UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 28, 2006.

Commission File No. 0-20572

PATTERSON COMPANIES, INC.

(Exact name of registrant as specified in its charter)

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, (as definedor a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in ruleRule 12b-2 of the Exchange Act.)Act

Large Accelerated Filer  x     YesAccelerated Filer  ¨    NoNon-Accelerated Filer  

¨

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

Patterson Companies, Inc. had outstanding 138,278,316138,642,997 shares of common stock as of DecemberMarch 6, 2005.2006.

PATTERSON COMPANIES, INC.

INDEX

Safe Harbor Statement Under The Private Securities Litigation Reform Act Of 1995:

This Form 10-Q for the period ended October 29, 2005,January 28, 2006, contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which may be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “anticipate”, “estimate”, “believe”, “goal”, or “continue”, or comparable terminology that involves risks and uncertainties that are qualified in their entirety by cautionary language set forth herein under the caption “Factors That May Affect Future Operating Results,” in the Company’s 2005 Annual Report on Form 10-K filed July 14, 2005, and other documents previously filed with the Securities and Exchange Commission.

PART I - FINANCIAL INFORMATION

PATTERSON COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

ended October 30, 2004January 29, 2005 (“Prior Quarter”). The Current Quarter included one less selling day than the Prior Quarter, which negatively impacted the growth rate by an estimated 1-2 percentage points.

The Company acquired Accu-Bite Dental, Inc. (“Accu-Bite”) in September 2005 and Milburn Distributions, Inc.Intra Corp (“Milburn”IntraVet”) in October 2004.December 2005. Excluding the impact of these two acquisitions, sales rose approximately 7.1%4.3%. The impact of foreign exchange rate changes on net sales for the Current Quarter was approximately 0.5% of total net sales.

Dental segment sales were $480.1$531.9 million in the Current Quarter, which was an increase of 9.4%6.4% from $438.9$499.8 million in the Prior Quarter. Sales of consumable dental supplies and printed office products increased 12%12.1% in the Current Quarter. Excluding the impact of the Accu-Bite acquisition, sales of these products were up 7.4%6.0%. Dental equipment and software sales rose 5.5%, driven by double-digitdecreased 1.1%. Strong sales growth of digital radiography equipment and related software, including the CEREC®line of CAESY patient education software, largely offset flat sales of basic equipment and modestly lower sales of CEREC^® 3D dental restorative systems and digital radiography equipment. Basic equipment sales growth and the Accu-Bite acquisition each had a minimal contribution to total equipment sales growth in the Current Quarter.systems. Finally, sales of other services and products, consisting primarily of parts, technical service labor, software support, and insurance e-claims increased 10.9%13.1% in the Current Quarter.

Veterinary sales increased 29.2%14.2% from $64.1$70.7 million in the Prior Quarter to $82.8$80.8 million in the Current Quarter. ExcludingThe IntraVet acquisition had a nominal impact on sales growth. The veterinary segment’s sales of equipment and software grew to $5.7 million in the impactCurrent Quarter, an increase of 65.1% from the Milburn acquisition, sales growth was approximately 14%.Prior Quarter. The rehabilitation unit reported sales of $78.8$69.8 million, reflecting approximately 5%3.3% sales growth in the Current Quarter.

This sales growth reflected a negative impact of foreign currency translation on sales of approximately 1.4%.

Gross Margins. Consolidated gross margin decreased from 35.4%35.6% to 34.2%35.3% in the Current Quarter as compared to the Prior Quarter. This decline resulted from several different factors.

Within the dental unit, gross margin was affected bylargely due to the acquisition of Accu-Bite, which haswhose gross margins are currently lower margins than the Company’s historic dental unit’s traditional margin. Additionally,levels. Accu-Bite was acquired in September 2005 and continues to be integrated into the Company’s existing dental operations.

In addition, the consolidated gross margin was negatively affectedimpacted by strong sales growth of the veterinary segment because this segment has the lowest gross margin of the Company’s three businesses. While still producing a shift duringlower gross margin than the other two businesses, the veterinary unit improved its own gross margin by 80 basis points in the Current Quarter, in the interest rate curve used to mark-to-market the Company’s residual interest inwhich was a finance contract portfolio. This shift was nearly double what the Company has experienced in other quarters and resulted in a reductionresult of the residual interest adjustment on a comparable basis.

The Veterinary supply business experienced a decline in its gross marginincreased sales of 80 basis points due mostly to the impact of the Milburn equine business, whose margins are below Webster Veterinary’s historic standards. The Current Quarter included the anniversary of this transactionequipment and as a result, future quarters are not expected to experience similar impacts on gross margins on a comparable basis.

software.

