10-Q

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 June 30, 2011

OR

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

For the transition period from                      to                      

Commission File Number:  000-51468

MWI VETERINARY SUPPLY, INC.

(Exact name of registrant as specified in its Charter)

Delaware	02-0620757
(State of Incorporation)	(I.R.S. Employer Identification Number)
3041 W. Pasadena Dr.
Boise, ID	83705
(Address of principal executive offices)	(Zip Code)
(208) 955-8930
(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. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x  No  o

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

Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o  (Do not check if a smaller reporting company)	Smaller reporting company	o

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

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of July 22, 2011 was 12,562,563.

MWI VETERINARY SUPPLY, INC.

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Statements of Income for the three and nine months ended June 30, 2011 and 2010	3
	Condensed Consolidated Balance Sheets as of June 30, 2011 and September 30, 2010	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2011 and 2010	5
	Notes to Condensed Consolidated Financial Statements	6
	Report of Independent Registered Public Accounting Firm	15
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
	Cautionary Statement	22
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Removed and Reserved	24
Item 5.	Other Information	24
Item 6.	Exhibits	24

		PART I. FINANCIAL INFORMATION
		Item 1. Financial Statements
		MWI VETERINARY SUPPLY, INC.
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		Dollars and shares in thousands, except per share data
		(unaudited)
			Three months ended June 30,				Nine months ended June 30,
			2011		2010		2011		2010
Revenues:
	Product sales		$	393,706	$	334,242	$	1,089,830	$	827,614
	Product sales to related party			10,560		9,113		38,401		30,687
	Commissions			6,470		4,332		15,791		12,094
		Total revenues		410,736		347,687		1,144,022		870,395
Cost of product sales				356,649		303,750		988,877		750,927
Gross profit				54,087		43,937		155,145		119,468
Selling, general and administrative expenses				33,663		27,435		97,160		75,448
Depreciation and amortization				1,723		1,438		4,879		3,559
Operating income				18,701		15,064		53,106		40,461
Other income (expense):
	Interest expense			(166)		(171)		(600)		(389)
	Earnings of equity method investees			51		45		187		155
	Other			116		57		394		299
		Total other income (expense), net		1		(69)		(19)		65
Income before taxes				18,702		14,995		53,087		40,526
Income tax expense				(7,312)		(5,858)		(20,537)		(15,884)
Net income			$	11,390	$	9,137	$	32,550	$	24,642
Earnings per common share:
	Basic		$	0.91	$	0.74	$	2.61	$	2.02
	Diluted		$	0.91	$	0.74	$	2.60	$	1.99
Weighted average common shares outstanding:
	Basic			12,484		12,265		12,453		12,215
	Diluted			12,526		12,408		12,507		12,380
See Notes to Condensed Consolidated Financial Statements.

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MWI VETERINARY SUPPLY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars and shares in thousands, except per share data
(unaudited)
			June 30,		September 30,
			2011		2010
Assets
Current Assets:
	Cash and cash equivalents		$	989	$	911
	Receivables, net			210,516		189,428
	Inventories			174,915		175,292
	Prepaid expenses and other current assets			5,175		8,729
	Deferred income taxes			2,165		1,556
		Total current assets		393,760		375,916
Property and equipment, net				23,968		15,238
Goodwill				49,279		47,330
Intangibles, net				25,807		26,710
Other assets, net				6,756		2,738
Total assets			$	499,570	$	467,932
Liabilities And Stockholders’ Equity
Current Liabilities:
	Credit facilities		$	13,943	$	10,140
	Accounts payable			175,029		183,604
	Accrued expenses			17,243		15,118
	Note payable			-		2,000
	Current portion of long-term debt and capital lease obligations			928		1,631
		Total current liabilities		207,143		212,493
Deferred income taxes				5,997		5,310
Long-term debt and capital lease obligations				570		953
Other long-term liabilities				2,381		2,389
Commitments and contingencies (see Note 14)
Stockholders’ Equity
	Common stock $0.01 par value, 40,000 authorized; 12,559 and
		12,457 shares issued and outstanding, respectively		126		125
	Additional paid in capital			133,241		129,675
	Retained earnings			149,458		116,908
	Accumulated other comprehensive income			654		79
		Total stockholders’ equity		283,479		246,787
Total liabilities and stockholders’ equity			$	499,570	$	467,932
See Notes to Condensed Consolidated Financial Statements.

4

MWI VETERINARY SUPPLY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands (unaudited)
					Nine months ended June 30,
					2011		2010
Cash Flows From Operating Activities:
	Net income				$	32,550	$	24,642
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization				4,888		3,568
		Amortization of debt issuance costs				50		41
		Stock-based compensation				887		490
		Deferred income taxes				32		(108)
		Earnings of equity method investees				(187)		(155)
		Gain on disposal of property and equipment				-		(9)
		Excess tax benefit of exercise of common stock options				(2,271)		(1,829)
		Pension payment				-		(2,047)
		Other				(83)		-
		Changes in operating assets and liabilities (net of effects of business acquisitions):
			Receivables			(16,269)		(12,072)
			Inventories			4,273		(8,282)
			Prepaid expenses and other current assets			5,530		155
			Accounts payable			(13,505)		6,365
			Accrued expenses			2,386		(159)
				Net cash provided by operating activities		18,281		10,600
Cash Flows From Investing Activities:
		Business acquisitions, net of cash acquired				(7,000)		(39,511)
		Purchases of property and equipment				(10,280)		(1,862)
		Other investments				(4,283)		(97)
				Net cash used in investing activities		(21,563)		(41,470)
Cash Flows From Financing Activities:
		Borrowings on credit facilities				232,630		124,776
		Payments on credit facilities				(228,895)		(108,900)
		Proceeds from issuance of common stock				297		178
		Proceeds from exercise of stock options				89		368
		Excess tax benefit of exercise of common stock options				2,271		1,829
		Debt issuance costs				-		(116)
		Payment on long-term debt and capital lease obligations				(3,117)		(616)
				Net cash provided by financing activities		3,275		17,519
Effect of Exchange Rate on Cash and Cash Equivalents						85		(43)
Increase/(Decrease) in Cash and Cash Equivalents						78		(13,394)
Cash and Cash Equivalents at Beginning of Period						911		14,302
Cash and Cash Equivalents at End of Period					$	989	$	908
See Notes to Condensed Consolidated Financial Statements.

5

MWI VETERINARY SUPPLY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dollars and sterling pounds in thousands, except share and per share data

(unaudited)

NOTE 1 — GENERAL

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the results of operations, financial position and cash flows of MWI Veterinary Supply, Inc. and its wholly-owned subsidiaries (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q).  All material intercompany balances have been eliminated.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to present fairly, in all material respects, our results for the periods presented. These condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our 2010 Annual Report on Form 10-K filed with the SEC on November 23, 2010.  The results of operations for the three and nine months ended months ended June 30, 2011 are not necessarily indicative of results to be expected for the entire fiscal year.

Our unaudited condensed consolidated balance sheet as of September 30, 2010 has been derived from the audited consolidated balance sheet as of that date.

Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared on the accrual basis of accounting using accounting principles generally accepted in the United States. In preparing financial information, we use certain estimates and assumptions that may affect the reported amounts and disclosures. Some of these estimates require difficult, subjective and complex judgments about matters that are inherently uncertain. As a result, actual results could differ materially from these estimates. Estimates are used when accounting for, among other items, sales returns, allowance for doubtful accounts, customer incentives, vendor rebates, inventories, goodwill and intangible assets, income taxes, impairment of long-lived assets, depreciation and amortization, employee benefits, unearned income and contingencies. The estimates of fair value of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and reported amounts of revenue and expenses for the periods are based on assumptions that we believe to be reasonable.

Revenue Recognition

We sell products we source from vendors to our customers through either a “buy/sell” transaction or an agency relationship with our vendors. In a “buy/sell” transaction, we purchase or take inventory of products from the vendor. When a customer places an order with us, we pick, pack, ship and invoice the customer for the order. We recognize revenue from “buy/sell” transactions as product sales when the product is delivered to the customer. We accept product returns from our customers. We estimate returns based on historical experience and recognize these estimated returns as a reduction of product sales. Product returns have historically not been significant to our financial statements. We record revenues net of sales tax.  In an agency relationship, we generally do not purchase and take inventory of products from vendors. We receive an order from a customer, then transmit the order to the vendor, who picks, packs and ships the order to the customer. In some cases, the vendor invoices and collects payment from the customer, while in other cases we invoice and collect payment from the customer on behalf of the vendor. We receive a commission payment for soliciting the order from the customer and for providing other customer service activities. Commissions are recognized when the services upon which the commissions are based are complete. Gross billings from agency contracts were $101,376 and $92,504 for the three months ended June 30, 2011 and 2010, respectively, and generated commission revenue of $6,470 and $4,332, respectively.  Gross billings from agency contracts were $282,637 and $234,788 for the nine months ended June 30, 2011 and 2010, respectively, and generated commission revenue of $15,791 and $12,094, respectively.

Cost of Product Sales and Vendor Rebates

Cost of product sales consist of our inventory product cost, including shipping and delivery costs to and from our distribution centers.  Vendor rebates are recorded based on the terms of the contracts or programs with each vendor.  Many of our vendors’ rebate programs are based on a calendar year.  We may receive quarterly, semi-annual or annual performance-based rebates from third-party vendors based upon attainment of certain sales and/or purchase goals. Sales rebates are classified in the accompanying condensed consolidated statements of income as a reduction to cost of product sales at the time the sales performance measures are achieved. Purchase rebates are measured against inventory purchases from the vendors and are classified as a reduction of inventory until the product is sold. When the inventory is sold and purchase measures are achieved, purchase rebates are recognized as a reduction to cost of product sales.

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Historically, actual results have not significantly deviated from those determined using the estimates described above. We expect that our estimates in the future will continue to be reasonable as our rebates are based on specific vendor program goals and are principally recorded upon achievement of sales or purchase performance measures. Vendors may change or eliminate rebate programs from year to year.

NOTE 2 — EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends the consolidation guidance applicable to variable interest entities and requires additional disclosures concerning an enterprise’s continuing involvement with variable interest entities. The guidance is effective for our fiscal year beginning October 1, 2010. We have adopted this guidance and it did not have a material impact on our consolidated financial statements.

In May 2011, the FASB issued guidance to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between generally accepted accounting principles in the United States and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. The guidance is effective for our fiscal year beginning October 1, 2012.  We do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements.

 In June 2011, the FASB issued guidance on the presentation of comprehensive income in an entity's financial statements. The guidance requires that comprehensive income be presented either in one continuous statement or in two separate but consecutive statements presenting the components of net income and its total, the components of other comprehensive income and its total, and total comprehensive income. The guidance also requires that reclassification adjustments from other comprehensive income to net income be presented in both the components of net income and the components of other comprehensive income. The guidance is effective for our fiscal year beginning October 1, 2012.  We do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements.

NOTE 3 — BUSINESS ACQUISITIONS

On March 21, 2011, MWI Veterinary Supply Co. (“MWI Co.”) purchased substantially all of the assets of Nelson Laboratories Limited Partnership (“Nelson”) for $7,000 in cash.  Nelson is a distributor of animal health products to over 1,100 veterinary practices, primarily in the Midwestern United States.  This acquisition allows us to better serve our customers in this region of the United States.  An intangible asset representing customer relationships acquired in the acquisition has an estimated useful life of 10 years. The amount recorded in goodwill is expected to be deductible for tax purposes over 15 years.

On February 8, 2010, MWI Co. purchased all of the outstanding share capital of Centaur Services Limited (“Centaur”), based in the United Kingdom for an initial purchase price of $44,053, consisting of $42,053 in cash and $2,000 in a note payable which was paid on February 8, 2011.  Subsequent to the acquisition of Centaur, we funded $2,047 to the pension plan of Centaur as required by the terms of the share purchase agreement.  Centaur is a supplier of animal health products to veterinarians in the United Kingdom.  Centaur distributes products to both the companion animal market and production animal market.  The acquisition of Centaur has allowed us to expand into the international markets.  We incurred $1,100 of direct acquisition-related expenses during fiscal year 2010.  The intangible assets acquired in the acquisition have estimated useful lives between 1 and 20 years, which include customer relationships, trade names and other intangible assets.  The amount recorded in goodwill will not be deductible for tax purposes.

7

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition, which may be adjusted during the allocation period as defined in ASC 280.  These purchase price allocations are based on a combination of valuations and analyses.

	2011		2010
Cash	$	-	$	674
Receivables		4,041		32,371
Inventories		3,594		17,830
Other current assets		-		480
Property and equipment		1,900		5,275
Goodwill		1,823		9,483
Intangibles		140		17,658
Total assets acquired		11,498		83,771
Accounts payable		4,498		25,811
Accrued expenses		-		5,299
Other liabilities		-		10,476
Total liabilities assumed		4,498		41,586
Net assets acquired	$	7,000	$	42,185

The following table presents supplemental pro forma information as if the acquisition of Centaur had occurred on October 1, 2009 for the nine months ended June 30, 2010 (unaudited):

	Unaudited Pro Forma Consolidated Results
	Nine months ended June 30, 2010
Revenues	$	955,011
Net Income	$	25,727

For the pro forma calculation, we used an average foreign currency exchange rate for the period presented and the annual net income as a percentage of revenues for purposes of determining the net income for interim periods.  The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition on October 1, 2009.  Additionally, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company.

NOTE 4 — RECEIVABLES

	June 30,		September 30,
	2011		2010
Trade	$	197,351	$	177,317
Vendor rebates and programs		15,647		14,681
		212,998		191,998
Allowance for doubtful accounts		(2,482)		(2,570)
	$	210,516	$	189,428

8

Product sales resulting from transactions with Banfield, The Pet Hospital (“Banfield”) were approximately 6% and 9% of total product sales during the three months ended June 30, 2011 and 2010, respectively.  Product sales resulting from transactions with Banfield were approximately 6% and 10% of total product sales during the nine months ended June 30, 2011 and 2010, respectively.  Approximately 8% of our trade receivables resulted from transactions with Banfield as of June 30, 2011 and September 30, 2010.

NOTE 5 — PROPERTY AND EQUIPMENT

	June 30,		September 30,
	2011		2010
Land	$	1,729	$	261
Building and leasehold improvements		13,386		5,870
Machinery, furniture and equipment		20,879		17,495
Computer equipment		5,255		4,886
Construction in progress		997		1,626
		42,246		30,138
Accumulated depreciation		(18,278)		(14,900)
	$	23,968	$	15,238

Depreciation expense was $1,266 and $1,046 for the three months ended June 30, 2011 and 2010, respectively.  Depreciation expense was $3,612 and $2,659 for the nine months ended June 30, 2011 and 2010, respectively.

