PATTERSON COMPANIES, INC. (Form: 10-Q, Received: 09/09/2004 11:19:28)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 31, 2004.

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

Commission File No. 0-20572

PATTERSON COMPANIES, INC.

(Exact name of registrant as specified in its charter)


Minnesota		41-0886515
(State of incorporation)		(I.R.S. 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)

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 at least the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Exchange Act.)

x Yes ¨ No

Patterson Companies, Inc. has outstanding 68,596,603 shares of common stock as of September 2, 2004.

PATTERSON COMPANIES, INC.

INDEX


		Page
PART I - FINANCIAL INFORMATION

Item 1 -	Financial Statements	3-10

	Consolidated Balance Sheets as of July 31, 2004 and April 24, 2004	3

	Consolidated Statements of Income for the Three Months Ended July 31, 2004 and July 26, 2003	4

	Consolidated Statements of Cash Flows for the Three Months Ended July 31, 2004 and July 26, 2003	5

	Notes to Consolidated Financial Statements	6-10

Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11-14

Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	14

Item 4 -	Controls and Procedures	14

PART II - OTHER INFORMATION

Item 6 -	Exhibits	15

Signatures		16

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

This Form 10-Q for the period ended July 31, 2004, 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 in the Company’s Form 10-K report filed July 8, 2004, and the Company’s Form 8-K report filed August 26, 2004, and other documents filed with the Securities and Exchange Commission.

PART I - FINANCIAL INFORMATION

PATTERSON COMPANIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	July 31, 2004			April 24, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	288,298		$	287,160
Short-term investments		9,957			8,018
Receivables, net		258,421			285,249
Inventory		191,587			173,022
Prepaid expenses and other current assets		28,246			24,694

Total current assets		776,509			778,143
Property and equipment, net		83,917			77,233
Long-term receivables, net		26,658			25,840
Goodwill		617,257			601,194
Identifiable intangibles, net		122,277			97,023
Other		9,727			9,524

Total assets	$	1,636,345		$	1,588,957

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	154,028		$	149,528
Accrued payroll expense		10,919			30,796
Other accrued expenses		65,284			61,409
Income taxes payable		20,494			1,924
Current maturities of long-term debt		20,031			20,031

Total current liabilities		270,756			263,688
Long-term debt		471,549			479,556
Deferred taxes		43,955			43,955

Total liabilities		786,260			787,199
STOCKHOLDERS’ EQUITY
Common stock		686			685
Additional paid-in capital		106,766			100,995
Accumulated other comprehensive income		4,866			2,901
Retained earnings		759,633			718,818
Notes receivable from ESOP		(21,866	)		(21,641	)

Total stockholders’ equity		850,085			801,758

Total liabilities and stockholders’ equity	$	1,636,345		$	1,588,957

See accompanying notes.

PATTERSON COMPANIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	July 31, 2004			July 26, 2003
Net sales	$	577,943		$	433,262
Cost of sales		373,974			288,680

Gross margin		203,969			144,582
Operating expenses		136,367			99,573

Operating income		67,602			45,009
Other income and (expense):
Finance income, net		1,321			1,898
Interest expense		(3,758	)		(32	)
Gain on currency exchange		41			227

Income before income taxes		65,206			47,102
Income taxes		24,391			17,709

Net income	$	40,815		$	29,393

Earnings per share:
Basic	$	0.60		$	0.43

Diluted	$	0.59		$	0.43

Weighted average common shares:
Basic		68,261			67,838
Diluted		69,304			68,430

See accompanying notes.

PATTERSON COMPANIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	July 31, 2004			July 26, 2003
Operating activities:
Net income	$	40,815		$	29,393
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		3,551			2,845
Amortization of intangibles		2,898			646
Bad debt expense		722			647
Change in assets and liabilities, net of acquired		17,485			22,799

Net cash provided by operating activities		65,471			56,330
Investing activities:
Additions to property and equipment, net		(8,100	)		(2,172	)
Acquisitions, net		(52,856	)		—
(Purchase) sale of short-term investments		(1,939	)		1,474

Net cash used in investing activities		(62,895	)		(698	)
Financing activities:
Payments and retirement of long-term debt and obligations under capital leases		(5,205	)		(221	)
Common stock issued, net		2,772			2,336

Net cash (used in) provided by financing activities		(2,433	)		2,115
Effect of exchange rate changes on cash		995			282

Net increase in cash and cash equivalents		1,138			58,029
Cash and cash equivalents at beginning of period		287,160			195,182

Cash and cash equivalents at end of period	$	288,298		$	253,211

See accompanying notes.