Patterson Medical’s gross margin declined approximately 60150 basis points quarter-over-quarter, due to product mix as well as increases in freight costs.

Operating Expenses. In the Current Quarter, operating expenses as a percent of sales were 22.8%22.3%. This ratio represented a reduction of 50 basis points as compared to 23.3%22.8% in the Prior Quarter, reflecting the impact ofstrengthened operating leverage and a lower level of intangible asset amortization primarily in the rehabilitation supply unit, and increased operating leverage at the veterinary supply unit. The dental unit’s operating expense ratio, which was adversely affected by the Accu-Bite acquisition, was unchanged quarter-over-quarter.

Operating Income. Operating income was $72.8$88.5 million, or 11.4%13.0% of net sales in the Current Quarter. This percentage was lowerapproximately 20 basis points higher than the 12.1%12.8% reported in the Prior Quarter and reflected the Company’s lower gross margin,improved operating expense ratio, partially offset by an improved operating expense ratio.a decline in consolidated gross margin.

Other Expense, Net.Net other expense was $1.4$2.3 million for the Current Quarter compared to $2.2$1.7 million in the Prior Quarter. The reductionInterest expense was due primarily to less interest expense resulting$3.5 million in the Current Quarter, up slightly from $3.3 million in the Company reducing its outstandingPrior Quarter despite a lower debt balance over the past year. The weighted average effective interest rate on debt was approximately 3.9% in the Current Quarter. An interest rate swap agreement, under which the Company had effectively been paying a fixed rate on $100 million of its variable rate debt, terminated in November 2005. Due to the swap termination, an increase in theThe weighted average effective interest rate ofon debt was approximately 0.5% is anticipated4.5% in the thirdCurrent Quarter, up from 3.3% in the Prior Quarter. A rate similar to the Current Quarter is expected in the Company’s fourth quarter of fiscal 2006.

Income Taxes.The effective income tax rate for the Current Quarter was 37.4%, which was consistent with the Prior Quarter.

Earnings Per Share.Earnings increased 5.2%7.7% to $44.7$54.0 million, resulting in diluted earnings per share of $0.32$0.39 versus $0.31$0.36 in the Prior Quarter.

SIXNINE MONTHS ENDED OCTOBER 29, 2005JANUARY 28, 2006 COMPARED TO SIXNINE MONTHS ENDED OCTOBER 30, 2004.JANUARY 29, 2005.

Net Sales. Net sales for the six months ended October 29, 2005Nine Months Ended January 28, 2006 (“Current Period”) totaled $1,237.5$1,919.9 million, a 7.0% increase from $1,156.2$1,794.2 million reported for the six months ended October 30, 2004Nine Months Ended January 29, 2005 (“Prior Period”). Sales for the Current Period included the contributions from the Accu-Bite and Milburn acquisitions. The Prior Period included the impact of an extra or twenty-seventhfortieth week resulting from the Company’s long-standing convention of using a fifty-two, fifty-three week fiscal year ending on the final Saturday of April. Fiscal year 2005 was a fifty-three week year, while fiscal year 2006 will be a fifty-two week year.

It is difficult to precisely quantify the impact of an extra week on six-monthnine-month operating results since certain aspects of the Company’s business, such as equipment sales and contract services, are not as directly affected by the additional billing days.

Dental segment sales of $912.1$1,444.0 million in the Current Period represented an increase of 5.5%5.8% from $864.5$1,364.3 million the Prior Period. Sales of consumables and printed office products (“Consumables”) were $523.5$797.9 million, or 5.4%7.7% higher than $496.6$740.7 million in the Prior Period. The Company estimates the impact of the extraadditional week in the Prior Period and the acquisition of Accu-Bite each had an impact on Consumables sales to be approximately $18.9 million. The Accu-Bite acquisition impact inthe comparability of the Current Period on Consumables was approximately $10.4 million. Adjusting forPeriod. Excluding these two factors,items from the respective period, consumables sales growth was approximately 7.4%7.0% in the Current Period.

Veterinary segment sales rose to $168.1$248.8 million, up 20.7%18.5% from $139.2$209.9 million in the Prior Period. Excluding the estimated impact of the extra week on the Prior Period and the Milburn acquisition,impact of acquisitions, sales growth in the veterinary segment was approximately 8.5%10.1%.

The rehabilitation business unit reported Current Period sales of $157.4$227.1 million, which was 3.2% higher than Prior Period sales of $152.5$220.0 million. Excluding the estimated impact of the extra week on Prior Period sales, growth was 6.7%5.7%.