NOTE 6 — GOODWILL AND INTANGIBLES

The changes in the carrying value of goodwill are as follows:

Goodwill as of September 30, 2010		$	47,330
	Acquisition activity		1,823
	Foreign currency adjustments		126
Goodwill as of June 30, 2011		$	49,279

Balances of intangibles are as follows:

		June 30,		September 30,
	Useful Lives	2011		2010
Amortizing:
Customer relationships	9-20 years	$	25,378	$	25,027
Covenants not to compete	1-5 years		814		811
Other	3-7 years		461		458
			26,653		26,296
Accumulated amortization			(4,640)		(3,361)
			22,013		22,935
Non-Amortizing:
Trade names and patents			3,794		3,775
		$	25,807	$	26,710

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Amortization expense was $459 and $395 for the three months ended June 30, 2011 and 2010, respectively.  Amortization expense was $1,276 and $909 for the nine months ended June 30, 2011 and 2010, respectively.  Estimated future annual amortization expense related to intangible assets as of June 30, 2011 follows:

	Amount
Remainder of 2011	$	371
2012		1,623
2013		1,538
2014		1,532
2015		1,379
Thereafter		15,570
	$	22,013

NOTE 7 — DEBT

The following table presents the outstanding debt and capital lease obligations as of June 30, 2011 and September 30, 2010:

			June 30,		September 30,
			2011		2010
Revolving credit facility, 1.63% as of June 30, 2011		$	10,500	$	9,600
Sterling revolving credit facility, 1.69% as of June 30, 2011			3,443		540
Note payable (1)			-		2,000
Capital lease obligations (2)			1,498		1,811
Term note			-		773
Total debt and capital lease obligations			15,441		14,724
	Less: Long-term debt and capital lease obligations		(570)		(953)
Total debt included in current liabilities		$	14,871	$	13,771
(1) Note payable was related to the acquisition of Centaur and was paid in full on February 8, 2011.
(2) The capital lease obligations have varying maturity dates.

Revolving Credit Facility — On August 10, 2010, MWI Co., our wholly-owned subsidiary as borrower, entered into a Second Amendment to its Credit Agreement (“the facility”) with us and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. (the “lenders”).  Under the facility, the aggregate revolving commitment of the lenders is $100,000.  The maturity date of the loans under the facility is March 1, 2013.  The variable interest rate is equal to the Daily LIBOR Floating Rate or the LIBOR 1-month fixed rate (at MWI Co.’s option) plus a margin ranging from 1.50% to 2.25%.  The lenders also receive an unused line fee and letter of credit fee which is equal to 0.2% of the unused amount of the facility.  The facility contains financial covenants, including a fixed charge ratio and a funded debt to EBITDA calculation.  We were in compliance with all of the covenants as of June 30, 2011 and September 30, 2010.

Sterling revolving credit facility— As of September 30, 2010, Centaur operated with a credit facility with Fortis Bank as the lender, which allowed for borrowings in the aggregate of £12,000.  This facility had a variable interest rate equal to a base rate of 0.50% plus GBP one-month LIBOR plus a margin of 0.85%.

On November 5, 2010, Centaur terminated the Fortis facility and entered into a £12,500 unsecured revolving line of credit facility (the “sterling revolving credit facility”) with Wells Fargo Bank, N.A. London Branch (“Wells Fargo”).  The sterling revolving credit facility is for a three year term with interest paid at the end of the applicable one month, three month or six month interest period.  Interest is based on LIBOR for the applicable interest period plus an applicable margin of 1.05% to 1.90%.  The facility contains financial covenants requiring Centaur to maintain a minimum tangible net worth of £3,000 which is to be calculated at the end of each fiscal year.

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NOTE 8 — FAIR VALUE OF FINANCIAL INSTRUMENTS

Current fair value accounting guidance includes a hierarchy that is intended to increase consistency and comparability in fair value measurements and disclosures.  This hierarchy prioritizes inputs to valuation techniques based on observable and unobservable data.  The guidance categorizes these inputs used in measuring fair value into three levels which include the following:

·   Level 1 – observable inputs such as quoted prices in active markets;

·   Level 2 – inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly.  These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and

·   Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial instruments include cash and cash equivalents, receivables and accounts payable, and the fair values approximate book values due to their short maturities.  The majority of our capital leases have lease terms of three years and their fair values approximate book values due to their short maturities.

In August 2010, we amended our revolving credit facility.  Because this amendment was done recently and includes interest rates based on current market conditions, we believe that the estimated fair value of our long-term debt (including current maturities) was materially the same as our carrying value.

In November 2010, we refinanced our sterling revolving credit facility.  Because this amendment was done recently and includes interest rates based on current market conditions, we believe that the estimated fair value of our long-term debt (including current maturities) was materially the same as our carrying value.

NOTE 9 — COMMON STOCK AND STOCK-BASED AWARDS

2002 Stock Plan

We have a 2002 Stock Plan (the “2002 Plan”) to provide our directors, executives and other key employees with additional incentives by allowing them to acquire an ownership interest in us and, as a result, encouraging them to contribute to our success. As of June 30, 2011 and September 30, 2010, we had 76,410 and 164,788 shares, respectively, of our common stock available for issuance under the 2002 Plan. The options granted under the 2002 Plan are nonqualified stock options that have an exercise price per share equal to fair market value of the common stock at the time of grant. The term of each option is determined by our board of directors or by a designated committee of the board.  The term of any option may not exceed ten years from the date of grant.  As of June 30, 2011, 15,970 options to purchase common stock were outstanding with a weighted average exercise price of $0.18 per share and expiring through June 2012.

2005 Stock Plan

We have a 2005 Stock-Based Award and Incentive Compensation Plan (the “2005 Plan”), under which we may offer restricted and unrestricted shares of our common stock and grant options to purchase shares of our common stock to selected employees and non-employee directors. The purpose of the 2005 Plan is to promote our long-term financial success by attracting, retaining and rewarding eligible participants. As of June 30, 2011 and September 30, 2010, we had 979,878 and 991,970 shares, respectively, of our common stock available for issuance under the 2005 Plan. As of June 30, 2011, 31,273 options to purchase common stock were outstanding with a weighted average exercise price of $17.83 per share and expiring through September 2015.

The 2005 Plan permits us to grant stock options (both incentive stock options and non-qualified stock options), restricted and unrestricted stock and deferred stock. The compensation committee will determine the number and type of stock-based awards to each participant, the exercise price of each award, the duration of the award (not to exceed ten years), vesting provisions and all other terms and conditions of such award in individual award agreements. The 2005 Plan provides that upon termination of employment with us, unless determined otherwise by the compensation committee at the time options are granted, the exercise period for vested awards will generally be limited, provided that vested awards will be canceled immediately upon a termination for cause or voluntary termination. The 2005 Plan provides for the cancellation of all unvested awards upon termination of employment with us, unless determined otherwise by the compensation committee at the time awards are granted.

We did not grant common stock options during each of the nine months ended June 30, 2011 and 2010.  During the nine months ended June 30, 2011 and 2010, we issued 5,550 and 2,000 shares of restricted stock under the 2005 Plan.  We also granted 6,000 shares of unrestricted stock to non-employee directors during each of the nine months ended June 30, 2011 and 2010.  During the three months ended June 30, 2011 and 2010, we recognized $235 and $98 of compensation expense related to stock grants, respectively.  During the nine months ended June 30, 2011 and 2010, we recognized $1,139 and $528 of compensation expense related to stock grants, respectively.

11

We also have an employee stock purchase plan (“ESPP”) that allows substantially all employees to purchase shares of our common stock at 95% of the fair market value on the date of purchase.  The purchase date is the last trading date of the purchase periods, which begin in March, June, September and December.  Employees accumulate amounts through payroll deductions during the purchase period of between 1% and 10% but no more than $20 annually.  An employee is allowed to purchase a maximum of 200 shares per purchase period.  During the nine months ended June 30, 2011 and 2010, we issued 4,420 and 4,454 shares, respectively, of our common stock under the ESPP.

NOTE 10 — INCOME TAXES

Our effective tax rate for each of the three months ended June 30, 2011 and 2010 was 39.1%.  Our effective tax rate for the nine months ended June 30, 2011 and 2010 was 38.7% and 39.2%, respectively.  The decrease in the effective tax rate is primarily due to the impact of the Centaur acquisition, which includes direct acquisition-related expenses in the prior year that were non-deductible for tax purposes as well as Centaur’s contribution to earnings at a lower effective tax rate.

As of June 30, 2011, we had $23 of unrecognized tax benefits, of which $15 would impact our effective rate if recognized. Our policy for classifying interest and penalties associated with unrecognized tax benefits is to include such items in income tax expense.  The amount of interest and penalties recognized during the three months ended June 30, 2011 and 2010 was not material.

We filed Form 3115 Application of Change in Accounting Method with the Internal Revenue Service during the fiscal year ended September 30, 2008.  We filed an advance consent request for a non-automatic account method change for tax purposes for which we received approval during the three months ended March 31, 2011.  The method change will make revenue recognition for tax purposes the same as revenue recognized for book purposes.  The approval of the method change decreased the liability for unrecognized tax benefits by $175 for the nine months ended June 30, 2011.

With few exceptions, we are no longer subject to income tax examination for years before 2005 in the U.S. and significant state and local jurisdictions.  We are no longer subject to income tax examination for years before 2009 in significant foreign jurisdictions.

12

NOTE 11 — COMPUTATION OF EARNINGS PER SHARE (In thousands, except per share data)

		Three months ended June 30,
		2011				2010
		Basic		Diluted		Basic		Diluted
Net income		$	11,390	$	11,390	$	9,137	$	9,137
Weighted average common shares outstanding			12,484		12,484		12,265		12,265
Effect of diluted securities
	Stock options and restricted stock				42				143
Weighted average diluted shares outstanding					12,526				12,408
Earnings per share		$	0.91	$	0.91	$	0.74	$	0.74
Anti-dilutive shares excluded from calculation					-				-
		Nine months ended June 30,
		2011				2010
		Basic		Diluted		Basic		Diluted
Net income		$	32,550	$	32,550	$	24,642	$	24,642
Weighted average common shares outstanding			12,453		12,453		12,215		12,215
Effect of diluted securities
	Stock options and restricted stock				54				165
Weighted average diluted shares outstanding					12,507				12,380
Earnings per share		$	2.61	$	2.60	$	2.02	$	1.99
Anti-dilutive shares excluded from calculation					-				-

NOTE 12 — RELATED PARTIES

MWI Co. holds a 50.0% membership interest in Feeders’ Advantage LLC (“Feeders’ Advantage”).  MWI Co. charged Feeders’ Advantage for certain operating and administrative services in the amounts of $193 and $172 for the three months ended June 30, 2011 and 2010, respectively.  MWI Co. charged Feeders’ Advantage for certain operating and administrative services in the amounts of $645 and $563 for the nine months ended June 30, 2011 and 2010, respectively.  Sales of products to Feeders’ Advantage were $10,560 and $9,113, which represented 3% of total product sales for each of the three months ended June 30, 2011 and 2010.  Sales of products to Feeders’ Advantage were $38,401 and $30,687, which represented 3% and 4% of total product sales for the nine months ended June 30, 2011 and 2010, respectively.

MWI Co. provides Feeders’ Advantage with a line-of-credit to finance its day-to-day operations. This line-of-credit bears interest at the prime rate. The interest due on the line-of-credit is calculated and charged to Feeders’ Advantage on the last day of each month. Conversely, to the extent MWI Co. has a payable balance due to Feeders’ Advantage, the payable balance accrues interest in favor of Feeders’ Advantage at the average federal funds rates in effect for that month. MWI Co. had a payable balance to Feeders’ Advantage of $653 and $281 as of June 30, 2011 and September 30, 2010, respectively.

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NOTE 13 —  STATEMENTS OF CASH FLOWS – SUPPLEMENTAL AND NON-CASH DISCLOSURES

	Nine months ended June 30,
	2011		2010
Supplemental Disclosures
Cash paid for interest	$	416	$	258
Cash paid for income taxes		14,436		13,563
Non-cash Activities
Note payable issued related to Centaur acquisition		-		2,000
Equipment acquisitions financed with accounts payable		102		130

NOTE 14 — COMMITMENTS AND CONTINGENCIES

From time to time, in the normal course of business, we may become a party to legal proceedings that may have an adverse effect on our financial position, results of operations and cash flows. At June 30, 2011, we were not a party to any material pending legal proceedings and were not aware of any claims that could have a material adverse effect on our financial position, results of operations or cash flows.

NOTE 15 — OTHER COMPREHENSIVE INCOME

The components of comprehensive income were as follows:

			Three months ended June 30,				Nine months ended June 30,
			2011		2010		2011		2010
Net income			$	11,390	$	9,137	$	32,550	$	24,642
Other comprehensive income (loss):
	Foreign currency translation			(245)		36		575		(1,706)
		Total comprehensive income	$	11,145	$	9,173	$	33,125	$	22,936

14

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

MWI Veterinary Supply, Inc.

Boise, Idaho

We have reviewed the accompanying condensed consolidated balance sheet of MWI Veterinary Supply, Inc. and subsidiaries (the "Corporation") as of June 30, 2011, and the related condensed consolidated statements of income for the three-month and nine-month periods ended June 30, 2011 and 2010, and of cash flows for the nine-month periods ended June 30, 2011 and 2010. These interim financial statements are the responsibility of the Corporation’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of MWI Veterinary Supply, Inc. and subsidiaries as of September 30, 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated November 23, 2010, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of September 30, 2010 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Boise, Idaho

July 29, 2011

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Item 2.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations

All dollar amounts are presented in thousands, except for per share amounts.

Overview

We are a leading distributor of animal health products to veterinarians in the United States and the United Kingdom. We sell our products to veterinarians in both the companion and production animal markets. Our growth has primarily been from internal growth initiatives and, to a lesser extent, selective acquisitions.  On March 21, 2011, we acquired substantially all of the assets of Nelson Laboratories Limited Partnership (“Nelson”), which is a distributor of animal health products to veterinarians in the midwestern United States.  On February 8, 2010, we acquired the outstanding share capital of Centaur Services Limited (“Centaur”), which is a supplier of animal health products in the United Kingdom.  We operate under a single reporting segment.

Historically, we estimate that approximately two-thirds of our total revenues have been generated from sales to the companion animal market and one-third from sales to the production animal market. The state of the overall economy in both the United States and the United Kingdom and consumer spending have impacted both the companion animal and production animal markets, with tightening credit markets, volatile commodity prices in milk, grain, corn and feeder cattle, and changes in weather patterns also affecting demand in the production animal market.  Both the companion animal and production animal markets have been integral to our financial results and we intend to continue supporting both markets.

Industry

We believe that the companion animal market in both the United States and the United Kingdom has slowed as a result of a decrease in consumer spending.  Historically, growth in the companion animal market has been due to the increasing number of households with companion animals, increased expenditures on animal health and preventative care, an aging pet population, advancements in pharmaceuticals and diagnostic testing and extensive marketing programs sponsored by companion animal nutrition and pharmaceutical companies. While the average order size for companion animal health products is often smaller than production animal health products, companion animal health products typically have higher margins. We intend to continue to penetrate this market through internal growth initiatives and selective acquisitions.  We believe that some of our customers in this market have experienced liquidity issues as a result of the tightening credit markets.

Product sales in the production animal market in both the United States and the United Kingdom are impacted by volatility in commodity prices such as milk, corn, grain and feeder cattle, changes in weather patterns that allow cattle to graze for longer periods and changes in the general economy.  Milk price declines in the dairy market have a significant impact on dairy farmers.  This creates cash-flow challenges for these farmers and in turn, could impact the time it takes for us to collect our outstanding accounts receivable from these customers as well as affect the overall collectability of these accounts.  However, we still believe that it is important to our business to service this market and we intend to continue to support production animal veterinarians with a broad range of products and value-added services. Historically, sales in this market have been largely driven by spending on animal health products to improve productivity, weight gain and disease prevention, as well as a growing focus on food safety.

