10-K

UNITED STATES SECURITIES AND

EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended September 30, 2011 Commission file number 000-51468
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to ________

MWI VETERINARY SUPPLY, INC.

(Exact name of registrant as specified in its Charter)

Delaware	02-0620757
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3041 W Pasadena Dr
Boise, ID	83705
(Address of Principal Executive Offices)	(Zip Code)

	(208) 955-8930
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT OF 1934:

Title of each class	Name of each exchange on which registered
Common Stock, $0.01 par value	The Nasdaq Stock Market, LLC

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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, as amended (the “Act”) 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 (§229.405 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer   x	Accelerated Filer  o	Non-Accelerated Filer  o	Smaller Reporting Company  o
		(Do not check if a smaller reporting  company)

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

As of March 31, 2011 (the last business day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the voting stock held by non-affiliates of the registrant was approximately $947,000,000.  Shares of common stock held by each executive officer and director and by each person who owns 10% or more of our outstanding common stock have been excluded since such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares of the registrant’s common stock, $0.01 par value, outstanding as of November 14, 2011 was 12,717,354.

Documents Incorporated by Reference

Listed hereunder are the documents, any portions of which are incorporated by reference and the Parts of this Form 10-K into which such portions are incorporated:

1. The registrant’s definitive proxy statement for use in connection with the Annual Meeting of Stockholders to be held on or about February 8, 2012 to be filed within 120 days after the registrant’s fiscal year ended September 30, 2011, portions of which are incorporated by reference into Part III of this Form 10-K.

MWI VETERINARY SUPPLY, INC.

FORM 10-K

TABLE OF CONTENTS

Item
PART I
	Cautionary Statement
1.	Business
1A.	Risk Factors
1B.	Unresolved Staff Comments
2.	Properties
3.	Legal Proceedings
4.	Reserved
PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
6.	Selected Financial Data
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
7A.	Quantitative and Qualitative Disclosures About Market Risk
8.	Financial Statements and Supplementary Data
9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
9A.	Controls and Procedures
9B.	Other Information
PART III
10.	Directors, Executive Officers and Corporate Governance of the Registrant
11.	Executive Compensation
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
13.	Certain Relationships, Related Transactions and Director Independence
14.	Principal Accountant Fees and Services
PART IV
15.	Exhibits and Financial Statement Schedules
SIGNATURES

PART I

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

This annual report on Form 10-K 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 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 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 to 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;

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

·   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;

·   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;

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·   our intellectual property rights may be inadequate to protect our business;

·   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;

·   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 Securities and Exchange Commission (“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. Business.

General

Our business commenced operations as part of a veterinary practice in 1976 and was incorporated as MWI Drug Supply, Inc., an Idaho corporation, in 1980. MWI Drug Supply, Inc. was acquired by Agri Beef Co. in 1981. MWI Veterinary Supply Co. was incorporated as an independent subsidiary of Agri Beef Co. in September 1994. Effective June 18, 2002, MWI Holdings, Inc. was formed by Bruckmann, Rosser, Sherrill & Co. II, L.P. (“BRS”) for the sole purpose of acquiring all of the outstanding stock of MWI Veterinary Supply Co. from Agri Beef Co. (“Agri Beef”). As a result of this transaction, MWI Veterinary Supply Co. (“MWI Co.”) became a wholly-owned subsidiary of MWI Holdings, Inc. On April 21, 2005, we changed our name from MWI Holdings, Inc. to MWI Veterinary Supply, Inc.  References in this report to “we,” “us,” “our,” and “MWI” refer to MWI Veterinary Supply, Inc. unless otherwise indicated.  Unless otherwise indicated, all statistical information provided about our business in this report is as of September 30, 2011.

We are a leading distributor of animal health products to veterinarians across the United States and United Kingdom. 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”).  Nelson was a distributor of animal health products to over 1,100 veterinary practices, primarily in the Midwestern United States.  In fiscal year 2010, we acquired the outstanding share capital of Centaur Services Limited (“Centaur”).  Based in Castle Cary, England, Centaur is a supplier of animal health products to veterinarians in the United Kingdom.

On October 31, 2011, subsequent to our fiscal year end, we acquired substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”) for $60 million, including $53.4 million in cash and 94,359 shares of common stock valued at $6.6 million.  Micro is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies, and other animal health products.  Micro also is a leading innovator of proprietary, computerized management systems for the production animal market.

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The assets acquired and the certain liabilities assumed relate to (a) the development and implementation of proprietary computerized systems for feed, health, information and production animal management which include individual animal identification and management, food safety assurance, trace back and process verification systems (b) ongoing research and development of such systems, and (c) the distribution and sale of micro feed ingredients, animal health products and dairy sanitation solutions.

Products we sell include pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies, specialty products, veterinary pet food and nutritional products. We market these products to veterinarians in both the companion animal and production animal markets. As of September 30, 2011, we had a sales force of 394 people covering the United States and a sales force of 21 people in the United Kingdom. We also offer our customers a variety of value-added services, including e-commerce platform, pharmacy fulfillment, inventory management system, equipment procurement consultation, special order fulfillment, educational seminars and pet cremation, which we believe closely integrates us with our customers’ day-to-day operations and provides them with meaningful incentives to continue ordering from us.

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 in both the United States and United Kingdom.  While we expect that the majority of our business will continue to be generated from the companion animal market, we expect that the product mix will change to an increasing amount of our revenues being generated from sales to the production animal market as a result of the Micro acquisition.

Geographic Information

Revenues and long-lived assets by geographic region are as follows:

			2011		2010		2009
Revenues for the fiscal years ended September 30
	United States		$	1,304,794	$	1,074,226	$	941,332
	International (United Kingdom)			260,546		155,116		-
		Total	$	1,565,340	$	1,229,342	$	941,332
Long-lived assets as of September 30
	United States		$	18,953	$	9,762	$	9,313
	International (United Kingdom)			6,256		5,476		-
		Total	$	25,209	$	15,238	$	9,313

Industry Overview

According to Sundale Research (“Sundale”), animal health product sales in the United States for calendar year 2010 were $7.1 billion based on prices at the manufacturers’ level, which represents a 5.1% compounded annual growth rate since calendar year 2000. The market for animal health products in the United States is split between products sold for companion and production animals. Companion animals include dogs, cats, horses and other pets, while production animals include cattle and other food-producing animals. Sundale estimates that companion animal products accounted for 56% of the total market for animal health products in the United States in calendar year 2010.  According to the GfK Vetrak UK market survey in October 2011 that compiles revenue statistics, animal health product sales in the United Kingdom for our fiscal year ended September 30, 2011 was approximately £740 million, and the market in the United Kingdom has been growing approximately 5% annually.

We believe the companion animal health products market’s growth has slowed as a result of a decrease in consumer spending.  Historically, the growth in the companion animal health market has been due to the increasing number of households with companion animals, an aging pet population, increased expenditures on animal health and preventative care, advancements in animal health products and extensive marketing programs sponsored by companion animal nutrition and pharmaceutical companies. Product sales in the production animal market could be negatively impacted by increasing volatility in commodity prices such as milk, corn, grain and feeder cattle, changes in weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) and changes in the general economy.  We 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 believe that these growth factors have been mitigated by the downward influence of generic drugs on pricing.

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Veterinarians are one of the primary purchasers of animal health products, particularly in the companion animal market. As of December 31, 2010, according to the American Veterinary Medical Association, or AVMA, there were more than 61,000 veterinarians in private practice nationwide. We believe that distributors play a vital role for veterinary practices by providing access to a broad selection of products through a single channel and helping them efficiently manage their inventory levels. Distributors also offer vendors substantial value by providing cost-effective access to a highly fragmented and geographically diverse customer base.  According to the statistics from the Royal College of Veterinary Surgeons, there are approximately 13,000 veterinarians in private practice in the United Kingdom, with a total of approximately 4,000 veterinary outlets.

Competitive Strengths

We believe that our strengths include:

· Leading Distributor to Veterinarians. While most of our products are available from several sources and our customers typically have relationships with several distributors, we have achieved this position primarily through internal growth. We believe that our broad product offering, competitive pricing, superior customer service, rapid product fulfillment and value-added services provide meaningful incentives for our customers to continue ordering from us.

· Leading Sales and Marketing Franchise. Our sales representatives in the United States educate customers on new veterinary products, assist in product selection and purchasing, and offer inventory management solutions. We also publish detailed product catalogs and monthly magazines, which are often utilized by our customers as reference tools. While salespeople and printed materials are vital to our marketing strategy, we also provide on-line ordering, valuable business information and value-added services through our Internet sites, www.mwivet.comand www.centaurweb.co.uk.

· Strong, Established Relationships with Veterinarians and Vendors. Our ability to serve as a single source for most of our customers’ animal health product needs has enabled us to develop strong and long-term customer relationships. For more than fifteen years we have maintained distribution arrangements with Banfield, The Pet Hospital (“Banfield”), the nation’s largest private veterinary practice, and with our non-controlled affiliate, Feeders’ Advantage, L.L.C. (“Feeders’ Advantage”), a related party and a buying group composed of several of the largest cattle feeders in the United States. Since we currently do not manufacture the vast majority of the products we sell, we are dependent on our vendors for the supply of our products. While our vendors often have relationships with multiple distributors, we have long-term relationships with many of our key vendors including Boehringer Ingelheim, IDEXX Laboratories, Merck (formerly known as Intervet/Schering-Plough), Merial, Pfizer and Vedco.

· Recurring Revenue Product Base. Over 97% of our product sales were from consumable medicines and supplies commonly required by veterinarians in their practice. Historically, this aspect of our business has resulted in a recurring stream of revenues.

· Sophisticated Technology and Information Systems. We continue to invest in our technology and information systems, which we believe has created a competitive advantage when delivering quality service to our customers.  Our e-commerce platform offers enhanced online ordering capabilities for veterinarians.  This platform provides many features for our customers with enhanced security.  With the acquisition of Micro, we now own proprietary technology and management systems that we will continue to develop and offer to our customers.

· Experienced Management Team. We have a strong and experienced senior management team with substantial animal health industry expertise. The members of our senior management team have been with us for an average of over eighteen years, and each member has demonstrated a commitment and capability to deliver growth in revenues and profitability.

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Business Strategy

Our mission is to be the best resource to the veterinary profession by delivering superior value, efficiency and innovation. Our strategy to achieve our mission is outlined below.

Increase Sales to Existing Customers. We believe that veterinary practices typically purchase animal health products from multiple distributors in the United States. For our fiscal year ended September 30, 2011, our average annual product sales per veterinary practice served in the United States was approximately $43,000.  We intend to increase our share of these purchases by utilizing our proprietary customer database to focus our marketing efforts, expanding our sales force, selectively adding products to our portfolio and increasing and expanding the value-added services we provide to our customers. By increasing the dollar value of purchases made by each customer as well as their average order size, we intend to increase our profitability. Competition for hiring sales representatives who have existing customer relationships is intense and we focus on retaining valued members of our staff who have demonstrated the skills needed to successfully market our products and services. If we fail to hire or retain a sufficient number of qualified sales professionals, it could adversely impact our business.  Veterinary practices typically purchase the majority of their animal health products from one wholesaler in the United Kingdom.

Expand Business Assistance Services for Veterinarians. We intend to enhance our customer relationships by expanding our business assistance services for veterinarians. These value-added services include among others our e-commerce platform, pharmacy fulfillment, inventory management system, equipment procurement consultation, special order fulfillment, educational seminars and pet cremation.

Increase the Total Number of Customers. We intend to add new customers by increasing the number and productivity of our sales representatives, selectively acquiring other animal health distributors and expanding distribution centers. We believe the greatest opportunities to add new customers are in the Northeastern, Midwestern and Southeastern regions of the United States and abroad, areas where we do not hold the leading market position.

Continuously Seek to Improve Operations. We continuously evaluate opportunities to increase sales, lower costs and realize operating efficiencies. Current initiatives include investments in our technology and distribution center infrastructure. We also plan to pursue alternative product sourcing strategies and have a private label program on selected products to reduce our procurement costs and increase our profitability, while maintaining strong relationships with key vendors.

Make Selective Acquisitions. The United States market for animal health products distribution is highly fragmented, with numerous national, regional and local distributors. Many of these companies are small, privately-held businesses, some of which may represent attractive acquisition candidates.  We also believe there are acquisition opportunities outside of the United States and we intend to seek out those companies that would be a strategic fit for us.

Products

During fiscal year 2011 in the United States, we sold more than 35,000 products, of which over 16,000 are stocked in our distribution centers, sourced from approximately 600 vendors. During fiscal year 2011 in the United Kingdom, we sold approximately 21,000 products, of which nearly 11,500 are stocked in our distribution center, sourced from approximately 500 vendors.  For our fiscal year ended September 30, 2011, our product revenues in the United States were comprised of approximately 40% pharmaceutical products, 18% vaccine products, 12% parasiticide products, 8% diagnostic products, 2% capital equipment products and 20% of other supplies. In addition, we sell approximately 600 products in the United States under agency agreements with our vendors. Under an agency agreement, we typically solicit orders and provide customer service for a commission, while the vendor stocks and ships the products. We also have available on special order approximately 17,000 products in the United States that we do not normally stock in our warehouses. We continually seek to update and improve the range of products we offer to address our customer requirements.  Micro’s offering includes comprehensive feed, health, information and production management systems as well as micro feed ingredients which we intend to offer to our existing customers.  For our fiscal year ended September 30, 2011, our product revenues in the United Kingdom were comprised of approximately 76% pharmaceuticals (which include vaccines and parasiticides), 15% pet foods and 9% of other consumable supplies.

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Pharmaceuticals, Vaccines and Parasiticides

We offer our customers a variety of pharmaceuticals, vaccines and parasiticides. Our pharmaceutical products typically include anesthetics, analgesics, antibiotics, ophthalmics and hormones. Our vaccine products are primarily comprised of small animal, equine and production animal biologicals. Our parasiticides are used for control of fleas, ticks, flies, mosquitoes and internal parasites.

Diagnostics, Capital Equipment and Supplies

We offer a wide range of diagnostics, capital equipment and supplies to veterinarians. Diagnostic sales typically include consumable in-clinic tests for detecting heartworm, lyme, feline leukemia and parvovirus, as well as consumable products for measuring blood chemistry, electrolyte balance and cell counts. Our capital equipment sales include anesthesia machines, surgical monitors, diagnostic equipment, dental machines, cages, lights and x-ray machines. We employ a team of capital equipment specialists to analyze the latest technologies and recommend equipment that meets our customers’ specific needs. Our sales of supplies include syringes, instruments, bandages, IV products, surgical consumables, grooming materials and other small equipment items used by veterinary practices.

Veterinary Pet Food and Nutritional Products

We offer our customers a broad selection of veterinary pet foods and nutritional products. We consider veterinary pet food to consist of two categories: foods for specialty diets and premium pet foods. Specialty diets are recommended by veterinarians to address specific medical and nutritional needs. Premium pet foods are recommended by veterinarians to promote optimal nutrition in healthy animals. Pet foods are typically sold under agency agreements. Nutritional products include dietary supplements, vitamins, dental chews and specialty treats which either help address specific medical conditions or are compatible with recommended nutritional guidelines.

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Value-Added Services

We offer our customers a variety of value-added services, which we believe closely integrate us with our customers’ day-to-day operations and provide them with meaningful incentives to continue ordering from us. These services include the following:

Service	Description
E-commerce platform	On-line ordering system that provides information to veterinary practices on products, vendor programs and purchasing history
Pharmacy fulfillment	Shipment of prescription production and companion animal health products to end-users in the United States on behalf of veterinarians from our six licensed pharmacies located in Edwardsville, Kansas; Grand Prairie, Texas; Harrisburg, Pennsylvania; Whitestown, Indiana; Nampa, Idaho; and Sioux Falls, South Dakota and a licensed veterinary food-animal drug retailer in Visalia, California
Inventory management system	Flexible system that facilitates counting, maintaining and ordering inventory in veterinary practices
Technology management systems	Comprehensive feed, health, information and production management systems including micro ingredient machines, health management systems and age and source verification.
Equipment procurement consultation	Consultation and demonstrations provided by our dedicated capital equipment specialists in the United States
Special order fulfillment	Procurement and shipment of approximately 17,000 unique products in the United States that we do not normally stock in our warehouses
Educational seminars	Seminars for our customers covering business and medical topics, frequently sponsored in conjunction with our vendors
Pet cremation	Business units presently operating with facilities in Idaho that serve veterinary practices and their clients by providing cremation services

Customers

As of September 30, 2011, we served more than 24,000 veterinary practices located throughout the United States and nearly 1,500 veterinary practices in the United Kingdom. These veterinary practices are typically small, privately-held businesses that we believe place at least one order per week to avoid storing and managing large volumes of supplies. We believe that these veterinary practices usually purchase animal health products from multiple distributors. We seek to be the principal provider of animal health products to our customer base.

We maintain a diverse and stable customer base. Independent veterinary practices have historically accounted for approximately 85% of our product sales. Also, for more than fifteen years, we have maintained distribution arrangements with Banfield, the nation’s largest private veterinary practice with approximately 770 veterinary hospitals, and our non-controlled affiliate, Feeders’ Advantage, a buying group composed of several of the largest cattle feeders in the United States. We typically do not enter into long-term contracts with our independent veterinary customers.

We are a party to three written agreements with Banfield, a First Amendment to the Agreement for Product Purchases, a First Amendment to the Agreement for Logistics Services and an Agreement for Home Delivery Logistics Services.   These contracts are effective from July 1, 2009 through June 30, 2012, and can be terminated by either party with or without cause upon 150 days prior written notice.  These contracts provide that we will be the supplier of logistics to Banfield, and these agreements govern the pricing, shipping and other terms and conditions under which we sell our products and provide logistics to Banfield. Under the Agreement for Product Purchases, as amended, we provide a limited warranty with respect to all goods sold by us and paid for by Banfield that good title to the products is conveyed, that the products are delivered free of any security interest, that the products will conform to the description, grade and condition of the products invoiced and that all products will be free of any defects arising while the products are either in our possession or control or in the control of any carrier transporting the goods from us to Banfield.

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Sales and Marketing

Our sales and marketing strategies are designed to establish and maintain strong customer relationships through personal visits by field sales representatives, frequent telesales contact and direct marketing, emphasizing our broad product lines, competitive pricing, efficient ordering capabilities, high levels of customer support and service and other value-added services. The key elements of our sales and marketing strategy are:

· Field Sales Representatives: Our sales force in the United States is a key component of our value-added approach.  Due to the fragmented nature of the animal health products market, we believe that a large sales force is vital to effectively support existing customers and target potential customers. As of September 30, 2011, we had 224 field sales personnel throughout the United States. Our field sales representatives educate customers on new veterinary products, assist in product selection and purchasing and offer inventory management solutions. Once a field sales representative has established a relationship with a customer, the field sales representative encourages the customer to use our telesales representatives and online ordering capabilities for day-to-day customer needs. Field sales representatives work under the supervision of regional sales managers within an assigned sales territory to ensure effective communication and timely sales calls with customers. Our field sales representatives complement our telesales and direct marketing efforts and enable us to better market, service and support the sale of our products and services. Our field sales representatives are employees of our Company and are compensated with a combination of salaries and commissions.  The sales staff for Centaur does not actively promote products to the veterinarians, but rather sells products and maximizes the logistics services that Centaur provides.

· Telesales: We support our field sales representatives and direct marketing efforts with telesales representatives in nine call centers covering the United States. As of September 30, 2011, we had 170 telesales representatives in the United States. Telesales representatives work as partners with our field sales representatives, providing a dual coverage approach for individual customers. Telesales representatives process orders and generate new sales through frequent and direct contact with customers. Telesales representatives are responsible for assisting customers with ordering, purchasing decisions and general questions. Telesales representatives utilize our customized order entry system to process customer orders, access pricing, availability and promotional information about products, and research customer preferences and order history. Our nine call centers are connected by our telecommunications system which enables them to operate as one virtual call center.

· Direct Marketing: We market to existing and potential customers by distributing product catalogs and monthly magazines. We publish a small animal catalog, livestock catalog and an equine catalog. These catalogs include detailed descriptions and specifications of our products and are often used as a reference tool by our customers and sales force. We also promote our products and services in our monthly magazine, the Messenger, which our field sales representatives use as a tool to educate customers on product and vendor programs. Additional marketing tools that we utilize include specialty catalogs, customer loyalty programs, specific product and vendor programs, flyers, faxes, order stuffers and other promotional materials. For the fiscal year ended September 30, 2011, we distributed nearly 800,000 pieces of direct marketing materials to existing and potential customers.  We also participate in national and regional trade shows to extend our customer reach and enhance customer interaction.

· E-Commerce Platform: We provide on-line ordering, valuable business information and value-added services to veterinarians via our primary Internet site in the United States, www.mwivet.com, our Internet site in the United Kingdom, www.centaurweb.co.uk, and customized Internet sites that we maintain for two of our largest customers, Banfield and Feeders’ Advantage. Customers can use our Internet sites to order products, learn more about products and vendor programs, print forms needed for their veterinary practice, review their historical purchases and manage their inventory.  For our fiscal years ended September 30, 2011, 2010 and 2009, approximately 36%, 34% and 31%, respectively, of our product sales in the United States were generated through orders placed over the Internet.  In the United Kingdom, over 90% of our orders are placed electronically.

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Product Sourcing

We currently do not manufacture the vast majority of our products and are dependent on vendors for our supply of products. We believe that effective purchasing is a key factor in maintaining our position as a leading provider of animal health care products. We regularly assess our purchasing needs and our vendors’ product offerings and prices to obtain products at favorable prices. While we purchase products from many vendors and there is generally more than one vendor for most animal health product categories, our concentration of aggregate purchases with key vendors is significant. In the United States, our ten largest vendors accounted for approximately 71%, 71% and 74% of our revenues for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Pfizer supplied products that accounted for approximately 24%, 25% and 24% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.  Of the Pfizer supplied products, production animal products under a livestock products agreement accounted for approximately 13%, 12% and 14% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively. Merck (formerly known as Intervet/Schering-Plough), supplied products that accounted for approximately 11%, 10% and 11% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.  Boehringer Ingelheim (“Boehringer”) supplied products that accounted for approximately 9%, 10% and 4% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.  Merial Limited (“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 47%, 49% and 56% of total commission revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.

There are two major types of transactions that can affect the flow of our products from our vendors, through us, to our customers. The method of selling products to veterinarians is dictated by our vendors. Traditional “buy/sell” transactions, which account for the vast majority of our business, involve the direct purchase of products by us from vendors, which we manage and store in our warehouses. A customer then places an order with us, and the order is then picked, packed, shipped and invoiced by us to our customer, followed by payment from our customer to us.

We also sell certain product lines to our customers under agency agreements with some of our vendors. Under this model, when we receive orders for products from the customer, we transmit the order to the vendor who then picks, packs and ships the products. In some cases our vendor invoices and collects payment from our customer, while in other cases we invoice and collect payment from our customer. We receive a commission payment for soliciting the order and for providing other customer service activities. Our operating expenses associated with agency sales transactions are lower than in traditional “buy/sell” transactions.

We have written agreements with approximately 50 of our vendors. Our livestock products agreement with Pfizer provides that we shall supply selected customers in the livestock field with Pfizer products. In return, we are entitled to a fee for logistics. We are not entitled to any rebates under this contract.  We are required to maintain sufficient inventory to meet our anticipated demand on a monthly basis and to store the Pfizer products in accordance with their respective label instructions. Pfizer also reserves the right to sell directly to our customers or any other party. The livestock products agreement has a one-year term that expires on December 31, 2011 and can be terminated by either party with or without cause upon 30 days written notice.  The livestock products agreement is a non-exclusive “buy-sell” contract.

Our equine products marketing agreement with Pfizer provides that we shall distribute certain products to customers in the equine field.  In return, we are entitled to receive certain service incentives and rebates.  We are required to maintain sufficient staffing levels of sales representatives and store and handle inventory under appropriate conditions that will maintain the quality and integrity of the products.  The agreement expires on December 31, 2011 and can be terminated by either party with or without cause upon 30 days prior written notice.  The equine products marketing agreement is a non-exclusive “buy-sell” contract.

Our 2011 strategic brands distribution agreement with Pfizer provides that we shall distribute the Rimadyl, Clavamox and Simplicef products offered by Pfizer.  In return, we are entitled to receive certain service incentives and rebates.  We are required to maintain sufficient staffing levels of sales representatives and store and handle inventory under appropriate conditions that will maintain the quality and integrity of the products.  The agreement expires on December 31, 2012 and can be terminated by Pfizer with or without cause upon 30 days written notice, and either party can terminate the agreement immediately upon written notice for material breach of the contract.  The 2011 strategic brands distribution agreement is a non-exclusive “buy-sell” contract.

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Our independent sales agent agreement with Merial provides that we shall sell, market and provide services related to Merial’s companion animal products to the veterinary trade.  In return, we are entitled to receive commissions.  The agreement expires on December 31, 2012 and may be terminated by either party without cause and without penalty upon 120 days prior written notice.  The agreement may also be terminated by either party without cause upon less than 120 days prior written notice; however, financial penalties will apply.  The Agreement does not prohibit MWI from representing products that compete with certain of Merial’s products, particularly those which are used for the treatment and/or control and/or prevention of fleas, ticks or heartworms.  The independent sales agent agreement is an agency contract.

Animal health product vendors may implement sales promotions or price changes for products distributed to veterinarians that can affect the period in which we recognize revenues. In addition, at the time we negotiate vendor agreements for the upcoming year, our vendors typically establish sales growth goals for us to meet in order to receive performance rebates or may reduce or eliminate rebate opportunities. These growth goals may be based on quarterly, semi-annual or annual targets.

Product returns from our customers and to our vendors occur in the ordinary course of business. We extend our customers the same return of goods policies as are extended to us by our vendors. We do not believe that our operations will be adversely impacted due to the return of products.

Distribution

As of September 30, 2011, we distributed our products from thirteen strategically located distribution centers throughout the United States and one in the United Kingdom.   We completed the move of our distribution center in Harrisburg, Pennsylvania to a larger facility in November 2011.  Also during our fiscal year 2011, we completed the move of our distribution center in Visalia, California to a larger facility.  During our fiscal year 2009, we moved our distribution center from Holland, Michigan to a larger facility in Whitestown, Indiana.  We also moved our distribution center in Grand Prairie, Texas to a larger facility, and consolidated our distribution center in San Antonio, Texas into our new Grand Prairie, Texas distribution center.  As a result of the acquisition of Micro, we now have six additional facilities which are used for the distribution of products.

We maintain inventory levels in our warehouses appropriate to satisfy customer demand for prompt delivery and fulfillment of their product orders. Inventory levels are managed on a daily basis through our information systems. In order to meet the rapid delivery requirements of our customers, we offer next-day delivery service on most of the products we stock in our warehouses. We estimate that as of September 30, 2011, we shipped same day from our warehouses approximately 98% of the dollar value of orders placed by our customers. We currently ship the majority of our orders in the United States through United Parcel Service, Inc. (“UPS”) with the balance of our orders being shipped by our own delivery trucks, regional carriers and other national carriers.  Products shipped out of the Centaur and Micro facilities are primarily shipped by our own delivery trucks.