PATTERSON COMPANIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(Unaudited)

July 31, 2004

NOTE 1 GENERAL

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of July 31, 2004 and the results of operations and the cash flows for the quarters ended July 31, 2004 and July 26, 2003. Such adjustments are of a normal recurring nature. The results of operations for the quarters ended July 31, 2004 and July 26, 2003, are not necessarily indicative of the results to be expected for the full year. The balance sheet at April 24, 2004, is derived from the audited balance sheet as of that date. These financial statements should be read in conjunction with the financial statements included in the 2004 Annual Report on Form 10-K filed on July 8, 2004.

The consolidated financial statements of Patterson Companies, Inc. include the assets and liabilities of PDC Funding Company, LLC, a wholly owned subsidiary and a separate legal entity under Minnesota law. The assets of PDC Funding Company, LLC, would be available first and foremost to satisfy the claims of its creditors. There are no known creditors of PDC Funding Company, LLC.

Fiscal Year End

The fiscal year end of the Company is the last Saturday in April. Accordingly, the first quarter of fiscal 2005 and 2004 represents the 14 weeks ended July 31, 2004 and the 13 weeks ended July 26, 2003, respectively. Because of the Company’s long established practice of using a 52/53-week fiscal year convention, the Company reported 14 weeks of results in its most recent quarter, and fiscal 2005 will include 53 weeks of operations when compared to fiscal 2004 that was a 52 week period.

Comprehensive Income

Total comprehensive income was $42,780 and $30,890 for the quarters ended July 31, 2004 and July 26, 2003, respectively.

Stock-Based Compensation

The Company has adopted the disclosure requirements of SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure, an amendment of FASB Statement 123.” The Company has chosen to continue with its current practice of applying the recognition and measurement principles of APB No. 25 “Accounting for Stock Issued to Employees.” This method defines the Company’s cost as the excess of the stock’s market value at the time of the grant over the amount that the employee is required to pay. In accordance with APB Opinion No. 25, no compensation expense was recognized for the stock based plans for the quarters ended July 31, 2004 and July 26, 2003, as the price paid was not less than 100 percent of fair market value.

The following table illustrates the effect on net earnings and net earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock Based Compensation” to stock-based employee compensation:


	Three Months Ended
	July 31, 2004		July 26, 2003
Net income, as reported	$	40,815	$	29,393
Deduct: total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect		546		493

Pro forma net earnings	$	40,269	$	28,900

Earnings per share—basic:
As reported	$	0.60	$	0.43
Pro forma	$	0.59	$	0.43
Earnings per share—diluted:
As reported	$	0.59	$	0.43
Pro forma	$	0.58	$	0.42

Earnings Per Share

The following table sets forth the denominator for the computation of basic and diluted earnings per share:


	Three Months Ended
	July 31, 2004	July 26, 2003
Denominator:
Denominator for basic earnings per share - weighted-average shares	68,261	67,838
Effect of dilutive securities:
Stock option plans	914	490
Employee Stock Purchase Plan	22	11
Capital Accumulation Plan	78	91
Convertible debentures	29	—

Dilutive potential common shares	1,043	592

Denominator for diluted earnings per share - adjusted weighted-average shares and assumed conversions	69,304	68,430

NOTE 2 GOODWILL AND OTHER INTANGIBLE ASSETS

The goodwill balance by business segment as of April 24, 2004 and July 31, 2004 is as follows:


	Balance at April 24, 2004		Acquisition Activity		Translation And Other Activity			Balance at July 31, 2004
Dental Supply	$	68,885	$	4,379	$	2,050		$	73,314
Rehabilitative Supply		469,344		12,801		83			482,228
Veterinary Supply		62,965		—		(3,250	)		59,715

Total	$	601,194	$	17,180	$	(1,117	)	$	617,257

The increase in the goodwill balance during the quarter ended July 31, 2004 reflects the preliminary purchase price allocation of acquisitions, contingent earn-out payments from acquisitions made in prior years and changes in currency exchange rates.

