; internal controls and security policies, strategies and procedures; and/or other confidential business information that she has learned, received or used at any time during her employment with Patterson whether or not such information has been previously identified as confidential or proprietary.

Confidential Information does not include information that is in the public domain or information generally known in the trade, other than as a result of a disclosure by or through Employee in violation of this Agreement or by another person in breach of a confidentiality obligation. Further, information that Employee acquired completely independently of her employment with Patterson is not considered to be Confidential Information.

Employee agrees that she shall not, at any time, disclose or otherwise make available Confidential Information to any person, company or other party. Further, Employee shall not use or disclose any Confidential Information at any time without Patterson’s prior written consent. This Agreement shall not limit any obligations Employee has under any confidentiality agreement or applicable law.

Company Property and Return of Property . Employee acknowledges that as of the Separation Date, she will return her Patterson-issued cellular phone and her Patterson-issued computer to the Company for processing. Within 21 days after the Separation Date, she will return all originals and copies of any documents, materials or property of Patterson, whether generated by her or any other person on her behalf or on behalf of Patterson or its vendors. All documents, files, records, reports, policies, training materials, communications materials, lists and information, e-mail messages, products, keys and access cards, cellular phones, computers, other materials, equipment, physical and electronic property, whether or not pertaining to Confidential Information, which were furnished to Employee by the Company, purchased or leased at the expense of the Company, or produced by the Company or Employee in connection with Employee’s employment will be and remain the sole property of the Company, except as otherwise provided herein. All copies of property, whether in tangible or intangible form, are also the property of the Company. Employee agrees that she will not retain any paper or electronic copies of these documents and materials.

Employee agrees that Patterson may open all mail (including but not limited to regular mail, electronic mail and voicemail) delivered to the Company and addressed to her.

General Waiver and Release by Employee . As a material inducement to the Company to enter into this Agreement, and in consideration of the Company’s promise to make the payments set forth in this Agreement, Employee hereby knowingly and voluntarily releases Patterson, its affiliated and related entities, and any of their respective direct or indirect subsidiaries, and its and their respective officers, employees, agents, insurers, representatives, counsel, shareholders, directors, successors and assigns (“Releasees”) from all liability for damages or claims of any kind arising out of any actions, decisions, or events occurring through the date of Employee’s execution of this Agreement.

Employee understands that she is giving up any and all claims, complaints, causes of action or demands of any kind that she has or may have for claims arising under or based on Title VII of the Civil Rights Act, the Equal Pay Act, Employee Order 11246, the Americans with Disabilities Act, The Genetic Information Nondiscrimination Act of 2008, the Employee Retirement Income Security Act (“ERISA”) with respect to unvested benefits, the Age Discrimination in Employment Act, the Family and Medical Leave Act, the Sarbanes-Oxley Act of 2002, the Worker Adjustment and Retraining Notification Act, the Uniform Services Employment and Reemployment Rights Act, the Minnesota Human Rights Act, any other state or local antidiscrimination, civil rights and human rights statutes, or any other federal state or local law which claims can be properly released through this Agreement. Employee further understands that this release extends to but is not limited to all claims that she has or may have for wrongful discharge, breach of contract, promissory estoppel or breach of an express or implied promise, misrepresentation or fraud, retaliation, infliction of emotional distress, defamation, or otherwise based on any theory arising from or related to her employment or separation of her employment with Patterson, or any other fact or matter occurring prior to her execution of this Agreement. Employee recognizes and understands that this Agreement does not seek to release claims that may not by law or otherwise be released, including but not limited to claims under the Fair Labor Standards Act, workers compensation or unemployment statutes, False Claims Act claims (Qui Tam), claims for vested rights under ERISA, and Employee’s right, pursuant to applicable law and the Company’s articles and bylaws, to seek to be defended and indemnified by the Company in the event a claim is asserted against her for acts that arose within the course and scope of her employment .