Competition

The distribution and manufacture of animal health products is highly competitive. We compete with numerous vendors and distributors based on customer relationships, service and delivery, product selection, price and e-commerce capabilities. Most of our products are available from several sources, including other distributors and vendors, and our customers tend to have relationships with several distributors. In addition, our competitors could obtain exclusive rights to distribute certain products, eliminating our ability to distribute those products. Consolidation in the veterinary distribution business could result in existing competitors increasing their market share, which could give them greater pricing power, decrease our revenues and profitability, and increase the competition for customers. Our primary competitors in the United States, excluding vendors, include the following:

· Animal Health International, Inc.;

· Butler Schein Animal Health;

· IVESCO;

· Midwest Veterinary Supply;

· Webster Veterinary Supply, a division of Patterson Companies, Inc.; and

· other national, regional, local and specialty distributors.

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The role of the animal health product distributor has changed dramatically during the last decade. Successful distributors are increasingly providing value-added services in addition to the products they have traditionally provided. We believe that to remain competitive we must continue to add value to the distribution channel, while removing unnecessary costs associated with product movement.

Distribution of animal health products is characterized by either “ethical” or “over-the counter,” commonly referred to as OTC, channels of product movement. Ethical distribution is defined as those sales of goods to licensed veterinarians for use in their professional practice. Many of these products are prescription and must be sold or prescribed by a licensed professional. OTC distribution is the movement of goods to the animal owner and the end-user. Many of these products also are purchased by licensed veterinarians for professional use or for resale to their client. There are numerous ethical and OTC distribution companies operating throughout the United States and competition in the veterinary distribution industry is intense.

Seasonality in Operating Results

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. The sales of production animal products can vary due to changes in commodity prices and weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) which may also affect seasonality.  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 vendors’ and distributors’ marketing programs or price increase announcements, 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. See “Risk Factors — Our quarterly operating results may fluctuate significantly, and these fluctuations may cause our stock price to fall.” Additionally, while we accrue rebates as they are earned, our rebates have historically been highest during the quarter ended December 31, since some of our vendors’ rebate programs were designed to include targets to be achieved near the end of the calendar year. This trend has slowed some in recent years due to certain changes in vendor contracts but it still remains our largest quarter for vendor rebates.

Intellectual Property

We have registered with the United States Patent and Trademark Office the marks “MWI,” “MWI Design,” “MWIVET.com,” “VETONE,” “PROXYRx” and “ANIMAL Rx PHARMACY.”    We believe that the MWI mark is well recognized in the animal health products industry and by veterinarians and is therefore a valuable asset of ours.

The assets we acquired in the Micro acquisition include a portfolio of United States and foreign patents and trademarks that Micro relied on to maintain and enhance its competitive position. Our success depends in part on our ability to protect our intellectual property rights. There are always risks that third parties may claim we are infringing upon their intellectual property rights and we could be prevented from selling our products, or suffer significant litigation or licensing expenses as a result of these claims. See “Risk Factors – If third parties claim that we infringe upon their intellectual property rights, our financial results could be adversely affected.” In addition, third parties may infringe upon or design around our intellectual property rights, and we may expend significant resources enforcing our rights or suffer competitive injury with adverse effects on our business and results of operations. See “Risk Factors – Our intellectual property rights may be inadequate to protect our business.”

Employees

As of September 30, 2011, we had 1,077 employees across the United States and 196 employees in the United Kingdom. We have not experienced a shortage of qualified personnel in the past, and believe that we will be able to attract such employees in the future. None of our employees are a party to a collective bargaining agreement, and we consider our relations with our employees to be good.

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Website

Our website address is www.mwivet.com and can be used to access free of charge, through the investor relations category, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC.  The information on our website is not incorporated as a part of this annual report.  The public can also obtain copies of these reports by visiting the SEC’s Public Reference Room at 100 F Street NE, Washington DC 20549, or by calling the SEC at 1-800-SEC-0330, or by accessing the SEC’s website at www.sec.gov.

Governmental Regulation

Certain of our businesses involve the distribution of pharmaceuticals, and in this regard we are subject to various local, state, federal and foreign governmental laws and regulations applicable to the distribution of pharmaceuticals.  Our vendors of pharmaceuticals, vaccines, parasiticides and certain controlled substances are typically regulated by federal agencies, such as the Food and Drug Administration (“FDA”), the United States Department of Agriculture (“USDA”), the Environmental Protection Agency (“EPA”), and the Drug Enforcement Agency (“DEA”), as well as most similar state agencies. Therefore, we are subject, either directly or indirectly, to regulation by the same agencies. Most states and the DEA require us to be registered or otherwise keep a current permit or license to handle controlled substances. Manufacturers of vaccines are required by the USDA to comply with various storage and shipping criteria and requirements for vaccines. To the extent we distribute such products, we must comply with the same requirements, including, without limitation, the storage and shipping requirements for vaccines.

Most state boards of pharmacy require us to be licensed in their respective states for the sale of pharmaceutical products and medical devices within their jurisdictions. As a distributor of prescription pharmaceutical products, we are subject to the Prescription Drug Marketing Act (“PDMA”). The PDMA provides governance and authority to the states to provide minimum standards, terms and conditions for the licensing by state licensing authorities of persons who “engage” in wholesale distribution (as defined by each state regulatory agency) in interstate commerce of prescription drugs. With this authority, states require site-specific registrations for the parties that engage in the selling and/or physical distribution of pharmaceutical products into their state in the form of out-of-state registrations. The federal pedigree regulations of the FDA under the PDMA require tracking human labeled prescription products through the entire distribution chain and are applicable to distributors that do not have a written agreement with the manufacturer granting the wholesale distributor status as an “Authorized Distributor of Record.” Selling and/or distributing products without the appropriate registrations may subject us to fines, penalties, misdemeanor or felony convictions, and/or seizure of the products involved. We have a Manager of Regulatory Compliance and have engaged outside consultants as needed to assist us in meeting and complying with the various state and federal licensure requirements to which we are subject.

In order to supply pharmaceutical products in the United Kingdom, we must comply with the requirements of the applicable regulatory bodies. The Veterinary Medicines Directorate regulates the use of veterinary products and the Medicines Healthcare Products Regulatory Authority regulates the use of human medicinal products within the United Kingdom.

Our pet cremation business is subject to state and local zoning laws, and we are required to maintain permits for the construction and operation of an animal incineration device. We are also required to have an air pollution permit in connection with the operation of our pet cremation business.

Some states (as well as certain cities and counties) require us to collect sales taxes/use taxes on certain types of animal products. We are also subject to laws governing our relationship with employees, including minimum wage requirements, overtime, working conditions and citizenship requirements. In addition, we are subject to additional regulations regarding our hiring practices because several federal, state and local governmental agencies are our customers.

Environmental Considerations

We do not currently manufacture or alter in any way the composition of the vast majority of the products that we distribute. All products are distributed in compliance with the relevant rules and regulations as approved by various state and federal agencies.

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Executive Officers

The following table sets forth the names, ages and titles, as well as a brief account of the business experience, of each person who was an executive officer of the Company as of the date of the filing:

Name	Age	Title
James F. Cleary, Jr.	48	Board Director, President and Chief Executive Officer
Mary Patricia B. Thompson	48	Senior Vice President of Finance and Administration, Chief Financial Officer
Jeffrey J. Danielson	51	Vice President of Sales
John J. Francis	58	Vice President and General Manager of the Specialty Resources Group
James S. Hay	68	Vice President and Chief Information Officer
Bryan P. Mooney	43	Vice President of Operations
Kevin W. Price	43	Vice President of Inventory Management
John R. Ryan	42	Vice President of Marketing

James F. Cleary, Jr. has served as President since March 2000 and Chief Executive Officer since June 2002. Mr. Cleary has also been a member of the board of directors since June 2002. He joined MWI in January 1998 as Director of National Accounts and was promoted to Vice President of Demand Generation in 1999. Mr. Cleary was Vice President of Agri Beef Co., MWI’s former parent, from 1996 to 1998. From 1990 to 1996, Mr. Cleary was employed in management positions with Morrison Knudsen Corporation and its affiliate MK Rail Corporation. Mr. Cleary graduated from Dartmouth College in 1985 with a Bachelor of Arts in Economics and received his Masters of Business Administration from Harvard Business School in 1990. Mr. Cleary is also a manager of Feeders’ Advantage, L.L.C. Mr. Cleary is the brother-in-law of Mr. Robert Rebholtz, a member of our board of directors.

Mary Patricia B. Thompson, CPA has served as Senior Vice President of Finance and Administration, Chief Financial Officer since August 2006, with oversight of finance, regulatory compliance, inventory management, information technology, and human resources.  Prior to August 2006, Ms. Thompson had been the Vice President, Secretary and Chief Financial Officer since June 2002. Ms. Thompson joined Agri Beef Co. in 1989 as the Feedlot and Commodity Division Controller. In September 1991, Ms. Thompson was promoted to Controller of MWI Veterinary Supply Co., then a wholly-owned subsidiary of Agri Beef Co. Prior to joining Agri Beef Co., Ms. Thompson worked for Arthur Andersen LLP from 1985 to 1989, where she provided auditing and accounting services. Ms. Thompson graduated from the University of Idaho in 1985, summa cum laude, with a Bachelor of Science in Accounting. Ms. Thompson is a licensed Certified Public Accountant in the state of Idaho. Ms. Thompson is a member of the board of directors and past-president of the American Veterinary Distributors Association.  Ms. Thompson is also a member of the University of Idaho College of Business and Economics Advisory Board.

Jeffrey J. Danielson has served as Vice President of Sales since 2001. Mr. Danielson joined MWI in 1985 as an Outside Sales Representative, serving the state of Washington. From 1989 to 1991, Mr. Danielson served as Assistant Sales Manager and from 1991 to 2001 served as National Sales Manager. Mr. Danielson graduated from Colorado State University in 1983 with a Bachelor of Science in Agricultural Business.

John J. Francis has served as Vice President and General Manager of the Specialty Resources Group since September 2006.  Prior to joining MWI, Mr. Francis worked for Webster Veterinary Supply as the Vice President of Sales from April 2004 to September 2006.  Mr. Francis was the Key Account Manager of Excel, a division of Cargill, Inc., from June 2002 to April 2004 and was the Vice President of Sales for Future Beef based in Parker, Colorado, from May 2000 to May 2002. From 1990 until 2000, Mr. Francis served as General Manager and then President of MWI Veterinary Supply Co. Mr. Francis graduated from Michigan State University in 1975 with a Bachelor of Science in Animal Husbandry and holds a Master of Science in Animal Science obtained in 1977 from the University of Illinois.  Mr. Francis is a member of the board of directors and secretary of Vedco, Inc.

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James S. Hay has served as Vice President and Chief Information Officer since September 2002. Mr. Hay joined Agri Beef Co. in 1996 as Vice President of Information Systems. Prior to joining Agri Beef Co., Mr. Hay served as Director of Management Information Systems at Natural Wonders Inc. from 1991 to 1995; Director of Management Information Systems at the Oakland Tribune from 1989 to 1991; Vice President and Chief Information Officer of Liquor Barn, Inc. from 1987 to 1989; Director of Information Services at Genstar Corporation from 1974 to 1987; management consultant at Price Waterhouse from 1968 to 1974; and as a systems engineer at IBM Corporation from 1965 to 1968. Mr. Hay graduated from the University of Manitoba in 1965 with a Bachelor of Science in Mathematics and Physics.

Bryan P. Mooney has served as Vice President of Operations since May 2005. Mr. Mooney joined MWI in January 1994 as the Operations Manager of our Denver, Colorado distribution operation and served in that capacity until May 1998. From May 1998 until February 2005, Mr. Mooney served as Manager of Transportation and Logistics and from January 2005 until May 2005 as the Western Regional Operations Manager. Mr. Mooney graduated from the University of Wyoming in 1991 with a Bachelor of Science in Agricultural Business.

Kevin W. Price was promoted to Vice President of Inventory Management on October 1, 2011. From 2003 to 2011, Mr. Price served as Purchasing Manager.  In 1998, Mr. Price was promoted to Food Animal Product Manager.  Mr. Price joined MWI in April 1989 in our Nampa distribution center. Mr. Price graduated from Northwest Nazarene University in 2010 with a Bachelor of Science in Business Administration.  In 2007, Mr. Price filed for bankruptcy under Chapter 13 of the United States Bankruptcy Code, and Mr. Price has informed the Company that he is performing his obligations in full under the plan.  Mr. Price has also informed the Company that he intends to make additional payments outside of the plan so that his legitimate creditors will be paid in full when all payments are completed.

John R. Ryan has served as Vice President of Marketing since 2000. Mr. Ryan joined MWI in June 1995 as an Outside Sales Representative and served in such capacity until June 2000. Prior to joining MWI, Mr. Ryan worked for the Virbac Corporation (a companion animal pharmaceutical company) as a Territory Manager from 1993 to 1995. Mr. Ryan graduated from the University of California, Davis in 1993 with a Bachelor of Science in Animal Physiology.

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Item 1A. Risk Factors.

In addition to the factors discussed elsewhere in this Form 10-K, the following are important factors which could cause actual results or events to differ materially from those contained in any forward-looking statements made by or on behalf of the Company.

Our operating results may fluctuate due to factors outside of management’s control.

Our future revenues and results of operations may significantly fluctuate due to a combination of factors, many of which are outside of management’s control. The most notable of these factors include:

·   the impact of vendor consolidation on our business;

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

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

·   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;

·   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;

·   our intellectual property rights may be inadequate to protect our business;

·   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;

·   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;

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

·   competition.

These factors could adversely impact our results of operations and financial condition. We may be unable to reduce operating expenses quickly enough to offset any unexpected shortfall in revenues or gross profit. If we have a shortfall in revenues or gross profit without a corresponding reduction to expenses, operating results may suffer. Our operating results for any particular fiscal year or quarter may not be indicative of future operating results. You should not rely on year-to-year or quarter-to-quarter comparisons of results of operations as an indication of our future performance.

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Consolidation among our vendors could be harmful to our business.

In the past two years, there have been two large acquisitions affecting our largest vendors.  In October 2009, Pfizer completed its acquisition of Wyeth.  Pfizer and Fort Dodge, a division of Wyeth, were our two largest vendors as measured by our revenues at the time of that acquisition.  In November 2009, Merck and Schering-Plough completed their merger under which Merck acquired all of the outstanding stock of Schering-Plough. These were two of our largest vendors at the time of the merger.  Additionally, on July 7, 2011, Pfizer, who is our largest vendor as measured by our revenues, issued a press release stating that they were considering a spin-off, sale or other transaction of their animal health business.

The surviving companies from these types of transactions could end up with higher market shares with respect to certain animal health products, and they could use their increased leverage in the channel to negotiate terms with distributors that are materially worse to the distributor than the terms that we have been able to negotiate with the companies individually while they were competing with each other. There is also a possibility of product disruption as these companies integrate their operations which could adversely impact our financial results.  Further consolidation among animal health products vendors could result in our vendors further increasing their market share, which could give vendors greater pricing power and make it easier for such vendors to sell their products directly to animal health customers, both of which could decrease our net sales and profitability.

Our business, financial condition and results of operations depend upon maintaining our relationships with vendors.

 We currently do not manufacture the vast majority of our products and are dependent on our vendors for our supply of products. Our ten largest vendors supplied products that accounted for approximately 71%, 71% and 74% of our revenues for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Pfizer supplied products that accounted for approximately 24%, 25% and 24% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively. Of the Pfizer supplied products, production animal products under a livestock agreement accounted for approximately 13%, 12% and 14% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.  Merck, formerly known as Intervet/Schering-Plough, supplied products that accounted for approximately 11%, 10% and 11% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.  Boehringer supplied products that accounted for approximately 9%, 10% and 4% of our revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively. Merial, a subsidiary of Sanofi-Aventis, supplies the majority of their products under an agency relationship.  Commission revenue generated from Merial products accounted for approximately 47%, 49% and 56% of total commission revenues for our fiscal years ended September 30, 2011, 2010 and 2009, respectively.

Our ability to sustain our gross profits has been, and will continue to be, dependent in part upon our ability to obtain favorable terms and access to new and existing products from our vendors. These terms may be subject to changes from time to time by vendors, such as changing from a “buy/sell” to an agency relationship, or from an agency to a “buy/sell” relationship which could adversely affect our revenues and operating income. The loss of one or more of our large vendors, a material reduction in their supply of products to us or material changes in the terms we obtain from them could have a material adverse effect on our business, financial condition and results of operations.

Vendors may also choose to change the method in which products are taken to market.  For example, a vendor may change our relationship from a complete distribution provider, including logistics and sales support, to only a logistics provider or only a sales support provider.  Only doing one of these services would reduce our margin on any sale.  A change in the method in which products are taken to market caused by any vendor could have a material adverse effect on our business.

Some of our current and future vendors may decide to compete with us in the future by pursuing or increasing their efforts in direct marketing and sales of their products. These vendors could sell their products at lower prices and maintain a higher gross margin on their product sales than we can. In this event, veterinarians or animal owners may elect to purchase animal health products directly from these vendors.  As an example of this type of event, we were a sales agent for a pet food line for most of fiscal year 2011 that we will not represent in fiscal year 2012 because that manufacturer chose to sell their products direct and not through sales agents.  Increased competition from any vendor of animal health products could significantly reduce our market share and adversely impact our financial results.

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An adverse change in vendor rebates could negatively affect our business.

The terms on which we purchase or sell products from many vendors of animal health products may entitle us to receive a rebate based on the attainment of certain growth goals. Vendors may adversely change the terms of or eliminate some or all of these rebate programs at any time without notice. Because the amount of rebates we earn is directly related to the attainment of pre-determined sales growth goals, and because the nature of the rebate programs and the amount of rebates available are determined by the vendors, there can be no assurance as to the amount of rebates that we will earn in any given year. Changes to or elimination of any rebate program initiated by our vendors may have a material effect on our gross profit and our operating results in any given quarter or year. Vendors may reduce or eliminate rebates offered under their programs, interpret the terms of their rebate programs in a way that is adverse to us or increase the growth goals or other conditions we must meet to earn rebates to levels that we cannot achieve. Additionally, factors outside of our control, such as customer preferences or vendor supply issues, can have a material impact on our ability to achieve the growth goals established by our vendors, which may reduce the amount of rebates we receive. The occurrence of any of these events could have an adverse impact on our results of operations.

Our quarterly operating results may fluctuate significantly, and these fluctuations may cause our stock price to fall.

Our quarterly revenues and operating results have varied significantly in the past, and may continue to do so in the future. While we accrue rebates from vendors as they are earned, our rebates have historically been highest during the quarter ended December 31, since most of our vendors’ rebate programs were designed to include targets to be achieved during the calendar year.  Historically, our revenues have been seasonal, with peak sales in the spring and fall months. The seasonal nature of our business is directly tied to the buying patterns of veterinarians for production animal health products used for certain medical procedures performed on production animals during the spring and fall months. These buying patterns can also be affected by vendors’ and distributors’ marketing programs or price increase announcements, which can cause veterinarians to purchase production animal health products earlier than those products are used. This kind of early purchasing may reduce our sales in the months these purchases would have otherwise been made. Additionally, the production animal market can be affected by volatility in commodity prices such as milk, corn, grain and feeder cattle, changes in weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) or a change in the general economy, which can shift the timing of when animals are treated and to what extent they are treated.  This shift in treatment may have a significant impact on the timing of purchases.  While companion animal products tend to have a different product use cycle than production animal health products, and approximately two-thirds of our revenues have been generated from sales to the companion animal market, we cannot assure you that our revenues and operating results will not continue to fluctuate on a quarter-to-quarter basis. We believe period-to-period comparisons of our results of operations are not necessarily meaningful as our future revenue and results of operations may vary substantially. It is also possible that in future quarters our results of operations will be below the expectations of securities analysts and investors. In either case, the price of our common stock could decline, possibly materially.

Our market is highly competitive. Failure to compete successfully could have a material adverse effect on our business, financial condition and results of operations.

The market for veterinary distribution services is highly competitive, continually evolving and subject to technological change. We compete with numerous vendors and distributors based on customer relationships, service and delivery, product selection, price and e-commerce capabilities.  Our primary competitors in the United States, excluding vendors, include the following:

· Animal Health International, Inc;

· Butler Schein Animal Health;

· IVESCO;

· Midwest Veterinary Supply;

· Webster Veterinary Supply, a division of Patterson Companies, Inc.; and

· other national, regional, local and specialty distributors.

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Some of our competitors may have more customers, stronger brand recognition or greater financial and other resources than we do. Most of our products are available from several sources, including other distributors and vendors, and our customers typically have relationships with several distributors and vendors. Many of our competitors have comparable product lines, technical expertise or distribution strategies that directly compete with us. Our competitors could obtain exclusive rights to distribute certain products, eliminating our ability to distribute those products. The entry of new or additional distributors in the industry could also have a material adverse effect on our ability to compete. Additionally, some of our vendors may decide to compete with us by selling their products directly to our customers. If we do not compete successfully against these organizations, it could have a material and adverse effect on our business, financial condition and results of operations.

Consolidation in the veterinary distribution business and veterinary practices may decrease our revenues and profitability.

Consolidation in the veterinary distribution business could result in existing competitors increasing their market share, which could give them greater pricing power, decrease our revenues and profitability, and increase the competition for customers. Consolidation of the many small, privately-held veterinary practices would result in an increasing number of larger veterinary practices, which could have increased purchasing leverage and the ability to negotiate lower product costs. This could reduce our operating margins and negatively impact our revenues and profitability. Any of these developments could result in increased marketing expenses and have a material adverse effect on our business, financial condition and results of operations.

Exclusivity requirements and failures to continue relationships with vendors may cause us to lose access to certain products and erode our market share.

We may not be able to establish or maintain relationships with key vendors in the animal health industry if we have established relationships with competitors of these key vendors. We have written agreements with approximately 50 of our vendors. Some of our agreements with vendors are for one-year periods. Upon expiration, we may not be able to renew our existing agreements on favorable terms, or at all.

In addition, vendors may require us to distribute their products on an exclusive basis, which would cause us to forego distributing competing products that may also be profitable, including generic products that may gain increased market share.  In this situation we are often forced to project future sales of competing products so that we can elect to distribute the product that we believe will be more profitable.  Our projections may not be correct, and we may be contractually prohibited from distributing products that gain market share, including generic products, at the expense of the products that we distribute.  Competitors of ours could also obtain exclusive rights to market particular products, which we would be unable to market. If we lose the right to distribute products under such agreements, or are required to exclusively distribute certain products at the expense of others that may be more profitable, we may lose access to certain products and lose a competitive advantage. Potential competitors could sell products from vendors that we fail to continue with and erode our market share.

An economic downturn could materially adversely affect our business.

Our business may be materially adversely affected by negative trends in the general economy that could reduce consumer discretionary spending on animal health products and reduce or eliminate sources of credit available to our customers. Levels of consumer spending have recently deteriorated significantly in the United States and may remain depressed for the foreseeable future.  Some of the factors that could influence the levels of consumer spending include continuing increases in fuel and other energy costs, conditions in the residential real estate and mortgage markets, unemployment levels, healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer spending behavior.  In addition, volatility in commodity prices such as milk, corn, grain and feeder cattle, changes in weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) and changes in the general economy may adversely impact the amount spent by animal owners in the production animal market.  Such volatility and/or tightening of credit available to our customers could further deteriorate the financial condition of our customers, and may ultimately lead our customers to reduce their working capital available to purchase our products.

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Our business ultimately depends on the ability and willingness of animal owners to pay for our products. This dependence could make us more vulnerable to any reduction in consumer confidence or disposable income than companies in other industries that are less reliant on consumer spending, such as the human health care industry, in which a large portion of payments are made by insurance programs.  Additionally, any cost-cutting measures taken to offset the effects of an economic downturn could materially impact our ability to generate future revenue growth.  For all of these reasons, an economic downturn could materially affect our business.

Any inability of our customers to pay us for our products and services due to their deteriorating financial condition or otherwise may adversely affect our results of operations and financial condition.

We generally extend some level of credit to our customers without requiring collateral, which exposes us to credit risk.  For example, milk price declines in the dairy market could have a significant impact on dairy farmers, which would create cash-flow challenges for these farmers and, in turn, impact the time it takes for us to collect on outstanding accounts receivable from these 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. The financial difficulties of a customer could cause us to curtail business with that customer or the customer to reduce its business with us and cancel orders.  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.

Difficulties with the integration of acquisitions or the improvement of the performance of acquired companies may impose substantial costs and delays and cause other unanticipated problems for us.

Acquisitions involve a number of risks relating to our ability to integrate an acquired business into our existing operations. The process of integrating or improving the performance of the operations of an acquired business, particularly its personnel, could cause interruptions to our business. Some of the risks we face include:

· the need to spend substantial operational, financial and management resources in integrating new businesses, technologies and products, and difficulties management may encounter in integrating or improving the performance of the operations, personnel or systems of the acquired business;

· retention of key personnel, customers and vendors of the acquired business;

· the occurrence of a material adverse effect on our existing business relationships with customers or vendors, or both, resulting from future acquisitions or business combinations could lead to a termination of or otherwise affect our relationships with such customers or vendors;

· impairments of goodwill and other intangible assets; and

· contingent and latent risks associated with the past operations of, and other unanticipated costs and problems arising in, an acquired business.

If we are unable to successfully integrate the operations of an acquired business into our operations, we could be required to undertake unanticipated changes. These changes could have a material adverse effect on our business.

In addition, it may be difficult to manage rapid growth from our acquired companies in the future, and the future success of our acquisitions depends on our ability to implement and/or maintain:

· sales and marketing programs;

· customer service levels;

· current and new product and service lines and vendor relationships;

· technological support which equals or exceeds our competitors;

· recruitment and training of new personnel; and

· operational and financial control systems.

If we are not able to manage our rapid growth from our acquisitions, there is a risk our customer service quality could deteriorate which may in turn lead to decreased sales or profitability. Also, due to acquisitions the cost of our operations could increase faster than growth in our revenues, negatively impacting our profitability.

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Risks associated with our international operations.

On February 8, 2010, we acquired the outstanding share capital of Centaur.  Centaur is based in the United Kingdom and uses the British pound as its functional currency.  Prior to this acquisition, we had very limited exposure to international risks. International operations are subject to risks that may materially adversely affect our business, results of operations and financial condition.  The risks that our international operations are subject to include, among other things:

·   difficulties and costs relating to staffing and managing foreign operations;

·   difficulties in establishing channels of distribution;

·   fluctuations in the value of foreign currencies;

·   repatriation of cash from our foreign operations to the United States;

·   regulatory requirements;

·   foreign countries may impose additional withholding taxes or otherwise tax our foreign income;

·   separate operating and financial systems;

·   disaster recovery;

·   unexpected difficulties in importing or exporting our products;

·   imposition of import/export duties, quotas, sanctions or penalties;

·   liability related to the defined benefit plan; and

·   unexpected regulatory, economic and political changes in foreign markets.

Our financial results could be adversely affected by foreign exchange fluctuations.