We generally extend some level of credit to our customers without requiring collateral, which exposes us to credit risk.  If customers’ cash flow or operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain other sources of credit, they may not be able to pay or may delay payment to us, or in some cases may return products to us.We continually assess our customers’ ability to pay us and adjust our allowance for doubtful accounts, as necessary.

Our quarterly sales and operating results have varied significantly in the past, and will likely continue to do so in the future. Historically, our total revenues have typically been higher during the spring and fall months due to increased sales of production animal products. Product use cycles for production animal products are directly related to medical procedures performed by veterinarians on production animals during the spring and fall months. These buying patterns can also be affected by the marketing programs or price increase announcements of vendors and distributors, which can cause veterinarians to purchase production animal health products earlier than those products are needed. This kind of early purchasing may reduce our sales in the months these purchases would have otherwise been made.

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Sales

We sell products that we source from our vendors to our customers through either a “buy/sell” transaction or an agency relationship with our vendors. In a “buy/sell” transaction, we purchase or take inventory of products from our vendors. When a customer places an order with us, we pick, pack, ship and invoice the customer for the order. We record sales from “buy/sell” transactions, which account for the vast majority of our business, as revenues in conformity with generally accepted accounting principles in the United States. In an agency relationship, we generally do not purchase and take inventory of products from our vendors. When we receive an order from our customer, we transmit the order to our vendor, who picks, packs and ships the order to our customer. In some cases, our vendor invoices and collects payment from our customer, while in other cases we invoice and collect payment from our customer on behalf of our vendor. We receive a commission payment for soliciting the order from our customer and for providing other customer service activities. The aggregate revenues we receive in agency transactions constitute the “commissions” line item on our consolidated statements of income and are recorded in conformity with accounting principles generally accepted in the United States. Our vendors determine the method we use to sell our products. Historically, vendors have occasionally switched between the “buy/sell” and agency models for particular products in response to market conditions related to that particular product. A switch between models can impact our revenues and our operating income. We cannot know in advance when a vendor will switch between the “buy/sell” and agency models or what impact, if any, such a change may have. A switch can occur even with vendors with whom we have written agreements, because most of our agreements with vendors have relatively short terms and are terminable with or without cause on short notice, normally 30 to 90 days. The impact of any individual change from a “buy/sell” to an agency model depends on the costs and expenses associated with a particular product, and can have either a positive or a negative effect on our profitability.

We typically renegotiate vendor contracts annually.  These vendor contracts may include terms defining margins, rebates, commissions, exclusivity requirements and the manner in which we go to market.  For example, vendors could require us to distribute their products on an exclusive basis, which could cause us to forego distributing competing products which may also be profitable.  Conversely, competitors could obtain exclusive rights to market particular products, which we would be unable to market.  If we lose the right to distribute products under such exclusive agreements, we may lose access to certain products and lose a competitive advantage.  Exclusivity agreements could allow potential competitors to sell products that we cannot offer and erode our market share.  In addition, vendors have the ability to expand the distributors that they use which could have a material adverse effect on our business.

Many of our vendors’ rebate programs are based on a calendar year.  Historically, the three months ended December 31 has been our most significant quarter for recognition of rebates.  Vendor rebates based on sales are classified in our accompanying consolidated statements of income as a reduction to cost of product sales at the time the sales performance measures are achieved. Purchase rebates are measured against inventory purchases from the vendors and are a reduction of inventory until the product is sold. When the inventory is sold, purchase rebates are recognized as a reduction to cost of product sales.

Historically, our contract with Merial to sell their flea, tick and heartworm products included an exclusivity requirement.  This requirement did not permit us to sell or distribute other competing flea, tick and heartworm products.  Beginning calendar year 2010, we agreed with Merial to begin a non-exclusive arrangement where we are permitted to sell and distribute other competing products.  Some of these competing products were sold under buy-sell arrangements, while others were sold under agency arrangements.  Merial’s flea, tick and heartworm products are primarily sold under an agency arrangement.  This addition of buy-sell arrangements for certain flea, tick and heartworm products has had an impact on how our revenues are reported, since under agency sales, only commissions are reported as revenues, while for buy-sell products the total sale price of the product is reported as revenue.  Effective February 20, 2011, we entered into a Second Amendment to the 2010-2011 Merial Independent Sales Agent Agreement (“Second Amendment”).  Under the Second Amendment, we are prohibited from distributing non-Merial fipronil-containing products, although we are not restricted from distributing other competing flea, tick and heartworm products.  The Second Amendment also extends the term of the Agreement to December 31, 2012, and commission and rebate rates are amended.

Vendor Consolidation

In the United States, our top ten vendors supplied products that accounted for approximately 70% and 68% of our revenues for the nine months ended June 30, 2011 and 2010, respectively, and 71% of our revenues for the fiscal year ended September 30, 2010.  Pfizer supplied products that accounted for approximately 24% and 25% of our revenues during the nine months ended June 30, 2011 and 2010, respectively, and 25% of our revenues for our fiscal year ended September 30, 2010.  Of the Pfizer supplied products, production animal products under a livestock agreement accounted for approximately 12% and 11% of our revenues during the nine months ended June 30, 2011 and 2010, respectively, and approximately 12% of our revenues for our fiscal year ended September 30, 2010.  Merck (formerly known as Intervet/Schering-Plough) supplied products that accounted for approximately 11% and 10% of our revenues during the nine months ended June 30, 2011 and 2010, respectively, and 10% of our revenues for our fiscal year ended September 30, 2010.  Boehringer Ingelheim supplied products that accounted for approximately 9% and 10% of our revenues during the each of the nine months ended June 30, 2011 and 2010, respectively, and 10% of our revenues for our fiscal year ended September 30, 2010.  Merial, a subsidiary of Sanofi-Aventis, supplies the majority of their products to us under an agency relationship.  Commission revenue generated from Merial products accounted for approximately 48% and 50% of total commission revenues during the nine months ended June 30, 2011 and 2010, respectively, and 49% of total commission revenues for our fiscal year ended September 30, 2010.

For more information on our business, see our Annual Report on Form 10-K filed with the SEC on November 23, 2010.

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Results of Operations

The following table summarizes our results of operations for the three and nine months ended June 30, 2011 and 2010, in dollars and as a percentage of total revenues.

				Three months ended June 30,								Nine months ended June 30,
				2011		%		2010		%		2011		%		2010		%
Revenues:
	Product sales			$	393,706	95.9	%	$	334,242	96.1	%	$	1,089,830	95.3	%	$	827,614	95.1	%
	Product sales to related party				10,560	2.5	%		9,113	2.6	%		38,401	3.3	%		30,687	3.5	%
	Commissions				6,470	1.6	%		4,332	1.3	%		15,791	1.4	%		12,094	1.4	%
			Total revenues		410,736	100.0	%		347,687	100.0	%		1,144,022	100.0	%		870,395	100.0	%
Cost of product sales					356,649	86.8	%		303,750	87.4	%		988,877	86.4	%		750,927	86.3	%
Gross profit					54,087	13.2	%		43,937	12.6	%		155,145	13.6	%		119,468	13.7	%
SG&A expenses					33,663	8.2	%		27,435	7.9	%		97,160	8.5	%		75,448	8.7	%
Depreciation and amortization					1,723	0.4	%		1,438	0.4	%		4,879	0.5	%		3,559	0.4	%
Operating income					18,701	4.6	%		15,064	4.3	%		53,106	4.6	%		40,461	4.6	%
Other income (expense):
	Interest expense				(166)	-	%		(171)	-	%		(600)	-	%		(389)	-	%
	Earnings of equity method
		investees			51	-	%		45	-	%		187	-	%		155	-	%
	Other				116	-	%		57	-	%		394	-	%		299	-	%
			Total other income (expense)		1	-	%		(69)	-	%		(19)	-	%		65	-	%
Income before taxes					18,702	4.6	%		14,995	4.3	%		53,087	4.6	%		40,526	4.6	%
Income tax expense					(7,312)	(1.8)	%		(5,858)	(1.7)	%		(20,537)	(1.8)	%		(15,884)	(1.8)	%
Net income				$	11,390	2.8	%	$	9,137	2.6	%	$	32,550	2.8	%	$	24,642	2.8	%
Earnings per common share:
	Basic			$	0.91			$	0.74			$	2.61			$	2.02
	Diluted			$	0.91			$	0.74			$	2.60			$	1.99
Weighted average common shares outstanding (in thousands):
	Basic				12,484				12,265				12,453				12,215
	Diluted				12,526				12,408				12,507				12,380

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Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010

Total Revenues.  Total revenues increased 18.1% to $410,736 for the three months ended June 30, 2011, from $347,687 for the three months ended June 30, 2010.  Revenue growth in the United States was 18.9% for the quarter ended June 30, 2011, compared to the same period in the prior fiscal year.  Revenue growth in the United Kingdom was 14.1% for the quarter ended June 30, 2011, compared to the same period in the prior fiscal year, consisting of 4.3% organic growth and 9.8% growth related to foreign currency exchange.The growth in organic revenues in the United States came from increased business as a result of the bankruptcy and liquidation of a competitor that is no longer in business, growth from our e-commerce platform and the addition of sales representatives over the past twelve months. Organic revenues attributable to existing customers represented approximately 40% of the growth in revenues during the three months ended June 30, 2011.  Organic revenues attributable to new customers represented approximately 60% of the growth in revenues during the three months ended June 30, 2011. For the purpose of calculating growth rates of new and existing customer revenue, we have defined a new customer as a customer that did not purchase product from us in the corresponding fiscal quarter of the prior year, with the remaining customer base being considered existing customers.  Revenues from new customers for each fiscal quarter are summed to arrive at the estimated year-to-date revenue for new customers.

Product sales to related party increased by 15.9% to $10,560 for the three months ended June 30, 2011, from $9,113 for the three months ended June 30, 2010.  Commissions increased 49.4% to $6,470 for the three months ended June 30, 2011, from $4,332 for the three months ended June 30, 2010 primarily due to achieving an incentive from one of our vendors, which was not achieved in the prior fiscal year, as well as an increase in commission rates and gross billings from agency contracts.

Gross Profit.  Gross profit increased by 23.1% to $54,087 for the three months ended June 30, 2011, from $43,937 for the three months ended June 30, 2010.  The change in gross profit is primarily a result of increased total revenues as discussed above.  Gross profit as a percentage of total revenues was 13.2% and 12.6% for the three months ended June 30, 2011 and 2010, respectively.  This increase in gross profit as a percentage of total revenues was due to the incentive that was discussed above and an overall increase in product margin, partially offset by a decrease in vendor rebates.  Vendor rebates for the three months ended June 30, 2011 decreased by approximately $205 compared to the three months ended June 30, 2010.

Selling, General and Administrative (“SG&A”).  SG&A expenses increased 22.7% to $33,663 for the three months ended June 30, 2011, from $27,435 for the three months ended June 30, 2010.  The increase in SG&A expenses was primarily due to compensation costs from increased headcount to support the revenue growth, as well as an increase in bank service fees related to customer credit card usage.  SG&A expenses as a percentage of total revenues were 8.2% for the three months ended June 30, 2011, compared to 7.9% for the three months ended June 30, 2010.

Income Tax Expense. Our effective tax rate for each of the three months ended June 30, 2011 and 2010 was 39.1%.

Nine Months Ended June 30, 2011 Compared to Nine Months Ended June 30, 2010

Total Revenues.  Total revenues increased 31.4% to $1,144,022 for the nine months ended June 30, 2011, from $870,395 for the nine months ended June 30, 2010.  Revenue growth in the United States was 22.4% for the nine months ended June 30, 2011, compared to the same period in the prior fiscal year.  Revenue growth in the United Kingdom was 108.2% for the nine months ended June 30, 2011 as compared to the same period in the prior year as we owned Centaur for the full nine months this fiscal year compared to approximately five months in the same period in the prior fiscal year.  The growth in organic revenues in the United States came from increased business as a result of the bankruptcy and liquidation of a competitor that is no longer in business, a broader product line with new flea, tick and heartworm products, growth from our e-commerce platform and the addition of sales representatives over the past twelve months. Organic revenues attributable to existing customers represented approximately 44% of the growth in revenues during the nine months ended June 30, 2011.  Organic revenues attributable to new customers represented approximately 56% of the growth in revenues during the nine months ended June 30, 2011. For the purpose of calculating growth rates of new and existing customer revenue, we have defined a new customer as a customer that did not purchase product from us in the corresponding fiscal quarter of the prior year, with the remaining customer base being considered an existing customer.  Revenues from new customers for each fiscal quarter are summed to arrive at the estimated year-to-date revenue for new customers.  Additionally, the organic growth was partially due to the increase in revenues from the sale of flea, tick and heartworm products that we did not sell in the three months ended December 31, 2010 due to our previously exclusive arrangement with Merial.  Certain new flea, tick and heartworm products that we now distribute are sold under “buy/sell” arrangements while most flea, tick and heartworm products in the past were sold under an agency agreement.  The product sales under a “buy-sell” arrangement results in greater revenue than product sales under an agency arrangement because we recognize product sales under a “buy-sell” arrangement as total sales net of estimated product returns and sales tax, whereas we only recognize commission revenue in product sales under an agency relationship.

19

Product sales to related party increased by 25.1% to $38,401 for the nine months ended June 30, 2011, from $30,687 for the nine months ended June 30, 2010.  Commissions increased 30.6% to $15,791 for the nine months ended June 30, 2011, from $12,094 for the nine months ended June 30, 2010.

Gross Profit.  Gross profit increased by 29.9% to $155,145 for the nine months ended June 30, 2011, from $119,468 for the nine months ended June 30, 2010.  The change in gross profit is primarily a result of increased total revenues as discussed above including the additional gross profit from Centaur.  Gross profit as a percentage of total revenues was 13.6% and 13.7% for the nine months ended June 30, 2011 and 2010, respectively.  Gross profit as a percentage of total revenues decreased due to the addition of Centaur because Centaur's gross profit as a percentage of total revenues is generally lower than MWI's, which serves to reduce the overall gross margin of the consolidated Company when compared to our results for the same period in the prior year.  Vendor rebates for the nine months ended June 30, 2011 increased by approximately $2,760 compared to the nine months ended June 30, 2010 due to the organic revenue growth.

Selling, General and Administrative (“SG&A”).  SG&A expenses increased 28.8% to $97,160 for the nine months ended June 30, 2011, from $75,448 for the nine months ended June 30, 2010.  This increase was primarily due to the organic revenue growth as well as the addition of Centaur’s operating expenses. SG&A expenses as a percentage of total revenues decreased to 8.5% for the nine months ended June 30, 2011 from 8.7% for the nine months ended June 30, 2010.  SG&A expenses as a percentage of total revenues decreased due, in part, to the addition of Centaur because Centaur’s SG&A expenses as a percentage of total revenues are generally lower than MWI’s, which serves to reduce the overall SG&A expenses as a percentage of total revenues when compared to our results for the same period in the prior year.

Income Tax Expense. Our effective tax rate for the nine months ended June 30, 2011 and 2010 was 38.7% and 39.2%, respectively.  The decrease in the effective tax rate is primarily due to the impact of the Centaur acquisition, which includes direct acquisition-related expenses in the prior year that were non-deductible for tax purposes as well as Centaur’s contribution to earnings at a lower effective tax rate.

Critical Accounting Policies

The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.  The accompanying condensed consolidated financial statements are prepared using the same critical accounting policies discussed in our Annual Report on Form 10-K filed with the SEC on November 23, 2010.