No Waiver of Rights . Employee understands this release does not apply to any claims or rights that the law does not allow to be waived, any claims or rights that may arise after the date that she signs this release, or any claims for breach of this Agreement. Moreover, nothing in this release including but not limited to the release of claims, the promise not to sue, the confidentiality obligations, and the

return of property provision generally prevents Employee, without providing prior notice to the Company, from filing a charge or complaint with or from participating in an investigation or proceeding conducted by or contacting or communicating with the EEOC, NLRB, SEC, FINRA, or any other federal, state or local agency charged with the enforcement of any laws, although by signing this release Employee is waiving her right to individual relief based on claims asserted in such a charge or complaint or receipt of any award for providing information to such governmental agency, except where such a waiver is prohibited under SEC rules or other applicable law.

Reasonable and Necessary . Employee acknowledges that she was a key employee of the Company and that Employee participated in and contributed to key phases of the Company’s operations. Employee agrees that the covenants provided for in this Section III are reasonable and necessary to protect the Company and its confidential information, goodwill and other legitimate business interests and, without such protection, the Company’s relationships and competitive advantage would be materially adversely affected. Employee agrees that the provisions of this Section III are an essential inducement to the Company to enter into this Agreement and they are in addition to, rather than in lieu of, any similar or related covenants to which Employee is a party or by which she is bound. Employee further acknowledges that the restrictions contained in this Section III shall not impose an undue hardship on her since she has general business skills which may be used in industries other than that in which the Company conducts its business and shall not deprive Employee of her livelihood. In exchange for Employee agreeing to be bound by these reasonable and necessary covenants, the Company is providing Employee with the benefits as set forth in this Agreement, including without limitation the compensation set forth in Section II. Employee acknowledges and agrees that these benefits constitute full and adequate consideration for her obligations hereunder and will be provided only if she signs and does not rescind this Agreement. In the event Employee breaches the terms of this Section III, the severance and other payments made to Employee hereunder are subject to cessation and repayment as set forth in Section V(A) of this Agreement.

IV.

ACCEPTANCE AND RESCISSION PERIOD

By executing the Agreement below, Employee confirms and acknowledges that she has reviewed the information about the offer described above and given to her as part of this Agreement. Employee further acknowledges that she has been granted twenty-one (21) days from the date she received this Agreement within which to consider this Agreement. Employee further acknowledges that by virtue of being presented with this Agreement, she is hereby advised in writing to consult with legal counsel prior to executing this Agreement. Employee acknowledges that if she executes this Agreement prior to the expiration of twenty-one (21) days, or chooses to forgo the advice of legal counsel, she has done so freely and knowingly, and she waives any and all future claims that such action or actions would affect the validity of this Agreement. Employee acknowledges that any changes made to this Agreement after its first presentation to her, whether material or immaterial, do not re-start the tolling of this twenty-one (21) day period.

Employee may cancel this Agreement at any time on or before the fifteenth (15th) day following the date on which she signs the Agreement to assert alleged claims under the Minnesota Human Rights Act. Employee also may cancel this Agreement at any time on or before the seventh (7th) day following the date on which she signs the Agreement to assert alleged claims under the Age Discrimination of Employment Act. To be effective, the decision to cancel must be in writing and delivered to the Company, personally or by certified mail, to the attention of the General Counsel, Patterson Companies, Inc., 1031 Mendota Heights Road, St. Paul, MN 55120 on or before the applicable fifteenth (15th) or seventh (7 ^th ) day after she signs the Agreement. If the release provisions of Section III are held invalid for any reason whatsoever, Employee agrees to return any consideration received under the terms of the Agreement to which she is not otherwise entitled absent this Agreement and that the Company is released from any obligations under the Agreement. By accepting the payments described in Section II of this Agreement, Employee acknowledges that the revocation periods have expired and that she did not revoke this Agreement.

V.	GENERAL PROVISIONS

Effect of Breach . In the event that the Company determines after consultation with legal counsel that Employee has materially breached any provision of this Agreement, Employee agrees that all payments yet to be paid under this Agreement shall immediately cease and be forfeited and Employee will immediately repay all moneys paid to her under this Agreement to which she is not otherwise entitled absent this Agreement; provided, however, that Employee will be entitled to resumption of payments and repayment of recollected amounts if an arbitrator or court subsequently issues a final determination ordering the same. Employee further agrees that she shall be obligated to reimburse the Company for its attorneys’ fees and costs incurred if necessary in collecting the money and successfully enforcing the terms of this Section V(A).