We operate in both the United States and the United Kingdom, but report revenues, costs and earnings in U.S. dollars. Exchange rates between the U.S. dollar and the British pound sterling are likely to fluctuate from period to period. Because our financial results are reported in U.S. dollars, we are subject to the risk of translation losses for reporting purposes. If we continue to expand our international operations, we will conduct more transactions in currencies other than the U.S. dollar. To the extent that foreign revenue and expense transactions are not denominated in the local currency, we are also subject to the risk of transaction losses. Given the volatility of exchange rates, there is no assurance that we will be able to effectively manage currency transaction and/or translation risks. We have not entered into derivative instruments to offset the impact of foreign exchange fluctuations. Fluctuations in foreign currency exchange rates could have a material adverse affect on our results of operations and financial condition.

We only have one distribution center in the United Kingdom and any catastrophic event could materially impact our results.

We conduct all of our fulfillment operations in the United Kingdom from our distribution center in Castle Cary, England. This facility contains all of our product inventory. A natural disaster or other catastrophic event, such as an earthquake, fire, flood, severe storm, break-in, server or systems failure, terrorist attack, or other comparable event at this facility would cause interruptions or delays in our business and loss of inventory and could render us unable to process or fulfill customer orders in a timely manner, or at all. Further, we have a limited disaster recovery plan, and our business interruption insurance may not adequately compensate us for losses that may occur, including with respect to any lost profits for any period in which the business is not able to operate.  In the event that a significant part of this facility was destroyed or our operations were interrupted for any extended period of time, our business, financial condition, and operating results would be harmed.

We rely substantially on third-party vendors, and the loss of products or delays in product availability from one or more third-party vendors could substantially harm our business.

We must contract for the supply of current and future products of appropriate quantity, quality and cost. These products must be available on a timely basis and be in compliance with any regulatory requirements. Failure to do so could substantially harm our business.

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We often purchase products from our vendors under agreements that typically have a term of one year and can be terminated on a periodic basis. There can be no assurance, however, that our vendors will be able to meet their obligations under these agreements or that we will be able to compel them to do so. Risks of relying on vendors include:

- If an existing agreement expires or a certain product line is discontinued or recalled, then we would not be able to continue to offer our customers the same breadth of products and our sales and operating results would likely suffer unless we are able to find an alternate supply of a similar product.

- If market demand for our products increases suddenly, our current vendors might not be able to fulfill our commercial needs, which would require us to seek new manufacturing arrangements or find new sources of supply, and may result in substantial delays in meeting market demand. If we consistently generate more demand for a product than a given vendor is capable of handling, it could lead to large backorders and potentially lost sales to competitive products that are more readily available.

- We may not be able to control or adequately monitor the quality of products we receive from our vendors. Poor quality products could damage our reputation with our customers.

- Some of our third party vendors are subject to ongoing periodic unannounced inspection by regulatory authorities, including the FDA, the USDA, the EPA, the DEA and the PDMA, as well as other federal and state agencies for compliance with strictly enforced regulations. We do not have control over our vendors’ compliance with these regulations and standards. Violations could potentially lead to interruptions in supply that could lead to lost sales to competitive products that are more readily available.

- If a vendor is unable to obtain the necessary credit to manage their business, they may not be able to deliver their products to us.

Potential problems with vendors such as those discussed above could substantially decrease sales of our products, lead to higher costs and damage our reputation with our customers.

We rely upon third parties to ship products to our customers and interruptions in their operations could harm our business, financial condition and results of operations.

We use UPS as our primary delivery service for our air and ground domestic shipments of products to our customers. If there were any significant service interruptions, there can be no assurance that we could engage alternative service providers to deliver these products in either a timely or cost-efficient manner, particularly in rural areas where many of our customers are located. Any labor disputes, slowdowns, transportation disruptions or other adverse conditions in the transportation industry experienced by UPS could impair or disrupt our ability to deliver our products to our customers on a timely basis, and could have a material adverse effect upon our customer relationships, business, financial condition and results of operations. In addition, rising fuel costs may result in continued increases in shipping costs charged by UPS, or other delivery service providers, and could have an adverse effect on our financial condition and results of operations.

The loss of one or more significant customers could adversely affect our profitability.

Our two largest customers, Banfield and Feeders’ Advantage (a related party), accounted for approximately 6% and 4%, respectively, of our product sales for our fiscal year ended September 30, 2011, 9% and 4%, respectively, of our product sales for our fiscal years ended September 30, 2010 and 11% and 5%, respectively, of our product sales for our fiscal years ended September 30, 2009. Our ten largest customers, excluding Banfield and Feeders’ Advantage, accounted for approximately 3%, 5% and 5% of our product sales for our fiscal years ended September 30, 2011, 2010 and 2009, respectively. Our business and results of operations could be adversely affected if the business of these customers was lost. We cannot guarantee that we will maintain or improve our relationships with these customers or that we will continue to supply these customers at current levels. Banfield, Feeders’ Advantage and other customers may seek to purchase some of the products that we currently sell directly from the vendors or from one or more of our competitors. Furthermore, our customers are not required to purchase any minimum amount of products from us. The loss of Banfield or Feeders’ Advantage or deterioration in our relations with either of them could significantly affect our financial condition and results of operations. Additionally, deterioration in the financial condition of one or more of our customers could have a material adverse effect on our results of operations.

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Increases in over-the-counter sales of animal health products could adversely affect our business.

We rely, and will continue to rely, on animal owners who purchase their animal health products directly from veterinarians, which we refer to as the ethical channel. There can be no assurance that animal owners will continue to use the ethical channel with the same frequency as they have in the past, and will not increasingly purchase animal health products from sources other than veterinarians, such as the Internet, human or Internet pharmacies and other over-the-counter channels. Increased competition from any distributor of animal health products making use of an over-the-counter channel could significantly reduce our market share and adversely impact our financial results.

If we fail to comply with or become subject to more onerous government regulations, our business could be adversely affected.

The veterinary distribution industry is subject to changing political and regulatory influences. Both state and federal government agencies regulate the distribution of certain animal health products and we are subject to regulation, either directly or indirectly, by the FDA, the USDA, the EPA, the DEA and comparable state agencies. As a distributor of prescription pharmaceutical products, we are also subject to the PDMA, which provides for minimum standards, terms and conditions to be maintained for licensing as a distributor.  The regulatory stance these agencies take could change. Our vendors are subject to regulation by the FDA, the USDA, the EPA, the DEA, and the PDMA, as well as other federal and state agencies, and material changes to the applicable regulations could affect our vendors’ ability to manufacture certain products, which could adversely impact our product supply. In addition, some of our customers may rely, in part, on farm and agricultural subsidy programs. Changes in the regulatory positions that impact the availability of funding for such programs could have an adverse impact on our customers’ financial positions, which could lead to decreased sales.

We strive to maintain compliance with these and all other applicable laws and regulations. We retain a Manager of Regulatory Compliance and have engaged outside consultants as needed to assist us in meeting and complying with the various state licensure requirements to which we are subject. If we are unable to maintain or achieve compliance with these laws and regulations, however, we could be subject to substantial fines or other restrictions on our ability to provide competitive distribution services, which could have an adverse impact on our financial condition.

We cannot assure you that existing laws and regulations will not be revised or that new, more restrictive laws will not be adopted or become applicable to us or the products that we distribute or dispense. The federal pedigree regulations of the FDA under the PDMA require tracking human labeled prescription products through the entire distribution chain and are enforceable for distributors that do not have a written agreement with the manufacturer granting the wholesale distributor status as an “Authorized Distributor of Record.”  We cannot assure you that the vendors of products that may become subject to more stringent laws will not try to recover any or all increased costs of compliance from us by increasing the prices at which we purchase products from them, or, that we will be able to recover any such increased prices from our customers. We also cannot assure you that our business and financial condition will not be materially and adversely affected by future changes in applicable laws and regulations.

Loss of key management or sales representatives could harm our business.

Our future success depends to a significant extent on the skills, experience and efforts of management, including our President and Chief Executive Officer, Mr. James F. Cleary, Jr. While we have not experienced problems in the past attracting and maintaining members of our management team, the loss of any or all of these individuals could adversely impact our business. We do not carry key-man life insurance on any member of management. In addition we do not have employment agreements with key members of our senior management team. We must continue to develop and retain a core group of individuals if we are to realize our goal of continued expansion and growth. We cannot assure you that we will be able to do so in the future.

Also, due to the specialized nature of our products and services, generally only highly qualified and trained sales representatives have the necessary skills to market our products and provide our services. These individuals develop relationships with our customers that could be damaged if these employees are not retained. We face intense competition for the hiring of these professionals, and many professionals in the field that may otherwise be attractive candidates for us to hire may be bound by non-competition agreements with our competitors. Any failure on our part to hire, train and retain a sufficient number of qualified professionals would damage our business. We do not generally enter into agreements that contain non-competition provisions with our employees, other than with members of our senior management team, former owners of acquired companies and certain other employees.

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Failure of, or security problems with, our information systems could damage our business.

Our information systems are dependent on third party software, global communications providers, telephone systems and other aspects of technology and Internet infrastructure that are susceptible to failure. Though we have implemented security measures and some redundant systems, our customer satisfaction and our business could be harmed if we or our vendors experience any system delays, failures, loss of data, power outages, computer viruses, break-ins, unauthorized access by competitors or similar disruptions. We currently process all customer transactions and data at our facilities in Boise, Idaho. Although we have safeguards for emergencies, including, without limitation, sophisticated back-up systems, the occurrence of a major catastrophic event or other system failure at any of our distribution facilities could interrupt data processing or result in the loss of stored data. This may result in the loss of customers or a reduction in demand for our services. Only some of our systems are fully redundant and although we do carry business interruption insurance, it may not be sufficient to compensate us for losses that may occur as a result of system failures. If a disruption occurs, our profitability and results of operations may suffer.

The outbreak of an infectious disease within either the production animal or companion animal population could have a significant adverse effect on our business and our results of operations.

An outbreak of disease affecting animals, such as foot-and-mouth disease, various forms of influenza or bovine spongiform encephalopathy, commonly referred to as “mad cow disease,” could result in the widespread destruction of affected animals and consequently result in a reduction in demand for animal health products. In addition, outbreaks of these or other diseases or concerns of such diseases could create adverse publicity that may have a material adverse effect on consumer demand for meat, dairy and poultry products, and, as a result, on our customers’ demand for the products we distribute. The outbreak of a disease among the companion animal population which could cause a reduction in the demand for companion animals could also adversely affect our business. Although we have not been adversely impacted by the outbreak of a disease in the past, there can be no assurance that a future outbreak of an infectious disease will not have an adverse effect on our business.

Our acquired technology or developed technology may not be successful in gaining new customers or the technology may fail to produce its intended results.

The process of acquiring or developing new technology products and solutions is inherently complex and uncertain. It requires accurate anticipation of customers’ changing needs and emerging technological trends. We must make long-term investments and commit significant resources before knowing whether these investments will eventually result in products or services that achieve customer acceptance and generate the revenues required to provide desired returns. If we fail to accurately anticipate and meet our customers’ needs through the development of new products and technologies and service offerings or if we fail to adequately protect our intellectual property rights or if our new products are not widely accepted or if our current or future products fail to meet applicable worldwide regulatory requirements, we could lose market share and customers to our competitors and that could materially adversely affect our results of operations and financial condition.  Additionally, we face the risk of claims from system users that the systems failed to produce the intended result and/or that the systems caused negative performance of the customer’s animals or overall operation of the customer’s business.  Any such claims, even those without merit, could be expensive and  time consuming to defend, cause us to lose a customer and the associated revenue, divert management’s attention and resources or require us to pay damages.

If third parties claim that we infringe upon their intellectual property rights, our financial results could be adversely affected.

We face the risk of claims that we have infringed third parties’ intellectual property rights, including trademarks, trade names, and patents. Third parties may claim that our proprietary branded products infringe their trademarks and/or trade names; that our consultative services infringe a patented machine, process, or business method; and/or that our products infringe such third parties’ patented animal health products.  We have not conducted an independent review of trademarks or patents issued to third parties. The large number of trademarks and patents, the rapid rate of new trademark and patent issuances, the complexities of the technology involved in patents and uncertainty of litigation increase the risk of business assets and management’s attention being diverted to intellectual property litigation.

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Any claims of patent or other intellectual property infringement, even those without merit, could:

• be expensive and time consuming to defend;

• cause us to cease making, licensing or using products or services that incorporate the challenged intellectual property;

• require us to redesign, reengineer, or rebrand our products or packaging, if feasible;

• divert management’s attention and resources; or

• require us to enter into royalty or licensing agreements in order to obtain the right to use a third party’s intellectual property.

Any royalty or licensing agreements, if required, may not be available to us on acceptable terms or at all. A successful claim of infringement against us could result in our being required to pay significant damages, enter into costly license or royalty agreements, or stop the sale of certain products, any of which could have a negative impact on our financial results and harm our future prospects.

Our intellectual property rights may be inadequate to protect our business.

We attempt to protect our intellectual property rights through a combination of patent, trademark, copyright and trade secret laws, as well as licensing agreements and third-party nondisclosure and assignment agreements. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business.

           We rely on our trademarks, trade names, service marks and brand names to distinguish our proprietary branded products and services from the products and services of our competitors, and have registered or applied to register many of these trademarks and servicemarks. We cannot assure you that our trademark and servicemark applications will be approved. Third parties may also oppose our trademark and servicemark applications, or otherwise challenge our use of the trademarks and servicemarks. In the event that our marks are successfully challenged, we could be forced to rebrand our proprietary branded products and services, which could result in loss of brand recognition, and could require us to devote resources to advertise and market new brands. Further, we cannot assure you that competitors will not infringe upon our marks, or that we will have adequate resources to enforce our marks.

         The pursuit and assertion of patent rights involve complex legal and factual determinations and, therefore, are characterized by some uncertainty.  In addition, the laws governing patentability and the scope of patent coverage continue to evolve.  As a result, we cannot assure you patents will be issued from any of our patent applications.  The scope of any of our patents, if issued, may not be sufficiently broad to offer meaningful protection. In addition, our patents, if they are issued, may be successfully challenged, invalidated, circumvented or rendered unenforceable so that our patent rights might not create an effective competitive barrier for certain of our niche products. Further, we cannot assure you that competitors will not infringe upon our patent, or that we will have adequate resources to enforce our patent.

We also rely on unpatented proprietary technology. It is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information.  Our inability to maintain the proprietary nature of our technologies for any reason could have a material adverse effect on our business.

If our proprietary branded products infringe on the intellectual property rights of others, we may be required to indemnify our customers for any damages they suffer.

Third parties may assert infringement claims against our customers. These claims may require us to initiate or defend protracted and costly litigation on behalf of our customers, regardless of the merits of these claims. If any of these claims succeed, we may be forced to pay damages on behalf of our customers or may be required to obtain licenses for the products they use. If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products.

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We may be subject to product liability and other claims in the ordinary course of business.

Our business involves a risk of product liability and other claims in the ordinary course of business, for example arising from shipping mislabeled or outdated product, product recalls or disputes among competing vendors. We maintain general liability insurance with policy limits of $1.0 million per incident and $2.0 million in the aggregate, and in many cases we have indemnification rights against such claims from the manufacturers of the products we distribute. We do not maintain a separate product liability insurance policy because we do not currently manufacture the vast majority of the products that we sell. Our ability to recover under insurance or indemnification arrangements is subject to the financial viability of the insurers and manufacturers. We cannot assure you that our insurance coverage or the manufacturers’ indemnity will be available or sufficient in any future cases brought against us.

We may not be able to raise needed capital in the future on favorable terms or at all.

We expect that our existing sources of cash, together with any funds generated from operations, will be sufficient to meet our anticipated capital needs for at least the next twelve months. However, we may require additional capital to finance our growth strategies or other activities in the future. Our capital requirements will depend on many factors, including the costs associated with our growth and expansion. Additional financing may not be available when needed and, if such financing is available, it may not be available on terms favorable to us. Our failure to raise capital when needed could have an adverse effect on our business, financial condition and results of operations.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Any borrowings on the revolving credit facility will be at variable rates of interest and expose us to interest rate risk based on market rates. If interest rates increase, our debt service obligations on any future variable rate indebtedness that we may incur on our revolving credit facility would increase even if the amount borrowed remained the same, and our net income and cash available for servicing our indebtedness would decrease. Our variable rate debt as of September 30, 2011 was $2.9 million (comprised of revolving credit facilities). As of October 31, 2011, our variable rate debt on our revolving credit facilities was $46.9 million, primarily due to the funding of the Micro acquisition. Our interest expense for fiscal year 2011 was approximately $0.7 million and was approximately $0.5 million for fiscal year 2010. A 1% increase in the average interest rate would not have a material impact on our operations assuming our current level of debt.  However, if we had to borrow additional funds to operate our business, the change in interest rates could affect our operations.   See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

Our lenders may have suffered losses related to the weakening economy and may not be able to fund our borrowings.

Our lenders, including the lenders participating in our revolving credit facility, 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, lenders may become insolvent or tighten their lending standards, which could make it more difficult for us to borrow under our revolving credit facility or to obtain other financing on favorable terms or at all.  Our financial condition and results of operations would be adversely affected if we were unable to draw funds under our revolving credit facility because of a lender default or to obtain other cost-effective financing.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The table below provides a summary of the Company’s principal facilities as of September 30, 2011:

Location	Total Square Feet	(1)	Own or Lease	Principal Function (3)
Boise, Idaho	62,000		Own	Headquarters and call center
Edwardsville, Kansas	135,000		Lease	Distribution center and pharmacy
Castle Cary, England	84,000		Own	Centaur office, call center and distribution center
Visalia, California	81,000		Lease	Distribution center and veterinary food-animal drug retailer
Denver, Colorado	75,000		Lease	Distribution center and call center
Grand Prairie, Texas	70,000		Lease	Distribution center, call center and pharmacy
Atlanta, Georgia	41,000		Lease	Distribution center
Harrisburg, Pennsylvania	40,000	(2)	Lease	Distribution center and pharmacy
Whitestown, Indiana	40,000		Lease	Distribution center and pharmacy
Nampa, Idaho	36,000		Lease	Distribution center and pharmacy
Fife, Washington	30,000		Lease	Distribution center
Orlando, Florida	30,000		Lease	Distribution center
Clear Lake, Wisconsin	25,000		Lease	Distribution center and call center
Sioux Falls, South Dakota	23,000		Own	Distribution center, call center and pharmacy
Glendale, Arizona	20,000		Lease	Distribution center
Sturbridge, Massachusetts	15,000		Lease	Securos office and call center
Letchworth, England	9,000		Lease	Centaur shipping depot
Stoke, England	8,000		Lease	Centaur shipping depot
Holland, Michigan	5,000		Lease	Call center
Omaha, Nebraska	4,000		Lease	Call center
Sioux City, Iowa	3,000		Lease	Call center
Ivybridge, England	2,000		Lease	Centaur shipping depot
(1)  Rounded to the nearest thousand square feet.
(2)  In November 2011, we moved into a larger distribution center which has been leased in Harrisburg, Pennsylvania with 111,000 square feet.
(3)  As a result of the acquisition of Micro, we now have facilities in Amarillo, Texas; Abilene, Texas; Elm Creek, Nebraska; Great Bend, Kansas; Scott City, Kansas; and Sequin, Texas.

Item 3. Legal Proceedings.

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. Management presently believes that the ultimate outcome of these proceedings will not have a material adverse effect on our financial position, cash flows or overall trends in results of operations.  However, litigation is subject to inherent uncertainties, and unfavorable outcomes could occur. An unfavorable outcome could include the payment of monetary damages or, in cases for which injunctive relief is sought, an injunction prohibiting us from selling one or more products or taking certain other actions.  Were an unfavorable outcome to occur, our business or results of operations could be materially harmed.

Item 4. Reserved.

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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock has been quoted on the Nasdaq under the symbol “MWIV” since August 3, 2005. Prior to that date there was no public market for our common stock. The following table sets forth, for the two most recent fiscal years, the high and low sales prices of our common stock, reported by the Nasdaq Global Select Market.

		Common Stock Price
		High		Low
Fiscal Year Ended September 30, 2010
	First Quarter	$	41.30	$	34.06
	Second Quarter	$	45.00	$	36.21
	Third Quarter	$	51.99	$	40.02
	Fourth Quarter	$	58.74	$	46.04
Fiscal Year Ended September 30, 2011
	First Quarter	$	65.84	$	54.61
	Second Quarter	$	80.86	$	59.95
	Third Quarter	$	86.99	$	76.82
	Fourth Quarter	$	90.24	$	65.31

At the close of business on November 14, 2011, we had 12,717,354 shares of common stock issued and outstanding.  As of that date, there were 300 registered holders of record.  This does not reflect beneficial stockholders who hold their stock in nominee or “street” name through brokerage firms.

We have not paid or declared any dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. We intend to retain future earnings to finance the ongoing operations and growth of our business. Any future determination relating to our dividend policy will be made at the discretion of our board of directors and will depend on conditions at that time, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant.  The information contained under the heading “Equity Compensation Plan Information” in Item 12 of this Form 10-K is incorporated herein by reference.

The table below provides information concerning our repurchase of shares of our common stock during the fourth quarter ended September 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
July 1 to July 31, 2011	—			—	—	—
August 1 to August 31, 2011	327	(1)	$	81.24	—	—
September 1 to September 30, 2011	3,901	(1)	$	69.25	—	—
Total	4,228		$	70.18	—	—
(1) These shares were withheld upon the vesting of employee stock grants in connection with payment of required withholding taxes.

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The graph below compares the cumulative total stockholder return on $100 invested at the market close on September 30, 2006 through and including September 30, 2011, the last trading day before the end of our most recently completed fiscal year, with the cumulative total return of the same time period on the same amount invested in the Russell 2000 Index, the Standard and Poor’s SmallCap 600 Index and a Peer Group Index, consisting of 10 companies that compete or operate in a comparable industry as the Company. The chart below the graph sets forth the actual numbers depicted on the graph.

 

	9/30/2006	9/30/2007	9/30/2008	9/30/2009	9/30/2010	9/30/2011
MWI Veterinary Supply, Inc.	$100.00	$112.59	$117.18	$119.15	$172.14	$203.46
S&P SmallCap 600 Index	100.00	113.89	97.01	85.38	96.44	95.59
Russell 2000 Index	100.00	111.01	93.66	83.28	93.18	88.78
Peer Group(1)	100.00	112.31	105.73	106.70	112.41	111.13

(1) Peer Group consists of Amerisourcebergen Corp. (ABC), Cardinal Health Inc. (CAH), Henry Schein Inc. (HSIC), IDEXX Laboratories Inc. (IDXX), Owens & Minor Inc. (OMI), McKesson Corp. (MCK), Patterson Companies Inc. (PDCO), PetMed Express Inc. (PETS), PSS World Medical Inc. (PSSI) and VCA Antech Inc. (WOOF).

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Item 6. Selected Financial Data.

The selected consolidated financial data below represent portions of our financial statements and are not complete. You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes to these statements included in this annual report. Historical results are not necessarily indicative of future performance.

			Year Ended September 30,
			2011		2010		2009		2008		2007
				(In  thousands, except per share data)
Revenues:
	Product sales		$	1,489,500	$	1,169,545	$	880,703	$	778,953	$	664,351
	Product sales to related party			55,185		43,017		46,406		39,452		36,122
	Commissions			20,655		16,780		14,223		12,959		9,632
		Total revenues		1,565,340		1,229,342		941,332		831,364		710,105
Cost of product sales				1,359,755		1,064,339		806,677		711,812		607,756
	Gross profit			205,585		165,003		134,655		119,552		102,349
Selling, general and administrative expenses				130,656		105,793		90,827		84,123		73,215
Depreciation and amortization				6,263		4,992		3,365		3,078		2,424
	Operating income			68,666		54,218		40,463		32,351		26,710
Other income (expense):
	Interest expense			(741)		(539)		(242)		(265)		(545)
	Earnings of equity method investees			268		220		230		179		169
	Other			507		427		540		642		756
		Total other income (expense)		34		108		528		556		380
Income before taxes				68,700		54,326		40,991		32,907		27,090
Income tax expense				(26,120)		(20,886)		(16,086)		(12,990)		(10,215)
Net income			$	42,580	$	33,440	$	24,905	$	19,917	$	16,875
Earnings per common share:
	Basic		$	3.42	$	2.73	$	2.06	$	1.65	$	1.43
	Diluted		$	3.40	$	2.70	$	2.02	$	1.62	$	1.40
Weighted average common shares outstanding:
	Basic			12,464		12,241		12,088		12,053		11,764
	Diluted			12,513		12,395		12,306		12,301		12,044

	As of September 30,
	2011		2010		2009		2008		2007
		(In thousands)
Cash	$	606	$	911	$	14,302	$	3,419	$	8,599
Total assets		504,219		467,932		337,919		314,805		267,194
Total debt		4,170		14,724		97		194		292
Total stockholders’ equity		292,810		246,787		207,927		181,003		160,011

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

All dollar and sterling pound 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.

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. While we expect that the majority of our business will continue to be generated from the companion animal market, we expect that the product mix will shift to an increasing amount of our revenues being generated from sales to the production animal market as a result of the Micro acquisition. The state of the overall economy in both the United States and 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 (e.g. droughts or seasons of higher precipitation) 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.

We believe that the companion animal market in both the United States and 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 United Kingdom are impacted by volatility in commodity prices such as milk, corn, grain and feeder cattle, changes in weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) 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.

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.

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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.

Some of our current and future vendors may decide to compete with us in the future by pursuing or increasing their efforts in direct marketing and sales of their products. These vendors could sell their products at lower prices and maintain a higher gross margin on their product sales than we can. In this event, veterinarians or animal owners may elect to purchase animal health products directly from these vendors.  As an example of this type of event, we were a sales agent for a pet food line for most of fiscal year 2011 that we will not represent in fiscal year 2012 because that manufacturer chose to sell their products direct and not through sales agents.

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.  This trend has slowed some in recent years due to certain changes in vendor contracts but it still remains our largest quarter for vendor 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.

Total Revenues. Our total revenues increased from $710,105 for our fiscal year ended September 30, 2007 to $1,565,340 for our fiscal year ended September 30, 2011. Our revenue growth has been driven primarily from internal growth and, to a lesser extent, selective acquisitions and our ability to offer a broad product selection at competitive prices with high levels of customer service and support and an expansion in the number of veterinary practices to which we distribute products. We have continually added new vendor relationships to expand our product offering and field sales representatives to increase our customer reach, principally in the Southeast, Northeast and Midwest regions of the United States.

Operating Expenses. Our selling, general and administrative expenses increased from $73,215 for our fiscal year ended September 30, 2007 to $130,656 for our fiscal year ended September 30, 2011. Selling, general and administrative expenses consist mainly of compensation and benefits, warehouse operating supplies, occupancy and location expenses and other general corporate expenses. Our selling, general and administrative expenses as a percentage of total revenues were 10.3% for our fiscal year ended September 30, 2007, compared to 8.3% for the same period in 2011.

Acquisitions. In February 2010, we acquired all of the share capital of Centaur.  Based in Castle Cary, England, Centaur is a distributor of animal health products to veterinarians in the United Kingdom.

On March 21, 2011, we acquired substantially all of the assets of Nelson.  Nelson was 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. 

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Fair values of the assets acquired and liabilities assumed as a result of these acquisitions are discussed in Note 3 “Business Acquisitions” to the consolidated financial statements.