Gross Margins. Current Period consolidated gross margin was 34.5%34.8% as compared to the Prior Period margin of 35.3%35.4%. The period-over-period decline resulted from several different factors.

Gross margins at the dental unit were down 6040 basis points in the Current Period, due to a decline in the second quarter, resulting partly fromprimarily to the acquisition of Accu-Bite, which has lower margins than the dental unit’s traditional margin. Additionally, dental unit gross margin was negatively affected by a shift during the Current Quarter in the interest rate curve used to mark-to-market the Company’s residual interest in a finance contract portfolio as discussed above.

The Veterinary supply business experienced a decline in its gross margin of 7020 basis points due to the impact of a full nine-months of the Milburn equine business, whose margins are below Webster Veterinary’s historic standards.

Patterson Medical’s gross margin declined approximately 7090 basis points period-over-period, due to product mix and increases in freight costs and strong Current Period sales from its Medco division, which carries lower gross margin than the other divisions of the Medical unit.

costs.

Operating Expenses. Operating expenses as a percent of sales were 23.0%22.7% in the Current Period, which was a reduction from 23.4%23.2% in the Prior Period. The lower operating expense ratio was due largely to two factors.

First, the Current Period included a lower level of intangible asset amortization at the rehabilitation unit. Secondly, the dental and veterinary unit has gainedboth achieved modest improvement due to operating leverage, on higher sales. In addition, in the Prior Period, the veterinary unit was integrating the less efficient operations of the April 2004 ProVet acquisition that resulted in extra operating expense.

The dental segment’s Current Periodlowering their operating expense ratio was consistent with the ratio in the Prior Period.

10 and 20 basis points, respectively.

Operating Income. Operating income was $142.3$230.9 million, or 11.5%12.1% of net sales in the Current Period. This percentage was lowerslightly less than the 11.9%12.2% reported in Prior Period and reflected the Company’s lower gross margin, partially offset by an improved operating expense ratio, both as discussed above.

Other Expense, Net.Net other expense was reduceddecreased from $4.6$6.2 million in the Prior Period to $2.4$4.7 million in the Current Period. This reduction resulted fromThe primary reason for the combination of two factors. First,decrease was lower interest expense, which was $6.2 million in the Current Period, down from $7.5$10.9 million in the Prior Period and $9.7 million in the Current Period. The Company carried less debt on its balance sheet during the Current Period due to the Company’s principal payments on outstanding debt over the past year. Additionally,Higher effective interest rates partially offset the Company’s interest income rose to $3.6 million inimpact of the Current Period as compared to $2.5 million in the prior period, due largely to higher interest rates.lower debt balances.

Income Taxes.The effective income tax rate for the Current Period was 37.4%, which was consistent with the Prior Period.

Earnings Per Share.Earnings increased 5.1%6.1% to $ 87.6$141.6 million, resulting in diluted earnings per share of $0.63$1.02 versus $0.60$0.96 in the Prior Period.

LIQUIDITY AND CAPITAL RESOURCES

For the six months ended October 29, 2005 (“Current Period”),Period, the Company generated $67.9$115.8 million of cash from operations on earnings of $87.6$141.6 million, compared to $125.4$191.3 million on earnings of $83.3$133.5 million in the six months ended October 30, 2004 (“Prior Period”).Period. The operating cash flow from operations forin the six months ended October 30, 2004Prior Period was favorably impacted by a difference in the sequencing of ourthe Company’s routine cash disbursement cycle and ourthe Company’s fiscal year calendar. This difference caused about one additional week of trade payables to be outstanding at the end of the Prior Period. Cash

Investing cash flows in the Current Period also reflectedreflect the $100 million distribution fee that was paid for a 10-year extension of the Company’s exclusive North American distribution agreement of Sirona’s CEREC equipment.

Capital expenditures were $27.2$36.7 million in the Current Period. Significant capital expenditures in fiscal 2006 included a new printed office products facility, a new distribution facility for Patterson Medical’s U.K. operation, and new shared distribution center projects in Kent, Washington and Lancaster, Pennsylvania. The new printed office products facility and the Washington distribution center both became operational in the first quarter of fiscal 2006. The U.K. andfacility is expected to be operational in the fourth quarter of fiscal 2006. The Pennsylvania distribution facility projects wereis expected to be operational in progress asthe first quarter of October 29, 2005.

fiscal 2007.