Knowing and Voluntary Execution . Employee acknowledges that this Agreement confirms the separation of Employee’s employment with Patterson and that this Agreement is entered into knowingly and voluntarily with full recognition and acceptance of the consequences of such act. Employee agrees that the payments listed above exceed that to which she would otherwise have been entitled, and that the extra payment is in exchange for signing this Agreement. Employee further acknowledges that she has had an opportunity to consult with the attorneys of her choice to explain the terms of this Agreement and the consequences of signing it.

No Admission . This Agreement is not an admission by Patterson that it has acted wrongfully and Patterson disclaims any liability to Employee or any other person on the part of itself, its affiliated and related entities, and any of their respective direct or indirect subsidiaries, and its and their respective officers, employees, agents, insurers, representatives, counsel, shareholders, directors, successors and assigns.

Entire Agreement . Employee and the Company each represent and warrant that no promise or inducement has been offered or made except as set forth and that the consideration stated is the sole consideration for this Agreement. This Agreement is a complete agreement and states fully all agreements, understandings, promises, and commitments between Employee and the Company as to the separation of Employee’s employment. If any portion of this Agreement is held to be void and unenforceable by a court of competent jurisdiction, the waiver and release set forth in Section III of this Agreement shall nevertheless be binding upon the Parties and remain in full force and effect.

No Oral Amendments . This Agreement may not be changed except by an instrument in writing signed by the Parties.

Defense to Future Claims . Employee agrees that in the event that any claim, suit or action shall be commenced by her against the Company arising out of any charge, claim or cause of action of any nature whatsoever, known or unknown, including, but not limited to, claims, suits or actions relating to her employment with Patterson or any prior agreement with Patterson, through this date, this Agreement shall constitute a complete defense to any such claims, suits or actions so instituted.

Employee’s termination of employment shall mean a “separation from service” within the meaning of Code Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall, to the maximum extent possible, be administered, interpreted and construed in a manner consistent with Code Section 409A; provided, that in no event shall the Company have any obligation to indemnify the Employee from the effect of any taxes under Code Section 409A.

The parties intend that this Agreement will be administered in accordance with Section 409A of the Code and to the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner so that all payments hereunder comply with, or are exempt from, Section 409A of the Code. The parties agree to cooperate so that this Agreement may be amended, as may be necessary to fully comply with, or to be exempt from, Section 409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder without additional cost to either party.

Acknowledgement . Employee affirms that she has read this Agreement and been advised that she has twenty-one (21) days from the date she received it to sign this Agreement, and that she has been advised in writing to consult with an attorney prior to signing this Agreement. Employee affirms that the provisions of this Agreement are understandable to her and she has entered into this Agreement freely and voluntarily.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF , the Parties have executed this Agreement by their signatures below.


Dated: _____________, 2018
	Ann B. Gugino

Dated: _____________, 2018	Patterson Companies, Inc.

	By:
		Mark S. Walchirk
		Chief Executive Officer

Exhibit 99

LOGO

Patterson Companies Reports Fiscal 2018 Third-Quarter Results

•

Reported net sales totaled $1.38 billion.

•

GAAP earnings from continuing operations increased to $1.18 per diluted share.

•

Adjusted earnings ¹ from continuing operations declined to $0.43 per diluted share.

•

Company revises fiscal 2018 outlook and now expects adjusted earnings ¹ from continuing operations to be in the range of $1.65 to $1.70 per diluted share.

•

Announces CFO transition.

St. Paul, Minn. — March 1, 2018 — Patterson Companies, Inc. (Nasdaq: PDCO) today reported consolidated net sales of approximately $1.4 billion (see attached Sales Summary for further details) in its fiscal third quarter ended January 27, 2018, a decline of 1.6 percent compared to the same period last year. Adjusting for the effects of currency translation, sales declined 2.7 percent.

Reported net income from continuing operations for the third quarter of fiscal year 2018 was $109.0 million, or $1.18 per diluted share, compared to $27.8 million, or $0.29 per diluted share, in last year’s fiscal third quarter. The current period includes the recognition of a provisional net tax benefit of $77.3 million, reflecting the revaluation of tax-deferred assets and liabilities, net of a one-time transition tax on unremitted foreign earnings as a result of the Tax Cuts and Jobs Act (“2017 Tax Act”) enacted during the third quarter.