Liquidity and Capital Resources

Our principal sources of liquidity are cash flows generated from operations and borrowings on our credit facilities. We use capital primarily to fund day-to-day operations and to maintain sufficient inventory levels in order to promptly fulfill customer orders and to expand our operations and sales growth. We believe our capital resources, including our ability to borrow funds from our credit facilities, will be sufficient to meet our anticipated cash needs for at least the next twelve months.

Our lenders may have suffered losses related to their lending and other financial relationships, especially because of the general weakening of the national economy and increased financial instability of many borrowers.  As a result, the lenders may become insolvent or tighten their lending standards, which could make it more difficult for us to borrow under our revolving credit facility, extend the terms of our revolving credit facility or obtain alternative financing on favorable terms or at all.  Our financial condition and results of operations could be adversely affected if we were unable to draw funds under our revolving credit facility because of a lender default or if we fail to obtain other cost-effective financing.

We generally extend some level of credit to our customers. If customers’ cash flow or operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain other sources of credit, they may not be able to pay or may delay payment to us, or in some cases may return products to us. Any inability of current and/or potential customers to pay us for our products and/or services due to their deteriorating financial condition or otherwise may adversely affect our results of operations and financial condition.

On August 10, 2010, MWI Co., our wholly-owned subsidiary as borrower, entered into a Second Amendment, to its Credit Agreement (“the facility”) with us and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. (the “lenders”).  Under the facility, the aggregate revolving commitment of the lenders is $100,000.  The maturity date of the loans under the facility is March 1, 2013.  The variable interest rate is equal to the Daily LIBOR Floating Rate or the LIBOR 1-month fixed rate (at MWI Co.’s option) plus a margin ranging from 1.50% to 2.25%.  The lenders also receive an unused line fee and letter of credit fee which is equal to 0.2% of the unused amount of the facility.  The facility contains financial covenants, including a fixed charge ratio and a funded debt to EBITDA calculation.  We were in compliance with both of these covenants as of June 30, 2011.  Our outstanding balance on the revolving credit facility at June 30, 2011 and September 30, 2010 was $10,500 and $9,600, respectively, and the interest rate was 1.63% as of June 30, 2011.

20

On November 5, 2010, Centaur entered into a £12,500 unsecured revolving line of credit facility (the “sterling revolving credit facility”) with Wells Fargo Bank, N.A. London Branch (“Wells Fargo”).  The sterling revolving credit facility is for a three year term with interest paid at the end of the applicable one month, three month or nine month interest period.  Interest is based on LIBOR for the applicable interest period plus an applicable margin of 1.05% to 1.90%.  The facility contains financial covenants requiring Centaur to maintain a minimum tangible net worth of £3,000 which is to be calculated at end of each fiscal year.  Our outstanding balance on the revolving credit facility at June 30, 2011 was £2,149, or $3,443 using the current exchange rate as of June 30, 2011, and the interest rate was 1.69% as of June 30, 2011.

Operating Activities.  For the nine months ended June 30, 2011, cash provided by operations was $18,281 and was primarily attributable to net income of $32,550 offset by changes in working capital.  Accounts payable decreased $13,505 as strategic inventory purchases were made during the quarter ended September 30, 2010 to support our organic growth of that quarter, and payments for those purchases were made during the nine months ended June 30, 2011 but we have kept inventory levels higher to support our growth.  Receivables increased $16,269 due to revenue growth.

For the nine months ended June 30, 2010, cash provided by operations was $10,600 and was primarily attributable to net income of $24,642 partially offset by an increase in accounts receivable of $12,072 due to the increase in revenues.   The increase in inventories of $8,282 and accounts payable of $6,365 were both due to the increase in revenues.

Investing Activities.  For the nine months ended June 30, 2011, net cash used in investing activities was $21,563.  We paid $7,000 in cash for the acquisition of Nelson. Additionally, we paid for capital expenditures of $10,280 which primarily related to an office building purchased in Boise, Idaho for our headquarters, equipment for our new distribution center in Visalia, California to accommodate the growth needs in that region and other distribution center technology.  Additionally, we made an investment in Cubex LLC, a technology based inventory management business, of $4,000.

For the nine months ended June 30, 2010, net cash used in investing activities was $41,470 and was primarily due to acquisition of Centaur of $39,511, net of cash acquired of $674, and capital expenditures of $1,862 related to distribution center infrastructure, including the relocation of the Holland, Michigan distribution center in September 2009 and technology investments.

Financing Activities.  For the nine months ended June 30, 2011, net cash provided by financing activities was $3,275, which was primarily due to net borrowings of $3,735 on our credit facilities.  Our revolving credit facilities are used to fund strategic acquisitions, make capital purchases and meet our working capital requirements.

For the nine months ended June 30, 2010, net cash provided by financing activities was $17,519, which was primarily due to net borrowings of $15,876 on our credit facilities.  Our revolving credit facility was used to finance the Centaur acquisition.  This was coupled with the tax benefit from stock option exercises of $1,829.

Contractual Obligations and Guarantees

For information on our contractual obligations and guarantees, see our Annual Report on Form 10-K filed on November 23, 2010 with the SEC.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks primarily from changes in interest rates, in particular, the Daily LIBOR Floating Rate, and foreign currency translation risk. We do not engage in financial transactions for trading or speculative purposes.  We do not hedge the translation of foreign currency profits into U.S. dollars.  We continually evaluate our foreign currency exchange rate risk and the different options available for managing such risk.

We are exposed to foreign currency risk due to our operations in the United Kingdom.  A hypothetical 10% change in the value of the U.S. dollar in relation to the British Pound, which is the Company’s most significant foreign currency exposure, would have changed net sales for the three months ended June 30, 2011 by approximately $6,500. This amount is not indicative of the hypothetical net earnings impact due to the partially offsetting impact of the currency exchange movements on cost of sales and operating expenses.

The interest payable on the facility is based on variable interest rates and is affected by changes in market interest rates. The outstanding balance on the revolving credit facility as of June 30, 2011 was $10,500.  Therefore, there was limited exposure to market risks as of this date.  If there had been a balance on the facility of $100,000, which is the maximum available amount on the facility, a change of 10% from the interest rate as of June 30, 2011, which was approximately 1.63% (Daily LIBOR Floating Rate plus a margin of 1.5%), would have changed interest by $41 for the three months ended June 30, 2011.

21

Item 4.  Controls and Procedures

Management of the Company, including the Chief Executive Officer and the Chief Financial Officer of the Company, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of June 30,.  Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, including the accumulation and communication of disclosures to the Company’s Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure, are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.  OTHER INFORMATION

Cautionary Statement for Purposes of “Safe Harbor Provisions” of the Private Securities Litigation Reform Act of 1995

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar expressions. These statements include, among others, statements regarding our expected business outlook, anticipated financial and operating results, our business strategy and means to implement our strategy, our objectives, the amount and timing of capital expenditures, the amount and timing of interest expense, the likelihood of our success in expanding our business, financing plans, budgets, working capital needs and sources of liquidity.

Forward-looking statements are only predictions and are not guarantees of our performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on currently available information. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the expansion of product offerings geographically or through new applications, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results that differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include, but are not limited to, the following:

·   the impact of vendor consolidation on our business;

·   changes in or availability of vendor contracts or rebate programs;

·   vendor rebates based upon attaining certain growth goals;

·   changes in the way vendors introduce/deliver products to market;

·   exclusivity requirements with certain vendors that may prohibit us from distributing competing products manufactured by other vendors;

·   risks associated with our international operations;

·   transitional challenges associated with acquisitions, including the failure to achieve anticipated synergies;

·   financial risks associated with acquisitions;

·   the impact of general economic trends on our business;

·   the recall of a significant product by one of our vendors;

·   extended shortage or backorder of a significant product by one of our vendors;

·   seasonality;

·   the timing and effectiveness of marketing programs or price changes offered by our vendors;

·   the timing of the introduction of new products and services by our vendors;

·   the ability to borrow on our revolving credit facility, extend the terms of our revolving credit facility or obtain alternative financing on favorable terms or at all;

22

·   risks from potential increases in variable interest rates;

·   the impact of tightening credit standards and/or access to credit on behalf of our customers and suppliers;

·   unforeseen litigation;

·   a disruption caused by adverse weather or other natural conditions or disasters;

·   inability to ship products to the customer as a result of technological or shipping disruptions; and

·   competition.

Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results or performance.

Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose any material non-public information or other confidential commercial information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Furthermore, we have a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of MWI Veterinary Supply, Inc.

Item 1.  Legal Proceedings

We are not currently a party to any material pending legal proceedings and are not aware of any claims that could have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, as modified by the risk factors disclosed in the “Risk Factors” section of the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2011.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The table below provides information concerning our repurchase of shares of our common stock during the three months ended June 30, 2011.

Issuer Purchases of Equity Securities
					Total Number of	Maximum Number (or
	Total				Shares Purchased	Approximate Dollar
	Number		Average		as Part of Publicly	Value) of Shares that May
	of Shares		Price Paid		Announced Plans	Yet Be Purchased Under
Period	Purchased		per Share		or Programs	the Plans or Programs
April 1 to April 30, 2011	—		$	—	—	—
May 1 to May 31, 2011	—			—	—	—
June 1 to June 30, 2011	75	(1)		79.80	—	—
Total	75		$	79.80	—	—
(1) These shares were withheld upon the vesting of employee stock grants in connection with payment of required withholding taxes.

Item 3.  Defaults Upon Senior Securities

None.

23

Item 4.  Removed and Reserved

None.

Item 5.  Other Information

None.

Item 6.  Exhibits

10.1	2011 Pfizer Equine Products Marketing Agreement between MWI Veterinary Supply, Inc. and Pfizer, Inc. effective as of January 1, 2011 †
10.2	Second Amendment to 2010-2011 Merial Independent Sales Agreement between MWI Veterinary Supply Co. and Merial Limited effective as of February 20, 2011 †
15	Letter re: Unaudited Interim Financial Information
31.1	Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Financials in XBRL format

† Certain portions of the exhibit have been omitted pursuant to a confidential treatment request submitted to and approved by the SEC.

SIGNATURE

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.

	MWI Veterinary Supply, Inc.
	(Registrant)
Date: July 29, 2011	/s/ Mary Patricia B. Thompson
	Mary Patricia B. Thompson
	Senior Vice President of Finance and Administration, Chief Financial Officer

EX-10.1

** — CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

2011 PFIZER EQUINE PRODUCTS MARKETING AGREEMENT

This Agreement dated and effective as of January 1, 2011 is made by and between Pfizer Inc, 5 Giralda Farms Madison, New Jersey 07940-1027 (hereinafter, “PFIZER”) and MWI Veterinary Supply Company, 651 South Stratford Drive, Suite 100, Meridian, ID 83642 (hereinafter, “MWI”)

1.PFIZER hereby appoints MWI, and MWI hereby accepts appointment, as a contract distributor for PFIZER Products set forth on Exhibit A (the “Products”), to purchase from PFIZER and to resell for MWI’s own account as a distributor, subject to the following terms and conditions.

2.MWI recognizes and agrees to the following:

(a)PFIZER has elected to work with a select group of distributors that are committed to maximizing the sale of the Products and to working closely with PFIZER to identify market opportunities for both companies. The intent of this Agreement is to attain that goal;

(b)PFIZER intends to utilize this group of distributors to sell the Products to customers below them in the distribution chain and that PFIZER has, and may in the future, run promotions and other activities that would be seriously prejudiced if MWI resells the Products to other PFIZER contract distributors, non-employee agents or through brokers.

3.Accordingly, MWI shall:

(a)use its reasonable best efforts to sell the Products by focusing its primary effort at reselling to veterinarians, OTC retailers, and horse owners;

(b)maintain a full-time outside and inside sales force that will personally and actively solicit sales of the Products and pay such sales representatives reasonable commission as MWI deems appropriate in its sole discretion;

(c)store and handle its inventory of Products under conditions that will ensure that such Products retain their potency, purity, quality, and identity;

(d)MWI will provide PDA/EDI with sales out data on each PFIZER sku MWI sells. MWI will provide to Covansys its Health Industry Number, Customer Health Industry Number, PFIZER product number, transaction date, ship to zip code, number of units and price with respect to each sale of product, and unit inventories on each PFIZER sku that MWI sells. This information should be sent to Covansys. Sales out data shall be provided to Covansys within /**/ of the date of each invoice. MWI will use its best efforts to insure sales out data integrity and timeliness;

(e)set its resale prices for the Products independently and at its sole discretion;

(f)cooperate fully with PFIZER by actively participating in such strategy sessions as PFIZER reasonably may require, for the purpose of developing programs to increase use of the Products; and to cooperate fully with PFIZER in implementing all promotions and sales campaigns for the Products;

(g)allow PFIZER’s representatives to attend and actively participate in meetings of MWI’s sales representatives;

(h)distribute the Products only under the labeling provided by PFIZER; prescribe, recommend, suggest, and advertise each Product for use only under the conditions stated in the labeling provided by PFIZER; and observe all federal, state, and local laws governing the distribution of animal drugs. In the case of Products bearing the legend, “CAUTION: FEDERAL LAW RESTRICTS THIS DRUG TO USE BY OR ON THE ORDER OF A LICENSED VETERINARIAN,” or any similar legend, sell such Products only to or on the order of a licensed veterinarian for use in the course of his or her professional practice or to another person or entity regularly and lawfully engaged in the use, distribution or dispensing of such legend drugs;

(i)MWI agrees that credit limits established by PFIZER shall be subject to change by PFIZER in its sole discretion and that no shipments will be made to MWI in excess of the established credit limits;

(j)take no action, whether or not identified above, that would harm the goodwill or name of PFIZER, or damage the interests of PFIZER or the Products, other than where supported by sound factual evidence. For purposes of this Agreement “Goodwill” shall mean the marketplace advantage of customer patronage and loyalty developed with continuous business under the same name over a period of time.

(k)MWI shall immediately notify PFIZER in the event MWI obtains information indicating that any of the Products may have to be recalled either by virtue of applicable law or regulation or good business judgment. PFIZER shall control all efforts necessary to conduct any such recall. MWI shall cooperate with PFIZER and MWI agrees to maintain adequate records to conduct such recall, including the name, address and Product purchases of all purchasers of PFIZER Products.

(l)MWI may make use of the Product Focus Funds provided for in Exhibit D hereto.

(m)Make payment to PFIZER /**/; and

(n)Provide to PFIZER by the close of business on the last business day of each PFIZER Accounting Period (as set forth in Exhibit E hereto) an inventory report covering all inventory purchased from PFIZER and setting forth in dollars at MWI’s acquisition cost from PFIZER the amount of inventory by species. MWI agrees that PFIZER shall have the right to audit inventory in the possession of MWI to confirm compliance with this paragraph 3 (n) and to confirm the accuracy of the data contained in the report.

(o)Each distributor, veterinarian, dealer or producer must make its own independent decision as to whether and how to sell and/or purchase Pfizer Animal Health’s Equine products, including at what price to advertise, sell or value Pfizer Animal Health’s Equine products. Notwithstanding the above, Pfizer may exclude from rebate calculations any Pfizer Products sold by distributors, veterinarians, dealers or producers below the recommended selling price.