Balances of acquired intangible assets excluding goodwill are as follows:


	July 31, 2004			April 24, 2004
Copyrights, trade names and trademarks	$	76,010		$	56,275
Customer lists and other amortizable intangible assets		60,755			52,338

Total		136,765			108,613
Less: Accumulated amortization		(14,488	)		(11,590	)

Total identifiable intangible assets, net	$	122,277		$	97,023

NOTE 3 ACQUISITIONS

On September 12, 2003, the Company acquired the stock of AbilityOne Products Corp. (“AbilityOne”). The purchase price of $585.8 million consists of a base price of $576.0 million and an additional $9.8 for an idle facility and transaction expenses. In conjunction with the transaction, the Company also issued $4.5 million of convertible debentures maturing in 2006. The debentures are convertible into the Common Stock of Patterson Companies, Inc. at a price of $50.98 per share. Interest on the debentures is accrued at the rate of 0.5% per annum.

The results of AbilityOne’s operations are included in the accompanying financial statements since the date of acquisition. The preliminary purchase price plus direct acquisition costs have been allocated on the basis of estimated fair values at the date of acquisition. The preliminary purchase price allocation is as follows:


Purchase price	$	585,828
Less:
Accounts receivable		27,930
Income tax receivable		8,069
Inventory		24,394
Fixed assets		12,740
Other assets		10,280
Accounts payable		(14,810	)
Deferred taxes		(35,187	)
Accrued expenses		(8,897	)
Hedge liability		(2,355	)
Identifiable intangible assets		94,320

Goodwill	$	469,344

The following pro forma summary presents the results of operations, as if the acquisition had occurred at the beginning of fiscal 2004. The pro forma results of operations are not necessarily indicative of the results that would have been achieved had the two companies been combined:


	Three Months Ended July 26, 2003
Net sales	$	489,664
Net income	$	33,529
Earnings per share:
Basic	$	0.49
Diluted	$	0.49

Shortly before the end of fiscal 2004 and during the first quarter of fiscal 2005, the Company acquired three companies, as follows: ProVet, a value-added distributor of companion-pet veterinary supplies in the Midwest and Northwest, on April 16, 2004, Medco Supply Company, Inc. (“Medco”), a leading national distributor of sports medicine, first aid, and medical supplies based in Buffalo, New York, on May 3, 2004, and CAESY Education Systems, Inc. (“CAESY”), a leading provider of electronic patient education services to dental practices in North America, on May 11, 2004. These three acquisitions were all-cash transactions. The operating results of each of these acquisitions are included in the Company’s consolidated statements of income from the date of each acquisition. Pro forma results of operations have not been presented for these acquisitions since the effects of these business acquisitions were not material to the Company either individually or in the aggregate.

NOTE 4 SEGMENT REPORTING

Since fiscal 2002, Patterson Companies, Inc. had operated in two reportable segments, dental supply and veterinary supply. In September 2003, the Company purchased AbilityOne. AbilityOne is the world’s leading distributor of rehabilitative supplies and non-wheelchair assistive patient products to the global physical and occupational therapy markets. AbilityOne became a reportable business segment of the Company, and now Patterson Companies, Inc. is comprised of three reportable segments: dental, veterinary, and rehabilitative supply. The Company’s reportable business segments are strategic business units that offer similar products and services to different customer bases. The dental supply segment provides a virtually complete range of consumable dental products, clinical and laboratory equipment and value-added services to dentists, dental laboratories, institutions and other healthcare providers throughout North America. The veterinary supply segment provides consumable supplies, equipment,

diagnostic products, biologicals (vaccines) and pharmaceuticals to companion-pet veterinary clinics primarily in the Eastern, Mid-Atlantic, Southeastern, Midwest and Northwest regions of the United States. The rehabilitative supply segment provides a comprehensive range of distributed and self-manufactured rehabilitative medical supplies and non-wheelchair assistive products to acute care hospitals, long-term care facilities, rehabilitation clinics, dealers and schools.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates segment performance based on operating income.