Adjusted net income ¹ from continuing operations, which excludes certain non-recurring items, deal amortization costs and the provisional net tax benefit related to the 2017 Tax Act, totaled $39.6 million for the third quarter of fiscal 2018, down 28.6 percent from $55.4 million in the same quarter last year, driven by decreased sales and gross margin compression. Adjusted earnings ¹ per diluted share from continuing operations totaled $0.43 in the third quarter, down 25.9 percent year-over-year.

“Our third-quarter results did not meet our expectations,” said Mark Walchirk, president and CEO of Patterson Companies. “Since joining Patterson 90 days ago, I have begun a thorough review of our business and the factors impacting performance. We are moving quickly to implement an initial set of actions to improve our results, focused on enhancing the customer experience and driving better execution across the business.”

Walchirk continued, “We have much more work to do to position Patterson to reach its full potential, but I am confident in the strength of our end markets, our deep customer relationships and the broad value proposition we offer. We are committed to continuing to take clear actions to improve our execution and set the foundation to drive improved performance and long-term value.”

Patterson Dental

Reported net sales in our Dental segment for the third quarter, which represented approximately 42 percent of total company sales, were $577.9 million, down 7.7 percent from the same quarter last year. Sales declined 8.1 percent on a constant currency basis compared to the fiscal 2017 third quarter. On that same basis, year-over-year sales by category were as follows:

•

Consumable dental supplies decreased 7.4 percent.

•

Equipment sales declined 10.6 percent.

•

Other services and products, primarily composed of technical service, parts and labor, software support services and office supplies decreased 3.4 percent.

“Our Dental segment results reflect the impact of a number of transitions taking place within our business, including changes in our sales force, disruptions resulting from our enterprise resource planning implementation and the expansion of our digital equipment portfolio,” continued Walchirk. “As we work to improve execution and performance, we are making meaningful progress increasing unit placements of our new technology offerings, reinforcing this strategic decision.”

Patterson Animal Health

Reported net sales in our Animal Health segment for the third quarter of fiscal 2018, which comprised approximately 58 percent of the company’s total sales, were $794.9 million, up 4.2 percent from last year’s third quarter. After normalizing for the impact of currency and changes in product selling relationships, segment sales increased 4.6 percent from the fiscal 2017 third quarter. On that same basis, year-over-year sales by category were as follows:

•

Global companion animal sales rose 0.4 percent.

•

Production animal sales increased 8.8 percent, reflecting particularly strong performance across swine and beef cattle species.

“In our Animal Health segment, our production animal business drove solid growth across species and channels and we continue to benefit from positive end-market fundamentals,” continued Walchirk. “The lower sales growth rate in our companion animal business was primarily related to a decrease in promotional activity compared to last year.”

Share Repurchases and Dividends

In the third quarter of fiscal 2018, Patterson repurchased approximately 0.4 million shares of its outstanding common stock, with a value of $13.5 million, leaving approximately 11.5 million shares for repurchase under the current authorization, which expires in March 2018. The company also paid $24.7 million in cash dividends to shareholders in the third quarter of fiscal 2018. For the first nine months of fiscal 2018, the company has returned a total of $162 million to shareholders in the form of share repurchases and dividends.

Year-to-Date Results ¹

Consolidated sales for the first nine months of fiscal 2018 totaled $4.1 billion, a 2.0 percent year-over-year decrease. Reported net income from continuing operations was $180.0 million, or $1.93 per diluted share, compared to $112.4 million, or $1.17 per diluted share in last year’s period. This comparison includes the recognition of a provisional net tax benefit of $77.3 million, reflecting the revaluation of tax-deferred assets and liabilities, net of a one-time transition tax on unremitted foreign earnings as a result of the 2017 Tax Act enacted during the third quarter.

Adjusted net income ¹ from continuing operations, which excludes certain non-recurring items, deal amortization costs and the provisional net tax benefit related to the 2017 Tax Act, totaled $128.6 million, or $1.38 per diluted share, compared to adjusted net income from continuing operations of $157.7 million, or $1.64 per diluted share, in the year-ago period.