4.PFIZER shall:

(a)sell the Products to MWI at the prices in effect in the then current published PFIZER Animal Health Products Distributor Price List (hereinafter, “Price List”). PFIZER also shall permit MWI to participate in the distributor incentive programs offered by PFIZER, in accordance with the terms of such programs. PFIZER shall have the unrestricted right to revise the prices, terms and conditions of the Price List, and to add or delete Products or package sizes, without advance notice to MWI, and the revisions shall be effective on all orders submitted after the effective date of the price revisions. In all cases of orders received for other than immediate shipment, the price for the Products shall be that in effect at the time of shipment. PFIZER agrees to give MWI /**/ advance notice of price increases;

(b)compensate MWI in accordance with Exhibits B, C and D hereto. In the event that one Agreement holder acquires or combines with another Agreement holder, the purchase objectives will be adjusted accordingly for the purpose of determining incentives earned; and

(c)allow MWI credit on prepaid returns in accordance with PFIZER’s Outdated Products Policy which is in effect at the time.

(d)Agreement holders with more than one location must combine purchases of all locations to determine attainment level for incentives. In the event that one Agreement holder acquires or combines with another Agreement holder, the purchase objectives will be adjusted accordingly for the purpose of determining incentives earned.

(e)Direct purchase from PFIZER will be used to determine the level of purchases achieved. Any discrepancies must be documented by the Marketing Agreement holder using copies of PFIZER invoices.

5.Nothing in this Agreement shall be deemed to limit PFIZER’s ability to sell Products to any other party.

6.All purchases by MWI pursuant to this Agreement shall be in accordance with the terms of PFIZER’s Pricing and Shipping Policies, as may be amended by PFIZER from time to time. Unless the parties agree otherwise, shipments shall be made to either MWI’s central warehouse point or to branch offices at MWI’s direction.

7.MWI shall not be provided with any rebate, discount or other compensation for Products handled under this Agreement unless specifically set forth herein. MWI will NOT be eligible to collect an RSA or Performance Payment on any lateral sales to other PFIZER contract distributors or to an unauthorized Pfizer distributor. (It is MWI’s obligation to confirm with Pfizer, prior to making a sale, as to whether a distributor is a PFIZER contract distributor or an unauthorized distributor.) Nor shall MWI be eligible to collect an RSA or Performance Payment on sales made through brokers or non-employee agents.

8.The following standard conditions shall apply to all sales under this Agreement:

(a)MWI shall cooperate fully with PFIZER in participating fully in the Animal Health Institute Electronic Data Interchange (“AHI EDI”) for the reporting of sales and inventory data on a daily basis. The data to be reported shall be as described in the AHI EDI Transaction sets.

(b)all orders are subject to acceptance by PFIZER’s Animal Health Headquarters. Title to the goods shall pass to MWI once they have been properly delivered to the address designated by MWI. Products requiring temperature control will be shipped F.O.B. destination;

(c)any tax or other charge upon the sale and/or shipment of the goods now or hereafter imposed by federal, state or municipal authorities shall be paid by MWI. In the event that the price of any article includes transportation charges, any increase or decrease in transportation charges shall be for MWI’s account;

(d)EXCEPT AS SET FORTH IN THIS AGREEMENT, OR IN THE LABELING OF THE PRODUCTS SOLD HEREUNDER, PFIZER MAKES NO EXPRESS OR IMPLIED WARRANTIES WITH RESPECT TO THE PRODUCTS;

(e)PFIZER shall defend and indemnify MWI from all claims resulting from any breach by PFIZER of the warranties set forth in this paragraph 8, and specifically any claim that the Products, as sold by PFIZER, were defective. In the event PFIZER is found by any court of competent jurisdiction to be liable for any claim based in products liability, then PFIZER shall reimburse MWI’s reasonable legal fees incurred in the course of cooperating with PFIZER’s defense. To be covered by this defense and indemnity, MWI must: promptly notify PFIZER of any such claim; allow PFIZER to fully control the defense and/or resolution of the claim; and cooperate fully with PFIZER in the matter. This defense, indemnity and payment for legal fees shall not apply to claims alleging: MWI alteration, negligent handling or improper storage of the Products; sale of outdated Products; sale or recommendation of the Products for uses or in a manner not set forth in the labeling supplied by PFIZER; or sale of the Products after receipt of notice from PFIZER that such sales should be halted;

(f)in no event shall PFIZER be liable to MWI for special, collateral, incidental, or consequential damages in connection with or arising out of the purchase, resale, or use of the Products. Except as provided under subparagraph 8(e), above, total damages recoverable against PFIZER by MWI shall be exclusively limited to the purchase price of the Products with respect to which damages are claimed;

(g)failure of PFIZER to make or of MWI to take, when due, any delivery (or portion thereof) pursuant to an order hereunder, if occasioned by any circumstance or condition beyond the control of the party so failing, shall not subject the failing party to any liability to the other and, at the option of either party, that order or portion thereof not delivered may be canceled;

(h)acceptance of MWI’s order by PFIZER is expressly made conditional upon MWI’s acceptance of the conditions of sale as set forth herein, and the prices, terms and conditions of the Price List then in effect, notwithstanding acknowledgment or receipt of MWI’s purchase order containing additional or different provisions, or conflicting oral representations by any agent of PFIZER.

9.MWI shall not delegate its duty of performance or assign its obligations under this Agreement without the prior written consent of PFIZER.

10.MWI and PFIZER agree that, under the specific circumstances delineated herein, PFIZER, at PFIZER’s sole discretion may recoup the sums outstanding to it from MWI against those sums which may become due from PFIZER to MWI, in that the obligations arise from mutual transactions. The specific circumstances which will enable PFIZER to initiate recoupment are:

(a)MWI becomes insolvent which shall be defined as:

(i)   the sum of MWI’s debts is greater than all of MWI’s property (“Balance Sheet Test”); or

(ii)   MWI is generally not paying its debts as they come due; or

(iii)   MWI has failed to act in good faith for a period in excess of six months to resolve any outstanding invoice or purchase order issues or reconciliations.

(b)MWI commences a liquidation of its operations by means of a sale of its assets in their entirety or piecemeal; or

(c)MWI ceases its business operations whether or not such cessation is voluntary or involuntary; or

(d)MWI files a proceeding pursuant to the U.S. Bankruptcy Code or any state court proceeding, including an Assignment for the Benefit of Creditors.

11.This Agreement shall be effective as of the date first written above and shall continue in force until December 31, 2011. Either party may terminate this Agreement prior to the expiration date (i) with or without cause, upon thirty (30) days written notice to the other party, or (ii) immediately upon written notice, in the event of a material breach by the other party.

12.MWI and PFIZER acknowledge that in the performance of their duties hereunder MWI and PFIZER may obtain access to “Confidential Information” (as defined below) of each other. MWI and PFIZER agree that during the term of this Agreement and for a period of five (5) years after the termination of this Agreement, unless specifically permitted in writing by the other party, which permission shall not be unreasonably withheld, especially in connection with the sale of all or a substantial portion of MWI’s business, to (a) retain in confidence and not disclose to any third party and (b) use only for the purpose of carrying out their duties hereunder, any such Confidential Information. As used herein the term “Confidential Information” means any information, or data, whether of a business or scientific nature and whether in written, oral or tangible form, relating to PFIZER’s and MWI’s business or potential business or its research and development activities, not generally available to or known to the public, and not otherwise known to the receiving party, that is disclosed to or learned by the other party pursuant hereto. “Confidential Information” does not mean or include any information: (a) which is, at the time of disclosure, available to the general public; or (b) which following disclosure becomes available to the general public through no fault of the recipient; or (c) which recipient can demonstrate was in its possession before receipt; or (d) which is disclosed to recipient without restriction on disclosure. Upon completion of the work provided for hereunder or other termination of this Agreement each party will return to the other party any documents, or copies thereof, or any product samples, containing or constituting Confidential Information disclosed to or generated by either party in connection with this Agreement. Neither MWI nor PFIZER shall disclose the existence of this Agreement without the consent of the other party hereto.

13.This Agreement shall be governed by the laws of the State of New York applicable to contracts to be fully performed therein.

14.This Agreement and documents referred to herein embody the entire understanding between the parties hereto, will supersede prior agreements relating to the Products, and may be modified only in writing and signed by the parties to be bound. No activities conducted pursuant to this Agreement or related thereto, including but not limited to the future planning activities of the parties, shall be deemed to give rise to any obligations on the part of either party other than as expressly provided for herein.

IN WITNESS WHEREOF, intending to be legally bound, the parties have executed this Agreement.

MWI Veterinary Supply Company	Pfizer Inc.
BY:        /s/ Mary Pat Thompson                                                          Print Name:  Mary Pat Thompson                                                                 Title:  Sr. Vice President and CFO                                                                 Date:  April 12, 2011	BY:        /s/ Clinton A. Lewis, Jr.                                                          Clinton A. Lewis, Jr. President, U.S. Operations Pfizer Animal Health Date:  May 4, 2011

Exhibit A

Ethical Equine Distributor Product & RSA List

(Equine – LVSTK Distributor)

EFFECTIVE:                                January 1, 2011 – December 31, 2011

SKU	DESCRIPTION	RX		UNIT	Units/Ship per Min. Quantity	RSA Eligible	RSA%	Performance Eligible
ANTI-INFLAMMATORIES
1424	Depo-Medrol, 40 mg/ml	Rx		5ml	24	/**/	/**/	/**/
1426	Depo-Medrol, 20 mg/20ml	Rx		20ml	25	/**/	/**/	/**/
2187	Domoso Gel	Rx		60 gm	1	/**/	/**/	/**/
2188	Domoso Gel	Rx		120 gm	1	/**/	/**/	/**/
2189	Domoso Solution	Rx		16 oz	1	/**/	/**/	/**/
2190	Domoso Solution	Rx		Gallon	1	/**/	/**/	/**/
1432	Hylartin V	Rx		2ml	48	/**/	/**/	/**/
2193	Ketofen	Rx		50ml	1	/**/	/**/	/**/
2194	Ketofen	Rx		100ml	1	/**/	/**/	/**/
1478	Predef 2x	Rx		100ml	6	/**/	/**/	/**/
1489	Solu-Delta Cortef, 100 mg	Rx		10ml	24	/**/	/**/	/**/
1490	Solu-Delta Cortef, 500 mg	Rx		10ml	24	/**/	/**/	/**/
2209	Torbugesic, 10 mg	CIV		10ml	1	/**/	/**/	/**/
2210	Torbugesic, 10 mg	CIV		50ml	1	/**/	/**/	/**/
ANTI-INFECTIVES
1506	Excede	Rx		200 mg	10	/**/	/**/	/**/
1465	Naxcel	Rx		1 gm	12	/**/	/**/	/**/
1466	Naxcel	Rx		4 gm	6	/**/	/**/	/**/
1463	Sterile Water			80ml	6	/**/	/**/	/**/
1464	Sterile Water			20ml	12	/**/	/**/	/**/
1519	Tucoprim Powder	Rx		400 gm	20	/**/	/**/	/**/
1494	Tucoprim Powder	Rx		2000 gm	1	/**/	/**/	/**/
ANTISEPTICS
2198	Nolvasan Suspension			28ml	1	/**/	/**/	/**/
2055	Nolvasan Solution			Gallon	1	/**/	/**/	/**/
2049	Nolvasan S			16 oz	1	/**/	/**/	/**/
2050	Nolvasan S			Gallon	1	/**/	/**/	/**/
2053	Nolvasan Skin and Wound Cleanser			4 oz	1	/**/	/**/	/**/
2054	Nolvasan Skin and Wound Cleanser			8 oz	1	/**/	/**/	/**/
2056	Nolvasan Surgical Scrub			16 oz	1	/**/	/**/	/**/
2057	Nolvasan Surgical Scrub			Gallon	1	/**/	/**/	/**/
BIOLOGICALS (PER DOSE)
2114	Arvac Arteritis Vaccine			10 x 1 ds	10	/**/	/**/	/**/
2116	Equiloid Innovator			12 x 1 ds	12	/**/	/**/	/**/
2117	Equiloid Innovator			10 ds	1	/**/	/**/	/**/
2119	Equivac Innovator EHV 1/4			10 ds	1	/**/	/**/	/**/
2120	Fluvac Innovator			12 x 1 ds	12	/**/	/**/	/**/
2122	Fluvac Innovator			10 ds	1	/**/	/**/	/**/
2139	Fluvac Innovator EHV 4/1			12 x 1 ds	12	/**/	/**/	/**/
2141	Fluvac Innovator EHV-4/1			10 ds	1	/**/	/**/	/**/
2123	Fluvac Innovator 4			12 x 1 ds	12	/**/	/**/	/**/
2125	Fluvac Innovator 4			10 ds	1	/**/	/**/	/**/
2128	Fluvac Innovator 5			12 x 1 ds	12	/**/	/**/	/**/
2130	Fluvac Innovator 5			10 ds	1	/**/	/**/	/**/
2134	Fluvac Innovator 6			12 x 1 ds	12	/**/	/**/	/**/
2136	Fluvac Innovator 6			10 ds	1	/**/	/**/	/**/
2146	Fluvac Innovator Triple-EFT			12 x 1 ds	12	/**/	/**/	/**/
2147	Fluvac Innovator Triple-EFT			10 ds	1	/**/	/**/	/**/
2151	Pinnacle I.N.			10 x 1 ds	10	/**/	/**/	/**/
2153	Pneumabort-K +1b			12 x 1 ds	12	/**/	/**/	/**/
2155	Pneumabort-K +1b			10 ds	1	/**/	/**/	/**/
2156	PotomacGuard			12 x 1 ds	12	/**/	/**/	/**/
2158	PotomacGuard			10 ds	1	/**/	/**/	/**/
2159	Rotovirus			10 ds	1	/**/	/**/	/**/
2160	Tetanus Antitoxin					/**/	/**/	/**/
2162	Tetanus Antitoxin					/**/	/**/	/**/
2164	Tetanus Toxoid			12 x 1 ds	12	/**/	/**/	/**/
2166	Tetanus Toxoid			10 ds	1	/**/	/**/	/**/
2167	Triple-E T Innovator			12 x 1 ds	12	/**/	/**/	/**/
2169	Triple-E T Innovator			10 ds	1	/**/	/**/	/**/
2181	West Nile-Innovator			12 x 1 ds	1	/**/	/**/	/**/
2183	West Nile-Innovator			10 ds	1	/**/	/**/	/**/
2172	West Nile-Innovator + EW			10 ds	1	/**/	/**/	/**/
2173	West Nile-Innovator + EWT			12 x 1 ds	12	/**/	/**/	/**/
2175	West Nile-Innovator + EWT			10 ds	1	/**/	/**/	/**/
2177	West Nile-Innovator+VEWT			12 x 1 ds	12	/**/	/**/	/**/
2180	West Nile-Innovator+VEWT			10 ds	1	/**/	/**/	/**/
5237	Zylexis		Rx	5 x 1 ds	150	/**/	/**/	/**/
PARASITICIDES & INSECTICIDES
6045	Anthelcide EQ Paste			Tube	72	/**/	/**/	/**/
2200	Quest Sure Dial, 11.6 gm			Tube	40	/**/	/**/	/**/
2203	Quest Plus Equine Oral Gel, 11.6 gm			Tube	40	/**/	/**/	/**/
2204	Quest Plus Equine Oral Gel, 11.6 gm			Tube	50	/**/	/**/	/**/
2207	Quest Bulk, 11.6 gm			Tube	50	/**/	/**/	/**/
8807	Solitude IGR			6 lb pail	6	/**/	/**/	/**/
8808	Solitude IGR			20 lb pail	2	/**/	/**/	/**/
7973	Strongid Paste			Tube	72	/**/	/**/	/**/
7974	Strongid Paste Bulk			Tube	96	/**/	/**/	/**/
7969	Strongid C			25 lb pail	36	/**/	/**/	/**/
7900	Strongid C 2X			10 lb pail	100	/**/	/**/	/**/
7866	Strongid C 2X			50 lb Bag	10	/**/	/**/	/**/
7972	Strongid T		Rx	Quart	6	/**/	/**/	/**/
SEDATIVES & ANESTHESIA
1419	Carbocaine-V		Rx	50ml	100	/**/	/**/	/**/
6290	Dormosedan		Rx	5 ml	10	/**/	/**/	/**/
6291	Domosedan Gel		RX	3 ml	10	/**/	/**/	/**/
6292	Dormosedan		Rx	20 ml	10	/**/	/**/	/**/
SUPPLEMENTS
2185	Clovite Conditioner			5 lb	1	/**/	/**/	/**/
2186	Clovite Conditioner			25 lb	1	/**/	/**/	/**/
8047	Lixotinic			Gallon	4	/**/	/**/	/**/
WOUND CARE
8021	Derma-Clens			14 ounce	12	/**/	/**/	/**/
8252	Granulex-V Aero Spray			4 ounce	12	/**/	/**/	/**/
8253	Granulex-V Liquid			1 ounce	12	/**/	/**/	/**/
REPRODUCTIVE PRODUCTS
1455	Lutalyse		Rx	30 ml	96	/**/	/**/	/**/
1504	Lutalyse		Rx	100 ml	1	/**/	/**/	/**/
OTHER PRODUCTS
2033	Amiglyde V		Rx	48 ml	1	/**/	/**/	/**/
2191	Equipoise		CIII	50 ml	1	/**/	/**/	/**/
2195	Kopertox			8 oz	1	/**/	/**/	/**/
2196	Kopertox			16 oz	1	/**/	/**/	/**/
1487	Roccal-D Plus			Gallon	4	/**/	/**/	/**/