The following table presents information about the Company’s reportable segments:


	Three Months Ended
	July 31, 2004		July 26, 2003
Net sales
Dental supply	$	425,617	$	371,812
Rehabilitative supply		77,245		—
Veterinary supply		75,081		61,450

Consolidated net sales	$	577,943	$	433,262

Operating income
Dental supply	$	49,710	$	40,189
Rehabilitative supply		14,416		—
Veterinary supply		3,476		4,820

Consolidated operating income	$	67,602	$	45,009


	July 31, 2004		April 24, 2004
Total assets
Dental supply	$	789,988	$	739,310
Rehabilitative supply		688,982		659,107
Veterinary supply		157,375		190,540

Consolidated total assets	$	1,636,345	$	1,588,957

The following table presents sales information by product for the Company:


	Three Months Ended
	July 31, 2004		July 26, 2003
Net sales
Consumable and printed products	$	389,863	$	281,394
Equipment and software		144,984		116,570
Other		43,096		35,298

Total	$	577,943	$	433,262

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the MD&A included in our Form 10-K report filed July 8, 2004, for important background information regarding, among other things, an overview to the markets in which we operate and our business strategies. Notes 3 and 4 to the accompanying consolidated financial statements are incorporated by reference into this discussion.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentage of net sales represented by certain operational data.


	Three Months Ended
	July 31, 2004		July 26, 2003
Net sales	100.0	%	100.0	%
Cost of sales	64.7	%	66.6	%

Gross margin	35.3	%	33.4	%
Operating expenses	23.6	%	23.0	%

Operating income	11.7	%	10.4	%
Other (expense) income, net	(0.4	)%	0.5	%

Income before income taxes	11.3	%	10.9	%
Net income	7.1	%	6.8	%

QUARTER ENDED JULY 31, 2004 COMPARED TO QUARTER ENDED JULY 26, 2003.

Net Sales. Net sales for the three months ended July 31, 2004 (“Current Quarter”) totaled $577.9 million, a 33.4% increase from $433.3 million reported for the three months ended July 26, 2003 (“Prior Quarter”). Sales for the Current Quarter include the incremental contributions from four acquisitions and the impact of an extra or fourteenth week in the Current Quarter resulting from the Company’s long-standing convention of using a fifty-two, fifty-three week fiscal year ending on the final Saturday in April. Fiscal year 2005 will be a fifty-three week year.

It is difficult to precisely quantify the impact of an extra week on quarterly or annual 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. Also, the Medco and CAESY businesses were acquired more than a week into the Current Quarter.

The four acquisitions include AbilityOne, which was acquired in September 2003, and the most recent acquisitions of the ProVet division of Lextron, Inc., Medco Supply Company, Inc. and CAESY Education Systems, Inc. The operations of AbilityOne, combined with the more recent Medco transaction, now form the rehabilitation segment of the business. This new segment

had the most significant impact on operations in the Current Quarter when viewing the impact of all the acquisition activity.

Dental segment sales rose 14.5% to $425.6 million. The May 2004 acquisition of CAESY and the estimated impact of the extra week contributed 6.7 percentage points of the Current Quarter’s sales growth. Sales growth in the dental supply segment was led by sales of equipment, which grew 16.6%, reflecting the continuation of robust demand for both basic and new-generation equipment, including the CEREC ^{^®} 3 dental restorative system and digital radiography systems. Consumable and printed office products increased 13.7% in the Current Quarter led by U.S. consumable growth of 14.9%. This improvement reflects the positive impact of continued strengthened market focus, new sales training, tools and programs, and the addition of territory sales representatives to the sales force. Sales of other services and products, consisting primarily of parts, technical service labor, software support and insurance e-claims, grew 12.3% compared to the Prior Quarter.

Veterinary sales increased 22.2% to $75.1 million compared to $61.5 million in the Prior Quarter. The positive impact of the April 2004 acquisition of ProVet and the extra week offset the conversion of a temporary pharmaceutical distribution agreement into an agency arrangement in third quarter of fiscal year 2004. After adjusting for these factors, the internal sales of the veterinary segment were unchanged in the Current Quarter.

AbilityOne, acquired in September 2003, serves the rehabilitation supply markets. Sales for AbilityOne, which include the May 2004 acquisition of Medco and the impact of the extra week, were $77.2 million. Excluding the acquisition and extra week, Current Quarter sales increased 6% on a pro forma basis.

Gross Margins . Gross margins increased from 33.4% to 35.3% in the Current Quarter. Acquisitions contributed 1.2 percentage points, while the Company’s ongoing business added 70 basis points to the increase. Gross profit increased 41.1% to $204.0 million for the Current Quarter from $144.6 million for the Prior Quarter. The ongoing dental business gross margins increased, due to improvements in CEREC margins which were lower in the Prior Quarter resulting from a trade-in program on an older generation of the product.