FY2018 Guidance

Patterson today revised its fiscal 2018 earnings guidance from continuing operations, which is provided on both a GAAP and non-GAAP adjusted ¹ basis:

•

GAAP earnings from continuing operations are now expected to be in the range of $2.13 to $2.18 per diluted share.

•

Non-GAAP adjusted earnings ¹ from continuing operations for fiscal 2018 are now expected to be in the range of $1.65 to $1.70 per diluted share.

•

Our non-GAAP adjusted earnings ¹ guidance excludes the after-tax impact of:

•

Deal amortization expense of approximately $26.9 million ($0.29 per diluted share);

•

Integration and business restructuring expenses of approximately $5.7 million ($0.06 per diluted share);

•

Provisional net tax benefit related to the 2017 Tax Act of approximately $77.3 million ($0.83 per diluted share).

Our guidance is for current continuing operations as well as completed or previously announced acquisitions and does not include the impact of potential future acquisitions or similar transactions, if any, or impairments and material restructurings beyond those previously publicly disclosed. Our guidance assumes North American and international market conditions similar to those experienced in the first nine months of fiscal 2018.

Patterson Announces CFO Transition

Patterson also announced that Ann Gugino, executive vice president and chief financial officer, will transition from her role as CFO, effective March 1, 2018. Patterson has appointed Dennis Goedken, current corporate controller, to serve as interim CFO in addition to his current role, while the company conducts a search for a permanent replacement. Ms. Gugino’s departure is not related to the company’s financial condition, financial disclosure or strategic direction, and Ms. Gugino has agreed to serve as a special advisor to the company until July 31, 2018.

Said Walchirk, “We are grateful to Ann for her many contributions to Patterson over the past 18 years with the company, and I thank her for her support during my transition. On behalf of the entire Patterson team, we wish her all the best. We are also fortunate to have someone with Dennis’ experience to serve as interim CFO while we conduct a search for a finance executive to help execute our strategic priorities.”

Mr. Goedken has spent more than 12 years with Patterson having served as the corporate controller since 2012, and as Patterson’s assistant controller from 1991-1998. During his tenure, Mr. Goedken was integrally involved in internal audit, taking the company public and various divestitures and acquisitions. Mr. Goedken curently leads the accounting team and oversees preparation of all SEC filings. Previously, Mr. Goedken has held senior finance leadership positions with Ceridian HCM, Inc. and Lifetouch Inc.

¹ Non-GAAP Financial Measures

The Reconciliation of GAAP to non-GAAP Measures table appearing behind the accompanying financial information is provided to adjust reported GAAP measures, namely earnings from continuing operations, net income from continuing operations and earnings per diluted share from continuing operations, for the impact of transaction related costs, deal amortization expenses, intangible asset impairment, integration and business restructuring expenses, along with the related tax effects of these items, the impact of the 2017 Tax Act and other discrete tax matters.

Management believes that these non-GAAP measures may provide a helpful representation of the company’s third-quarter and full-year performance, and enable comparison of financial results between periods where certain items may vary independent of business performance. These non-GAAP financial measures are presented solely for informational and comparative purposes and should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures.

In addition, the term constant currency used in this release represents net sales adjusted to exclude foreign currency impacts. Foreign currency impact represents the difference in results that is attributable to fluctuations in currency exchange rates the company uses to convert results for all foreign entities where the functional currency is not the U.S. dollar. The company calculates the impact as the difference between the current period results translated using the current period currency exchange rates and using the comparable prior period’s currency exchange rates. The company believes the disclosure of net sales changes in constant currency provides useful supplementary information to investors in light of significant fluctuations in currency rates.

Third-Quarter Conference Call and Replay

Patterson’s third-quarter earnings conference call will start at 10 a.m. Eastern today. Investors can listen to a live webcast of the conference call at www.pattersoncompanies.com . The conference call will be archived on Patterson’s website. A replay of the fiscal 2018 third-quarter conference call can be heard for one week at 800-585-8367 and by providing the Conference ID 6584419 when prompted.

About Patterson Companies, Inc.

Patterson Companies, Inc. is a value-added distributor serving the dental and animal health markets.