Terms of All Equine Product Shipments:

1.      All orders must exceed $250 for freight pre-paid.

2.      All orders will be shipped in specified "Units/Shipper" quantities only.

3.      All orders will receive standard terms.

4.      Prices are subject to change without notice.

Exhibit B

PFIZER shall compensate MWI in the following ways:

(a)           Reimburse MWI on a percentage of sales out of Products as designated on the RSA product list contained in Exhibit A, per the EDI sales out data calculated based on the products purchase price contained in the Price List.

Exhibit C

Performance Payment

MWI will be eligible to receive the performance payments set forth in this clause 1 below subject to the eligibility and performance criteria set forth below and MWI's fulfillment of all of the other obligations contained in this Agreement.

To be eligible for the performance payments set forth below, MWI must do each of the following:

1. Achieve sales out during the period of January 1, 2011 through December 31, 2011 of at least /**/ in performance eligible Pfizer Equine Biologicals, which are designated in the Ethical Equine Distributor Product & RSA List found in Exhibit A of this Agreement.

2. Achieve sales out during the period of January 1, 2011 through December 31, 2011 of at least /**/ in all performance eligible Pfizer Equine Products, which are designated in the Ethical Equine Distributor Product & RSA List found in Exhibit A of this Agreement.

If both #1 and #2 are achieved, MWI, will be eligible for a performance payment. The performance payment will be equal to:

a)           /**/ plus

b)           /**/ of all sales out between /**/ and /**/ plus

c)           /**/ of sales out between /**/ and /**/ plus

d)           /**/ of sales out between /**/ and /**/

Only EDI data for invoices dated January 1, 2011 through December 31, 2011 and submitted to Covansys by December 31, 2011 and accepted by PFIZER from Covansys by January 5, 2012 will count towards the calculation of sales out for the period.

Only sales by MWI of the products listed in Exhibit A count towards the performance payments under this Exhibit C.

Exhibit D

Product Focus Funds

If MWI fulfils all of the obligations set forth in this Exhibit D, PFIZER will pay MWI up to a maximum of /**/ in Product Focus funds ("PFF") based on MWI executing PFF's which are agreed with PFIZER. Programs that use these funds must be discussed in advance with MWI's PFIZER Strategic Account, submitted in writing to PFIZER's Senior Director of Channel Management and approved in writing by PFIZER's Senior Director of Channel Management prior to the start of the program. PFIZER shall have no obligation to pay MWI PFF's if the parties are unable to agree on the programs to be funded. In addition;

1. To be eligible for PFF's, programs must include specific performance metrics and specifics on total PFF's to be spent in the program and how all PFF's would be spent. In no event will MWI be eligible to receive PFF's in excess of /**/.

2. Programs that result in a direct price decrease to the Purchaser will not be supported.

3. ALL PFF'S REQUIRE PROOF OF PERFORMANCE AT PROGRAM CONCLUSION. No payment of PFF's will be made by PFIZER to MWI until all proof or performance wrap-ups are submitted.

4. All program wrap-ups are to be submitted within forty-five (45) days of completion of the program. Wrap ups for programs that run to year end 2011 should be submitted no later than February 15, 2012 for payment. Any program wrap-ups submitted to PFIZER after February 15, 2012 for 2010 programs will be paid of out 2012 PFF's at PFIZER's discretion. Programs will be paid by credit memo or check.

EXHIBIT E

Pfizer Domestic 2011 Calendar

Accounting Period	Close Date	# of Weeks
AP 1	01/30/11	4
AP 2	02/27/11	4
AP 3	04/03/11	5
AP 4	05/01/11	4
AP 5	05/29/11	4
AP 6	07/03/11	5
AP 7	07/31/11	4
AP 8	08/28/11	4
AP 9	10/02/11	5
AP 10	10/30/11	4
AP 11	11/30/11	5
AP 12	12/31/11	5

EX-10.2

** — CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

SECOND AMENDMENT TO

2010-2011 MERIAL /**/ INDEPENDENT SALES AGENT AGREEMENT

This Second Amendment to 2010-2011 Merial /**/ Independent Sales Agent Agreement (“Amendment”), executed as of this ____ day of February 2011 by and between Merial Limited, a company limited by shares registered in England and Wales (registered number 3332751) with a registered office at PO Box 327, Sandringham House, Sandringham Avenue, Harlow Business Park, Harlow, Essex CM19 5QA, England, and domesticated in Delaware, USA, as Merial LLC, with a place of business at 3239 Satellite Blvd., Duluth, GA 30096-4640, USA (“MERIAL”), and MWI Veterinary Supply Co., with a place of business at 3041 W. Pasadena Drive, Boise, Idaho 83705 (“Independent Sales Agent”).

WHEREAS, MERIAL and Independent Sales Agent entered into the 2010-2011 Merial /**/ Independent Sales Agent Agreement, effective as of January 1, 2010 (the “Agreement”);

WHEREAS, the Agreement was amended by the First Amendment to 2010-2011 Merial Independent Sales Agent Agreement, effective as of January 1, 2011; and

WHEREAS, the parties wish to further amend the Agreement.

NOW, THEREFORE, the parties to the Agreement do hereby agree to amend the Agreement as follows:

1.   Term»

.  Section 3.1 of the Agreement shall be deleted in its entirety and replaced with the following:

“This Agreement will be deemed to have commenced on the Commencement Date and, subject to its terms and conditions, shall continue in full force and effect from the Commencement Date through and until 31 December 2012. This Agreement may be renewed for successive terms by mutual agreement expressed in writing and signed by MERIAL and Independent Sales Agent.”

2.   Termination»

.  Section 3.2 of the Agreement shall be deleted in its entirety and replaced with the following:

“Either Party may terminate this agreement without cause and without penalty upon one hundred twenty (120) days’ prior written notice. In the event that either Party terminates this Agreement without cause upon less than one hundred twenty (120) days’ prior written notice, such Party will be obligated to pay a sum equal to the total Promotional and Educational Allowance earned or unused by Independent Sales Agent during the preceding six (6) month period (the “Termination Fee”); provided, however, that MERIAL’s obligation to pay the Termination Fee shall be subject to its rights under paragraph 7.1(c). Except as otherwise provided in this Agreement, this Agreement shall terminate thirty (30) days after (i) either Party gives the other Party written notice of the other Party’s default of any of its material obligations under this Agreement, and (ii) the other Party fails to cure such default within such thirty (30) day period.”

3.   Product Representation»

.  The following shall be added to the Agreement as Section 6.1(m):

“Notwithstanding anything in this Agreement to the contrary, other than for those Products manufactured and/or marketed by MERIAL, neither Independent Sales Agent nor its Affiliates shall, directly or indirectly, manufacture, distribute, wholesale, market, sell, promote, represent, broker or provide services relating to: any Fipronil containing product(s) used or administered less frequently than weekly for the treatment and/or control and/or prevention of fleas or ticks or both (“Competing Fipronil Products”). Notwithstanding the foregoing, Independent Sales Agent may take and transmit uncompensated EDI orders for Competing Fipronil Products. Furthermore, this Section 6.1(m) shall no longer apply in the event that /**/; for the avoidance of doubt, in such instance, neither party would be relieved of their obligation to comply with Section 3.2 hereof.”

4.   Indemnification»

.  Subsection 7.1(g) of the Agreement shall be deleted in its entirety and replaced with the following:

“Indemnify, defend and hold harmless Independent Sales Agent from and against any and all claims, damages, losses, and liabilities directly or indirectly (i) caused by the use of Products or Other Products, except to the extent that said claim arises out of any statement, act or omission by Independent Sales Agent and (ii) arising out of any action or threatened action that a Product or Other Product infringes on any patent, trademark, copyright, trade secret or other third party intellectual property right in the Territory.”

5.   Schedules»

.  Schedules B to the Agreement shall be deleted and replaced in its entirety by the new Schedule B for 2011 attached hereto.

6.   Effective Date»

.  This Amendment shall be deemed effective as of February 20, 2011.

7.   No Other Amendment»

.  Except as amended, modified or supplemented by this Amendment, the Agreement is confirmed and remains in full force and effect.

8.   Counterparts»

.  This Amendment may be executed in one or more counterparts, each of which shall for all purposes be deemed an original and all of which constitute one and the same agreement.

[Signatures on the following page(s)]

40294.0008.2341755.1

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to the Agreement.

MERIAL LIMITED	MWI VETERINARY SUPPLY CO.
By:  /s/ Thomas Zerzan Name:  Thomas Zerzan Title:  Head of Merial U.S.	By:        /s/ Jim Cleary                                                          Name:  Jim Cleary Title:  President & CEO

40294.0008.2341755.1

SCHEDULE B - 2010-2011 MERIAL /**/ INDEPENDENT

SALES AGENT AGREEMENT

MWI Veterinary Supply Co. Independent Sales Agent Earnings

Commission Rates - Net Sales of Products to AMAs

Independent Sales

Agent Monthly

Commission Rate

/**/

I.Commissions Earned for Sales of Products to AMAs

Independent Sales Agent earns commissions on the Net Sales of Products to AMAs in the Territory when the order is placed with MERIAL by the Independent Sales Agent or by an AMA which indicates a Named Sales Agent.

No commissions are paid for products not listed on Schedule A or for sales outside of Independent Sales Agent’s Territory.

For Named Sales Agent Sales, Independent Sales Agent Monthly Commission will be paid to Independent Sales Agent within /**/of the last business day of each month in which MERIAL receives a qualifying order.

At the end of 2012, if the difference between gross/total sales and Net Sales increases more than /**/ over 2011 (“Increase”), then Merial will pay any commission amounts for 2012 which Independent Sales Agent would otherwise not receive as a consequence of such Increase; provided, however, that this obligation will only apply when such reduction in commissions is in excess of /**/ of what would have been received by Independent Sales Agent had such Increase not occurred.

Independent Sales Agent agrees to commit /**/ of commissioned sales (“Promotion and Education Allowance Funds”) to fund (i) certain growth initiatives, e.g., advertising initiatives, executive training, sales personnel incentives, and the like and (ii) education and training to increase the effectiveness of agent personnel in representing the MERIAL® product lines. Proposed uses for such funds shall be submitted to MERIAL in writing utilizing the appropriate Promotion and Education Allowance Funds request forms. Any such proposals shall be approved in advance by MERIAL, in accordance with its sole discretion. Earned Promotion and Education Allowance funds shall not rollover; Promotion and Education Allowance Funds accrued in 2011 must be used by Independent Sales Agent by no later than March 31, 2012 unless otherwise approved in writing by MERIAL. Such funds shall be remitted by MERIAL to reimburse Independent Sales Agent for approved activities within thirty (30) days after MERIAL’s receipt of a detailed invoice of the expenses incurred by Independent Sales Agent in connection with such activities.

A Sales Agent Representative is an individual who, working as an agent or employee of the Independent Sales Agent, solicited and placed the qualifying order. The Independent Sales Agent will provide MERIAL a list of its Sales Agent Representatives with address, telephone number, and SAR code (number) within fourteen (14) days of the Commencement Date and within fourteen (14) days of any change in the Independent Sales Agent’s sales force. Independent Sales Agent shall pay its Sales Agent Representatives a minimum of /**/ of commissioned sales for their sales of the Products. Independent Sales Agent shall also utilize a minimum of /**/ of commissioned sales for compensation of Inside Sales Representatives; should an order be credited by MERIAL to Independent Sales Agent, then such /**/ will be accrued in the Promotion and Education Allowance Funds in addition to the /**/ accrued on sales of all Merial products. Any adjustment to the payment of commissions to Sales Agent Representatives or Inside Sales Representatives must receive the prior approval of Merial. The Independent Sales Agent must not make any deductions from amounts due Sales Agent Representatives or Inside Sales Representatives.

In addition to updating the Distributor Representative Roster within the AHI project, the Independent Sales Agent agrees to provide updated clinic assignment lists to Merial quarterly. Clinic assignments are defined as the assignment of a Sales Agent representative, as identified within the Distributor Representative Roster, and the clinics to which they receive commissioned sales credit. Specifically, Independent Sales Agent will provide the Clinic HIN # as defined by the AHI project and the corresponding Distributor Representative Rep ID as defined and maintained within the AHI project.

II.Commissions paid for Sales of Other Products

Independent Sales Agent earns full commission on the Net Sales of Other Products to AMAs in the Territory when the order is placed with MERIAL by Independent Sales Agent via EDI.

No commissions are paid for products not listed on Schedule E or for sales outside of Independent Sales Agent’s Territory. The commissions will only be paid in connection with those orders which are transmitted to MERIAL via EDI. Such commission will be paid to Independent Sales Agent within thirty (30) days of the last business day of the month in which MERIAL receives a qualifying order.

BONUS OPPORTUNITY

In addition to the total commission payment described above, Independent Sales Agent may earn an additional /**/ bonus on the Net Sales of FRONTLINE® and HEARTGARD® products based on the following schedule:

/**/	/**/
/**/	/**/
/**/	/**/
/**/	/**/

Ø   Dose share calculated monthly based on Merial authorized, commissioned accounts and commissioned sales of parasiticide product portfolio

Ø   Bonus paid quarterly

Ø   Quarterly bonuses earned based on schedule and performance to prior 2010 quarter (For Example the 2011 Q1 audited results will be compared to 2010 Q1 audited results).

In addition to the quarterly dose share opportunity the Sales Agent may catch-up on unearned share bonuses calculated based on the schedule above and the dose share performance of trailing 4 quarters comparison to full year, audited 2010 results. The maximum dose share payment on any parasiticide sale is 3% although attainment of this bonus may occur over multiple quarters per the schedule above.