On October 31, 2011, subsequent to our fiscal year end, we acquired substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”).  Micro is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies, and other animal health products.  Micro also is a leading innovator of proprietary, computerized management systems for the production animal market.

The assets acquired and the certain liabilities assumed relate to (a) the development and implementation of proprietary computerized systems for feed, health, information and production animal management which include individual animal identification and management, food safety assurance, trace back and process verification systems, (b) ongoing research and development of such systems, and (c) the distribution and sale of micro feed ingredients, animal health products and dairy sanitation solutions.

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Results of Operations

The following tables summarize our historical results of operations for our fiscal years ended September 30, 2011, 2010 and 2009.

			Year Ended September 30,
				2011	%		2010	%		2009	%
				(In  thousands, except per share data)
Revenues:
	Product sales		$	1,489,500	95.2%	$	1,169,545	95.1%	$	880,703	93.6%
	Product sales to related party			55,185	3.5%		43,017	3.5%		46,406	4.9%
	Commissions			20,655	1.3%		16,780	1.4%		14,223	1.5%
		Total revenues		1,565,340	100.0%		1,229,342	100.0%		941,332	100.0%
Cost of product sales				1,359,755	86.9%		1,064,339	86.6%		806,677	85.7%
Gross profit				205,585	13.1%		165,003	13.4%		134,655	14.3%
Selling, general and administrative expenses				130,656	8.3%		105,793	8.6%		90,827	9.6%
Depreciation and amortization				6,263	0.4%		4,992	0.4%		3,365	0.4%
Operating income				68,666	4.4%		54,218	4.4%		40,463	4.3%
Other income (expense):
	Interest expense			(741)	0.0%		(539)	0.0%		(242)	0.0%
	Earnings of equity method investees			268	0.0%		220	0.0%		230	0.0%
	Other			507	0.0%		427	0.0%		540	0.1%
		Total other income (expense)		34	0.0%		108	0.0%		528	0.1%
Income before taxes				68,700	4.4%		54,326	4.4%		40,991	4.4%
Income tax expense				(26,120)	-1.7%		(20,886)	-1.7%		(16,086)	-1.7%
Net income			$	42,580	2.7%	$	33,440	2.7%	$	24,905	2.7%
Earnings per common share:
	Basic		$	3.42		$	2.73		$	2.06
	Diluted		$	3.40		$	2.70		$	2.02
Weighted average common shares
	outstanding:
	Basic			12,464			12,241			12,088
	Diluted			12,513			12,395			12,306

Fiscal 2011 Compared to Fiscal 2010

Total Revenues. Total revenues increased $335,998, or 27.3%, to $1,565,340 for the fiscal year ended September 30, 2011 from $1,229,342 for the fiscal year ended September 30, 2010. Revenue growth in the United States was 21.5% as compared to the fiscal year ended September 30, 2010.  Revenue growth in the United Kingdom was 68.0% as we owned Centaur for the full fiscal year compared to approximately eight months in the same period in the prior fiscal year.  The growth in organic revenues in the United States came primarily 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, the addition of new flea, tick and heartworm products, the acquisition of Nelson and the addition of sales representatives over the past twelve months. Organic revenues in the United States attributable to new customers represented approximately 53% of the growth in total revenues during the fiscal year ended September 30, 2011. Organic revenues in the United States attributable to existing customers represented approximately 47% of the growth in total revenues during the fiscal year ended September 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.

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Commission revenues increased $3,875, or 23.1%, to $20,655 for the fiscal year ended September 30, 2011 from $16,780 for the fiscal year ended September 30, 2010.  The increase of commission revenues was due to the increase in gross agency billings of $42,971, or 13.1%, to $371,024 for the fiscal year ended September 30, 2011 from $328,053 for the fiscal year ended September 30, 2010.  Additionally, the growth in commissions included the achievement of an incentive from one of our vendors during the fiscal year ended September 30, 2011, which was not achieved in the prior fiscal year.

Gross Profit. Gross profit increased $40,582, or 24.6%, to $205,585 for the fiscal year ended September 30, 2011 from $165,003 for the fiscal year ended September 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 for the full fiscal year as compared to approximately eight months in the prior fiscal year.  Gross profit as a percentage of total revenues was 13.1% and 13.4% for the fiscal years ended September 30, 2011 and 2010, respectively.  Gross profit as a percentage of total revenues decreased partially due to the addition of Centaur as well as a slight decrease in the gross margin in the United States.  The gross margin is impacted by 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 increased by $2,362 for the fiscal year ended September 30, 2011 as compared to the fiscal year ended September 30, 2010.  This increase in vendor rebates was primarily due to revenue growth achieved during the fiscal year.

Selling, General and Administrative Expenses (“SG&A”). SG&A increased $24,863, or 23.5%, to $130,656 for the fiscal year ended September 30, 2011 from $105,793 for the fiscal year ended September 30, 2010. This increase was primarily due to the addition of Centaur’s operating expenses for the full fiscal year compared to approximately eight months in the prior fiscal year, increased compensation and benefits costs and increased bank service fees.  Also included in the increase in SG&A expenses are the direct acquisition-related expenses of $861 incurred in connection with acquisitions.  SG&A as a percentage of revenue was 8.3% for the fiscal year ended September 30, 2011 and 8.6% for the fiscal year ended September 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.

Depreciation and Amortization. Depreciation and amortization expense increased $1,271, or 25.5%, to $6,263 for the fiscal year ended September 30, 2011 from $4,992 for the fiscal year ended September 30, 2010. The increase was primarily due to the acquisition of Centaur plus capital expenditures during the year including an office building purchased in Boise, Idaho for our headquarters, equipment for our new distribution center in Visalia, California and other distribution center technology.

Other Income/Expenses. Other income decreased $74, or 67.7%, to $34 for the fiscal year ended September 30, 2011 from $108 for the fiscal year ended September 30, 2010. The decrease in other income was primarily due to an increase in interest expense during the fiscal year ended September 30, 2011 as compared to the same period in the prior year. This was primarily due to a higher average outstanding balance during the fiscal year ended September 30, 2011 on our revolving credit facility compared to the fiscal year ended September 30, 2010 due to borrowings incurred to finance the acquisition of Centaur and Nelson, capital expenditures and an investment made in Cubex LLC, a technology based inventory management business.

Income Tax Expense. Our effective tax rate was 38.0% for the fiscal year ended September 30, 2011 and 38.4% for the fiscal year ended September 30, 2010.  This decrease was primarily due to the impact of the Centaur acquisition that contributed additional earnings at a lower effective tax rate.  Additionally, there was a lower international enacted tax rate change during the quarter ended September 30, 2011.

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Fiscal 2010 Compared to Fiscal 2009

Total Revenues. Total revenues increased $288,010, or 30.6%, to $1,229,342 for the fiscal year ended September 30, 2010 from $941,332 for the fiscal year ended September 30, 2009. Of the 30.6% increase in revenues, 14.1% was due to organic growth in the United States and 16.5%, or $155,116 was from the acquisition of Centaur.  The organic growth was partially due to the increase in revenues, starting in our second fiscal quarter, from the sale of flea, tick and heartworm products that we did not sell in the same period of the prior fiscal year 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.  The organic growth was also due to the fact that, starting in the latter part of our third fiscal quarter, certain of our existing customers as well as new customers placed additional orders with us when their primary supplier was no longer able to meet their needs.  Organic revenues attributable to new customers represented approximately 62% of the growth in total revenues during the fiscal year ended September 30, 2010. Organic revenues attributable to existing customers represented approximately 38% of the growth in total revenues during the fiscal year ended September 30, 2010. 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.

Commission revenues increased $2,557, or 18.0%, to $16,780 for the fiscal year ended September 30, 2010 from $14,223 for the fiscal year ended September 30, 2009.  The increase of commission revenues was due to the increase in gross agency billings of $58,996, or 21.9%, to $328,053 for the fiscal year ended September 30, 2010 from $269,057 for the fiscal year ended September 30, 2009.  The increase was partially due to the additional flea, tick and heartworm contracts that we entered into after the exclusive arrangement with Merial ended in January 2010.

Gross Profit. Gross profit increased $30,348, or 22.5%, to $165,003 for the fiscal year ended September 30, 2010 from $134,655 for the fiscal year ended September 30, 2009. The change in gross profit is primarily a result of increased total revenues as discussed above including the additional gross profit from Centaur starting from the acquisition date.  Gross profit as a percentage of total revenues was 13.4% and 14.3% for the fiscal years ended September 30, 2010 and 2009, respectively.  Gross profit as a percentage of total revenues decreased partially 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 decreased by $684 for the fiscal year ended September 30, 2010 as compared to the fiscal year ended September 30, 2009.  This decrease in vendor rebates was primarily due to the elimination of the Pfizer livestock rebate opportunity in the quarter ended December 31, 2009 as well as a rebate earned during the quarter ended September 30, 2009 from a vendor that is no longer in business.  These decreases were partially offset by increases in rebates from other vendors due to the revenue growth previously discussed.

Selling, General and Administrative Expenses. SG&A increased $14,966, or 16.5%, to $105,793 for the fiscal year ended September 30, 2010 from $90,827 for the fiscal year ended September 30, 2009. This increase was primarily due to the addition of Centaur’s operating expenses starting from the acquisition date and increased compensation and benefits costs, partially offset by a decrease in our bad debt expense as a result of payments made by certain customers.  Also included in the increase in SG&A expenses are the direct acquisition-related expenses of $1,100 incurred in connection with the acquisition of Centaur.  SG&A as a percentage of revenue was 8.6% for the fiscal year ended September 30, 2010 and 9.6% for the fiscal year ended September 30, 2009.  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.

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Depreciation and Amortization. Depreciation and amortization expense increased $1,627, or 48.4%, to $4,992 for the fiscal year ended September 30, 2010 from $3,365 for the fiscal year ended September 30, 2009. The increase was primarily due to the acquisition of Centaur.

Other Income/Expenses. Other income decreased $420, or 79.5%, to $108 for the fiscal year ended September 30, 2010 from $528 for the fiscal year ended September 30, 2009. The decrease in other income was primarily due to an increase in interest expense during the fiscal year ended September 30, 2010 as compared to the same period in the prior year. This was primarily due to a higher average outstanding balance during the fiscal year ended September 30, 2010 on our revolving credit facility compared to the fiscal year ended September 30, 2009 due to borrowings incurred to finance the acquisition of Centaur.

Income Tax Expense. Our effective tax rate was 38.4% for the fiscal year ended September 30, 2010 and 39.2% for the fiscal year ended September 30, 2009.  This decrease was primarily due to the impact of the Centaur acquisition that contributed additional earnings at a lower effective tax rate.  Additionally, there was a lower international enacted tax rate change during the quarter ended September 30, 2010.

Seasonality in Operating Results

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. The sales of production animal products can vary due to changes in commodity prices and weather patterns (e.g. droughts or seasons of higher precipitation that determine how long cattle will graze) which may also affect seasonality.  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 vendors’ and distributors’ marketing programs or price increase announcements, 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. See “Risk Factors — Our quarterly operating results may fluctuate significantly, and these fluctuations may cause our stock price to fall.” Additionally, while we accrue rebates as they are earned, our rebates have historically been highest during the quarter ended December 31, since some of our vendors’ rebate programs were designed to include targets to be achieved near the end of the calendar year.  This trend has slowed some in recent years due to certain changes in vendor contracts but it still remains our largest quarter for vendor rebates.

Our companion animal products tend to have a different product use cycle that minimally overlaps with that of production animal products. In the companion animal market, sales of flea, tick and mosquito products are highest during the spring and summer months. The differing product use cycles of companion animal products partially offsets the seasonality we typically experience due to our sales of production animal products.

For the reasons and factors discussed above our quarterly operating results may fluctuate significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year and our sales for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. If this occurs, the price of our stock would likely decrease.

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.

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. 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. Volatility in commodity prices, such as milk, corn, grain and feeder cattle, and deteriorating economic conditions can have a significant impact on the financial results of our customers. We continually assess our customers’ ability to pay us and adjust our allowance for doubtful accounts, as necessary.

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Capital Resources.  On November 1, 2011, MWI Veterinary Supply Co. as borrower, entered into a Third Amendment to Credit Agreement (the “Third Amendment”) with MWI Veterinary Supply, Inc. and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. as lenders (collectively, the “Lenders”), amending the Credit Agreement dated December 13, 2006, and as amended from time to time, by and among MWI Veterinary Supply Co., MWI Veterinary Supply, Inc., Memorial Pet Care, Inc. and the Lenders (the  “Credit Agreement”).  The Third Amendment increased the aggregate revolving commitment of the Lenders under the Credit Agreement from $100,000 to $150,000 and extended the maturity date of the Credit Agreement from March 1, 2013 to November 1, 2016.  Under the Third Amendment, the margin on variable interest rate borrowings now ranges from 0.95% to 1.50%.  The margin previously ranged from 1.50% to 2.25% under the Second Amendment.  The Third Amendment also reduced the commitment fee from a range of 0.2% to 0.35% to a range of 0.15% to 0.25% depending on the funded debt to EBITDA ratio.  As of September 30, 2011, the Second Amendment to the Credit Agreement provided that the aggregate revolving commitment of the Lenders was $100,000.  The maturity date of the loans under the facility was March 1, 2013.  The variable interest rate was 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 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 September 30, 2011 and 2010.  Our outstanding balance on the revolving credit facility in the United States at September 30, 2011 was $0, and the interest rate was 1.61% as of September 30, 2011.

On November 5, 2010, Centaur terminated its credit facility with Fortis Bank 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 outstanding balance at September 30, 2011 on the sterling revolving credit facility was £1,861, or $2,907 using the exchange rate on September 30, 2011.  The interest rate for the sterling revolving credit facility was 1.69% as of September 30, 2011.  The facility contains financial covenants requiring Centaur to maintain a minimum tangible net worth of £3,000.  As of September 30, 2011, Centaur was in compliance with the covenant.

Operating Activities. For fiscal year ended September 30, 2011, cash provided by operating activities was $32,428, and was primarily attributable to net income of $42,580 and a decrease in inventory of $8,553.  This amount was partially offset by an increase in receivables of $23,021 and a decrease in accounts payable of $5,150.  The increase in net income is a result of the factors discussed above in “Results of Operations.”  The increase in receivables was primarily due to the revenue growth during the fiscal year.  The decreases in inventories and accounts payable were primarily due to the a decrease during the fiscal year ended September 30, 2011 to a more normalized level after we had made large purchases near the end of the fiscal year ended September 30, 2010 to accommodate the additional orders from new customers when their primary supplier was no longer able to meet their needs.

For fiscal year ended September 30, 2010, cash provided by operating activities was $16,866, and was primarily attributable to net income of $33,440 and an increase in accounts payable of $39,781.  This amount was partially offset by an increase in receivables of $14,154 and an increase in inventory of $41,106.  The increase in net income is a result of the factors discussed above in “Results of Operations.”  The increase in receivables was primarily due to the addition of the Centaur balances from the acquisition.  The increases in inventories and accounts payable were primarily due to the inventory purchased during the quarter to accommodate the growth from our customers who placed additional orders with us when their primary supplier was no longer able to meet their needs.

For fiscal year ended September 30, 2009, cash provided by operating activities was $11,939, and was primarily attributable to net income of $24,905, a decrease in inventory of $2,072 and an increase in accrued expenses of $2,091.  This amount was partially offset by an increase in receivables of $14,019 and a decrease in accounts payable of $4,712.  The increase in net income is a result of the factors discussed above in “Results of Operations.” The increase in accounts receivable is primarily related to the increase in sales as well as an increase in receivables with extended payment terms due to a vendor promotion offered during the fourth quarter of fiscal year 2010.  We provide financing terms to our customers that we believe are customary for our industry.  There are occasions when we offer extended terms based on market conditions and customer demand.  Our inventory levels decreased in the current year due to focused inventory management.  Our accounts payable decreased primarily due to the decrease in inventory and the timing of payments for inventory.

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Investing Activities.For fiscal year ended September 30, 2011, net cash used in investing activities was $25,509.  We paid $7,000 for the acquisition of Nelson plus $2,000 was placed in escrow for the acquisition of Micro, which closed on October 31, 2011.  We paid for capital expenditures of $12,516 which primarily related to an office building purchased in Boise, Idaho for our headquarters, equipment for our new distribution centers in Visalia, California and Harrisburg, Pennsylvania to accommodate the growth needs in those regions and other distribution center technology.  Additionally, we made an investment in Cubex LLC, a technology based inventory management business, of $4,000.

For fiscal year ended September 30, 2010, net cash used in investing activities was $44,090.  Significant transactions impacting cash used in investing activities include the acquisition of Centaur of $39,645, capital expenditures of $4,388 primarily related to the equipment purchased in preparation for the move to a larger distribution center in Visalia, California as well as other facility and technology infrastructure improvements.

For fiscal year ended September 30, 2009, net cash used in investing activities was $2,520.  Significant transactions impacting cash used in investing activities include capital expenditures of $2,662 primarily related to the relocation of our distribution center in Grand Prairie, Texas and the opening of our distribution center in Whitestown, Indiana.  Additionally, we continued to improve our information technology infrastructure.

Financing Activities.  For fiscal year ended September 30, 2011, net cash provided by financing activities was $7,291, and was primarily attributable to the net payments on our credit facilities of $7,188.  Our revolving credit facilities are used to fund strategic acquisitions, make capital purchases and meet our working capital requirements.  Additionally, we paid $3,327 in debt payments for the note payable related to the Centaur acquisition, the term note for Centaur and capital lease obligations.  This was largely offset by the excess tax benefit of exercise of common stock options of $2,714.

For fiscal year ended September 30, 2010, net cash provided by financing activities was $13,785, and was primarily attributable to the borrowings on our credit facilities of $10,116 and the tax benefit of $3,611 from the exercise of common stock options.

For fiscal year ended September 30, 2009, net cash provided by financing activities was $1,464, and was primarily attributable to the tax benefit of $1,178 from the exercise of common stock options. We had proceeds of $143 from the stock option exercises and $240 related to the sale of stock under our employee stock purchase plan.

Off Balance Sheet Arrangements.  At September 30, 2011, we had no significant investments that were accounted for under the equity method in accordance with accounting principles generally accepted in the United States except for Feeders Advantage. Feeders Advantage has no liabilities associated with them that were guaranteed by or that would be considered material to us. Accordingly, we do not have any off balance sheet arrangements.

Contractual Obligations

 Contractual Obligations.  Our contractual obligations at September 30, 2011 mature as follows (in thousands):

	Payments Due by Period
	Total	1 Year or less		2-3 Years		4-5 Years		More than 5 Years
Revolving credit facilities(1)	$2,907		$  2,907		$—		$—		$     —
Operating lease commitments	22,337		3,286		5,522		4,115		9,414
Capital lease commitments	1,263		909		339		15		—
Interest on revolving credit facilities(2)	1,121		251		453		400		17
Other long-term obligations(3)	578		461		47		47		23
Total contractual obligations	$28,206		$  7,814		$6,361		$4,577		$ 9,454

38

 (1) The balance on our revolving credit facilities at September 30, 2011 was $2,907.  The terms of the revolving credit facilities do not require payment until the maturity date which was beyond fiscal year 2012.  However, we have classified this as a current liability as it was our intent to pay the amount owed as of September 30, 2011 in the next twelve months.  Due to the borrowings incurred as a result of the acquisition of Micro, our balance on our revolving credit facilities as of October 31, 2011 was $46,876.

(2) For debt instruments with variable interest rates and unused commitment fees, interest has been calculated for all future periods using the rates in effect at September 30, 2011.  As of October 31, 2011 the balance for the revolving credit facility in the United States was $45,100 due to the acquisition of Micro.  Assuming that this balance was outstanding to maturity, the interest on long-term debt and revolving credit facility would change to a total of $3,366 with $663 due in year 1, $1,351 in 2-3 years, $1,298 in 4-5 years and $54 thereafter.

(3) Other long-term obligations include contracts primarily related to information technology services and telecommunications.  This also includes $49, which is an estimate of certain tax positions that are expected to be settled within the next fiscal year.

 Guarantees.We provide guarantees, indemnifications and assurances to others in the ordinary course of our business. We have evaluated our agreements that contain guarantees and indemnification clauses in accordance with the guidance of financial accounting rules.

We enter into a wide range of indemnification arrangements in the ordinary course of business. These include tort indemnities, tax indemnities, indemnities against third party claims arising out of arrangements to provide services to us, indemnities in merger and acquisition agreements and indemnities in agreements related to the sale of our securities. Also, our governance documents and the governance documents of all of our subsidiaries provide for the indemnification of individuals made party to any suit or proceeding by reason of the fact that the individual was acting as an officer, director or agent of the relevant company or as a fiduciary of a company-sponsored welfare benefit plan. We also provide guarantees and indemnifications for the benefit of our wholly-owned subsidiaries for the satisfaction of performance obligations, including certain lease obligations. We are not aware of any material liabilities arising from these indemnification arrangements.

Inflation

Most of our operating expenses are inflation-sensitive, with inflation generally producing increased costs of operations.  During the past three years, the most significant effects of inflation have been on employee wages, costs of products and fuel-intensive costs including freight, packing supplies and travel.  We manage the effects of inflation by controlling increases in compensation expense, renegotiating freight carrier contracts and utilizing a central source for warehouse shipping supplies.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to 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 and contingencies. We base our estimates on historical experience and on various other assumptions and factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We, based on our ongoing review, will make adjustments to our judgments and estimates where facts and circumstances dictate. Historically, actual results have not significantly deviated from those determined using the estimates described above.

We believe the following critical accounting policies are important to understand our financial condition and results of operations and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

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Revenue Recognition

We sell products that 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 and 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 sales returns based on historical experience, and returns are recognized as a reduction of product sales. Product returns have not been significant to our financial statements. In an agency relationship, we generally do not purchase and take inventory of products from our 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.

Vendor Rebates

Vendor rebates are recorded based on the terms of the contracts with each vendor. We may receive quarterly, semi-annual and annual performance-based rebates from third-party vendors based upon attainment of certain sales and/or purchase goals. Sales rebates 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, 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.

Customer Incentives

Customer incentives are accrued based on the terms of the contracts with each customer. These incentive programs provide that the customer receives an incentive based on their product purchases or attainment of performance goals. Incentives are estimated based on the specific terms in each agreement, historical experience and product growth rates.  The incentives are recognized as a reduction of product sales.

Goodwill and Intangible Assets

We assess the potential impairment of goodwill and non-amortizing intangible assets annually and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that we consider important and may trigger an interim impairment review include:

· significant underperformance relative to expected historical or projected future operating results;

· significant changes in the manner of our use of acquired assets or the strategy of our overall business; and

· significant negative industry or economic trends.

If we determine through the impairment review process that goodwill or non-amortizing intangible assets are impaired, an impairment charge is recognized in our consolidated statement of income.

Goodwill and non-amortizing intangible assets were evaluated for impairment in our fourth quarter of 2011 and we determined that the recorded amount was not impaired. The fair value calculations used for these tests require us to make assumptions about items that are inherently uncertain. Assumptions related to future market demand, market prices and product costs could vary from actual results, and the impact of such variations could be material. Factors that could affect the assumptions include changes in economic conditions, changes in government regulations, success in marketing products and competitive conditions in our industry. The factors that most significantly affect the fair value calculation are market multiples and estimates of future cash flows. Fair value was determined using the discounted cash flow method.

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Recently Issued and New Accounting Pronouncements

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.

Item 7A. 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 U.K. subsidiary Centaur.  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 fiscal 2011 net sales by approximately $26 million. 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 in the United States as of September 30, 2011 was $0.  Therefore, there was no exposure to market risks as of this date.  If there had been a balance on the facility of $150,000, which is the maximum available amount on the facility under the Third Amendment effective November 1, 2011, a change of 10% from the interest rate as of November 1, 2011, which was approximately 1.09% (Daily LIBOR Floating Rate plus a margin of .95%), would have changed interest by $164 for fiscal year 2011.

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Item 8. Financial Statements and Supplementary Data.

MWI Veterinary Supply, Inc.

Index to Consolidated Financial Statements

	Page Number
Report of Independent Registered Public Accounting Firm	43
Consolidated Statements of Income for the years ended September 30, 2011, 2010 and 2009	44
Consolidated Balance Sheets as of September 30, 2011 and 2010	45
Consolidated Statements of Stockholders’ Equity for the years ended September 30, 2011, 2010 and 2009	46
Consolidated Statements of Cash Flows for the years ended September 30, 2011, 2010 and 2009	47
Notes to Consolidated Financial Statements	48

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

MWI Veterinary Supply, Inc.