Operating Expenses. Operating expenses as a percent of sales increased from 23.0% in the Prior Quarter to 23.6% in the Current Quarter. The increase was due almost entirely to recent acquisitions. The Company is assimilating businesses with cost structures higher than the Company’s historic norm and is absorbing the impact of identifiable intangible asset amortization resulting from the accounting for these transactions. The operating expenses as a percent of sales for the veterinary supply business were 15.6% in the Current Quarter, an increase from 12.7% in the Prior Quarter. The higher operating expenses of this business reflected the absorption of the ProVet operation, costs related to the implementation of a new order-entry system, and the loss of leverage stemming from the conversion of the distribution agreement discussed above.

Operating Income. Operating income increased 130 basis points to 11.7%, with 60 points of this increase generated by the Company’s historic business and acquisitions contributing the remainder, primarily due to AbilityOne.

Other (Expense) Income. The net expense of $2.4 million for the Current Quarter compared to $2.1 million of income in the Prior Quarter is primarily due to the interest expense incurred on the debt financing used to purchase AbilityOne.

Income Taxes. The effective income tax rate was decreased in the Current Quarter from 37.6% to 37.4%. This adjustment was necessitated by the addition of the foreign operations of AbilityOne, particularly in the United Kingdom, that caused the estimated annual effective tax rate to decline since the rates in the United Kingdom are less than in the United States of America at this current time.

Earnings Per Share. Diluted earnings per share increased to $0.59 versus $0.43 the same quarter a year ago, an increase of 37.2%.

LIQUIDITY AND CAPITAL RESOURCES

For the three months ended July 31, 2004, the Company generated $65.5 million of cash from operations on earnings of $40.8 million, compared to $56.3 million on earnings of $29.4 million in the Prior Quarter. Included in operating cash flow is an incremental $20 million of proceeds from the sale of finance contracts generated during the fourth quarter that could not be sold until this year’s first quarter. Historically, the Company experiences lower equipment sales volumes, and lower financing, in the first quarter of each fiscal year as compared to the fourth quarter of the preceding fiscal year.

Cash flows used in investing activities include $53 million for the acquisitions of Medco and CAESY and $8.1 million in capital expenditures.

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 2004 Annual Report on Form 10-K filed July 8, 2004.

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. The 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’s ability to meet increased competition from national, regional and local full-service distributors and mail-order distributors of dental, veterinary and rehabilitative and assistive living products, while maintaining current or improved profit margins.

•

The ability of the Company to retain its base of customers and to increase its market share.

•

The ability of the Company to maintain satisfactory relationships with qualified and motivated sales personnel.

•

The continued ability of the Company to maintain satisfactory relationships with key vendors and the ability of the Company to create relationships with additional manufacturers of quality, innovative products.

•

Changes in the economics of dentistry affecting dental practice growth and the demand for dental products, including the ability and willingness of dentists to invest in high-technology diagnostic and therapeutic products.

•

Reduced growth in expenditures for dental services by private dental insurance plans.

•

The accuracy of the Company’s assumptions concerning future per capita expenditures for dental services, including assumptions as to population growth and the demand for preventive dental services such as periodontic, endodontic and orthodontic procedures.

•

The rate of growth in demand for infection control products currently used for prevention of the spread of communicable diseases such as AIDS, hepatitis and herpes.

•

Changes in the economics of the veterinary supply market, including reduced growth in per capita expenditures for veterinary services and reduced growth in the number of households owning pets.

•

The effects of healthcare related legislation and regulation, which may affect expenditures or reimbursements for rehabilitative and assistive products.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from April 24, 2004 in the Company’s market risk. For further information on market risk, refer to Item 7A in the Company’s Annual Report on Form 10-K for the fiscal year ended April 24, 2004.

ITEM 4.

CONTROLS AND PROCEDURES

As of July 31, 2004, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of July 31, 2004 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

During the fiscal quarter ended July 31, 2004, there were no significant changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 6.

EXHIBITS



2.1		Articles of Merger and Plan of Merger of Patterson Dental Company and Patterson Companies, Inc., dated June 23, 2004.

3.3		Restated Articles of Incorporation, effective September 2, 2004

4.1		Specimen Stock Certificate

31.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C.ss.1350, as Adopted, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

All other items under Part II have been omitted because they are inapplicable or the answers are negative, or, as in the case of legal proceedings, were previously reported in the Annual Report on Form 10-K filed July 8, 2004.