Combination products that treat Flea/Tick and Heartworm will count as two doses for purposes of the bonus calculation. The dose share calculation is inclusive of sales agency and distribution sales to Merial commissioned AMAs. The bonus shall be calculated quarterly and paid within forty-five (45) days of the end of each quarter.

CALCULATIONS

The commission and bonus payments will be calculated by MERIAL, and shall not be subject to review by Independent Sales Agent. For the avoidance of doubt, all such payments shall be subject to audit of Independent Sales Agent’s records by MERIAL pursuant to Section 6(k) of the Agreement.

EX-15

EXHIBIT 15

MWI Veterinary Supply, Inc.

Boise, Idaho

We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of MWI Veterinary Supply, Inc. and subsidiaries for the periods ended June 30, 2011, and 2010, as indicated in our report dated July 29, 2011; because we did not perform an audit, we expressed no opinion on that information.

We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, is incorporated by reference in Registration Statement Nos. 333-127879, 333-127880, and 333-149275 on Form S-8 and Registration Statement No. 333-141078 on Form S-3.

We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.

/s/ DELOITTE & TOUCHE LLP

Boise, Idaho

July 29, 2011

EX-31.1

EXHIBIT 31.1

MWI VETERINARY SUPPLY, INC.

CERTIFICATIONS PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, James F. Cleary, Jr., certify that:

1.      I have reviewed this quarterly report on Form 10-Q of MWI Veterinary Supply, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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 of the end of the period covered by this report based on such evaluation; and

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 the registrant’s board of directors (or persons performing the equivalent functions):

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.

Date: July 29, 2011	/s/ James F. Cleary, Jr.
	James F. Cleary, Jr. President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

MWI VETERINARY SUPPLY, INC.

CERTIFICATIONS PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION

I, Mary Patricia B. Thompson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MWI Veterinary Supply, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) 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) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) 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 of the end of the period covered by this report based on such evaluation; and

d) 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 (the registrant’s fourth fiscal quarter in the case of an annual report) 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 the registrant’s board of directors (or persons performing the equivalent functions):

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.

Date: July 29, 2011	/s/ Mary Patricia B. Thompson
	Mary Patricia B. Thompson Senior Vice President of Finance and Administration, Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MWI Veterinary Supply, Inc. (the “Company”) for the period ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, James F. Cleary, Jr. and Mary Patricia B. Thompson, Chief Executive Officer and Chief Financial Officer, respectively, 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 to our knowledge:

(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 as of the dates and for the periods expressed in the Report.

July 29, 2011

  /s/ James F. Cleary, Jr.

James F. Cleary, Jr.

Chief Executive Officer

  /s/ Mary Patricia B. Thompson

Mary Patricia B. Thompson

Chief Financial Officer

XML



Document and Entity Information	3 Months Ended
	Jun. 30, 2011	Jul. 22, 2011
Document And Entity Information Abstract
DocumentType	10-Q
DocumentPeriodEndDate	Jun. 30, 2011
AmendmentFlag	false
DocumentFiscalPeriodFocus	Q3
Document Fiscal Year Focus	2011
CurrentFiscalYearEndDate	--09-30
EntityCentralIndexKey	0001323974
EntityCurrentReportingStatus	Yes
EntityFilerCategory	Accelerated Filer
EntityRegistrantName	MWI Veterinary Supply, Inc.
EntityVoluntaryFilers	No
EntityWellKnownSeasonedIssuer	No
EntityCommonStockSharesOutstanding		12,562,563

XML



Note 5 - Property and Equipment

9 Months Ended

Jun. 30, 2011

Property Plant And Equipment Abstract

Property Plant And Equipment Text Block

	June 30,		September 30,
	2011		2010
Land	$	1,729	$	261
Building and leasehold improvements		13,386		5,870
Machinery, furniture and equipment		20,879		17,495
Computer equipment		5,255		4,886
Construction in progress		997		1,626
		42,246		30,138
Accumulated depreciation		(18,278)		(14,900)
	$	23,968	$	15,238

Depreciation expense was $1,266 and $1,046 for the three months endedJune 30,2011 and 2010, respectively. Depreciation expense was $3,612 and $2,659 for the nine months endedJune 30,2011 and 2010, respectively.

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Note 6 - Goodwill and Intangibles

9 Months Ended

Jun. 30, 2011

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets Disclosure Text Block

The changes in the carrying value of goodwill are as follows:

Goodwill as of September 30, 2010		$	47,330
	Acquisition activity		1,823
	Foreign currency adjustments		126
Goodwill as of June 30, 2011		$	49,279

Balances of intangibles are as follows:

		June 30,		September 30,
	Useful Lives	2011		2010
Amortizing:
Customer relationships	9-20 years	$	25,378	$	25,027
Covenants not to compete	1-5 years		814		811
Other	3-7 years		461		458
			26,653		26,296
Accumulated amortization			(4,640)		(3,361)
			22,013		22,935
Non-Amortizing:
Trade names and patents			3,794		3,775
		$	25,807	$	26,710

Amortization expense was $459 and $395 for the three months endedJune 30,2011 and 2010, respectively. Amortization expense was $1,276 and $909 for the nine months endedJune 30,2011 and 2010, respectively.Estimated future annual amortization expense related to intangible assets as of June 30,2011 follows:

	Amount
Remainder of 2011	$	371
2012		1,623
2013		1,538
2014		1,532
2015		1,379
Thereafter		15,570
	$	22,013

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Note 7 - Debt

9 Months Ended

Jun. 30, 2011

Credit Facility And Long Term Debt [Abstract]

Debt Disclosure Text Block

The following table presents the outstanding debt and capital lease obligations as of June 30,2011 and September 30, 2010:

			June 30,		September 30,
			2011		2010
Revolving credit facility, 1.63% as of June 30, 2011		$	10,500	$	9,600
Sterling revolving credit facility, 1.69% as of June 30, 2011			3,443		540
Note payable (1)			-		2,000
Capital lease obligations (2)			1,498		1,811
Term note			-		773
Total debt and capital lease obligations			15,441		14,724
	Less: Long-term debt and capital lease obligations		(570)		(953)
Total debt included in current liabilities		$	14,871	$	13,771
(1) Note payable was related to the acquisition of Centaur and was paid in full on February 8, 2011.
(2) The capital lease obligations have varying maturity dates.

Revolving Credit Facility — On August 10, 2010, MWI Co., our wholly-owned subsidiary as borrower, entered into a Second Amendment to its Credit Agreement (“the facility”) with us and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. (the “lenders”). Under the facility, the aggregate revolving commitment of the lenders is $100,000. The maturity date of the loans under the facility is March 1, 2013. The variable interest rate is equal to the Daily LIBOR Floating Rate or the LIBOR 1-month fixed rate (at MWI Co.'s option) plus a margin ranging from 1.50% to 2.25%. The lenders also receive an unused line fee and letter of credit fee which is equal to 0.2% of the unused amount of the facility. The facility contains financial covenants, including a fixed charge ratio and a funded debt to EBITDA calculation. We were in compliance with all of the covenants as of June 30, 2011 and September 30, 2010.

Sterling revolving credit facility— As of September 30, 2010, Centaur operated with a credit facility with Fortis Bank as the lender, which allowed for borrowings in the aggregate of £12,000. This facility had a variable interest rate equal to a base rate of 0.50% plus GBP one-month LIBOR plus a margin of 0.85%.

On November 5, 2010, Centaur terminated the Fortis facility and entered into a £12,500 unsecured revolving line of credit facility (the “sterling revolving credit facility”) with Wells Fargo Bank, N.A. London Branch (“Wells Fargo”). The sterling revolving credit facility is for a three year term with interest paid at the end of the applicable one month, three month or six month interest period. Interest is based on LIBOR for the applicable interest period plus an applicable margin of 1.05% to 1.90%. The facility contains financial covenants requiring Centaur to maintain a minimum tangible net worth of £3,000 which is to be calculated at the end of each fiscal year.

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Note 8 - Fair Value of Financial Instruments

9 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures Text Block

Current fair value accounting guidance includes a hierarchy that is intended to increase consistency and comparability in fair value measurements and disclosures. This hierarchy prioritizes inputs to valuation techniques based on observable and unobservable data. The guidance categorizes these inputs used in measuring fair value into three levels which include the following:

• Level 1 – observable inputs such as quoted prices in active markets;
• Level 2 – inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
• Level 3 – unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Financial instruments include cash and cash equivalents, receivables and accounts payable, and the fair values approximate book values due to their short maturities.The majority of our capital leases have lease terms of three years and their fair values approximate book values due to their short maturities.

In August 2010, we amended our revolving credit facility. Because this amendment was done recently and includes interest rates based on current market conditions, we believe that the estimated fair value of our long-term debt (including current maturities) was materially the same as our carrying value.

In November 2010, we refinancedoursterling revolving credit facility. Because this amendment was done recently and includes interest rates based on current market conditions, we believe that the estimated fair value of our long-term debt (including current maturities) was materially the same as our carrying value.

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Note 9 - Common Stock and Stock-Based Awards

9 Months Ended

Jun. 30, 2011

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Disclosure Of Compensation Related Costs Share Based Payments Text Block

2002 Stock Plan

We have a 2002 Stock Plan (the “2002 Plan”) to provide our directors, executives and other key employees with additional incentives by allowing them to acquire an ownership interest in us and, as a result, encouraging them to contribute to our success. As of June 30, 2011 and September 30, 2010, we had 76,410 and 164,788 shares, respectively, of our common stock available for issuance under the 2002 Plan. The options granted under the 2002 Plan are nonqualified stock options that have an exercise price per share equal to fair market value of the common stock at the time of grant. The term of each option is determined by our board of directors or by a designated committee of the board. The term of any option may not exceed ten years from the date of grant. As of June 30, 2011, 15,970 options to purchase common stock were outstanding with a weighted average exercise price of $0.18 per share and expiring through June 2012.

2005 Stock Plan

We have a 2005 Stock-Based Award and Incentive Compensation Plan (the “2005 Plan”), under which we may offer restricted and unrestricted shares of our common stock and grant options to purchase shares of our common stock to selected employees and non-employee directors. The purpose of the 2005 Plan is to promote our long-term financial success by attracting, retaining and rewarding eligible participants. As of June 30, 2011 and September 30, 2010, we had 979,878 and 991,970 shares, respectively, of our common stock available for issuance under the 2005 Plan. As of June 30, 2011, 31,273 options to purchase common stock were outstanding with a weighted average exercise price of $17.83 per share and expiring through September 2015.

The 2005 Plan permits us to grant stock options (both incentive stock options and non-qualified stock options), restricted and unrestricted stock and deferred stock. The compensation committee will determine the number and type of stock-based awards to each participant, the exercise price of each award, the duration of the award (not to exceed ten years), vesting provisions and all other terms and conditions of such award in individual award agreements. The 2005 Plan provides that upon termination of employment with us, unless determined otherwise by the compensation committee at the time options are granted, the exercise period for vested awards will generally be limited, provided that vested awards will be canceled immediately upon a termination for cause or voluntary termination. The 2005 Plan provides for the cancellation of all unvested awards upon termination of employment with us, unless determined otherwise by the compensation committee at the time awards are granted.

We did not grant common stock options during each of the nine months endedJune 30, 2011 and 2010. During the nine months endedJune 30, 2011 and 2010, we issued 5,550 and 2,000 shares of restricted stock under the 2005 Plan. We also granted 6,000 shares of unrestricted stock to non-employee directors during each of the nine months ended June 30, 2011 and 2010. During the three months endedJune 30, 2011 and 2010, we recognized $235 and $98 of compensation expense related to stock grants, respectively. During the nine months ended June 30, 2011 and 2010, we recognized $1,139 and $528 of compensation expense related to stock grants, respectively.

We also have an employee stock purchase plan (“ESPP”) that allows substantially all employees to purchase shares of our common stock at 95% of the fair market value on the date of purchase. The purchase date is the last trading date of the purchase periods, which begin in March, June, September and December. Employees accumulate amounts through payroll deductions during the purchase period of between 1% and 10% but no more than $20 annually. An employee is allowed to purchase a maximum of 200 shares per purchase period. During the nine months endedJune 30, 2011 and 2010, we issued 4,420 and 4,454 shares, respectively, of our common stock under the ESPP.

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Note 10 - Income Taxes

9 Months Ended

Jun. 30, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure Text Block

Our effective tax rate for each of the three months ended June 30,2011 and 2010 was 39.1%. Our effective tax rate for the nine months ended June 30, 2011 and 2010 was 38.7% and 39.2%, respectively. The decrease in the effective tax rate is primarily due to the impact of the Centaur acquisition, which includes direct acquisition-related expenses in the prior year that were non-deductible for tax purposes as well as Centaur's contribution to earnings at a lower effective tax rate.

As of June 30,2011, we had $23 of unrecognized tax benefits, of which $15 would impact our effective rate if recognized. Our policy for classifying interest and penalties associated with unrecognized tax benefits is to include such items in income tax expense. The amount of interest and penalties recognized during the three months ended June 30,2011 and 2010 was not material.

We filed Form 3115 Application of Change in Accounting Method with the Internal Revenue Service during the fiscal year ended September 30, 2008. We filed an advance consent request for a non-automatic account method change for tax purposes for which we received approval during the three months ended March 31, 2011. The method change will make revenue recognition for tax purposes the same as revenue recognized for book purposes. The approval of the method change decreased the liability for unrecognized tax benefits by $175 for the nine months ended June 30, 2011.

With few exceptions, we are no longer subject to income tax examination for years before 2005 in the U.S. and significant state and local jurisdictions. We are no longer subject to income tax examination for years before 2009 in significant foreign jurisdictions.

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Note 11 - Computation of Earnings per Share

9 Months Ended

Jun. 30, 2011

Earnings per common share:

Earnings Per Share Text Block

(In thousands, except per share data)

		Three months ended June 30,
		2011				2010
		Basic		Diluted		Basic		Diluted
Net income		$	11,390	$	11,390	$	9,137	$	9,137
Weighted average common shares outstanding			12,484		12,484		12,265		12,265
Effect of diluted securities
	Stock options and restricted stock				42				143
Weighted average diluted shares outstanding					12,526				12,408
Earnings per share		$	0.91	$	0.91	$	0.74	$	0.74
Anti-dilutive shares excluded from calculation					-				-
		Nine months ended June 30,
		2011				2010
		Basic		Diluted		Basic		Diluted
Net income		$	32,550	$	32,550	$	24,642	$	24,642
Weighted average common shares outstanding			12,453		12,453		12,215		12,215
Effect of diluted securities
	Stock options and restricted stock				54				165
Weighted average diluted shares outstanding					12,507				12,380
Earnings per share		$	2.61	$	2.60	$	2.02	$	1.99
Anti-dilutive shares excluded from calculation					-				-

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Note 12 - Related Parties

9 Months Ended

Jun. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure Text Block

MWI Co. holds a 50.0% membership interest in Feeders' Advantage LLC (“Feeders' Advantage”). MWI Co. charged Feeders' Advantage for certain operating and administrative services in the amounts of $193 and $172for the three months ended June 30, 2011 and 2010, respectively. MWI Co. charged Feeders' Advantage for certain operating and administrative services in the amounts of $645 and $563for the nine months endedJune 30, 2011 and 2010, respectively.Sales of products to Feeders' Advantage were $10,560 and $9,113, which represented 3% of total product sales for each of the three months ended June 30, 2011 and 2010. Sales of products to Feeders' Advantage were $38,401 and $30,687, which represented 3% and4% of total product sales forthe nine months endedJune 30, 2011 and 2010, respectively.