Boise, Idaho

We have audited the accompanying consolidated balance sheets of MWI Veterinary Supply, Inc. and subsidiaries (the "Company") as of September 30, 2011 and 2010, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended September 30, 2011.  Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(a)2.  These consolidated financial statements and consolidated financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of September 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2011, in conformity with accounting principles generally accepted in the United States of America.  Also, in our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of September 30, 2011, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 28, 2011, expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Boise, Idaho

November 28, 2011

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MWI VETERINARY SUPPLY, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended September 30, 2011, 2010 and 2009
Dollars and shares in thousands, except per share amounts
			2011		2010		2009
Revenues:
	Product sales		$	1,489,500	$	1,169,545	$	880,703
	Product sales to related party			55,185		43,017		46,406
	Commissions			20,655		16,780		14,223
		Total revenues		1,565,340		1,229,342		941,332
Cost of product sales				1,359,755		1,064,339		806,677
Gross profit				205,585		165,003		134,655
Selling, general and administrative expenses				130,656		105,793		90,827
Depreciation and amortization				6,263		4,992		3,365
Operating income				68,666		54,218		40,463
Other income (expense):
	Interest expense			(741)		(539)		(242)
	Earnings of equity method investees			268		220		230
	Other			507		427		540
		Total other income (expense), net		34		108		528
Income before taxes				68,700		54,326		40,991
Income tax expense				(26,120)		(20,886)		(16,086)
Net income			$	42,580	$	33,440	$	24,905
Earnings per common share:
	Basic		$	3.42	$	2.73	$	2.06
	Diluted		$	3.40	$	2.70	$	2.02
Weighted average common shares outstanding:
	Basic			12,464		12,241		12,088
	Diluted			12,513		12,395		12,306
See notes to consolidated financial statements

44

MWI VETERINARY SUPPLY, INC.
CONSOLIDATED BALANCE SHEETS
As of September 30, 2011 and 2010
Dollars and shares in thousands, except per share amounts
				2011		2010
Assets
Current Assets:
	Cash and cash equivalents		$	606	$	911
	Receivables, net			215,861		189,428
	Inventories			170,065		175,292
	Prepaid expenses and other current assets			10,079		8,729
	Deferred income taxes			1,672		1,556
		Total current assets		398,283		375,916
Property and equipment, net				25,209		15,238
Goodwill				49,041		47,330
Intangibles, net				24,894		26,710
Other assets, net				6,792		2,738
Total assets			$	504,219	$	467,932
Liabilities And Stockholders’ Equity
Current Liabilities:
	Credit facilities		$	2,907	$	10,140
	Accounts payable			182,594		183,604
	Accrued expenses			16,385		15,118
	Note payable			-		2,000
	Current maturities of long-term debt and capital lease obligations			909		1,631
		Total current liabilities		202,795		212,493
Deferred income taxes				5,989		5,310
Long-term debt and capital lease obligations				354		953
Other long-term liabilities				2,271		2,389
Commitments and contingencies (See Note 12)
Stockholders’ Equity
Common stock $0.01 par value, 40,000 authorized; 12,618 and
	12,457 shares issued and outstanding, respectively			126		125
Additional paid in capital				133,759		129,675
Retained earnings				159,488		116,908
Accumulated other comprehensive income				(563)		79
	Total stockholders’ equity			292,810		246,787
Total liabilities and stockholders’ equity			$	504,219	$	467,932
See notes to consolidated financial statements

45

MWI VETERINARY SUPPLY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Years Ended September 30, 2011, 2010 and 2009
Dollars and shares in thousands
		Shares of			Additional		Accum.
		Common	Common		Paid In		Other Comp.		Retained
		Stock	Stock		Capital		Inc/(Loss)		Earnings		Total
Balance at October 1, 2008		12,098	$	121	$	122,319	$	—	$	58,563	$	181,003
Net income		—		—		—		—		24,905		24,905
Issuance of common stock		9		—		240		—		—		240
Exercises of common stock options		81		1		142		—		—		143
Tax benefit of common stock exercises		—		—		1,178		—		—		1,178
Issuance of stock awards, net of forfeitures		8		—		458		—		—		458
Balance at September 30, 2009		12,196		122		124,337		—		83,468		207,927
Net income		—		—		—		—		33,440		33,440
Issuance of common stock		6		—		248		—		—		248
Exercises of common stock options		199		2		401		—		—		403
Tax benefit of common stock exercises		—		—		3,611		—		—		3,611
Issuance of stock awards, net of forfeitures		56		1		1,078		—		—		1,079
Foreign currency translation		—		—		—		536		—		536
Other		—		—		—		(457)		—		(457)
Balance at September 30, 2010		12,457		125		129,675		79		116,908		246,787
Net income		—		—		—		—		42,580		42,580
Issuance of common stock		6		—		412		—		—		412
Exercises of common stock options		102		1		97		—		—		98
Tax benefit of common stock exercises		—		—		2,714		—		—		2,714
Issuance of stock awards, net of forfeitures		53		—		861		—		—		861
Foreign currency translation		—		—		—		(663)		—		(663)
Other		—		—		—		21		—		21
Balance at September 30, 2011		12,618	$	126	$	133,759	$	(563)	$	159,488	$	292,810
	See notes to consolidated financial statements

46

MWI VETERINARY SUPPLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 2011, 2010 and 2009
Dollars in thousands
					2011		2010		2009
Cash Flows From Operating Activities:
	Net income				$	42,580	$	33,440	$	24,905
	Adjustments to reconcile net income to net cash provided by operating
	activities:
		Depreciation and amortization				6,284		5,004		3,377
		Amortization of debt issuance costs				65		58		43
		Stock-based compensation				831		1,088		482
		Deferred income taxes				597		249		(161)
		Earnings of equity method investees				(268)		(220)		(230)
		Excess tax benefit of exercise of common stock options				(2,714)		(3,611)		(1,178)
		(Gain)/loss on disposal of property and equipment				-		(11)		29
		Pension payment				-		(2,047)		-
		Other				(76)		97		-
		Changes in operating assets and liabilities (net of effects of business acquisitions):
			Receivables			(23,021)		(14,154)		(14,019)
			Inventories			8,553		(41,106)		2,072
			Prepaid expenses and other current assets			3,398		(2,419)		(760)
			Accounts payable			(5,150)		39,781		(4,712)
			Accrued expenses			1,349		717		2,091
				Net cash provided by operating activities		32,428		16,866		11,939
Cash Flows From Investing Activities:
		Business acquisitions, net of cash acquired in 2010 of $674				(9,000)		(39,645)		117
		Purchases of property and equipment				(12,516)		(4,388)		(2,662)
		Other investments				(3,993)		(57)		25
				Net cash used in investing activities		(25,509)		(44,090)		(2,520)
Cash Flows From Financing Activities:
		Borrowings on line-of-credit				249,978		151,616		183,300
		Payments on line-of-credit				(257,166)		(141,500)		(183,300)
		Proceeds from issuance of common stock				412		248		240
		Proceeds from exercise of common stock options				98		403		143
		Excess tax benefit of exercise of common stock options				2,714		3,611		1,178
		Payment of debt issuance costs				-		(116)		-
		Payment on long-term debt and capital lease obligations				(3,327)		(477)		(97)
				Net cash (used in)/provided by financing activities		(7,291)		13,785		1,464
Effect of exchange rate on Cash and Cash Equivalents						67		48		-
Net (Decrease)/Increase in Cash and Cash Equivalents						(305)		(13,391)		10,883
Cash and Cash Equivalents at Beginning of Period						911		14,302		3,419
Cash and Cash Equivalents at End of Period					$	606	$	911	$	14,302
See notes to consolidated financial statements

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MWI VETERINARY SUPPLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

1. Business Description and Basis of Presentation

MWI Veterinary Supply, Inc. is a leading distributor of animal health products to veterinarians in the United States and United Kingdom. We sell our products to veterinarians in both the companion and production animal markets. We operate thirteen distribution centers located across the United States and one distribution center in the United Kingdom.

2. Summary of Significant Accounting Policies

Principles of Consolidation — The accompanying consolidated financial statements consist of MWI Veterinary Supply, Inc. and its wholly-owned subsidiaries, collectively referred to herein as “MWI.” All intercompany transactions have been eliminated.  We use the equity method of accounting for our investments in entities in which we have significant influence; generally this represents an ownership interest between 20% and 50%. Our share of income or loss from these investments is reported as increases or decreases in the respective investment with a corresponding amount reported as other income.

Basis of Accounting and Use of Estimates — The accompanying 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 from these estimates. Estimates are used when accounting for 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, 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.

Segment Information — We are a distributor of animal health products to veterinarians. Our financial results are disclosed as one reportable segment.  We identified two operating segments based on geographic areas but aggregate based on applicable accounting standards.  We determined that the two operating segments have similar operating margins and are expected to maintain this similarity into the future.  Additionally, our products, customers, operations, delivery to market and regulatory environments are all similar in nature.

Foreign Currency Translation — For our international operations, local currencies have been determined to be the functional currencies.  We translate functional currency assets and liabilities to their U.S. dollar equivalents at rates in effect at the balance sheet date and record these translation adjustments in Stockholders’ equity – Accumulated other comprehensive income/(loss).  We translate functional currency statement of income amounts to their U.S. dollar equivalents at average rates for the period.

Other Comprehensive Income — Comprehensive income includes cumulative foreign currency translation adjustments and actuarial adjustments on pension valuation. Comprehensive income has been reflected in the consolidated statements of stockholders’ equity and in Note 15 – Other Comprehensive Income.

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 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 $371,024, $328,053 and $269,057 for the years ended September 30, 2011, 2010 and 2009, respectively, and generated commission revenue of $20,655, $16,780 and $14,223 for the years ended September 30, 2011, 2010 and 2009, respectively.

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Cost of Product Sales and Vendor Rebates — Cost of product sales consist of our inventory product cost, including shipping costs to and from our distribution centers. Costs of fulfillment are included in selling, general and administrative costs. Vendor rebates are recorded based on the terms of the contracts or programs with each vendor. We receive quarterly, semi-annual and 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 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.

Customer Incentives — Customer incentives are accrued based on the terms of the contracts with each customer. These incentive programs provide that the customer receive an incentive based on their product purchases or attainment of performance goals. Incentives are estimated based on the specific terms in each agreement, historical experience and product growth rates.  Incentives are recognized as a reduction to product sales.

Cash and Cash Equivalents  — Cash equivalents consist of highly liquid investments with a maturity of three months or less from the date of purchase. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment.

Inventories — Inventories, consisting of pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies and nutritional products, are stated at the lower of cost (on a moving-average basis) or market.

Property and Equipment — Property and equipment are stated at cost and depreciation is computed using the straight-line method over the estimated useful lives, which includes the shorter of useful life or lease term for leasehold improvements, of the related assets as follows:

Buildings	25 to 35 years
Machinery, furniture and equipment	3 to 7 years
Computer equipment	3 to 7 years
Leasehold improvements	1 to 10 years

The cost and accumulated depreciation of items sold or retired are removed from the property accounts and any resulting gain or loss is reflected in net income. Repairs and maintenance are expensed as incurred and improvements are capitalized.

We periodically review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Goodwill and Intangible Assets — We recognize the excess purchase price over the fair value of net assets acquired and liabilities assumed in a business combination as goodwill on the consolidated balance sheet. We perform an annual impairment test on goodwill as of September 30th each year.  We calculate the fair value of each reporting unit using a discounted cash flow analysis and compare the fair value to its book value.  There were no indicators during this evaluation that would require additional testing.  We have concluded that there was no impairment during the fiscal years ended September 30, 2011, 2010 and 2009. This impairment tests will continue to be performed at least annually and more frequently if circumstances indicate a possible impairment.

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Identifiable intangible assets primarily include trademarks, patents, customer relationships and covenants not to compete and are amortized, as necessary, over their useful lives or contractual term which range from 1-20 years.  We review identifiable intangible assets at least annually for impairment or when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Other Assets — Included in other assets are our equity method investments and investments in entities accounted for under the cost method of accounting. We periodically evaluate these investments for other-than-temporary impairment using both qualitative and quantitative criteria, or when indicators of impairment are noted. In the event an investment is deemed to be other-than-temporarily impaired, we would recognize the loss component in the consolidated statements of income.  Other assets also consist of debt issuance costs that are being amortized over the life of the related debt.

Earnings Per Common Share — Basic earnings per common share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per common share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. Potential common shares that would increase earnings per share amounts are antidilutive and are, therefore, excluded from the earnings per common share computations. Earnings per common share is computed separately for each period presented.

Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized to provide for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are measured using enacted tax rates in effect during the years in which the temporary differences are expected to reverse.

Concentrations of Risk — Our financial instruments that are exposed to concentrations of credit risk consist primarily of our receivables. Our customers are geographically dispersed throughout the United States and United Kingdom. We routinely assess the financial strength of our customers and review their credit history before extending credit. In addition, we establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Product sales to Banfield were approximately 6% of our total product sales in fiscal year 2011, 9% in fiscal year 2010 and 11% in fiscal year 2009. Product sales to Feeders’ Advantage, a related party (See Note 13), were approximately 4% of our total product sales in fiscal year 2011 and 2010 and 5% of our total product sales in 2009.

Advertising — Advertising costs are expensed when incurred and are included as part of selling, general and administrative expenses. Advertising costs were $723, $717 and $783 in fiscal years 2011, 2010 and 2009, respectively.

Recently Issued and New Accounting Pronouncements — 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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3. Business Acquisitions

On February 8, 2010, MWI Veterinary Supply Co. (“MWI Co.”) purchased all of the outstanding share capital of Centaur Services Limited (“Centaur”), based in the United Kingdom for a purchase price of $44,053, consisting of $42,053 in cash and $2,000 in a note payable due in one year.  Subsequent to the acquisition of Centaur, we funded $2,047 to the pension plan as required by the terms of the share purchase agreement.  The purchase price was reduced subsequent to the acquisition date by $1,868 as a result of a post-closing working capital and debt adjustment.  Centaur is a supplier of animal health products to veterinarians in the United Kingdom.  Centaur sells 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.  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.

On March 21, 2011, 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.

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

		2011		2010		2009
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)		1,823		9,483		(117)
Intangibles		140		17,658		-
Total assets acquired		11,498		83,771		(117)
Accounts payable		4,498		25,811		-
Accrued expenses		-		5,299		-
Other liabilities		-		10,476		-
Total liabilities assumed		4,498		41,586		-
Net assets acquired (2)	$	7,000	$	42,185	$	(117)
(1) Amount in 2009 relates to a post-closing working capital adjustment for the AAHA MarketLink acquisition.
(2) Net assets acquired does not include $2,000 paid in fiscal year 2011 to an escrow account for the acquisition of Micro.

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 The following table presents supplemental pro forma information for the Company as if the acquisition of Centaur had occurred on October 1, 2009 for the period ended September 30, 2010 and on October 1, 2008 for the period ended September 30, 2009 (unaudited):

		Unaudited Pro Forma Consolidated Results
		Fiscal year ended September 30,
		2010		2009
Revenues	$	1,314,046	$	1,154,761
Net Income	$	34,726	$	27,213

For the pro forma calculation, we used an average foreign currency exchange rate for each of the periods 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 and on October 1, 2008.  Additionally, the unaudited pro forma consolidated results do not purport to project the future results of operations of the combined company.

4. Receivables

Receivables consist of the following at September 30:

		2011		2010
Trade	$	203,038	$	177,317
Vendor rebates and programs		15,404		14,681
		218,442		191,998
Allowance for doubtful accounts		(2,581)		(2,570)
	$	215,861	$	189,428

Approximately 8% of our trade receivables resulted from transactions with a single customer as of September 30, 2011 and 2010.

5. Property and Equipment

Property and equipment consists of the following at September 30:

		2011		2010
Land	$	1,723	$	261
Building and leasehold improvements		13,427		5,870
Machinery, furniture and equipment		20,979		17,495
Computer equipment		5,864		4,886
Construction in progress		2,203		1,626
		44,196		30,138
Accumulated depreciation and amortization		(18,987)		(14,900)
	$	25,209	$	15,238

We recorded depreciation expense of $4,501, $3,692 and $2,546 for the years ended September 30, 2011, 2010 and 2009, respectively.

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6. Goodwill and Intangibles

The changes in the carrying value of goodwill for the fiscal years ended September 30, 2011 and 2010 are as follows:

		2011		2010
Goodwill - Beginning of year	$	47,330	$	37,610
Acquisition activity		1,823		9,483
Other  (1)		(112)		237
Goodwill - End of year	$	49,041	$	47,330
(1) In fiscal year 2011, Other relates to foreign exchange.  In fiscal year 2010, Other relates to foreign exchange and contingent consideration payment to the former Securos shareholders for the achievement of defined financial targets.

Intangible assets consist of the following as of September 30:

		Useful Lives	2011		2010
Amortizing:
	Customer relationships	9-20 years	$	24,981	$	25,027
	Covenants not to compete	1-5 years		808		811
	Other	3-5 years		455		458
				26,244		26,296
Accumulated amortization				(5,109)		(3,361)
				21,135		22,935
Non-Amortizing:
	Trade names and patents			3,759		3,775
			$	24,894	$	26,710

We recorded amortization expense of $1,783, $1,312 and $831 for the years ended September 30, 2011, 2010 and 2009, respectively.  Estimated amortization expense related to intangible assets as of September 30, 2011 is as follows:

	Amount
2012	$	1,607
2013		1,542
2014		1,511
2015		1,358
2016		1,261
Thereafter		13,856
	$	21,135

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7. Debt

Outstanding debt consists of the following as of September 30:

		2011		2010
Revolving credit facility, 1.61% as of September 30, 2011		$	-	$	9,600
Sterling revolving credit facility, 1.63% as of September 30, 2011			2,907		540
Note payable (1)			-		2,000
Capital lease obligations (2)			1,263		1,811
Term note			-		773
Total debt and capital lease obligations			4,170		14,724
	Less: Long-term debt and capital lease obligations		(354)		(953)
Total debt included in current liabilities		$	3,816	$	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 commitment fee ranged from 0.2% to 0.35% depending on the funded debt to EBITDA ratio.  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 September 30, 2011 and 2010.  This facility was amended on November 1, 2011.  See Note 19 – Subsequent events.

Sterling Revolving Credit Facility— 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 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.  As of September 30, 2011, Centaur was in compliance with the covenant.

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 credit facility was terminated on November 5, 2010.  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%.

8. 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. At September 30, 2011 and 2010, we had 67,032 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.

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2005 Stock Plan

We have a 2005 Stock-Based Award and Incentive Compensation Plan (the “2005 Plan”), under which we may offer restricted 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. At September 30, 2011 and 2010 we had 932,438 and 991,970 shares, respectively, of our common stock available for issuance under the 2005 Plan.

The 2005 Plan permits us to grant stock options (both incentive stock options and non-qualified stock options), restricted 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.

A summary of common stock options activity under the 2002 and 2005 Plans are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	exercise		of		exercise		of		exercise
	Shares	price		Shares		price		Shares		price
Outstanding at beginning of year	139,550	$	4.65		339,404	$	3.11		420,898	$	2.87
Exercised	(102,128)		0.96		(199,670)		2.02		(81,004)		1.77
Cancelled or expired	(37)		17.00		(184)		17.00		(490)		17.57
Outstanding at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11
Exercisable at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11

	Outstanding and exercisable options
			Weighted
			average
			remaining		Weighted
			contractual		average
		Number of	life		exercise
Range of exercise prices		Shares	(in years)		price
$ 0.18 - $16.99		6,592		0.7	$	0.18
$17.00 - $19.99		25,823		3.8	$	17.00
$20.00 - $22.60		4,970		4.0	$	22.20

The intrinsic value of the shares outstanding and exercisable was $2,022 as of September 30, 2011 and $7,405 as of September 30, 2010.

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A summary of restricted stock awards activity under the 2005 Plan are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	grant date		of		grant date		of		grant date
	Shares	fair value		Shares		fair value		Shares		fair value
Nonvested at beginning of year	70,584	$	49.33		38,388	$	38.33		43,119	$	37.92
Granted	63,900		71.14		58,350		55.05		11,500		39.52
Vested	(25,934)		52.46		(25,994)		45.99		(15,551)		38.04
Forfeitures	(3,010)		51.92		(160)		39.27		(680)		39.27
Nonvested at end of year	105,540	$	61.69		70,584	$	49.33		38,388	$	38.33

As of September 30, 2011, total unrecognized stock based compensation expense related to nonvested awards was approximately $6,380 before income taxes, which is expected to be recognized over the rermaining term of the awards which range from 1 to 5 years.  During the fiscal years ended September 30, 2011 and 2010, we recognized $1,387 and $1,151, respectively, in compensation expense related to common stock awards.

2008 Employee Stock Purchase Plan

In February 2008, we approved the 2008 Employee Stock Purchase Plan (the “ESPP”).  The plan 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 period, which begins 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.  We issued 6,058 and 5,852 shares of our common stock under the ESPP during fiscal years ended September 30, 2011 and 2010, respectively.

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9. Computation Of Earnings Per Common Share (In thousands, except per share data)

		2011				2010				2009
		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net income		$	42,580	$	42,580	$	33,440	$	33,440	$	24,905	$	24,905
Weighted average common
	shares outstanding		12,464		12,464		12,241		12,241		12,088		12,088
Effect of diluted securities
	Stock options and restricted stock				49				154				218
Weighted average shares
	outstanding				12,513				12,395				12,306
Earnings per share		$	3.42	$	3.40	$	2.73	$	2.70	$	2.06	$	2.02
There was no impact from anti-dilutive shares in fiscal years ended September 30, 2011, 2010 or 2009.

10. Income Taxes

The components of income tax expense consist of the following:

			2011		2010		2009
United States
	Current payable
		Federal	$	20,741	$	17,060	$	13,868
		State		3,696		2,751		2,379
	Deferred
		Federal		628		538		(136)
		State		120		95		(25)
Total U.S. tax expense				25,185		20,444		16,086
International
	Current payable			1,109		826		-
	Deferred			(174)		(384)		-
Total international tax expense				935		442		-
Total income tax expense			$	26,120	$	20,886	$	16,086

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Our deferred tax assets and liabilities consist of the following at September 30:

		2011		2010
Deferred tax assets:
	Allowance for doubtful accounts	$	1,005	$	996
	Inventories		363		358
	Revenue recognition		-		175
	Lease expense		282		192
	Employee benefits		740		1,012
	Other		325		456
Total deferred tax assets			2,715		3,189
Deferred tax liabilities:
	Property and equipment		(6,534)		(6,481)
	Prepaid expenses		(316)		(306)
	Other		(182)		(156)
Total deferred tax liabilities			(7,032)		(6,943)
Net deferred tax assets/(liabilities)		$	(4,317)	$	(3,754)

Additionally, other deferred tax assets totaling $758 and $780 as of September 30, 2011 and 2010, respectively, arising from the Company's foreign subsidiary, are subject to full valuation allowance.

Income tax expense differed from income taxes at the U.S. federal statutory tax rate for all periods presented as follows:

	2011		2010		2009
Taxes computed at statutory rate		35.0%		35.0%		35.0%
State income taxes (net of federal income tax benefit)		3.7		3.5		3.8
Foreign		(0.9)		(1.1)		-
Other		0.2		1.0		0.4
		38.0%		38.4%		39.2%

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations.  As of September 30, 2011, the Company has not made a provision for U.S. or additional foreign withholding taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration.  Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances.  It is not practicable to estimate the amount of deferred tax liability related to investments in foreign subsidiaries.

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 A reconciliation of the unrecognized tax benefits is as follows:

	2011		2010		2009
Unrecognized tax benefits – Beginning of year	$	198	$	223	$	523
Gross decreases related to prior period tax positions		(175)		-		(54)
Gross increases related to current period tax positions		-		175		182
Settlements		-		(200)		(428)
Unrecognized tax benefits – End of year	$	23	$	198	$	223

For the fiscal years ended September 30, 2011, 2010 and 2009, the amount included in our income tax expense for tax-related interest and penalties was not significant.  Of the $23 unrecognized tax benefits as of September 30, 2011, $15 would impact our effective rate, if recognized.  Of the $198 unrecognized tax benefits as of September 30, 2010, $15 would have impacted our effective rate, if recognized.  Of the $223 unrecognized tax benefits as of September 30, 2009, $27 would have impacted our effective rate, if recognized.  We expect no material changes to our unrecognized tax benefits during the next fiscal year.  Our policy for classifying interest and penalties associated with unrecognized tax benefits is to include such items in income tax expense.

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 fiscal year 2011.  Resolution decreased the liability for unrecognized tax benefits by approximately $175.

With few exceptions, we are no longer subject to income tax examination for years before 2006 in the U.S. and significant state and local jurisdictions.  We are no longer subject to income tax examinations for years before 2009 in significant foreign jurisdictions.

11. Statements of Cash Flows — Supplemental and Noncash Disclosures

	2011		2010		2009
Supplemental Disclosures
Cash paid for interest	$	505	$	340	$	173
Cash paid for income taxes		21,302		19,850		15,251
Noncash Activities
Capital lease asset additions and related obligations		455		-		-
Equipment acquisitions financed with accounts payable		124		23		119

12. Commitments and Contingencies

We have operating leases for office and distribution center space and equipment for varying periods. We also lease some of our vehicles in the United Kingdom under capital leases.  Certain leases have renewal options and require contingent payments for increases, including executory costs, property taxes, insurance and certain other costs in excess of a base year amount. Total rent expense for the years ended September 30, 2011, 2010 and 2009 were $4,259, $4,051 and $3,968, respectively.

59

 The aggregate future noncancelable minimum rental payments on operating leases and capital leases at September 30, 2011 are as follows:

	Lease Obligations
Fiscal Year	Operating Leases		Capital Leases
2012	$	3,286	$	909
2013		3,135		284
2014		2,387		55
2015		2,073		15
2016		2,042		-
Thereafter		9,414		-
Total future minimum obligations	$	22,337	$	1,263

13. Related Party Transactions

MWI Co., our subsidiary, holds a 50% membership interest in Feeders’ Advantage that is accounted for as an investment using the equity method. Sales of products to Feeders’ Advantage, which are at our cost, were $55,185, $43,017 and $46,406 for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. MWI Co. charged Feeders’ Advantage for certain operating and administrative services of $919, $794 and $771 for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Our President and Chief Executive Officer and a member of our Board of Directors are each members of the board of managers of Feeders’ Advantage.

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. As of September 30, 2011, MWI Co. had a receivable balance from Feeders’ Advantage of $756 and as of September 30, 2010, MWI Co. had a payable balance to Feeders’ Advantage of $281.

14. Employee Benefit Plans

We have a multi-employer defined contribution profit sharing plan with a 401(k) arrangement for employees in the United States.  To become eligible for the profit sharing portion of the plan, an employee must complete two years of service and attain the age of twenty-one. Participation is automatic beginning the following January or July. To become eligible for the 401(k) portion of the plan, the employee must complete three-months of service and attain the age of twenty-one.

Both portions of the plan allow for employer contributions. We are required to match 50% of the employee’s contribution to the 401(k) portion of the plan up to 6% of the employee’s salary. Our matching contributions for the 401(k) portion of the plan were $1,464, $1,108 and $975 for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Employee’s contributions are fully vested immediately while employer contributions vest over a five-year period.

Contributions to the profit sharing portion of the Plans are discretionary, ranging from 0% to 3%, and are approved by our Board of Directors. Total profit sharing expense for the fiscal years ended September 30, 2011, 2010 and 2009 were $1,516, $1,244 and $1,106, respectively. Employer contributions are fully vested immediately.

Centaur sponsors a defined contribution plan for all other staff not participating in the defined benefit plan described below. The contributions made by the employer over the period are detailed below. Contributions are currently payable at a minimum of 3% up to a maximum of 6% of eligible pay if matched by employee.  The matching contribution for the plan was $269 and $207 for the fiscal years ended September 30, 2011 and 2010, respectively.

60

Centaur operates a defined benefit pension plan which provides benefits based on pensionable pay and is closed to future benefit accrual.  We recorded the liability at the estimated fair value at the date of the acquisition.  Subsequent to the acquisition of Centaur in fiscal year 2010, we funded $2,047 to the pension plan as required by the terms of the share purchase agreement.

The fair value of plan assets, benefit obligation and funded status of the defined benefit plan as of September 30 is as follows:

	2011		2010
Fair value of plan assets	$	4,760	$	4,771
Benefit obligation		(7,031)		(7,160)
Unfunded pension liability	$	(2,271)	$	(2,389)

The unfunded pension liability is recognized as other long-term liabilities in the Consolidated Balance Sheets.  Net periodic benefit expense for the fiscal year ended September 30 consisted of the following:

		2011		2010
Interest cost		$	255	$	159
Expected return on plan assets			(205)		(139)
Net periodic benefit cost			50		20
Other changes recognized in other comprehensive income
	Actuarial (gain)/loss		(88)		591
Total recognized in net periodic benefit costs and other comprehensive income		$	(38)	$	611
Total (gain)/loss recognized in other comprehensive income, net of tax		$	(21)	$	457

The estimated net actuarial loss that will be amortized from accumulated other comprehensive losses into net periodic benefit costs during fiscal year 2012 is not significant.  The following table provides the weighted-average actuarial assumptions:

		2011
Assumptions used to determine benefit obligations
	Discount rate	3.1%
	Rate of compensation increase (1)	N/A
Assumptions used to determine net periodic benefit cost
	Discount rate	3.6%
	Expected return on plan assets	4.3%
	Rate of compensation increase (1)	N/A
(1) There is no assumed rate of compensation increase as there have been no current active members since April 2006

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The assets of the plan are invested as follows as of September 30, 2011:

Asset Class		Market Value		Asset Allocation	Fair Value Level
Equities		$	1,752	36%	2
Corporate bonds			977	21%	2
UK Government bonds			445	9%	2
Cash			26	1%	1
Other assets			1,560	33%	2
	Total	$	4,760	100%

15. Other Comprehensive Income

The components of comprehensive income (loss) were as follows:

				2011		2010		2009
Net income			$	42,580	$	33,440	$	24,905
Other comprehensive income:
	Foreign currency translation			(663)		536		-
	Actuarial gain/(loss) on pension valuation, net of deferred taxes			21		(457)		-
		Total comprehensive income	$	41,938	$	33,519	$	24,905

16. 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.