SIGNATURES

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


	PATTERSON COMPANIES, INC. (Registrant)
Dated: September 9, 2004

	By:	/s/ R. S TEPHEN A RMSTRONG
		R. Stephen Armstrong
		Executive Vice President, Treasurer and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

EXHIBIT 2.1

ARTICLES OF MERGER AND PLAN OF MERGER

PATTERSON DENTAL COMPANY

AND

PATTERSON COMPANIES, INC.

Pursuant to Section 302A.621 of the Minnesota Business Corporation Act, the undersigned officer of Patterson Dental Company., a Minnesota corporation (the “Surviving Corporation”), which is the owner of 100% of the outstanding capital stock of Patterson Companies, Inc., a Minnesota corporation (the “Subsidiary Corporation”), hereby executes and files these Articles of Merger:

FIRST: The Plan of Merger, in the form of resolutions duly adopted by unanimous action of the Board of Directors of the Surviving Corporation on June 23, 2004, is attached hereto as Exhibit A.

SECOND: The number of outstanding shares of each class and series of the Subsidiary Corporation and the number of shares of each class and series owned by the Surviving Corporation are as follows:

Designation of

Class and Series

Number of

Outstanding Shares

Number of Shares Owned

by Surviving Corporation

Common Stock, par value $.01

100

THIRD: Since there are no shareholders of the Subsidiary Corporation other than the Surviving Corporation, Minnesota Statutes § 302A.621 does not require the mailing of a copy of the Plan of Merger to any shareholders of the Subsidiary Corporation.

FOURTH: The Plan of Merger has been duly approved by the Surviving Corporation pursuant to Minnesota Statutes § 302A.621.

FIFTH: Upon the effective time of the merger, pursuant to Section 302A.621, Subd. 1, Article I of the Articles of Incorporation of the Surviving Corporation shall be amended as follows:

ARTICLE I.

NAME

The name of this Corporation is Patterson Companies, Inc.

SIXTH: The merger shall be effective upon filing of these Articles of Merger and Plan of Merger with the Secretary of State of the State of Minnesota.

Dated: June 23, 2004


PATTERSON DENTAL COMPANY

By		/s/ P ETER L. F RECHETTE
		Peter L. Frechette
		Chairman and Chief Executive Officer

EXHIBIT A

PATTERSON DENTAL COMPANY

RESOLUTIONS OF

BOARD OF DIRECTORS

WHEREAS, the Corporation owns 100% of the issued and outstanding capital stock of Patterson Companies, Inc., a Minnesota corporation (“Subsidiary”), consisting of 100 shares of common stock, par value $.01; and

WHEREAS, the Corporation desires to effect the merger of Subsidiary with and into the Corporation pursuant to Section 302A.621 of the Minnesota Business Corporation Act.

NOW, THEREFORE, BE IT RESOLVED, that Subsidiary be merged with and into the Corporation pursuant to Section 302A.621 of the Minnesota Business Corporation Act, in accordance with the further resolutions set forth below (which resolutions shall constitute the Plan of Merger).

RESOLVED FURTHER, that at the effective time of the merger, all of the outstanding shares of common stock of Subsidiary owned by the Corporation shall be canceled, and no securities of the Corporation or any other corporation, or any money or other property, shall be issued in exchange therefor.

RESOLVED FURTHER, that upon the filing of the Articles of Merger, pursuant to Section 302A.621, Subd. 1, of the Minnesota Business Corporation Act, by virtue of the filing of the Articles of Merger and without any further action by the Company, its Board of Directors, or its shareholders, Article I of the Company’s Articles of Incorporation shall be amended in its entirety to read as follows:

ARTICLE I.

NAME

The name of this Corporation is Patterson Companies, Inc.

RESOLVED FURTHER, that the merger shall be effective upon the date of filing of the Articles of Merger with the Secretary of State of the State of Minnesota in the manner required by law.

RESOLVED FURTHER, that Peter L. Frechette or any officer of the Corporation be and hereby is authorized and directed to make, sign and acknowledge, for and on behalf of the Corporation, Articles of Merger setting forth the foregoing Plan of Merger and such other information as

required by law, and to cause such articles to be filed for record with the Secretary of State of the State of Minnesota in the manner required by law.