MWI Co. provides Feeders' Advantage with a line-of-credit to finance its day-to-day operations. This line-of-credit bears interest at the prime rate. The interest due on the line-of-credit is calculated and charged to Feeders' Advantage on the last day of each month. Conversely, to the extent MWI Co. has a payable balance due to Feeders' Advantage, the payable balance accrues interest in favor of Feeders' Advantage at the average federal funds rates in effect for that month. MWI Co. had a payable balance to Feeders' Advantage of $653 and $281 as of June 30, 2011and September 30, 2010, respectively.

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Note 13 - Statements of Cash flows - Supplemental and Non-Cash Disclosures

9 Months Ended

Jun. 30, 2011

Statement Of Cash Flows Supplemental [Abstract]

Cash Flow Supplemental Disclosures Text Block

	Nine months ended June 30,
	2011		2010
Supplemental Disclosures
Cash paid for interest	$	416	$	258
Cash paid for income taxes		14,436		13,563
Non-cash Activities
Note payable issued related to Centaur acquisition		-		2,000
Equipment acquisitions financed with accounts payable		102		130

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Note 14 - Commitments and Contingencies

9 Months Ended

Jun. 30, 2011

Commitments And Contingencies Disclosure [Abstract]

Commitments And Contingencies Disclosure Text Block

From time to time, in the normal course of business, we may become a party to legal proceedings that may have an adverse effect on our financial position, results of operations and cash flows. At June 30, 2011, we were not a party to any material pending legal proceedings and were not aware of any claims that could have a material adverse effect on our financial position, results of operations or cash flows.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues:
Product sales	$ 393,706	$ 334,242	$ 1,089,830	$ 827,614
Product sales to related party	10,560	9,113	38,401	30,687
Commissions	6,470	4,332	15,791	12,094
Total revenues	410,736	347,687	1,144,022	870,395
Cost of product sales	356,649	303,750	988,877	750,927
Gross profit	54,087	43,937	155,145	119,468
Selling, general and administrative expenses	33,663	27,435	97,160	75,448
Depreciation and amortization	1,723	1,438	4,879	3,559
Operating income	18,701	15,064	53,106	40,461
Other income (expense):
Interest expense	(166)	(171)	(600)	(389)
Earnings of equity method investees	51	45	187	155
Other	116	57	394	299
Total other income (expense), net	1	(69)	(19)	65
Income before taxes	18,702	14,995	53,087	40,526
Income tax expense	(7,312)	(5,858)	(20,537)	(15,884)
Net income	$ 11,390	$ 9,137	$ 32,550	$ 24,642
Earnings per common share:
Basic	$ 0.91	$ 0.74	$ 2.61	$ 2.02
Diluted	$ 0.91	$ 0.74	$ 2.60	$ 1.99
Weighted average common shares outstanding:
Basic	12,484	12,265	12,453	12,215
Diluted	12,526	12,408	12,507	12,380

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Note 15 - Other Comprehensive Income

9 Months Ended

Jun. 30, 2011

Comprehensive Income Disclosure [Abstract]

Comprehensive Income Disclosure Text Block

The components of comprehensive income were as follows:

			Three months ended June 30,				Nine months ended June 30,
			2011		2010		2011		2010
Net income			$	11,390	$	9,137	$	32,550	$	24,642
Other comprehensive income (loss):
	Foreign currency translation			(245)		36		575		(1,706)
		Total comprehensive income	$	11,145	$	9,173	$	33,125	$	22,936

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Current Assets:
Cash and cash equivalents	$ 989	$ 911
Receivables, net	210,516	189,428
Inventories	174,915	175,292
Prepaid expenses and other current assets	5,175	8,729
Deferred income taxes	2,165	1,556
Total current assets	393,760	375,916
Property and equipment, net	23,968	15,238
Goodwill	49,279	47,330
Intangibles, net	25,807	26,710
Other assets, net	6,756	2,738
Total assets	499,570	467,932
Current Liabilities:
Credit facilities	13,943	10,140
Accounts payable	175,029	183,604
Accrued expenses	17,243	15,118
Note payable	0	2,000
Current maturities of long-term debt and capital lease obligations	928	1,631
Total current liabilities	207,143	212,493
Deferred income taxes	5,997	5,310
Long-term debt and capital lease obligations	570	953
Other long-term liabilities	2,381	2,389
Stockholders Equity
Common stock	126	125
Additional paid in capital	133,241	129,675
Retained earnings	149,458	116,908
Accumulated other comprehensive (loss)/income	654	79
Total stockholders equity	283,479	246,787
Total liabilities and stockholders equity	$ 499,570	$ 467,932

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Statement of Financial Position (Parentheticals) (USD $) In Thousands, except Per Share data	Jun. 30, 2011	Sep. 30, 2010
Statement Of Financial Position [Abstract]
Common Stock Par Value	$ 0.01	$ 0.01
Common Stock shares authorized	40,000	40,000
Common Stock shares issued	12,559	12,457

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	9 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash Flows From Operating Activities:
Net income	$ 32,550	$ 24,642
Adjustments to reconcile net income to net cash (used in)/provided by operating activities:
Depreciation and amortization	4,888	3,568
Amortization of debt issuance costs	50	41
Stock-based compensation	887	490
Deferred income taxes	32	(108)
Earnings of equity method investees	(187)	(155)
(Gain)/loss on disposal of property and equipment	0	(9)
Excess tax benefit of exercise of common stock options	(2,271)	(1,829)
Pension payment	0	(2,047)
Other	(83)	0
Changes in operating assets and liabilities (net of effects of business acquisitions):
Receivables	(16,269)	(12,072)
Inventories	4,273	(8,282)
Prepaid expenses and other current assets	5,530	155
Accounts payable	(13,505)	6,365
Accrued expenses	2,386	(159)
Net cash (used in)/provided by operating activities	18,281	10,600
Cash Flows From Investing Activities:
Business acquisitions, net of cash acquired	(7,000)	(39,511)
Purchases of property and equipment	(10,280)	(1,862)
Other	(4,283)	(97)
Net cash used in investing activities	(21,563)	(41,470)
Cash Flows From Financing Activities:
Borrowings on credit facilities	232,630	124,776
Payments on credit facilities	(228,895)	(108,900)
Proceeds from issuance of common stock	297	178
Proceeds from exercise of stock options	89	368
Excess tax benefit of exercise of common stock options	2,271	1,829
Debt issuance costs	0	(116)
Payment on long-term debt and capital lease obligations	(3,117)	(616)
Net cash provided by financing activities	3,275	17,519
Effect of Exchange Rate on Cash and Cash Equivalents	85	(43)
Increase/(Decrease) in Cash and Cash Equivalents	78	(13,394)
Cash and Cash Equivalents at Beginning of Period	911	14,302
Cash and Cash Equivalents at End of Period	$ 989	$ 908

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Note 1 - General

9 Months Ended

Jun. 30, 2011

General [Abstract]

Organization Consolidation And Presentation Of Financial Statements Disclosure Text Block

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the results of operations, financial position and cash flows of MWI Veterinary Supply, Inc. and its wholly-owned subsidiaries (collectively referred to as “we,” “us,” and “our” throughout this Form 10-Q). All material intercompany balances have been eliminated.

In the opinion of our management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary to present fairly, in all material respects, our results for the periods presented. These condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our 2010 Annual Report on Form 10-K filed with the SEC on November 23, 2010. The results of operations for the three and nine months ended months ended June 30,2011 are not necessarily indicative of results to be expected for the entire fiscal year.

Our unaudited condensed consolidated balance sheet as of September 30, 2010 has been derived from the audited consolidated balance sheet as of that date.

Use of Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared on the accrual basis of accounting using accounting principles generally accepted in the United States. In preparing financial information, we use certain estimates and assumptions that may affect the reported amounts and disclosures. Some of these estimates require difficult, subjective and complex judgments about matters that are inherently uncertain. As a result, actual results could differ materially from these estimates. Estimates are used when accounting for, among other items, sales returns, allowance for doubtful accounts, customer incentives, vendor rebates, inventories, goodwill and intangible assets, income taxes, impairment of long-lived assets, depreciation and amortization, employee benefits, unearned income and contingencies. The estimates of fair value of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and reported amounts of revenue and expenses for the periods are based on assumptions that we believe to be reasonable.

Revenue Recognition

We sell products we source from vendors to our customers through either a “buy/sell” transaction or an agency relationship with our vendors. In a “buy/sell” transaction, we purchase or take inventory of products from the vendor. When a customer places an order with us, we pick, pack, ship and invoice the customer for the order. We recognize revenue from “buy/sell” transactions as product sales when the product is delivered to the customer. We accept product returns from our customers. We estimate returns based on historical experience and recognize these estimated returns as a reduction of product sales. Product returns have historically not been significant to our financial statements. We record revenues net of sales tax. In an agency relationship, we generally do not purchase and take inventory of products from vendors. We receive an order from a customer, then transmit the order to the vendor, who picks, packs and ships the order to the customer. In some cases, the vendor invoices and collects payment from the customer, while in other cases we invoice and collect payment from the customer on behalf of the vendor. We receive a commission payment for soliciting the order from the customer and for providing other customer service activities. Commissions are recognized when the services upon which the commissions are based are complete. Gross billings from agency contracts were $101,376 and $92,504 for the three months ended June 30,2011 and 2010, respectively, and generated commission revenue of $6,470 and $4,332, respectively. Gross billings from agency contracts were $282,637 and $234,788 for the nine months ended June 30, 2011 and 2010, respectively, and generated commission revenue of $15,791 and $12,094, respectively.

Cost of Product Sales and Vendor Rebates

Cost of product sales consist of our inventory product cost, including shipping and delivery costs to and from our distribution centers. Vendor rebates are recorded based on the terms of the contracts or programs with each vendor. Many of our vendors' rebate programs are based on a calendar year. We may receive quarterly, semi-annual or annual performance-based rebates from third-party vendors based upon attainment of certain sales and/or purchase goals. Sales rebates are classified in the accompanying condensed consolidated statements of income as a reduction to cost of product sales at the time the sales performance measures are achieved. Purchase rebates are measured against inventory purchases from the vendors and are classified as a reduction of inventory until the product is sold. When the inventory is sold and purchase measures are achieved, purchase rebates are recognized as a reduction to cost of product sales.

Historically, actual results have not significantly deviated from those determined using the estimates described above. We expect that our estimates in the future will continue to be reasonable as our rebates are based on specific vendor program goals and are principally recorded upon achievement of sales or purchase performance measures. Vendors may change or eliminate rebate programs from year to year.

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Note 2 - Effect of Recently Issued Accounting Standards

9 Months Ended

Jun. 30, 2011

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Schedule Of New Accounting Pronouncements And Changes In Accounting Principles Text Block

In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends the consolidation guidance applicable to variable interest entities and requires additional disclosures concerning an enterprise's continuing involvement with variable interest entities. The guidance is effective for our fiscal year beginning October 1, 2010. We have adopted this guidance and it did not have a material impact on our consolidated financial statements.

In May 2011, the FASB issued guidance to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between generally accepted accounting principles in the United States and International Financial Reporting Standards. The guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 fair value measurements. The guidance is effective for our fiscal year beginning October 1, 2012. We do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements.

In June 2011, the FASB issued guidance on the presentation of comprehensive income in an entity's financial statements. The guidance requires that comprehensive income be presented either in one continuous statement or in two separate but consecutive statements presenting the components of net income and its total, the components of other comprehensive income and its total, and total comprehensive income. The guidance also requires that reclassification adjustments from other comprehensive income to net income be presented in both the components of net income and the components of other comprehensive income. The guidance is effective for our fiscal year beginning October 1, 2012. We do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements.

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Note 3 - Business Acquisition

9 Months Ended

Jun. 30, 2011

Business Combinations [Abstract]

Business Combination Disclosure Text Block

On March 21, 2011, MWI Veterinary Supply Co. (“MWI Co.”) purchased substantially all of the assets of Nelson Laboratories Limited Partnership (“Nelson”) for $7,000 in cash. Nelson is a distributor of animal health products to over 1,100 veterinary practices, primarily in the Midwestern United States. This acquisition allows us to better serve our customers in this region of the United States. An intangible asset representing customer relationships acquired in the acquisition has an estimated useful life of 10 years. The amount recorded in goodwill is expected to be deductible for tax purposes over 15 years.

On February 8, 2010, MWI Co. purchased all of the outstanding share capital of Centaur Services Limited (“Centaur”), based in the United Kingdom for an initial purchase price of $44,053, consisting of $42,053 in cash and $2,000 in a note payable which was paid on February 8, 2011. Subsequent to the acquisition of Centaur, we funded $2,047 to the pension plan of Centaur as required by the terms of the share purchase agreement. Centaur is a supplier of animal health products to veterinarians in the United Kingdom. Centaur distributes products to both the companion animal market and production animal market. The acquisition of Centaur has allowed us to expand into the international markets. We incurred $1,100 of direct acquisition-related expenses during fiscal year 2010. The intangible assets acquired in the acquisition have estimated useful lives between 1 and 20 years, which include customer relationships, trade names and other intangible assets. The amount recorded in goodwill will not be deductible for tax purposes.

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition, which may be adjusted during the allocation period as defined in ASC 280. These purchase price allocations are based on a combination of valuations and analyses.

	2011		2010
Cash	$	-	$	674
Receivables		4,041		32,371
Inventories		3,594		17,830
Other current assets		-		480
Property and equipment		1,900		5,275
Goodwill		1,823		9,483
Intangibles		140		17,658
Total assets acquired		11,498		83,771
Accounts payable		4,498		25,811
Accrued expenses		-		5,299
Other liabilities		-		10,476
Total liabilities assumed		4,498		41,586
Net assets acquired	$	7,000	$	42,185

The following table presents supplemental pro forma information as if the acquisition of Centaur had occurred on October 1, 2009 for the nine months ended June 30, 2010 (unaudited):

	Unaudited Pro Forma Consolidated Results
		Nine months ended June 30, 2010
Revenues		$	955,011
Net Income		$	25,727

For the pro forma calculation, we used an average foreign currency exchange rate for the period presented and the annual net income as a percentage of revenues for purposes of determining the net income for interim periods. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition on October 1, 2009. Additionally, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company.

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Note 4 - Receivables

9 Months Ended

Jun. 30, 2011

Accounts Notes Loans And Financing Receivable Gross Allowance And Net Abstract

Schedule Of Accounts Notes Loans And Financing Receivable Text Block

	June 30,		September 30,
	2011		2010
Trade	$	197,351	$	177,317
Vendor rebates and programs		15,647		14,681
		212,998		191,998
Allowance for doubtful accounts		(2,482)		(2,570)
	$	210,516	$	189,428

Product sales resulting from transactions with Banfield, The Pet Hospital (“Banfield”) were approximately 6% and 9% of total product sales during the three months ended June 30,2011 and 2010, respectively. Product sales resulting from transactions with Banfield were approximately 6% and 10% of total product sales during the nine months ended June 30, 2011 and 2010, respectively. Approximately 8% of our trade receivables resulted from transactions with Banfield as of June 30,2011 and September 30, 2010.