As of September 30, 2011 and 2010, financial instruments include cash and cash equivalents, receivables and accounts payable, and the fair values approximate book values due to their short maturities.

In November 2010, we amended our sterling revolving credit facility in the United Kingdom.  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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17. Geographic Information

Revenues and long-lived assets by geographic region are as follows:

			2011		2010		2009
Revenues for the fiscal years ended September 30
	United States		$	1,304,794	$	1,074,226	$	941,332
	International			260,546		155,116		-
		Total	$	1,565,340	$	1,229,342	$	941,332
Long-lived assets as of September 30
	United States		$	18,953	$	9,762	$	9,313
	International			6,256		5,476		-
		Total	$	25,209	$	15,238	$	9,313

18. Quarterly Financial Data (Unaudited)

		Three-Months Ended
		Dec. 31,		Mar. 31,		June 30,		Sept. 30,		Year
			(Dollars and shares in thousands, except per share data) (1)
Fiscal Year 2011
Total revenues		$	366,174	$	367,112	$	410,736	$	421,318	$	1,565,340
Gross profit			50,072		50,986		54,087		50,440		205,585
Operating income			17,536		16,869		18,701		15,560		68,666
Net income			10,828		10,332		11,390		10,030		42,580
Earnings per common share — basic		$	0.87	$	0.83	$	0.91	$	0.80	$	3.42
Earnings per common share — diluted		$	0.87	$	0.83	$	0.91	$	0.80	$	3.40
Weighted average common shares
	outstanding:
	Basic		12,415		12,462		12,484		12,497		12,464
	Diluted		12,483		12,511		12,526		12,531		12,513
Fiscal Year 2010
Total revenues		$	236,111	$	286,597	$	347,687	$	358,947	$	1,229,342
Gross profit			36,009		39,522		43,937		45,535		165,003
Operating income			12,733		12,664		15,064		13,757		54,218
Net income			7,834		7,671		9,137		8,798		33,440
Earnings per common share — basic		$	0.64	$	0.63	$	0.74	$	0.71	$	2.73
Earnings per common share — diluted		$	0.63	$	0.62	$	0.74	$	0.71	$	2.70
Weighted average common shares
	outstanding:
	Basic		12,173		12,207		12,265		12,318		12,241
	Diluted		12,356		12,376		12,408		12,437		12,395
(1) The sums of the quarterly net income and earnings per share amounts may not agree to the year-to-date
earnings per common share amount as a result of rounding.

19. Subsequent events

On October 31, 2011, subsequent to our fiscal year end, we acquired substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”) for $60,000, including $53,400 in cash and 94,359 shares of common stock valued at $6,600.  Micro is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies, and other animal health products.  Micro also is a leading innovator of proprietary, computerized management systems for the production animal market.

The assets acquired and the certain liabilities assumed relate to (a) the development and implementation of proprietary computerized systems for feed, health, information and production animal management which include individual animal identification and management, food safety assurance, trace back and process verification systems, (b) ongoing research and development of such systems, and (c) the distribution and sale of micro feed ingredients, animal health products and dairy sanitation solutions.

On November 1, 2011 MWI Co. as borrower, entered into a Third Amendment to Credit Agreement (the “Third Amendment”) with MWI Veterinary Supply, Inc. and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. as lenders (collectively, the “Lenders”), amending the Credit Agreement dated December 13, 2006, and as amended from time to time, by and among Supply Co., MWI Veterinary Supply, Inc., Memorial Pet Care, Inc. and the Lenders (the  “Credit Agreement”).  The Third Amendment increased the aggregate revolving commitment of the Lenders under the Credit Agreement from $100 million to $150 million and extended the maturity date of the Credit Agreement from March 1, 2013 to November 1, 2016.  Under the Third Amendment, the margin on variable interest rate borrowings now ranges from 0.95% to 1.50%.  The margin previously ranged from 1.50% to 2.25% under the Second Amendment.  The Third Amendment also reduced the commitment fee from a range of 0.2% to 0.35% to a range of 0.15% to 0.25% depending on the funded debt to EBITDA ratio.  On October 31, 2011, the borrowings outstanding on this credit facility were $45,100 as a result of the funding of the acquisition of Micro.

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Item 9.            Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Our management, including the Chief Executive Officer and the Chief Financial Officer, have evaluated the effectiveness of the our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of September 30, 2011. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our 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 us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission‘s rules and forms.

Management’s annual report on internal control over financial reporting and the attestation report of our independent registered public accounting firm are set forth below on this Annual Report on Form 10-K.

There were no changes in our internal controls over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  On October 31, 2011, we completed the acquisition of substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”).  During fiscal year 2012, we will begin integrating Micro into our existing internal control procedures. The Micro integration may lead us to change our controls in future periods, but we do not expect changes to significantly affect our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

The management of MWI Veterinary Supply, Inc. and subsidiaries (the “Company”) is responsible for establishing and maintaining effective internal control over financial reporting (as such term is defined in Exchange Act Rules 13a-15(f)).

There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2011. This assessment was based on criteria for effective internal control over financial reporting described in “Internal Control – Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of September 30, 2011, internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. generally accepted accounting principles.

The effectiveness of the Company’s internal control over financial reporting has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States). Their report is included herein.

64

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

MWI Veterinary Supply, Inc.

Boise, Idaho

We have audited the internal control over financial reporting of MWI Veterinary Supply, Inc. and subsidiaries (the "Company") as of September 30, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.  Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel 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.  A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis.  Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and consolidated financial statement schedule as of and for the year ended September 30, 2011, of the Company, and our report dated November 28, 2011 expressed an unqualified opinion on those consolidated financial statements and consolidated financial statement schedule.

/s/ DELOITTE & TOUCHE LLP

Boise, Idaho

November 28, 2011

65

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance of the Registrant.

The information regarding directors and nominees for directors of the Company, including identification of the audit committee and audit committee financial expert, is presented under the headings “Corporate Governance—Committees of the Board of Directors,” and “Election of Directors—Nominees For Directors” in the Company’s definitive proxy statement for use in connection with the 2012 Annual Meeting of Stockholders (the “Proxy Statement”) to be filed within 120 days after the end of the Company’s fiscal year ended September 30, 2011. The information contained under these headings is incorporated herein by reference. Information regarding the executive officers of the Company is included in this Annual Report on Form 10-K under Item 1 of Part I as permitted by Instruction 3 to Item 401(b) of Regulation S-K.

The Company has adopted a code of conduct that applies to its Chief Executive Officer and Chief Financial Officer. This code of conduct is available on the Company’s Web site at www.mwivet.com. If the Company makes any amendments to this code other than technical, administrative or other non-substantive amendments, or grants any waivers, including implicit waivers, from a provision of this code to the Company’s Chief Executive Officer or Chief Financial Officer, the Company will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a report on Form 8-K filed with the SEC.

Item 11. Executive Compensation.

Information concerning executive compensation is presented under the headings “Executive Compensation” and “Compensation Committee Report” in the Proxy Statement.  The information contained under these headings is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information with respect to security ownership of certain beneficial owners and management is set forth under the heading “Security Ownership of Certain Beneficial Owners and Directors and Officers” in the Proxy Statement. The information contained under these headings is incorporated herein by reference.

Equity Compensation Plan Information

The following table provides information as of September 30, 2011 about the common stock that may be issued under all of our existing equity compensation plans, including the 2002 Stock Plan and 2005 Stock-Based Incentive Compensation Plans. Both of these plans have been approved by our stockholders.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		37,385		$14.73		962,085
Equity compensation plans not approved by security holders		—		—		—
Total		37,385		$14.73		962,085

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Item 13. Certain Relationships, Related Transactions and Director Independence.

Information concerning related transactions and director independence is presented under the heading “Certain Relationships, Related Transactions and Director Independence” in the Proxy Statement. The information contained under this heading is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services.

Information concerning principal accountant fees and services is presented under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement. The information contained under this heading is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this report:

1) Consolidated Financial Statements: See Index to Consolidated Financial Statements at Item 8 on page 42 of this report.

2) Financial Statement Schedule: Schedule II—Consolidated Valuation and Qualifying Accounts

3) Exhibits are incorporated herein by reference or are filed with this report as set forth in the Index to Exhibits on page 69 hereof

MWI VETERINARY SUPPLY, INC.

SCHEDULE II—CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS

(Amounts in thousands)

	Balance at Beginning of Period		Charged (Credited) to Costs and Expenses			Deductions/ Write-offs			Balance at End of Period
Allowance for Doubtful Accounts
Year ended September 30, 2009		$   878		$2,769			$(641	)		$    3,006
Year ended September 30, 2010		3,006		(134	)		(302	)		2,570
Year ended September 30, 2011		2,570		437			(428	)		2,579

67

Signatures

Pursuant to the requirements of Section 13 or 15(d) 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.
	By: /s/ Mary Patricia B. Thompson
	Mary Patricia B. Thompson
	(Senior Vice President of Finance and Administration, Chief Financial Officer)
Date: November 28, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of November 28, 2011.

/s/ James F. Cleary, Jr.	/s/ Mary Patricia B. Thompson
James F. Cleary, Jr. Director, President and Chief Executive Officer (Principal Executive Officer)	Mary Patricia B. Thompson Senior Vice President of Finance and Administration, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
/s/ Keith E. Alessi	/s/ Bruce C. Bruckmann
Keith E. Alessi (Director)	Bruce C. Bruckmann (Director)
/s/ John F. McNamara	/s/ A. Craig Olson
John F. McNamara (Director)	A. Craig Olson (Director)
/s/ Robert N. Rebholtz	/s/ William J. Robison
Robert N. Rebholtz (Director)	William J. Robison (Director)

68

Index to Exhibits

Filed with the Annual Report

on Form 10-K for the

Year Ended September 30, 2011

Number	Description
2.1	Agreement Relating to the Sale and Purchase of the Entire Issued Share Capital of Centaur Services Limited dated February 8, 2010 by and among MWI Veterinary Supply Co., MWI Supply (UK Acquisition) Limited, AHN (UK) Holdings Limited and AHN International, LLC, incorporated herein by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed February 12, 2010
2.2	Asset Purchase Agreement dated September 20, 2011 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co. and Micro Beef Technologies, Ltd
3.1	Form of Amended and Restated Certificate of Incorporation of MWI Veterinary Supply, Inc., incorporated herein by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed August 1, 2007.
3.2	Form of Amended and Restated Bylaws of MWI Veterinary Supply, Inc., incorporated herein by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q, filed August 1, 2007.
4.1	Form of MWI Veterinary Supply, Inc. common stock certificate, incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).
4.2	Registration Rights Agreement dated as of June 18, 2002 by and between MWI Holdings, Inc., Bruckmann, Rosser, Sherrill & Co. II, L.P., Agri Beef Co. and the other parties thereto, incorporated herein by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).
4.3	Executive Stock Agreement dated as of June 18, 2002 by and among MWI Veterinary Supply Co., MWI Holdings, Inc. and James Cleary, incorporated herein by reference to Exhibit 4.4 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.4	Executive Stock Agreement dated as of June 18, 2002 by and among MWI Veterinary Supply Co., MWI Holdings, Inc. and Jeff Danielson, incorporated herein by reference to Exhibit 4.5 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.5	Executive Stock Agreement dated as of June 18, 2002 by and among MWI Veterinary Supply Co., MWI Holdings, Inc. and James Hay, incorporated herein by reference to Exhibit 4.6 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.6	Executive Stock Agreement dated as of June 18, 2002 by and among MWI Veterinary Supply Co., MWI Holdings, Inc. and Mary Pat Thompson, incorporated herein by reference to Exhibit 4.8 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.7	First Amendment to Executive Stock Agreement dated as of May 6, 2005 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co. and James F. Cleary, Jr., incorporated herein by reference to Exhibit 4.9 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.8	First Amendment to Executive Stock Agreement dated as of May 5, 2005 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co. and Jeffrey J. Danielson, incorporated herein by reference to Exhibit 4.10 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.9	First Amendment to Executive Stock Agreement dated as of May 6, 2005 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co. and James S. Hay, incorporated herein by reference to Exhibit 4.11 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
4.10	First Amendment to Executive Stock Agreement dated as of May 6, 2005 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co. and Mary Patricia B. Thompson, incorporated herein by reference to Exhibit 4.13 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
10.1	2002 Stock Option Plan, incorporated herein by reference to Exhibit 10.11 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).*
10.2	MWI Veterinary Supply, Inc. 2005 Stock-Based Incentive Compensation Plan, adopted July 27, 2005, as Amended and Restated, effective July 24, 2006, incorporated herein by reference to Exhibit 10.21 of the Company’s Current Report on Form 8-K, filed February 8, 2007.*
10.3	Form of Option Letter, incorporated herein by reference to Exhibit 10.22 of the Company’s Registration Statement on Form S-1 (Reg No. 333-124264).
10.4	Second Amendment to 2010-2011 Merial Independent Sales Agent Agreement between MWI Veterinary Supply Co. and Merial Limited effective as of February 20, 2011, incorporated herein by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q, filed July 29, 2011.†
10.5	First Amendment to the Agreement for Product Purchases effective as of July 1, 2009 by and between MWI Veterinary Supply Co. and Medical Management International, Inc., dba Banfield, The Pet Hospital®, incorporated herein by reference to Exhibit 10.7 of the Company’s Annual Report on Form 10K, filed November 20, 2009.†
10.6	First Amendment to the Agreement for Logistics Services effective as of July 1, 2009 by and between MWI Veterinary Supply Co. and Medical Management International, Inc., dba Banfield, The Pet Hospital®, incorporated herein by reference to Exhibit 10.8 of the Company’s Annual Report on Form 10K, filed November 20, 2009.†
10.7	Agreement for Home Delivery Logistics Services effective as of July 1, 2009 by and between MWI Veterinary Supply Co. and Medical Management International, Inc., dba Banfield, the Pet Hospital®, incorporated herein by reference to Exhibit 10.9 of the Company’s Annual Report on Form 10K, filed November 20, 2009.†
10.8	Credit Agreement dated as of December 13, 2006 by and between MWI Veterinary Supply Co., as Borrower, MWI Veterinary Supply, Inc. and Memorial Pet Care, Inc. as Guarantors, Bank of America, N.A. and Wells Fargo Bank, N.A., as Lenders, incorporated herein by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q, filed February 5, 2007.
10.9	2011 Livestock Products Distribution Agreement between MWI Veterinary Supply, Inc. and Pfizer, Inc. effective as of January 1, 2011, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q/A, filed July 20, 2011.†
10.10	2011 Pfizer Equine Products Marketing Agreement between MWI Veterinary Supply Co. and Pfizer, Inc. effective as of January 1, 2011, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed July 29, 2011.†
10.11	2011 Strategic Brands Distribution Agreement effective as of January 1, 2011 by and between Pfizer Inc. and MWI Veterinary Supply Co., incorporated herein by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q/A, filed July 20, 2011.†
10.12	MWI Veterinary Supply, Inc. 2008 Employee Stock Purchase Plan, incorporated herein by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q, filed May 1, 2008.
10.13	License Agreement dated and effective July 1, 2008 between MWI Veterinary Supply Co. and American Animal Hospital Association, incorporated herein by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K, filed November 24, 2008. †
10.14	Sponsorship Letter Agreement dated June 30, 2008 between American Animal Hospital Association and MWI Veterinary Supply Co, incorporated herein by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K, filed November 24, 2008.
10.15	First Amendment to Credit Agreement dated February 8, 2010 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co., Memorial Pet Care, Inc., Bank of America, N.A. and Wells Fargo Bank, N.A., incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed February 12, 2010.
10.16	Second Amendment to Credit Agreement dated August 10, 2010 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co., Memorial Pet Care, Inc., Bank of America, N.A. and Wells Fargo Bank, N.A., incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed August 13, 2010.
10.17	Third Amendment to Credit Agreement dated November 1, 2011 by and among MWI Veterinary Supply, Inc., MWI Veterinary Supply Co., Memorial Pet Care, Inc., Bank of America, N.A. and Wells Fargo Bank, N.A.
10.18	Non-competition and Confidential Information Agreement dated September 20, 2011, by and between MWI Veterinary Supply Co. and William C. Pratt.
10.19	Non-competition and Confidential Information Agreement dated September 20, 2011, by and between MWI Veterinary Supply Co. and Mark Shaw.
10.20	Sterling Revolving Credit Facility dated November 5, 2010 by and among Centaur Services Limited and Wells Fargo Bank, N.A., incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed November 10, 2010.
10.21	Continuing Guaranty of MWI Veterinary Supply Co. dated November 5, 2010, incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed November 10, 2010.
10.22	Distributor Agreement between MWI Veterinary Supply Co. and Intervet Inc., dba as Intervet/Schering Plough Animal Health effective as of December 1, 2009, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed May 6, 2010. †
10.23	Non-Disclosure and Non-Competition Agreement dated as of September 10, 2006 by and among MWI Veterinary Supply Co. and John Francis, incorporated herein by reference to Exhibit 4.1 of the Company’s Quarterly Report on Form 10Q, filed May 6, 2010.*
10.24	Non-Disclosure and Non-Competition Agreement dated as of August 26, 2011 by and among MWI Veterinary Supply Co. and Kevin W. Price
10.25	2010 Livestock Products Distribution Agreement between MWI Veterinary Supply, Inc. and Pfizer, Inc. effective as of January 1, 2010, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed May 5, 2011. †
10.26	2010 Pfizer Equine Products Marketing Agreement between MWI Veterinary Supply Co. and Pfizer Inc. effective as of January 1, 2010, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed May 5, 2011. †
10.27	2010 Strategic Brands Distribution Agreement between MWI Veterinary Supply, Inc. and Pfizer Inc. effective as of January 1, 2010, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q, filed May 5, 2011. †
21.1	Subsidiaries of MWI Veterinary Supply, Inc.
23	Consent of Deloitte & Touche LLP
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer 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.

* Identifies management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto.

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

69

EX-2.2

EXHIBIT 2.2

ASSET PURCHASE AGREEMENT

among

MICRO BEEF TECHNOLOGIES, LTD.,

MWI VETERINARY SUPPLY CO.

and

MWI VETERINARY SUPPLY, INC.

dated as of

September 20, 2011

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS  1

ARTICLE II PURCHASE AND SALE  14

Section 2.01. Purchase and Sale of Assets  14

Section 2.02. Excluded Assets  15

Section 2.03. Assumed Liabilities  16

Section 2.04. Excluded Liabilities  16

Section 2.05. Purchase Price  19

Section 2.06. Purchase Price Adjustment  20

Section 2.07. Allocation of Purchase Price  23

Section 2.08. Withholding Tax  24

Section 2.09. Third Party Consents  24

Section 2.10. Prorated Items  25

Section 2.11. Payments Post-Closing  25

Section 2.12. Possession  25

Section 2.13. Conveyance of Title  25

ARTICLE III CLOSING  25

Section 3.01. Closing  25

Section 3.02. Closing Deliverables  26

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER  28

Section 4.01. Organization and Qualification of Seller  28

Section 4.02. Authority of Seller  28

Section 4.03. No Conflicts; Consents  29

Section 4.04. Financial Statements  29

Section 4.05. Undisclosed Liabilities  30

Section 4.06. Absence of Certain Changes, Events and Conditions  30

Section 4.07. Material Contracts  31

Section 4.08. Title to Purchased Assets  33

Section 4.09. Condition and Sufficiency of Assets  34

Section 4.10. Real Property  34

Section 4.11. Intellectual Property  35

Section 4.12. Inventory  37

Section 4.13. Accounts Receivable  37

Section 4.14. Customers and Suppliers  37

Section 4.15. Insurance  37

Section 4.16. Legal Proceedings; Governmental Orders  38

Section 4.17. Compliance With Laws; Permits  38

Section 4.18. Environmental Matters  40

Section 4.19. Employees and Employment Matters  41

Section 4.20. Taxes  44

Section 4.21. Affiliate Transactions  46

Section 4.22. Brokers  46

Section 4.23. Investment Representations  46

Section 4.24. Products  47

Section 4.25. Certain Business Practices  48

Section 4.26. Full Disclosure  48

Section 4.27. Representations and Warranties Are Independent of Due Diligence  48

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT  48

Section 5.01. Organization of Buyer and Parent  48

Section 5.02. Authority of Buyer and Parent  48

Section 5.03. No Conflicts; Consents  49

Section 5.04. Brokers  49

Section 5.05. Sufficiency of Funds  49

Section 5.06. Legal Proceedings  49

Section 5.07. Parent Restricted Stock  49

Section 5.08. Full Disclosure  50

ARTICLE VI COVENANTS  50

Section 6.01. Conduct of Business Prior to the Closing  50

Section 6.02. Access to Information  51

Section 6.03. No Solicitation of Other Bids  52

Section 6.04. Notice of Certain Events  52

Section 6.05. Employees and Employee Benefits  53

Section 6.06. Noncompetition and Confidential Information Agreements and other Restrictive Covenants.  54

Section 6.07. Governmental Approvals and Consents  57

Section 6.08. Title Insurance Matters  58

Section 6.09. Books and Records  60

Section 6.10. Closing Conditions  60

Section 6.11. Public Announcements  61

Section 6.12. Bulk Sales Laws  61

Section 6.13. Transfer Taxes  61

Section 6.14. Termination of Certain Agreements  61

Section 6.15. Non Solicitation of Employees  61

Section 6.16. Rule 144 Compliance  62

Section 6.17. Receivables  62

Section 6.18. Further Assurances  62

ARTICLE VII CONDITIONS TO CLOSING  62

Section 7.01. Conditions to Obligations of All Parties  62

Section 7.02. Conditions to Obligations of Buyer  63

Section 7.03. Conditions to Obligations of Seller  64

ARTICLE VIII INDEMNIFICATION  66

Section 8.01. Survival  66

Section 8.02. Indemnification By Seller  66

Section 8.03. Indemnification By Buyer  67

Section 8.04. Certain Limitations  67

Section 8.05. Indemnification Procedures  68

Section 8.06. Recoupment  70

Section 8.07. Tax Treatment of Indemnification Payments  71

Section 8.08. No Waiver  71

Section 8.09. Tax Benefits  71

Section 8.10. Independent Analysis  71

Section 8.11. No Remote or Speculative Damages  71

Section 8.12. Mitigation  72

Section 8.13. Exclusive Remedies  72

Section 8.14. Exception for Fraud and Willful Misconduct  72

ARTICLE IX TERMINATION  72

Section 9.01. Termination  72

Section 9.02. Effect of Termination  74

ARTICLE X MISCELLANEOUS  74

Section 10.01. Expenses  74

Section 10.02. Notices  75

Section 10.03. Interpretation  76

Section 10.04. Headings  76

Section 10.05. Severability  76

Section 10.06. Entire Agreement  76

Section 10.07. Successors and Assigns  76

Section 10.08. No Third-party Beneficiaries  77

Section 10.09. Amendment and Modification; Waiver  77

Section 10.10. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial  77

Section 10.11. Schedules, Etc  78

Section 10.12. Specific Performance  79

Section 10.13. Counterparts  79

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of September 20, 2011, is entered into between MICRO BEEF TECHNOLOGIES, LTD., a Texas limited partnership (“Seller”), MWI VETERINARY SUPPLY, INC., a Delaware corporation (“Parent”) and Parent’s wholly-owned subsidiary MWI VETERINARY SUPPLY CO., an Idaho corporation (“Buyer”).

RECITALS:

WHEREAS, Seller is engaged in (a) the development of computerized management systems for individual animal information collection and management, and related marketing, health and nutrition systems (including animal identification and food safety assurance traceback systems), (b) the research and development related thereto, and (c) the distribution and sale of feed additives and animal health products (the “Business”);

WHEREAS, Seller wishes to sell and assign to Buyer, and Buyer wishes to purchase and assume from Seller, substantially all the assets and certain specified liabilities of the Business, subject to the terms and conditions set forth herein;

WHEREAS, Micro Beef Management, LLC, a Texas limited liability company and the general partner of Seller (“General Partner”), Micro Beef Holdings, Inc., a Nevada corporation and a limited partner of Seller (“Institutional Limited Partner”), Mark Shaw and Duane Lomax, each an employee and a limited partner of Seller (collectively, the “Employee Limited Partners” and together with the Institutional Limited Partner, the “Limited Partners”) have declared the advisability of this Agreement and approved and adopted this Agreement;

WHEREAS, the board of directors of Buyer and Parent have declared the advisability of this Agreement and approved and adopted this Agreement; and

WHEREAS, concurrently with the execution of this Agreement and as an inducement to Seller to enter into this Agreement, Buyer has deposited a cash amount of $2,000,000 (together with any interest or other earnings thereon, the “Pre-Closing Escrow Fund”) in a segregated account established and maintained at the Escrow Agent, to be held and disbursed by the Escrow Agent pursuant to the terms of this Agreement and the Pre-Closing Escrow Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I                      

DEFINITIONS

The following terms have the meanings specified or referred to in this ARTICLE I:

“Acquired Real Property” has the meaning set forth in Section 2.01(f).

“Acquisition Proposal” has the meaning set forth in Section 6.03(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Active Employees” has the meaning set forth in Section 6.05(a).

“Actual Assumed Indebtedness” has the meaning set forth in Section 2.06(b).

“Actual Working Capital” has the meaning set forth in Section 2.06(b).

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Aggregate Post-Closing Escrow Amount” means the sum of the Post-Closing Indemnification Escrow Fund and the Post-Closing Working Capital Escrow Fund, which aggregate amount shall be deposited with the Escrow Agent and held in escrow pursuant to the Post-Closing Escrow Agreement.

“Agreement” has the meaning set forth in the preamble.

“Amarillo Owned Real Property” means all of the real property located at “311 North Arthur, Amarillo, Texas 79101” and further described in Section 4.10(a) of the Disclosure Schedules.

“Appraisals” has the meaning set forth inSection 2.07.

“Appraisers” has the meaning set forth in Section 2.07.

“Assigned Contracts” has the meaning set forth in Section 2.01(c).

“Assignment and Assumption Agreement” has the meaning set forth in Section 3.02(a)(iii).

“Assignment and Assumption of Lease” has the meaning set forth in Section 3.02(a)(vi).

“Assumed Indebtedness” means all principal, interest, premiums or other obligations of Seller expressly assumed by Buyer and described in Section 2.03(c) of the Disclosure Schedules.

“Assumed Liabilities” has the meaning set forth in Section 2.03.

“Audited Financial Statements” has the meaning set forth in Section 4.04.

“Balance Sheet” has the meaning set forth in Section 4.04.

“Balance Sheet Date” has the meaning set forth in Section 4.04.

“Bank of America Indebtedness” means the Loan Agreement dated May 2, 2007, between Seller and Bank of America, N.A., as modified, extended or amended from time to time.