Dental Market

Patterson’s Dental segment 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 Market

Patterson’s Animal Health segment is a leading distributor of products, services and technologies to both the production and companion animal health markets in North America and the U.K.

This press release contains certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are information of a non-historical nature and are subject to risks and uncertainties that are beyond Patterson’s ability to control. Forward-looking statements generally can be identified by words such as “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of Patterson or the price of Patterson stock. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such risks and uncertainties include, without limitation, operations disruptions attributable to our enterprise resource planning system implementation; our ability to attract or retain qualified sales representatives and service technicians who relate directly with our customers; the reduction, modification, cancellation or delay of purchases of innovative, high-margin equipment; material changes in our purchasing relationships with suppliers; changes in general market and economic conditions; and the other risks and important factors contained and identified in Patterson’s filings with the Securities and Exchange Commission, such as its Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K, any of which could cause actual results to differ materially from the forward-looking statements. Any forward-looking statement in this press release speaks only as of the date on which it is made. Except to the extent required under the federal securities laws, Patterson does not intend to update or revise the forward-looking statements.

For additional information contact:

John M. Wright

Vice President, Investor Relations

651-686-1364

Source: Patterson Companies, Inc.

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended						Nine Months Ended
	January 27, 2018			January 28, 2017			January 27, 2018			January 28, 2017
Net sales	$	1,375,222		$	1,397,418		$	4,065,074		$	4,148,095
Gross profit		294,736			329,761			909,527			965,899
Operating expenses		244,690			283,207			730,889			774,126

Operating income from continuing operations		50,046			46,554			178,638			191,773
Other income (expense):
Other income, net		2,096			994			4,768			4,980
Interest expense		(11,783	)		(11,400	)		(34,454	)		(31,659	)

Income from continuing operations before taxes		40,359			36,148			148,952			165,094
Income tax expense (benefit)		(68,596	)		8,379			(31,094	)		52,663

Net income from continuing operations		108,955			27,769			180,046			112,431
Net loss from discontinued operations		—			(3,229	)		—			(3,229	)

Net income	$	108,955		$	24,540		$	180,046		$	109,202

Basic earnings (loss) per share:
Continuing operations	$	1.18		$	0.29		$	1.94		$	1.18
Discontinued operations		—			(0.03	)		—			(0.03	)

Net basic earnings per share	$	1.18		$	0.26		$	1.94		$	1.15

Diluted earnings (loss) per share:
Continuing operations	$	1.18		$	0.29		$	1.93		$	1.17
Discontinued operations		—			(0.03	)		—			(0.03	)

Net diluted earnings per share	$	1.18		$	0.26		$	1.93		$	1.14

Weighted average shares:
Basic		91,949			94,737			92,674			95,252
Diluted		92,609			95,359			93,323			95,915
Dividends declared per common share	$	0.26		$	0.24		$	0.78		$	0.72

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	January 27, 2018		April 29, 2017
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	118,005	$	94,959
Receivables		863,455		884,803
Inventory		882,018		711,903
Prepaid expenses and other current assets		116,310		111,928

Total current assets		1,979,788		1,803,593
Property and equipment, net		287,439		298,452
Goodwill and other intangible assets		1,216,374		1,238,983
Long-term receivables, net and other		190,757		166,885

Total assets	$	3,674,358	$	3,507,913

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	654,792	$	616,859
Other accrued liabilities		191,540		213,318
Current maturities of long-term debt		74,754		14,754
Borrowings on revolving credit		179,000		59,000

Total current liabilities		1,100,086		903,931
Long-term debt		931,419		998,272
Other non-current liabilities		179,863		211,277

Total liabilities		2,211,368		2,113,480
Stockholders’ equity		1,462,990		1,394,433

Total liabilities and stockholders’ equity	$	3,674,358	$	3,507,913

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	January 27, 2018			January 28, 2017
Operating activities:
Net income	$	180,046		$	109,202
Net loss from discontinued operations		—			(3,229	)

Net income from continuing operations		180,046			112,431
Adjustments to reconcile net income from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		62,787			63,056
Intangible asset impairment		—			36,312
Non-cash employee compensation		22,999			17,254
Change in assets and liabilities, net of acquired		(225,819	)		(238,464	)