RESOLVED FURTHER, that the officers of the Corporation, and each of them, be and they hereby are authorized, for and on behalf of the Corporation, to take such other action as such officers, or any of them, shall deem necessary or appropriate to carry out the purposes of the foregoing resolutions.

Exhibit 3.3

RESTATED ARTICLES OF INCORPORATION

PATTERSON COMPANIES, INC.

The undersigned, Matthew L. Levitt, Secretary of Patterson Companies, Inc., a Minnesota corporation subject to the provisions of the Minnesota Business Corporation Act (the “Act”), does hereby certify that the board of directors of the corporation, pursuant to Section 302A.135 Subd. 5 of the Act did, by written action effective September 2, 2004, unanimously adopt a resolution restating the Restated Articles of Incorporation of the corporation and all amendments thereto. The undersigned further certifies that the aforesaid resolution adopted pursuant to the Act and set forth in the text below correctly sets forth without change the corresponding provisions of the existing Restated Articles of Incorporation, as amended, to wit:

RESOLVED that the Restated Articles of Incorporation of this corporation be amended and restated as follows:

ARTICLE 1

Name : The name of the corporation shall be Patterson Companies, Inc.

ARTICLE 2

Purpose : The corporation is formed for general business purposes and may engage in any lawful act or activity for which corporations may be formed under the laws of the state of Minnesota.

ARTICLE 3

Registered Office : The address of the registered office of the corporation in the state of Minnesota is 1031 Mendota Heights Road, Mendota Heights, Minnesota 55120.

ARTICLE 4

Authorized Shares : The total authorized shares of all classes which the corporation shall have authority to issue is 630,000,000, consisting of: 30,000,000 shares of preferred stock of the par value of one cent ($.01) per share (hereinafter the “preferred stock”); and 600,000,000 shares of common stock of the par value of one cent ($.01) per share (hereinafter the “common stock”).

4.1 Shares of preferred stock of the corporation may be issued from time to time in one or more series, each of which series shall have such designation or title and such number of shares as shall be fixed by the board of directors prior to the issuance of any shares thereof. Each such series of preferred stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative participating, optional or other special rights and such qualifications, limitations or restrictions, as shall be stated and expressed in the resolution or

resolutions of the board of directors providing for the issue of such series of preferred stock pursuant to the authority hereby expressly vested in such board to the full extent permitted by the Act. The board of directors is further authorized to increase or decrease (but not below the number of shares then outstanding) the number of shares of any series of preferred stock subsequent to the issuance of shares of that series.

4.2 Except as provided in the resolution or resolutions of the board of directors creating any series of preferred stock, the holders of shares of common stock shall have the exclusive right to vote, on a noncumulative basis, for the election and removal of directors and for all other purposes. Each holder of shares of common stock shall be entitled to one vote for each share held.

4.3 The board of directors shall have the authority of issue shares of a class or series, shares of which may then be outstanding, to holders of shares of another class or series to effectuate share dividends, splits, or conversion of its outstanding shares.

4.4 The board of directors is authorized to accept and reject subscriptions for and to dispose of authorized shares of the corporation, including the granting of stock options, warrants and other rights to purchase shares, without action by the shareholders and upon such terms and conditions as may be deemed advisable by the board of directors in the exercise of its discretion, except as otherwise limited by the Act, as amended.

4.5 The board of directors is authorized to issue, sell or otherwise dispose of bonds, debentures, certificates of indebtedness and other securities, including those convertible into shares of stock, without action by the shareholders and for such consideration and upon such terms and conditions as may be deemed advisable by the board of directors in the exercise of its discretion, except as otherwise limited by the Act, as amended.

ARTICLE 5

Certain Shareholder Rights : No shareholder shall be entitled to any preemptive right to purchase, subscribe for or otherwise acquire any new or additional securities of the corporation, or any options or warrants to purchase, subscribe for or otherwise acquire any such new additional securities before the corporation may offer them to other persons. No shareholder shall be entitled to any cumulative voting rights.

ARTICLE 6

Written Action by Board : Any action required or permitted to be taken by the board of directors of this corporation may be taken by written action signed by the number of directors that would be required to take the same action at a meeting of the board at which all directors are present, except as to those matters requiring shareholder approval, in which case the written action shall be signed by all members of the board of directors then in office.