“Benefit Plan” has the meaning set forth in Section 4.19(g).

“Bill of Sale” has the meaning set forth in Section 3.02(a)(ii).

“Books and Records” has the meaning set forth in Section 2.01(k).

“Business” has the meaning set forth in the recitals.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in the State of Idaho are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Closing Certificate” has the meaning set forth in Section 7.03(f).

“Buyer Fundamental Reps” has the meaning set forth in Section 8.04(c).

“Buyer Indemnitees” has the meaning set forth in Section 8.02.

“Buyer’s Accountants” means Deloitte & Touche LLP.

“Cash Purchase Price” has the meaning set forth in Section 2.05.

“CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

“Closing” has the meaning set forth in Section 3.01.

“Closing Date” has the meaning set forth in Section 3.01.

“Closing Date Statement” has the meaning set forth in Section 2.06(b).

“Closing Day Purchase Price” has the meaning set forth in Section 2.05(b).

 “Closing Working Capital” means: (a) Current Assets, less (b) Current Liabilities, determined as of the open of business on the Closing Date.

 “Code” means the Internal Revenue Code of 1986, as amended.

“Communication Addresses” means all telephone numbers, facsimile numbers, internet addresses, internet domain names, internet domain name registrations, log-in identifications, user identifications, screen names and on-line service identifications relating to Seller.

“Compete” has the meaning set forth in Section 6.06(b).

“Competitive Business” has the meaning set forth in Section 6.06(b).

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other legally binding agreements, commitments and arrangements, whether written or oral.

“Current Assets” means the current assets of the Business included in the line items set forth on Section 2.06 of the Disclosure Schedules and only to the extent acquired pursuant to the terms of this Agreement.

“Current Liabilities” means the current liabilities of the Business included in the line items set forth on Section 2.06 of the Disclosure Schedules and only to the extent assumed pursuant to the terms of this Agreement.

“Deed” has the meaning set forth in Section 2.13(a).

“Direct Claim” has the meaning set forth in Section 8.05(c).

“Disclosure Schedules” means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.

“Disputed Amounts” has the meaning set forth in Section 2.06(c)(iii).

“Dollars or $” means the lawful currency of the United States.

“Due Diligence Review” has the meaning set forth in Section 6.02(a).

“Employee Limited Partners” has the meaning set forth in the recitals.

“Employee Release” has the meaning set forth in Section 6.05(a).

“Employees” means those Persons employed by Seller in connection with the Business immediately prior to the Closing.

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or material restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, distribution, packaging, labeling, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials.

“Environmental Permit” means any Permit, required under or issued, granted, authorized by or made pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate”means any corporation or trade or business (whether or not incorporated) which is treated with Seller as a single employer within the meaning of Section 414 of the Code.

“Escrow Agent” means Wells Fargo Bank, National Association.

“Estimated Assumed Indebtedness” has the meaning set forth in Section 2.06(a).

“Estimated Closing Adjustment” means the positive or negative number equal to the sum of: (a) the positive or negative number representing the result of Target Working Capital minus the Estimated Working Capital and (b) Estimated Assumed Indebtedness.

“Estimated Closing Date Statement” has the meaning set forth in Section 2.06(a).

“Estimated Working Capital” has the meaning set forth in Section 2.06(a).

“Excluded Assets” has the meaning set forth in Section 2.02.

“Excluded Contracts” has the meaning set forth in Section 2.02(c).

“Excluded Liabilities” has the meaning set forth in Section 2.04.

“FDA” has the meaning set forth in Section 2.04(g).

“Final Assumed Indebtedness” shall mean the amount calculated and determined in accordance with Section 2.06(c)(ii) or Section 2.06(c)(iii).

“Final Working Capital”shall mean the amount calculated and determined in accordance with Section 2.06(c)(ii) or Section 2.06(c)(iii).

“Financial Statements” has the meaning set forth in Section 4.04.

“FIRPTA Certificate” has the meaning set forth in Section 7.02(l).

 “GAAP” means United States generally accepted accounting principles.

“Garden City Owned Real Property” means that certain real property located at “101 North 4th, Garden City, Kansas 67846” and further described in Section 4.10(a) of the Disclosure Schedules

“General Partner” has the meaning set forth in the recitals.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Hazardous Materials” means: (a) any material, substance, containment, pollutant, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“Indebtedness” means all principal, interest, premiums or other obligations of Seller and its subsidiaries, related to (a) all indebtedness for borrowed money, (b) all obligations for the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and consistent with past practice), (c) all obligations evidenced by notes, bonds, debentures or other similar instruments, and the amount of all checks drawn in excess of balances (d) all indebtedness created or arising under a conditional sale or other title retention agreement with respect to acquired property, (e) all obligations as lessee or lessees under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, under acceptance, letter of credit or similar facilities, (g) all obligations owing pursuant to factoring agreements for accounts receivable and all obligations under swap or derivative agreements, including without limitation the Swap Agreement, (h) all Indebtedness of the type referred to in clauses (a) through (g) above guaranteed directly or indirectly in any manner by Seller or its subsidiaries, (i) all Indebtedness of the type referred to in clauses (a) through (g) above that is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien on property (including accounts and contract rights) owned by Seller or its subsidiaries, even though such person has not assumed, become liable for or guaranteed the payment of such Indebtedness, and (j) all accrued but unpaid interest (or interest equivalent) to the date of determination, and all prepayment premiums or penalties, related to any items of the type referred to in clauses (a) through (j) above.

“Indemnification Cap”has the meaning set forth in Section 8.04(b).

“Indemnified Party” has the meaning set forth in Section 8.05.

“Indemnifying Party” has the meaning set forth in Section 8.05.

“Independent Accountants” has the meaning set forth in Section 2.06(c)(iii).

“Institutional Limited Partner” has the meaning set forth in the recitals.

“Insurance Policies” has the meaning set forth in Section 4.15.

“Intellectual Property” means all of the following and any similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations, renewals and applications for registration of such trademarks, including intent-to-use applications, and all associated business goodwill; (b) internet domain name registrations; (c) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law) and mask works, all registrations and applications for registration of such copyrights and mask works, all issuances, extensions and renewals of such registrations and applications, and all moral rights or rights of attribution arising in any of the foregoing; (d) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; (e) rights arising in computer software, whether in source code or object code format, including application software, software languages, firmware, middleware, routines, scripts, tools, compilers, databases and documentation; and (f) patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.

“Intellectual Property Assets” means all Intellectual Property that is owned by Seller.

“Intellectual Property Assignments” has the meaning set forth in Section 3.02(a)(iv).

“Intellectual Property Licenses” means all licenses, sublicenses and other agreements by or through which other Persons, including Seller’s Affiliates, grant Seller exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted.

“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Interim Balance Sheet” has the meaning set forth in Section 4.04.

“Interim Balance Sheet Date” has the meaning set forth in Section 4.04.

“Interim Financial Statements” has the meaning set forth in Section 4.04.

“Inventory” has the meaning set forth in Section 2.01(b).

“IRS” has the meaning set forth in Section 4.19(i).

 “Key Management Employees” means William C. Pratt and Mark Shaw.

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of any director or officer of Seller and the constructive knowledge that a prudent Person holding the position or positions of a director or officer of Seller would reasonably be expected to acquire in the course of performing the duties contemplated by such position or positions in a customary manner.

“Law” means any statute, law, ordinance, regulation, rule, directive, code, order, constitution, treaty, common law, judgment, injunction, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” has the meaning set forth in Section 4.10(b).

“Leases” has the meaning set forth in Section 4.10(b).

“Legitimate Business Interests” has the meaning set forth in Section 6.06.

“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

“Limited Partners”has the meaning set forth in the recitals.

“Losses” means all losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers.

“MAE Notice" has the meaning set forth in Section 10.11.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business taken as a whole, (b) the value of the Purchased Assets taken as a whole, or (c) the ability of Seller to consummate the transactions contemplated hereby on a timely basis; provided, however, the determination of “Material Adverse Effect” shall not include (i) changes in business or economic conditions affecting the economy or Seller’s industry generally, (ii) changes in economic or political conditions or the financing, banking, currency or capital markets in general, (iii) changes in Tax rates or the enactment or implementation of any new Law or Tax; (iv) any event as to which Buyer has provided written consent hereunder; or (v) the execution, delivery or performance of this Agreement (including any announcement relating to this Agreement or the fact that Buyer is acquiring the Purchased Assets), provided, however, that any event, occurrence, fact, condition or change described in the foregoing clauses (i) through (iii) above may constitute or give rise to a Material Adverse Effect only to the extent that such event, occurrence, fact, condition or change has a disproportionate impact on Seller or the Business, each, taken as a whole, relative to other Persons operating in the industries in which the Business is operated.

“Material Consents” has the meaning set forth in Section 2.09.

“Material Contracts” has the meaning set forth in Section 4.07(a).

“Material Customers” has the meaning set forth in Section 4.14(a).

“Material Suppliers” has the meaning set forth in Section 4.14(b).

“Multiemployer Plan”has the meaning set forth inSection 4.19(h).

“Net Negative Purchase Price Adjustment Amount” has the meaning set forth in Section 2.06(d)(ii).

“Net Positive Purchase Price Adjustment Amount” has the meaning set forth in Section 2.06(d)(i).

“Non-competition and Confidentiality Agreements” means those certain Non-competition and Confidential Information Agreements between Buyer and each of the Key Management Employees entered into in connection with the transactions contemplated hereby.

“Non-Transferred Employees” has the meaning set forth in Section 6.05(a).

“Outstanding Receivable” has the meaning set forth in Section 2.06(b)(iii)

“Owned Real Property” means the Amarillo Owned Real Property and the Garden City Owned Real Property.

“Parent” has the meaning set forth in the preamble.

“Parent Restricted Stock” means the restricted stock of Parent, in an amount calculated by dividing Six Million Six Hundred Thousand Dollars ($6,600,000.00) by the average closing price per share for the common stock of Parent, as reported by the NASDAQ Stock Exchange for the twenty consecutive trading days prior to (and not including) the Closing Date.

“Partnership Agreement” has the meaning set forth in Section 4.02.

“Pay-off Letters” has the meaning set forth in Section 3.02(a)(xii).

“PBGC” has the meaning set forth in Section 4.19(i).

“Pension Plan” has the meaning set forth in Section 4.19(k).

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Permitted Encumbrances” has the meaning set forth in Section 4.08.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

“Personal Property Leases” has the meaning set forth in Section 2.01(e).

“Pharmaceutical Products” means (i) articles recognized in the official United States Pharmacopoeia, official Homoeopathic Pharmacopoeia of the United States, or official National Formulary, or any supplement to any of them; (ii) articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in animals; (iii) articles (other than food) intended to affect the structure or any function of the body of animals; (iv) articles classified as a “drug” or “device” under the United States Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, etc., and the regulations promulgated pursuant to such Act; and (v) articles classified as a “drug”, “device”, or similar such terms under applicable state or local statutes, ordinances, rules and regulations governing pharmacists or pharmacies, and (vi) articles that are dispensed or delivered for administration to or use by a patient or other individual entitled to receive the article pursuant to a prescription issued by a physician, veterinarian or other person who has a license to issue such a prescription.

“Post-Closing Escrow Agreement” means the Escrow Agreement among Buyer, Seller and the Escrow Agent, to be executed and delivered at the Closing to govern the Aggregate Post-Closing Escrow Amount, in the form attached hereto as Exhibit A.

“Post-Closing Indemnification Escrow Fund” means a cash amount of six million dollars ($6,000,000.00), together with any interest or other earnings thereon, in a segregated account established and maintained at the Escrow Agent pursuant to the Post-Closing Escrow Agreement to be available to satisfy claims made by Buyer or any other Buyer Indemnitee against Seller pursuant to ARTICLE VIII and Section 2.06(d)(ii).

“Post-Closing Working Capital Escrow Fund” means a cash amount of five hundred thousand dollars ($500,000), together with any interest or other earnings thereon, in a segregated account established and maintained at the Escrow Agent pursuant to the Escrow Agreement to be available to satisfy amounts owed by Seller or to Buyer pursuant to Section 2.06(d)(i)and Section 2.06(d)(ii).

“Pre-Closing Escrow Agreement” means the Escrow Agreement among Buyer, Seller and the Escrow Agent, executed and delivered on the date hereof in the form attached hereto as Exhibit B (as amended, restated or otherwise modified from time to time).

“Pre-Closing Escrow Fund” has the meaning set forth in the recitals.

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

“Protected Person” has the meaning set forth in Section 6.06(c)(ii).

“Purchase Price” has the meaning set forth in Section 2.05.

“Purchased Assets” has the meaning set forth in Section 2.01.

“Receivables” mean, whether or not accrued on the Closing Date, all accounts or notes receivable, work in progress unbilled services rendered prior to Closing, promissory notes, amounts due under sales contracts, rebates and incentives, and any security, claim, remedy or other right related to the foregoing and any other amounts owed to Seller at Closing and arising in the ordinary course of business.

“Related Party” has the meaning set forth in Section 4.21. 

“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Repaid Indebtedness”has the meaning set forth in Section 3.02(a)(xii).

“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Resolution Period” has the meaning set forth in Section 2.06(c)(ii).

“Restricted Party” has the meaning set forth in Section 6.06.

“Review Period” has the meaning set forth in Section 2.06(c)(i).

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any successor Law, and the rules and regulations issued pursuant thereto or pursuant to any successor Law.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor Law, and the rules and regulations issued pursuant thereto or pursuant to any successor Law.

“Seller” has the meaning set forth in the preamble.

“Seller Closing Certificate” has the meaning set forth in Section 7.02(i).

“Seller Fundamental Reps” has the meaning set forth in Section 8.04(a).

“Seller Indemnitees” has the meaning set forth in Section 8.03.

“Seller’s Accountants” means Dosheir, Pickens & Francis, PC.

“Seller’s Cure Period” has the meaning set forth in Section 6.08(c)(ii).

“Seller’s Welfare Plans” has the meaning set forth in Section 6.05(b).

“Statement of Objections” has the meaning set forth in Section 2.06(c)(ii).

“Survey” has the meaning set forth in Section 6.08(a).

“Swap Agreement” means the International Swaps and Derivatives Association, Inc. 2002 Master Agreement dated as of January 22, 2008, between Micro Beef Technologies, Ltd. and Bank of America, N.A.

“Tangible Personal Property” has the meaning set forth in Section 2.01(e).

“Target Working Capital” means $26,000,000.00.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Taxes” means (i) all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, and (ii) any Liability for any item described in clause (i) of another Person, whether by Contract, as a transferee or successor, pursuant to any applicable Law, or otherwise.

“Third Party Claim” has the meaning set forth in Section 8.05(a).

“Title Commitment” has the meaning set forth in Section 6.08(b).

“Title Company” has the meaning set forth in Section 6.08(b).

“Title Objections” has the meaning set forth in Section 6.08(c)(i).

“Title Policy”has the meaning set forth in Section 6.08(b).

“Transaction Documents” means this Agreement, the Pre-Closing Escrow Agreement, the Post-Closing Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, Intellectual Property Assignments, Deed, Assignment and Assumption of Leases, the Non-competition and Confidentiality Agreements and the other agreements, certificates, instruments and documents required to be delivered on the date hereof or at the Closing.

“Transfer Tax Estimate” has the meaning set forth in Section 6.13.

“Transferred Employees” has the meaning set forth in Section 6.05(a).

“UCC Search” has the meaning set forth in Section 6.08(b).

“Undisputed Amounts” has the meaning set forth in Section 2.06(c)(iii).

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

ARTICLE II                                

PURCHASE AND SALE

Section 2.01.Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell, assign, transfer, convey and deliver, and Seller shall cause its Affiliates to sell, assign, transfer and convey and deliver, to Buyer, and Buyer shall purchase from Seller, free and clear of any Encumbrances other than Permitted Encumbrances, all of Seller’s right, title and interest in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired and whether or not reflected on the books and records of Seller (other than the Excluded Assets), which relate to, or are used or held for use in connection with, the Business (collectively, the “Purchased Assets”), including, without limitation, the following:

(a)all Receivables;

(b)all inventory, finished goods, raw materials, work in progress, packaging, supplies, parts, all Pharmaceutical Products, and all other operating supplies and other inventories  (“Inventory”);

(c)all Contracts related to Seller and the Business, including Intellectual Property Licenses, including those set forth on Section 2.01(c) of the Disclosure Schedules, to the extent Lawfully assignable (the “Assigned Contracts”);

(d)all Intellectual Property Assets;

(e)all tangible personal property owned by or leased to Seller including without limitation, furniture, fixtures, equipment, machinery, tools, vehicles, office equipment, trade fixtures, computer equipment, computer systems, furnishings, machinery, tenant improvements, security equipment, communications equipment, and equipment operation manuals, if any (the “Tangible Personal Property”), including but not limited to those items listed on Section 2.01(e) of the Disclosure Schedules, with all equipment and other personal property leases for such Tangible Personal Property, to the extent Lawfully assignable (“Personal Property Leases”);

(f)all leasehold interests in the Leased Real Property, and fee simple title to the each parcel of the Amarillo Owned Real Property (collectively, the “Acquired Real Property”), together with the building, fixtures and other improvements located on such Acquired Real Property;

(g)all Permits, including Environmental Permits, which are held by Seller and required for the conduct of the Business as currently conducted or for the ownership and use of the Purchased Assets, including, without limitation, those listed on Section 4.17(b) and Section 4.18(b) of the Disclosure Schedules, to the extent transfer is permitted by Law;

(h)all rights to any Actions of any nature available to or being pursued by Seller to the extent related to the Business, the Purchased Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise;

(i)all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits (including any cash deposits), charges, sums and fees, to the extent related to the Purchased Assets or Assumed Liabilities;

(j)all of Seller’s rights under warranties, guaranties, indemnities and all similar rights against third parties to the extent related to any Purchased Assets;

(k)originals, or where not available, copies, of all books and records relating to the Business, including, but not limited to, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, Communication Addresses, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and intellectual property files relating to the Intellectual Property Assets and the Intellectual Property Licenses (“Books and Records”);

(l)all goodwill and the going concern value of the Business; and

(m)all rights of Seller arising under or relating to the Assumed Liabilities.

Section 2.02.Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following assets (collectively, the “Excluded Assets”):

(a)all cash and cash equivalents of Seller (other than cash related to customer deposits);

(b)the seals, organizational documents, minute books, stock records, Tax Returns or other records having to do with the formation of the General Partner or the partnership of Seller and all stock, membership interests, partnership interests and any other security in any other Person;

(c)Contracts set forth on Section 2.02(c) of the Disclosure Schedules (the “Excluded Contracts”);

(d)the assets, properties and rights specifically set forth on Section 2.02(d) of the Disclosure Schedules;

(e)the rights which accrue or will accrue to Seller under the Transaction Documents;

(f)all personnel records and other records that Seller is required by Law to retain in its possession;

(g)all claims for refunds of Taxes and other governmental charges of whatever nature (but only if such other governmental charges are an Excluded Liability);

(h)all rights in connection with and assets of the Benefit Plans;

(i)all Insurance Policies and rights thereunder;

(j)the assets indentified as Excluded Assets on Section 2.02(j) of the Disclosure Schedules; and

(k)employee receivables under any employee notes or obligations.

Section 2.03.Assumed Liabilities. Subject to the terms and conditions set forth herein, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Seller (collectively, the “Assumed Liabilities”), and no other Liabilities:

(a)the Liabilities of Seller that are classified under the “accounts payable,” “customer deposits,” “accrued expenses” (but not including any payroll obligations for periods prior to Closing), and other ‘current liabilities” and “deferred revenue” line items of the Interim Balance Sheet (except as such line items are modified on Section 2.03(a) of the Disclosure Schedules), without duplication, (i) as of the Interim Balance Sheet Date and (ii) as of the Closing Date that arose in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date and that consistent with past practice would have been categorized under such line items had the Interim Balance Sheet Date been the Closing Date;

(b)all Liabilities in respect of the Assigned Contracts, and Personal Property Leases but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date, were incurred in the ordinary course of business and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing; provided that the payments, installment payments, monthly payments and other liabilities related to Personal Property Leases and Assigned Contracts shall be paid current by Seller up to and including Closing; and

(c)the Assumed Indebtedness, if any.

Except for the Assumed Liabilities, Buyer is not assuming, shall not assume, and shall not be deemed to have assumed, any Liability of Seller or the Business at Closing.  If a Liability is not identified in this Section 2.03, then the Liability shall not be assumed by Buyer, and shall be retained by, and be the sole and exclusive obligation of, Seller following Closing.  No party hereto intended that the assumption by Buyer of the Assumed Liabilities shall in any way enlarge the rights of any third parties relating thereto.

Section 2.04.Excluded Liabilities.  Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller shall, and shall cause each of its Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited to, the following Liabilities:

(a)Any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including, without limitation, fees and expenses of counsel, accountants, consultants, advisers and others.

(b)Any Liability for (i) Taxes of Seller (or any partner or Affiliate of Seller) or relating to the Business, the Purchased Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (ii) Taxes of Seller (or any partner or Affiliate of Seller) that arise out of the consummation of the transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 6.13; or (iii) other Taxes of Seller (or any partner or Affiliate of Seller) of any kind or description (including any Liability for Taxes of Seller (or any partner or Affiliate of Seller) that becomes a Liability of Buyer under any common law doctrine of de facto merger or transferee or successor liability or otherwise by operation of contract or Law).

(c)Any Liabilities relating to or arising out of the Excluded Assets.

(d)Any Liabilities of Seller or relating to the Purchased Assets in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date.

(e)Any product Liability or similar claim for injury to a Person or property which arises out of or is based upon the improper performance or malfunctioning of a product, improper design or manufacture, failure to adequately package, label or warn of hazards or other related product defects of any products manufactured or sold or any service performed by Seller prior to the Closing Date, including, any such matters which are based upon any express representation, warranty, agreement or guaranty made by Seller prior to the Closing Date, with respect to a matter that is not an Assumed Liability.

(f)Any recall, design defect or similar claims of any products manufactured, sold or distributed or any service performed by Seller prior to the Closing Date.

(g)Any Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any Law, Permit or Governmental Order.  Without limiting the foregoing, Seller shall be responsible for any Liabilities arising from or related to its failure to properly comply with (i) any federal, state, or local Law, Permit or Governmental Order of the U.S. Food and Drug Administration (“FDA”) or relating to Pharmaceutical Products and (ii) the duty to exercise the requisite care, skill and knowledge in purchasing, storing, selling, and distributing Pharmaceutical Products.

(h)Any Liabilities of Seller with respect to employment, termination of employment, compensation (including any vacation time or leave which is accrued and unpaid prior to the Closing) or employee benefits of any nature (including, but not limited to the benefits to be provided under the Benefit Plans) owed to any current or former Employee, agent or independent contractor of Seller or its Affiliates (or the beneficiary of any current or former Employee, agent or independent contractor) whether or not such current or former Employee, agent or independent contractor becomes a Transferred Employee or otherwise provides services to Buyer, that arises out of or relates to the employment or other service provider relationship between Seller or its Affiliates and any such current or former Employee or the termination of such relationship.  Without limiting the foregoing, Seller shall be responsible for the payment of any severance payment or benefits that become due to any current or former Employee as a result of the termination of such current or former Employee by Seller or its Affiliates.  Buyer and its Affiliates shall not be obligated to continue or assume any employee benefit plan or program of Seller or its Affiliates (including, but not limited to the Benefit Plans) or be responsible for any obligation or liability thereunder.

(i)Any Liabilities of Seller for transaction bonuses, change in control payments or other similar payments due or triggered as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby.

(j)Any Environmental Claims or Liabilities under Environmental Laws with respect to the ownership or operation of the Business or Purchased Assets arising out of or relating to events, activities or conditions first existing or occurring on or prior to the Closing, or otherwise arising out of any actions or omissions of Seller or its Affiliates prior to the Closing.

(k)Any Liabilities of Seller accounted for on the Interim Balance Sheet that are not classified under the “accounts payable,” “customer deposits,” “accrued expenses”, “other current liabilities” and “deferred revenue” line items of the Interim Balance Sheet.

(l)Any Liabilities which constitute intercompany payables owing to Affiliates of Seller.

(m)Any Liabilities of Seller relating to or arising from unfulfilled commitments, quotations, purchase orders, customer orders or work orders that (i) do not constitute part of the Purchased Assets issued by Seller’s customers to Seller on or before the Closing; (ii) did not arise in the ordinary course of business; or (iii) are not validly and effectively assigned to Buyer pursuant to this Agreement.

(n)Any Liabilities to indemnify, reimburse or advance amounts to any present or former officer, director, employee, partner or agent of Seller (including with respect to any breach of fiduciary obligations by same), except for indemnification of same pursuant to Section 8.03 as Seller Indemnitees.

(o)Any Liabilities under the Excluded Contracts or any other Contracts, including Intellectual Property Licenses, (i) which are not validly and effectively assigned to Buyer pursuant to this Agreement; or (ii) to the extent such Liabilities arise out of or relate to a breach by Seller of such Contracts prior to Closing.

(p)Any Liabilities for accrued distributions, declared by the General Partner and payable to the General Partner or Limited Partners, which have not been paid or otherwise distributed.

(q)Any Liabilities of Seller for deductibles, co-payments, premiums or other payments relating to property, casualty, errors and omissions, and other insurance premiums or payments.

(r)Any Indebtedness of Seller, other than Assumed Indebtedness.

(s)Any Liabilities of Seller, actual or potential, known or unknown, that are not assumed by Buyer hereunder and that occurred, arose or relate to, or are connected with any action or omission of Seller that occurred or arose prior to Closing, whether or not covered by insurance obtained or maintained by Seller or Buyer.

Seller will retain and timely pay all other Liabilities of Seller not expressly scheduled as part of this Agreement and not assumed by Buyer, including, without limitation, (i) Liabilities incurred by Seller from the effective date of this Agreement to Closing and (ii) Liabilities not listed as Assumed Liabilities.

Section 2.05.Purchase Price. The aggregate purchase price for the Purchased Assets shall be (x) the Parent Restricted Stock, plus (y) $53,400,000 in immediately available funds, which amount is subject to adjustment pursuant to Section 2.05 hereof (as adjusted, the “Cash Purchase Price,” and with the Parent Restricted Stock, the “Purchase Price”), plus the assumption of the Assumed Liabilities. The Purchase Price shall be paid as follows:

(a)Buyer shall pay, or cause to be paid, on behalf of Seller by wire transfer of immediately available funds an amount equal to the Repaid Indebtedness to the accounts designated in writing by Seller to Buyer no later than two (2) Business Days prior to the Closing Date and pursuant to the Pay-off Letters;

(b)Buyer shall pay, or cause to be paid, the Cash Purchase Price, minus (x) the amount of the then available funds in the Pre-Closing Escrow Fund, minus (y) the Aggregate Post-Closing Escrow Amount, and minus (z) the Estimated Closing Adjustment (understanding that the Estimated Closing Adjustment may be a negative number, in which case it would be added to the Cash Purchase Price) (such resulting amount, the “Closing Day Purchase Price”) by wire transfer of immediately available funds to an account or accounts designated in writing by Seller to Buyer no later than two (2) Business Days prior to the Closing Date;

(c)Parent shall cause the Parent Restricted Stock to be issued and delivered to Seller;

(d)Buyer and Seller shall issue joint instructions directing the Escrow Agent to pay to Seller the entire amount of the then available funds in the Pre-Closing Escrow Fund by wire transfer of immediately available funds to an account designated in writing by Seller in such direction letter; and

(e)Buyer shall deposit, or cause to be deposited, the Aggregate Post-Closing Escrow Amount by wire transfer of immediately available funds into an account designated by the Escrow Agent, which amount shall be held and distributed in accordance with the terms hereof and the Post-Closing Escrow Agreement.