Net cash provided by (used in) operating activities- continuing operations		40,013			(9,411	)
Net cash used in operating activities- discontinued operations		—			(3,229	)

Net cash provided by (used in) operating activities		40,013			(12,640	)
Investing activities:
Additions to property and equipment		(28,239	)		(37,457	)
Collection of deferred purchase price receivables		37,068			38,964
Other investing activities		10,600			(3,095	)

Net cash provided by (used in) investing activities- continuing operations		19,429			(1,588	)
Net cash provided by investing activities- discontinued operations		—			—

Net cash provided by (used in) investing activities		19,429			(1,588	)
Financing activities:
Dividends paid		(74,641	)		(70,947	)
Repurchases of common stock		(87,500	)		(84,651	)
Debt amendment costs		—			(1,266	)
Retirement of long-term debt		(7,377	)		(22,550	)
Draw on revolver		120,000			178,000
Other financing activities		7,546			5,495

Net cash provided by (used in) financing activities		(41,972	)		4,081
Effect of exchange rate changes on cash		5,576			(5,567	)

Net change in cash and cash equivalents	$	23,046		$	(15,714	)

PATTERSON COMPANIES, INC.

SALES SUMMARY

(Dollars in thousands)

(Unaudited)


	January 27, 2018		January 28, 2017		Total Sales Growth			Foreign Exchange Impact			Internal Growth
Three Months Ended
Consolidated net sales
Consumable	$	1,074,189	$	1,064,098		0.9	%		1.3	%		(0.4	)%
Equipment and software		222,574		249,047		(10.6	)		0.4			(11.0	)
Other		78,459		84,273		(6.9	)		0.6			(7.5	)

Total	$	1,375,222	$	1,397,418		(1.6	)%		1.1	%		(2.7	)%

Dental
Consumable	$	302,296	$	325,181		(7.0	)%		0.4	%		(7.4	)%
Equipment and software		207,000		230,431		(10.2	)		0.4			(10.6	)
Other		68,581		70,731		(3.0	)		0.4			(3.4	)

Total	$	577,877	$	626,343		(7.7	)%		0.4	%		(8.1	)%

Animal Health
Consumable	$	771,893	$	738,917		4.5	%		1.6	%		2.9	%
Equipment and software		15,574		18,616		(16.3	)		0.1			(16.4	)
Other		7,400		5,044		46.7			5.9			40.8

Total	$	794,867	$	762,577		4.2	%		1.6	%		2.6	%

Corporate
Other	$	2,478	$	8,498		(70.8	)%		—	%		(70.8	)%

Total	$	2,478	$	8,498		(70.8	)%		—	%		(70.8	)%

Nine Months Ended
Consolidated net sales
Consumable	$	3,270,385	$	3,252,551		0.5	%		0.2	%		0.3	%
Equipment and software		540,860		627,187		(13.8	)		0.2			(14.0	)
Other		253,829		268,357		(5.4	)		0.1			(5.5	)

Total	$	4,065,074	$	4,148,095		(2.0	)%		0.2	%		(2.2	)%

Dental
Consumable	$	933,691	$	982,366		(5.0	)%		0.2	%		(5.2	)%
Equipment and software		504,376		586,375		(14.0	)		0.2			(14.2	)
Other		212,247		214,170		(0.9	)		0.2			(1.1	)

Total	$	1,650,314	$	1,782,911		(7.4	)%		0.2	%		(7.6	)%

Animal Health
Consumable	$	2,336,694	$	2,270,185		2.9	%		0.2	%		2.7	%
Equipment and software		36,484		40,812		(10.6	)		—			(10.6	)
Other		21,408		21,357		0.2			—			0.2

Total	$	2,394,586	$	2,332,354		2.7	%		0.2	%		2.5	%

Corporate
Other	$	20,174	$	32,830		(38.6	)%		—	%		(38.6	)%

Total	$	20,174	$	32,830		(38.6	)%		—	%		(38.6	)%

PATTERSON COMPANIES, INC.