ARTICLE 7

Nonliability of Directors for Certain Actions : A director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach of

fiduciary duty as a director, except to the extent provided by applicable law (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) under Sections 302A.559 or 80A.23 of the Minnesota Statutes, as amended, (iv) for any transaction from which the director derived an improper personal benefit, or (v) for any act or omission occurring prior to the date that this Article becomes effective. No amendment to or repeal of this Article shall apply to or have any affect on the liability or alleged liability of any director of the corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

ARTICLE 8

Indemnification of Directors and Officers : The corporation shall indemnify and may, in the discretion of the board of directors, insure directors, officers and employees of the corporation in the manner and to the full extent permitted by law.

IN WITNESS WHEREOF, the undersigned, acting for and on behalf of the corporation has subscribed his name this 2 ^nd day of September, 2004.

/s/ M ATTHEW L. L EVITT

Matthew L. Levitt

Secretary

Exhibit 4.1


Number	[GRAPHIC]	Shares

INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA

	PATTERSON COMPANIES, INC.	SEE REVERSE SIDE FOR CERTAIN DEFINITIONS

		CUSIP 703395 10 3

THIS CERTIFIES THAT

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, OF THE PAR VALUE OF $.01 PER SHARE, OF

PATTERSON COMPANIES, INC.

Common

transferable on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and Registrar.

IN WITNESS WHEREOF, the said Corporation has caused this certificate to be signed by facsimile signatures of its duly authorized officers.

Dated:



/s/ M ATHEW L EVITT		/s/ P ETER L. F RECHETTE
SECRETARY		CHIEF EXECUTIVE OFFICER

	Countersigned and Registered: WELLS FARGO BANK, N.A. Transfer Agent and Registrar

	By:	/s/ J ENNIE M. K AUFMAN
		Authorized Signature

The Corporation is authorized to issue shares of more than one class or series of Preferred Stock of the par value of one cent ($.01) per share. The Board of Directors of the Corporation has the authority to determine the relative rights and preferences of each such class or series. The Corporation will furnish, without charge, to each shareholder who so requests, a full statement of the designations, preferences, limitations, relative rights and voting power granted to or imposed upon the shares of each class or series authorized to be issued, and the authority of the board to determine the relative rights and preferences of subsequent classes or series.

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws and regulations:


TEN COM	–	as tenants in common	UTMA – Custodian
TEN COM	–	as tenants in common	(Cust) (Minor)

TEN ENT	–	as tenants by the entireties	under Uniform Transfer to Minors

JT TEN	–	as joint tenants with right of survivorship and not as tenants in common	Act (State)

Additional abbreviations may also be used though not in the above list.

For value received hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

___________________________________________________________________________________________________________

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE

___________________________________________________________________________________________________________

______________________________________________________________________________________________________ Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint _______________ ___________________________________________________________________________________________________ Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises.


Dated


				NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.

SIGNATURE GUARANTEED

ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (“STAMP”), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM (“MSP”), OR THE STOCK EXCHANGES MEDALLION PROGRAM (“SEMP”) AND MUST NOT BE DATED. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE.

Exhibit 31.1

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Peter L. Frechette, the Chief Executive Officer of Patterson Companies, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Patterson Companies, Inc.;

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

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

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

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

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

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

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

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

/s/ P ETER L. F RECHETTE

Peter L. Frechette

Chairman and Chief Executive Officer

September 9, 2004

Exhibit 31.2

CERTIFICATIONS PURSUANT TO

SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, R. Stephen Armstrong, the Chief Financial Officer of Patterson Companies, Inc., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Patterson Companies, Inc.;

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

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

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

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

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

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

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

/s/ R. S TEPHEN A RMSTRONG

R. Stephen Armstrong

Chief Financial Officer

September 9, 2004

Exhibit 32.1

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Patterson Companies, Inc. (the “Company”) on Form 10-Q for the period ended July 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Peter L. Frechette, Chief Executive Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

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

(2)

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

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

/s/ P ETER L. F RECHETTE

Peter L. Frechette

Chairman and Chief Executive Officer

September 9, 2004

Exhibit 32.2

CERTIFICATIONS PURSUANT TO

SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Patterson Companies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended July 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Stephen Armstrong, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

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

(2)

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

/s/ R. S TEPHEN A RMSTRONG

R. Stephen Armstrong

Chief Financial Officer

September 9, 2004

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