The Company expects funds generated by operations, existing cash balances and availability under existing debt facilities will be sufficient to meet the Company’s working capital needs and finance anticipated expansion plans and strategic initiatives over the next fiscal year.

CRITICAL ACCOUNTING POLICIES

There has been no material change in the Company’s Critical Accounting Policies, as disclosed in its 2005 Annual Report on Form 10-K filed July 14, 2005.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

Certain information of a non-historical nature contains forward-looking statements. Words such as “believes,” “expects,” “plans,” “estimates,” “intends” and variations of such words are intended to identify such forward-looking statements. These statements are not guaranties of future performance and are subject to certain risks, uncertainties or assumptions that are difficult to predict; therefore, the Company cautions shareholders and prospective investors

that the following important factors, among others, could cause the Company’s actual operating results to differ materially from those expressed in any forward-looking statements. The statements under this caption are intended to serve as cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following information is not intended to limit in any way the characterization of other statements or information under other captions as cautionary statements for such purpose. The order in which such factors appear below should not be construed to indicate their relative importance or priority. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes since April 30, 2005 in the Company’s market risk. The weighted-average interest rate on the Company’s debt for the Current Period was approximately 3.9%4.5%. An interestA similar rate swap under which the Company has effectively been paying a fixed rate on $100 million of its variable rate debt terminated in November 2005. Due to the swap termination, an increase in the effective interest rate of approximately 0.5% is anticipated in the thirdfourth quarter of fiscal 2006. As discussed in Note 4 to the condensed consolidated financial statements, the Company entered into certain offsetting interest rate cap agreements during the first quarter ofand an interest rate swap agreement in fiscal 2006 that, on2006. On a consolidated basis, these agreements do not materially impact the Company’s market risk. For further information on market risk, refer to Item 7A in the Company’s 2005 Annual Report on Form 10-K filed July 14, 2005.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), management evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of October 29, 2005.January 28, 2006. Based upon their evaluation of these disclosure controls and procedures, the CEO and CFO concluded that the disclosure controls and procedures were effective as of October 29, 2005.

January 28, 2006.

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the quarter ended October 29, 2005January 28, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Five purported class action lawsuits werehave been filed during the second quarter of fiscal 2006 in the United States District Court for the District of Minnesota, naming the Company and certain officers and directors and alleging certain violations of the federal securities laws. On August 31, 2005, the Court entered an order consolidating the cases into a single action captionedIn re Patterson Companies, Inc. Securities Litigationdocketed as File No. 05cv1757 DSD/NMJ. On September 16, 2005, a derivative lawsuit was filed in the United States District Court for the District of Minnesota captionedVance Cadd, Derivatively On Behalf of Patterson Companies, Inc. vs. James W. Wiltz, et al., docketed as File No. 05-cv-02155 RHK/AJB. This lawsuit names certain officers and directors of the Company as defendants and alleges breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment. On October 11, 2005, a class action lawsuit was filed in the United States District Court for the District of Minnesota captionedTamara Dolliver, On Behalf of Herself and All Others Similarly Situated vs. Patterson Companies, Inc., et al docketed as File No. 05-cv-02383 JNE/SRN. This class action lawsuit was brought on behalf of the participants in the Company’s Employee Stock Ownership Plan against the Company and certain officers and directors, and alleges violations of the federal Employee Retirement Income Security Act. TheCaddandDolliver cases are predicated on essentially the same factual allegations alleged in, and are related cases to, the class action lawsuits consolidated asIn Re Patterson Companies, Inc. Securities Litigation. Because of the status of the proceedings in these lawsuits, as well as the contingencies and uncertainties associated with litigation, it is not possible to predict the exposure that the Company will have, if any, in connection with the claims. The Company believes that the allegations made against it in these lawsuits are without merit and it intends to vigorously defend the claims.

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Company’s Annual Meeting of Shareholders held on September 12, 2005, the Company’s shareholders approved the following matters:

There were no abstentions or broker non-votes. The other directors of the Company whose terms in office continued after the 2005 Annual Meeting of Shareholders are as follows: terms expiring at the 2006 Annual Meeting—Ellen A. Rudnick, Harold C. Slavkin and James W. Wiltz; and term expiring at the 2007 Annual Meeting—Peter L. Frechette.

ITEM 6. EXHIBITS

The exhibits listed in the accompanying exhibit index are filed as part of this Quarterly Report on Form 10-Q.

All other items under Part II have been omitted because they are inapplicable or the answers are negative, or were previously reported in the 2005 Annual Report on Form 10-K filed July 14, 2005.

SIGNATURES

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

EXHIBIT INDEX

2221