OPERATING INCOME BY SEGMENT

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	January 27, 2018			January 28, 2017			January 27, 2018			January 28, 2017
Operating income (loss)
Dental	$	58,439		$	40,018		$	183,165		$	177,356
Animal Health		18,037			23,777			57,930			60,460
Corporate		(26,430	)		(17,241	)		(62,457	)		(46,043	)

Total	$	50,046		$	46,554		$	178,638		$	191,773

PATTERSON COMPANIES, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(Dollars in thousands, except per share amounts)

(Unaudited)


For the three months ended January 27, 2018	GAAP			Transaction- related costs		Deal amortization		Intangible asset impairment		Integration and business restructuring expenses			Discrete tax matters			Non-GAAP
Operating income from continuing operations	$	50,046		$	—	$	9,692	$	—	$	—		$	—		$	59,738
Other expense, net		(9,687	)		—		—		—		—			—			(9,687	)

Income from continuing operations before taxes		40,359			—		9,692		—		—			—			50,051
Income tax expense (benefit)		(68,596	)		—		2,209		—		(370	)		77,256			10,499

Net income from continuing operations	$	108,955		$	—	$	7,483	$	—	$	370		$	(77,256	)	$	39,552

Diluted earnings per share from continuing operations*	$	1.18		$	—	$	0.08	$	—	$	—		$	(0.83	)	$	0.43

Operating income from continuing operations as a % of sales		3.6	%														4.3	%
Effective tax rate		-170.0	%														21.0	%

For the three months ended January 28, 2017	GAAP			Transaction- related costs		Deal amortization		Intangible asset impairment		Integration and business restructuring expenses			Discrete tax matters			Non-GAAP
Operating income from continuing operations	$	46,554		$	236	$	9,951	$	36,312	$	625		$	—		$	93,678
Other expense, net		(10,406	)		—		—		—		—			—			(10,406	)

Income from continuing operations before taxes		36,148			236		9,951		36,312		625			—			83,272
Income tax expense (benefit)		8,379			89		3,480		13,263		236			2,406			27,853

Net income from continuing operations	$	27,769		$	147	$	6,471	$	23,049	$	389		$	(2,406	)	$	55,419

Diluted earnings per share from continuing operations*	$	0.29		$	—	$	0.07	$	0.24	$	—		$	(0.03	)	$	0.58

Operating income from continuing operations as a % of sales		3.3	%														6.7	%
Effective tax rate		23.2	%														33.4	%

For the nine months ended January 27, 2018	GAAP			Transaction- related costs		Deal amortization		Intangible asset impairment		Integration and business restructuring expenses			Discrete tax matters			Non-GAAP
Operating income from continuing operations	$	178,638		$	—	$	28,982	$	—	$	8,594		$	—		$	216,214
Other expense, net		(29,686	)		—		—		—		—			—			(29,686	)

Income from continuing operations before taxes		148,952			—		28,982		—		8,594			—			186,528
Income tax expense (benefit)		(31,094	)		—		8,900		—		2,879			77,256			57,941

Net income from continuing operations	$	180,046		$	—	$	20,082	$	—	$	5,715		$	(77,256	)	$	128,587

Diluted earnings per share from continuing operations*	$	1.93		$	—	$	0.22	$	—	$	0.06		$	(0.83	)	$	1.38

Operating income from continuing operations as a % of sales		4.4	%														5.3	%
Effective tax rate		-20.9	%														31.1	%

For the nine months ended January 28, 2017	GAAP			Transaction- related costs		Deal amortization		Intangible asset impairment		Integration and business restructuring expenses			Discrete tax matters			Non-GAAP
Operating income from continuing operations	$	191,773		$	1,479	$	30,212	$	36,312	$	6,304		$	—		$	266,080
Other expense, net		(26,679	)		—		—		—		—			—			(26,679	)

Income from continuing operations before taxes		165,094			1,479		30,212		36,312		6,304			—			239,401
Income tax expense (benefit)		52,663			558		10,394		13,263		2,383			2,406			81,667

Net income from continuing operations	$	112,431		$	921	$	19,818	$	23,049	$	3,921		$	(2,406	)	$	157,734

Diluted earnings per share from continuing operations*	$	1.17		$	0.01	$	0.21	$	0.24	$	0.04		$	(0.03	)	$	1.64

Operating income from continuing operations as a % of sales		4.6	%														6.4	%
Effective tax rate		31.9	%														34.1	%

*	May not sum due to rounding

###