Section 2.06.Purchase Price Adjustment.

(a)Determination of Closing Adjustment. No later than two (2) Business Days prior to the Closing, Seller shall provide Buyer with a certificate executed by the Chief Financial Officer of Seller (the “Estimated Closing Date Statement”) setting forth in reasonable detail (i) a good faith estimate of Closing Working Capital (“Estimated Working Capital”) (prepared in accordance with the schedule attached as Section 2.06 of the Disclosure Schedules), (ii) a good faith estimate of the aggregate amount of all Assumed Indebtedness of Seller as of the open of business on the Closing Date (“Estimated Assumed Indebtedness”), and (iii) the calculation of the Estimated Closing Adjustment, together with such schedules and data with respect to the determination thereof as may be appropriate to support the calculations therein.  The Estimated Closing Date Statement shall be prepared in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end, subject to the modifications and limitations set forth on Section 2.06 of the Disclosure Schedules; provided that to the extent there is any discrepancy between GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end and Schedule 2.06, Schedule 2.06 shall govern.  Buyer and its Representatives shall have an opportunity to review and reasonably comment on the Estimated Closing Date Statement delivered by Seller, which shall be subject to Buyer’s reasonable approval.  Set forth in Section 2.06 of the Disclosure Schedules are examples of the Estimated Closing Date Statement determined as if the Closing had occurred on the date of the Interim Financial Statements, and assuming for purposes of examples of the Estimated Closing Adjustment, both that Target Working Capital is greater than Estimated Working Capital, and that Estimated Working Capital is greater than Target Working Capital.

(b)Post-Closing Determination of Closing Date Statement.

(i)Within 180 days after the Closing Date, Buyer shall prepare and deliver to Seller a written statement (the “Closing Date Statement”) setting forth Buyer’s good faith calculations of (A) Closing Working Capital (“Actual Working Capital”) and (B) the aggregate amount of all Assumed Indebtedness of Seller as of the open of business on the Closing Date (“Actual Assumed Indebtedness”), together with such schedules and data with respect to the determination thereof as may be appropriate to support the calculations set forth therein.

(ii)The Closing Date Statement,  and the calculations of Actual Working Capital and Actual Assumed Indebtedness, shall be prepared in accordance with GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end, subject to the modifications and limitations set forth on Section 2.06 of the Disclosure Schedules; provided that to the extent there is any discrepancy between GAAP applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the Audited Financial Statements for the most recent fiscal year end and Schedule 2.06 of the Disclosure Schedules, Schedule 2.06 of the Disclosure Schedules shall govern.

(iii)Solely for purposes of preparing and finalizing the Closing Date Statement (and the computation of Actual Working Capital included therein), in the event any Receivable outstanding at Closing for which there was a reserve set forth on the Estimated Closing Date Statement was actually collected prior to the delivery of the Closing Date Statement, then the amount of such reserve shall dollar for dollar be decreased by the amount actually collected and, to the extent any Receivable (or any portion thereof) outstanding at Closing was not collected prior to the delivery of the Closing Date Statement, then such uncollected amount of such Receivable (each an "Outstanding Receivable") shall dollar for dollar be included in the reserves set forth on the Closing Date Statement and in the calculation of Actual Working Capital to the extent not previously included in the reserves set forth on the Estimated Closing Date Statement.  Any Outstanding Receivable subsequently collected by Buyer (to the extent Buyer has received payment for such Outstanding Receivable in accordance with this Section 2.06(b) shall be immediately paid to Seller).

(c)Examination and Review.

(i)Examination. After receipt of the Closing Date Statement, Seller and its Representatives shall have thirty (30) days (the “Review Period”) to review the Closing Date Statement. During the Review Period, Seller and Seller’s Accountants shall have reasonable access to the relevant books and records of Buyer, the personnel of, and work papers prepared by, Buyer and/or Buyer’s Accountants to the extent that they relate to the Closing Date Statement and to such historical financial information (to the extent in Buyer’s possession) relating to the Closing Date Statement as Seller may reasonably request for the purpose of reviewing the Closing Date Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Buyer.

(ii)Objection. On or prior to the last day of the Review Period, Seller may object to the Closing Date Statement by delivering to Buyer a written statement setting forth those items that Seller disputes (the “Statement of Objections”). The Statement of Objections shall (i) specify in reasonable detail the nature of any disagreement so asserted, and include all supporting schedules, analyses, working papers and other documentation, (ii) include only disagreements based on mathematical errors or the components of the Closing Date Statement not being calculated in accordance with this Section 2.06, and (iii) specify the line item or items in the Closing Date Statement with which Seller disagrees and the amount of each such line item or items as calculated by Seller.  Seller shall be deemed to have agreed with all items and amounts included in the Closing Date Statement delivered pursuant to Section 2.06(b) except such items that are specifically disputed in the Statement of Objections.  If Seller fails to deliver the Statement of Objections before the expiration of the Review Period, the Closing Date Statement and the Actual Working Capital and Actual Assumed Indebtedness reflected in the Closing Date Statement shall be deemed to have been accepted by Seller and shall be deemed the “Final Working Capital”and “Final Assumed Indebtedness” and shall be final and binding. If Seller delivers the Statement of Objections before the expiration of the Review Period, Buyer and Seller shall negotiate in good faith to resolve such objections within thirty (30) days after the delivery of the Statement of Objections (the “Resolution Period”), and, if the same are so resolved within the Resolution Period, the Closing Date Statement and the Actual Working Capital and Actual Assumed Indebtedness with such changes as may have been previously agreed in writing by Buyer and Seller, shall be deemed the “Final Working Capital” and “Final Assumed Indebtedness” and shall be final and binding.

(iii)Resolution of Disputes. If Seller and Buyer fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“Disputed Amounts” and any amounts not so disputed, the “Undisputed Amounts”) shall be submitted for resolution to KPMG LLP or, if KPMG LLP; is unable to serve, Buyer and Seller shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Seller’s Accountants or Buyer’s Accountants (the “Independent Accountants”) who, acting as experts and not arbitrators, shall resolve the Disputed Amounts only and make any adjustments to the Actual Working Capital and Actual Assumed Indebtedness. The parties hereto agree that all adjustments shall be made without regard to materiality. The Independent Accountants shall only decide the specific items under dispute by the parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Date Statement and the Statement of Objections, respectively.  The Independent Accountants shall review such submissions from Buyer and Seller and base its determination solely on such submissions.  The Independent Accountants shall make a determination as soon as practicable within thirty (30) days (or such other time as the parties hereto shall agree in writing) after their engagement.  The decision of the Independent Accountants shall be deemed final and binding upon the parties and enforceable by any court of competent jurisdiction and the Independent Accountants’ final calculation of (i) Actual Working Capital shall be deemed the “Final Working Capital” and (ii) Actual Assumed Indebtedness shall be deemed the “Final Assumed Indebtedness.”

(iv)Fees of the Independent Accountants. Seller shall pay a portion of the fees and expenses of the Independent Accountants equal to 100% multiplied by a fraction, the numerator of which is the amount of Disputed Amounts submitted to the Independent Accountants that are resolved in favor of Buyer (that being the difference between the Independent Accountants’ determination and Seller’s determination) and the denominator of which is the total amount of Disputed Amounts submitted to the Independent Accountants. Buyer shall pay that portion of the fees and expenses of the Independent Accountants that Seller is not required to pay hereunder.

(d)Post-Closing Adjustment.

(i)Following the determination of the components of the Closing Date Statement, if the result of (x) the Final Working Capital minus the Estimated Working Capital plus (y) the Estimated Assumed Indebtedness minus the Final Assumed Indebtedness is an amount greater than zero (the “Net Positive Purchase Price Adjustment Amount”) then (A) Buyer shall pay the Net Positive Purchase Price Adjustment Amount in cash to Seller and (B) Buyer and Seller shall deliver a joint direction instructing the Escrow Agent to release the then available funds in the Post-Closing Working Capital Escrow Fund to Seller.

(ii)Following the determination of the components of the Closing Date Statement, if the result of (x) the Final Working Capital minus the Estimated Working Capital plus (y) the Estimated Assumed Indebtedness minus the Final Assumed Indebtedness is an amount less than zero (the “Net Negative Purchase Price Adjustment Amount”) then (A) Buyer shall be entitled to receive a payment in cash out of the then available funds in the Post-Closing Working Capital Escrow Fund in such amount and Buyer and Seller shall deliver a joint direction instructing the Escrow Agent to make such payment to Buyer.  If the amount of the Post-Closing Working Capital Escrow Fund is greater than the absolute value of the Net Negative Purchase Price Adjustment Amount, then Buyer and Seller shall deliver a joint direction instructing the Escrow Agent to make a payment to Seller equal to the amount of remaining funds in the Post-Closing Working Capital Escrow Fund after the distribution of the Net Negative Purchase Price Adjustment Amount to Buyer in accordance with this Section 2.06(d).  If the amount of the Post-Closing Working Capital Escrow Fund is less than the absolute value of the Net Negative Purchase Price Adjustment Amount, Buyer and Seller shall deliver a joint direction instructing the Escrow Agent to make a payment to Buyer in an amount equal to such shortfall from the Post-Closing Indemnification Escrow Fund. Set forth in Section 2.06(d)(ii) of the Disclosure Schedules are examples of the determination of the post-Closing adjustments contemplated in Sections 2.06(d)(i) and (ii), demonstrating both a Net Positive Purchase Price Adjustment Amount and a Net Negative Purchase Price Adjustment Amount.

(iii)All payments pursuant to this Section 2.06(d)shall be made by wire transfer of immediately available funds to an account designated in advance by Seller or Buyer, as applicable, and shall be made on or prior to the fifth (5th) Business Day following: (A) the thirty (30)-day period following Buyer’s delivery of the Closing Date Statement pursuant to Section 2.06(b) if Seller does not timely dispute such amounts pursuant to Section 2.06(c)(ii); (B) the date of Seller’s and Buyer’s mutual determination of Final Working Capital and Final Assumed Indebtedness in the event Seller timely disputes such amounts pursuant to Section 2.06(c)(ii) and Seller’s and Buyer’s differences are resolved without the engagement of an Independent Accountant pursuant to Section 2.06(c)(iii); and (C) the date of the Independent Accountant’s determination of Final Working Capital and/or Final Assumed Indebtedness pursuant to Section 2.06(c)(iii) in the event Seller timely disputes such amounts pursuant to Section 2.06(c)(ii)and Seller and Buyer are unable to resolve their differences pursuant to Section 2.06(c)(ii).

(iv)The amount of any Net Positive Purchase Price Adjustment Amount or any Net Negative Purchase Price Adjustment Amount, as the case may be, shall bear interest from and including the Closing Date to but excluding the date of payment at a rate per annum equal to the rate of interest published by The Wall Street Journal as the “prime rate” at large U.S. money center banks on the Closing Date, calculated on the basis of a 365 day year and the actual number of days elapsed, without compounding.

(e)Adjustments for Tax Purposes. Any payments made pursuant to Section 2.06 shall be treated as an adjustment to the Purchase Price by the parties for Tax purposes, unless otherwise required by Law.

Section 2.07.Allocation of Purchase Price. After the Closing, Buyer, at its expense, will engage an independent real estate appraisal service company or companies, to conduct an appraisal of each parcel of the Acquired Real Property and an independent appraisal service company (collectively the “Appraisers”), to conduct an appraisal of certain other Assets and Liabilities of Seller, in accordance with GAAP (collectively, the “Appraisals”).  Within 120 days after Closing, Buyer will deliver the Appraisals and all supporting documents to Seller.  Seller shall be allowed, within fifteen (15) days following delivery by Buyer to Seller of the Appraisals and all supporting documents, to provide reasonable comments on the Appraisals to Buyer and the Appraisers, and Buyer shall request the Appraisers to reasonably consider such comments prior to rendering final Appraisals.  The Purchase Price shall be allocated for federal and state tax purposes by Buyer in accordance with the Appraisals; provided, however, that Seller shall not be obligated to allocate the Purchase Price in accordance with the Appraisals.  Buyer and Seller shall each complete and File IRS Form 8594 in accordance with Section 1060 of the Code and the corresponding rules and regulations thereunder reflecting the allocation proposed by such party.

Section 2.08.Withholding Tax. Buyer shall be entitled to deduct and withhold from the Purchase Price all Taxes that Buyer may be required to deduct and withhold under any provision of Tax Law. All such withheld amounts shall be treated as delivered to Seller hereunder.

Section 2.09.Third Party Consents. To the extent that Seller’s rights under any Contract or Permit constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Buyer without the consent of another Person which has not been obtained, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its expense, shall use its commercially reasonable efforts to obtain any such required consent(s) as promptly as possible. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Buyer’s rights under the Purchased Asset in question so that Buyer would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by law and the Purchased Asset, shall act after the Closing as Buyer’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with Buyer in any other reasonable arrangement designed to provide such benefits to Buyer. Buyer shall, to the extent it receives the benefits under any such Purchased Asset, perform the obligations of Seller thereunder. Once any such required consent has been obtained Seller shall promptly assign, transfer, convey and deliver the applicable Contract or Permit to Buyer, and Buyer shall assume any obligations under such Permit or Contract pursuant to an Assignment and Assumption Agreement upon substantially the same terms as those of the Assignment and Assumption Agreement (which Agreement Buyer and Seller shall prepare, execute and deliver in good faith at the time of such transfer).  Notwithstanding any provision in this Section 2.09 to the contrary, it is a condition to Buyer’s obligation to close the transactions contemplated hereunder that Seller (x) provide evidence of notice or consent pursuant to the Contracts and Permits specifically designated as requiring such evidence on Section 4.03 of the Disclosure Schedules (the “Material Consents”) in each case, in form and substance reasonably satisfactory to Buyer and Seller and (y) fulfill the condition contained in Section 7.02(o) hereof, and Buyer shall not be deemed to have waived its rights under Section 7.02(c) hereof unless and until Buyer either provides written waivers thereof or elects to proceed to consummate the transactions contemplated by this Agreement at Closing.

Section 2.10.Prorated Items.  The following items shall be prorated as of Closing: (i) Personal Property Lease payments; (ii) property Taxes, rent, utility charges, and other similar administrative obligations and prepaid benefits; (iii) insurance premiums for insurance purchased by Seller and retained by Buyer, if any; and (iv) interest and reserves on Encumbrances and obligations, if any, expressly assumed in writing by Buyer.

Section 2.11.Payments Post-Closing.

(a)If, following the Closing Date, Seller receives any payment or other proceeds which relate to an obligation or right that arose on or after the Closing Date with respect to any of the Purchased Assets or Assumed Contracts, Seller shall promptly remit to Buyer such payments.

(b)If, following the Closing Date, Buyer receives any payment or other proceeds which relate to any of the Excluded Assets, Buyer shall promptly remit to Seller such payments.

(c)Unless otherwise specified, the prorations described in Section 2.10and this Section 2.11shall be made as of the Closing Date.  Seller and Buyer agree to adjust between themselves after Closing any errors or omissions in any such proration made at Closing. Such adjustments shall be made promptly after the receipt of information that verifies the amount of such adjustment; provided however, that such prorations shall be deemed final and not subject to further post-closing adjustment if no such adjustments have been requested in writing within one (1) year after the Closing Date.

Section 2.12.Possession.  Seller shall deliver actual possession of the Purchased Assets and Assumed Liabilities to Buyer at Closing.

Section 2.13.Conveyance of Title.

(a)Real Property.  Title to the Amarillo Owned Real Property shall be conveyed by a Special Warranty Deed in the form and substance satisfactory to Buyer and Seller (each, a “Deed”).  Title to the Amarillo Owned Real Property shall be marketable and insurable and shall be free and clear of all Encumbrances other than Permitted Encumbrances.

(b)Other Assets.  Title to the Purchased Assets and Assumed Liabilities shall be conveyed by Bills of Sale, motor vehicle titles, assignments, and other instruments of transfer as described in Section 3.02(a).  Unless expressly stated otherwise, title to the Purchased Assets and Assumed Liabilities (i) shall be marketable in Buyer, (ii) shall be conveyed free and clear of all Encumbrances, other than Permitted Encumbrances, and (iii) shall be conveyed with only the warranties expressly set forth in this Agreement.

ARTICLE III                                

CLOSING

Section 3.01.Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Dechert LLP, Cira Centre, 2929 Arch Street, Philadelphia, PA, 19104, at 9:00 a.m., Eastern Time, on the second (2nd) Business Day after all of the conditions to Closing set forth in ARTICLE VII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Seller and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the “Closing Date.”

Section 3.02.Closing Deliverables.

(a)At the Closing, Seller shall deliver the following:

(i)to Buyer, the Post-Closing Escrow Agreement duly executed by Seller;

(ii)to Buyer, a bill of sale in the form of Exhibit C hereto (the “Bill of Sale”) and duly executed by Seller, transferring the Tangible Personal Property included in the Purchased Assets to Buyer;

(iii)to Buyer, an assignment and assumption agreement in the form of Exhibit D hereto (the “Assignment and Assumption Agreement”) and duly executed by Seller, effecting the assignment to and assumption by Buyer of the Purchased Assets and the Assumed Liabilities;

(iv)to Buyer,assignments in the form of Exhibit E hereto (the “Intellectual Property Assignments”) and duly executed by Seller, transferring all of Seller’s right, title and interest in and to the Intellectual Property Assets and the Intellectual Property Licenses to Buyer, provided that, with respect to domain name registrations included in the Intellectual Property Assets, Seller shall, at or immediately following the Closing, take such steps as Buyer may direct to convey and transfer such domain name registrations to Buyer’s designated account, including assenting to any electronic request to transfer such domain name registrations as Buyer or Buyer’s agent may initiate;

(v)to Buyer,with respect to the Amarillo Owned Real Property, a Deed duly executed and notarized by Seller;

(vi)to Buyer, with respect to each Lease, an Assignment and Assumption of Lease in form and substance satisfactory to Buyer and Seller (each, an “Assignment and Assumption of Lease”) and duly executed by Seller;

(vii)to Buyer, with respect to the Amarillo Owned Real Property and with respect each Lease, all keys, combinations, passwords, and codes to all locks, security devices and entrance doors and copies of all plans and specifications, certificates of occupancy, permits, variances, approvals and site plans;

(viii)to Buyer, a power of attorney in the form of Exhibit F hereto and duly executed by Seller;

(ix)to Buyer, Seller Closing Certificate;

(x)to Buyer, the FIRPTA Certificate;

(xi)to Buyer, the certificates of the Secretary or Assistant Secretary of Seller required by Section 7.02(j) and Section 7.02(k);

(xii)to Buyer, pay-off letters for all Indebtedness to be repaid in full at Closing which shall acknowledge the aggregate principal amount and all accrued, but unpaid interest, in form and substance reasonably acceptable to Buyer (such letters, collectively, the “Pay-off Letters”andthe aggregate of such Indebtedness set forth in the Pay-off Letters, the “Repaid Indebtedness”) and UCC searches reasonably acceptable to Buyer, evidencing Seller’s title to the Purchased Assets, and Tax lien and litigation searches regarding Seller;

(xiii)to Buyer, evidence of the Material Consents;

(xiv)to Buyer, any approvals, waivers, and consents from each Governmental Authority, necessary for consummation of the transactions contemplated herein;

(xv)to Buyer, employment and consulting agreements, as the case may be, with Key Management Employees duly executed by each such Key Management Employee in form and substance reasonably satisfactory to Buyer;

(xvi)to Buyer, such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyer and Seller, as may be required to give effect to this Agreement;

(xvii)to the Escrow Agent, executed joint written instructions to the Escrow Agent, in accordance with Section 2.05(d); and

(xviii)to the Escrow Agent, the Post-Closing Escrow Agreement, duly executed by Seller.

(b)At the Closing, Buyer shall deliver the following:

(i)to Seller, the Closing Day Purchase Price;

(ii)to Seller, the Post-Closing Escrow Agreement duly executed by Buyer;

(iii)to Seller, the Assignment and Assumption Agreement duly executed by Buyer;

(iv)to Seller, with respect to each Lease, an Assignment and Assumption of Lease duly executed by Buyer;

(v)to Seller, Buyer Closing Certificate;

(vi)to Seller, the certificates of the Secretary or Assistant Secretary of Buyer required by Section 7.03(g) and Section 7.03(h);

(vii)to each Key Management Employee, the employment and consulting agreements, as the case may be, with such Key Management Employees duly executed by Buyer;

(viii)to the holders of Repaid Indebtedness, the respective amounts of Indebtedness to be paid in accordance with the Pay-off Letters;

(ix)to the Escrow Agent, executed joint written instructions to the Escrow Agent, in accordance with Section 2.05(d); and

(x)to the Escrow Agent, the Aggregate Post-Closing Escrow Amount and the Post-Closing Escrow Agreement duly executed by Buyer.

(c)At the Closing, Buyer and Seller co-execute any necessary documents to effect the assignment of the Intellectual Property, and Buyer shall record such documents and make such filings as appropriate.

ARTICLE IV                                

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Buyer that the statements contained in this ARTICLE IV are true and correct.

Section 4.01.Organization and Qualification of Seller. Seller is a limited partnership, duly organized, validly existing and in good standing under the Laws of the State of Texas and has full partnership power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets forth each jurisdiction in which Seller is licensed or qualified to do business, and, except as set forth in Section 4.01 of the Disclosure Schedules, Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as currently conducted makes such licensing or qualification necessary, except where the failure to so qualify or be duly licensed may not reasonably be expected to have a Material Adverse Effect.

Section 4.02.Authority of Seller. Seller has full partnership power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms. When each other Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms.  There is no restriction in the Amended and Restated Limited Partnership Agreement of Seller (the “Partnership Agreement”) or any other organizational document or any document governing Assumed Indebtedness of Seller or the Business or any other Contract limiting the right or power of Seller to sell the Purchased Assets and Assumed Liabilities.

Section 4.03.No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of formation, Partnership Agreement or other organizational documents of Seller; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller, the Business or the Purchased Assets; (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract or Permit to which Seller is a party or by which Seller or the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on the Purchased Assets. Except as set forth in Section 4.03 of the Disclosure Schedules, no consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority or any other Person is required by or with respect to Seller in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, except for such filings as may be required under the HSR Act.

Section 4.04.Financial Statements. Complete copies of the audited financial statements consisting of the balance sheet of Seller as of December 31 in each of the years 2008, 2009 and 2010 and the related statements of income and retained earnings, partnership equity and cash flow for the years then ended (the “Audited Financial Statements”), and unaudited financial statements consisting of the balance sheet of Seller as of August 31, 2011 and the related statements of income and retained earnings, partners’ equity and cash flow for the six month period then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, the “Financial Statements”) are included in the Disclosure Schedules at Section 4.04. The Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the period involved, subject, in the case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially adverse) and the absence of notes (that, if presented, would not differ materially from those presented in the Audited Financial Statements). The Financial Statements are based on the Books and Records, and fairly present the financial condition of Seller as of the respective dates they were prepared and the results of the operations and financial position of Seller for the periods indicated and as of the Closing. The balance sheet of Seller as of December 31, 2010 is referred to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the balance sheet of the Business as of August 31, 2011 is referred to herein as the “Interim Balance Sheet” and the date thereof as the “Interim Balance Sheet Date.” Seller maintains a standard system of accounting established and administered in accordance with GAAP.  The books of accounts and records of the Business are complete and correct in all material respects, and there have been no material transactions involving Seller which properly should have been set forth in business records and which have not been accurately so set forth.

Section 4.05.Undisclosed Liabilities. Seller has no Liabilities with respect to the Business, except (a) those which are adequately reflected or reserved against in the Financial Statements, (b) those which have been incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date, including under any Contracts, or (c) other Liabilities that are not individually or collectively material in amount.

Section 4.06.Absence of Certain Changes, Events and Conditions. Since the Balance Sheet Date, except as set forth in Section 4.06 of the Disclosure Schedules, there has not been any:

(a)event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(b)material change in any method of accounting or accounting practice for the Business, except as required by GAAP or as disclosed in the notes to the Financial Statements;

(c)material change in cash management practices and policies, practices and procedures with respect to collection of Receivables, establishment of reserves for uncollectible Receivables, accrual of Receivables, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits;

(d)failure to make commercially reasonable efforts to preserve and protect the goodwill of Seller and its relationships with clients, customers, suppliers, referral sources and other persons having business relationships with the Business;

(e)entry into any Contract that would constitute a Material Contract, other than in the ordinary course of business consistent with past practices;

(f)incurrence, assumption or guarantee of any indebtedness in excess of $15,000 except unsecured current obligations and Liabilities incurred in the ordinary course of business consistent with past practice, provided; however, that the Bank of America Indebtedness is the subject of negotiations with respect to the refinancing thereof, and may be modified, refinanced, or replaced, prior to Closing;

(g)transfer, assignment, sale or other disposition of any of the Purchased Assets shown or reflected in the Balance Sheet, except for the sale of Inventory in the ordinary course of business, dispositions of obsolete items, and items of below standard quality;

(h)cancellation of any debts or claims or amendment, termination or waiver of any rights constituting Purchased Assets, with a value in excess of $15,000, other than in the ordinary course of business, consistent with past practices;

(i)transfer, assignment or grant of any license, waiver, covenant not to sue, sublicense or other permission under any rights under or with respect to any Intellectual Property Assets or Intellectual Property Licenses, other than in the ordinary course of business, consistent with past practices;

(j)material damage, destruction or loss, or any material interruption in use, of any material Purchased Assets, whether or not covered by insurance;

(k)acceleration, termination, material modification to or cancellation of any Assigned Contract or Permit, other than in the ordinary course of business, consistent with past practices;

(l)capital expenditures in excess of $100,000 which would constitute an Assumed Liability;

(m)imposition of any Encumbrance upon any of the Purchased Assets, with the exception of the Bank of America Indebtedness, and any modification, refinancing or replacement thereof;

(n)grant of any bonuses, whether monetary or otherwise, or any general wage or salary increases in respect of any current or former Employees, consultants or officers of Seller, or other change in the material terms of employment for any Employee or entry into a material agreement with any Employee other than as provided for in any written agreements or consistent with past practice in the ordinary course of business;

(o)entry into, termination of, adoption of or amendment to, in any material respect, any change in control or severance agreement or any other Benefit Plan or collective bargaining agreement;

(p)loan to, or entry into any other transaction (other than in the ordinary course of business consistent with past practices) with, any Employees;

(q)adoption, amendment, modification or termination of any Benefit Plan;

(r)adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(s)purchase, lease or other acquisition of the right to own, use or lease any property or assets in connection with the Business for an amount in excess of $100,000, individually (in the case of a lease, per annum) or $200,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of Inventory or supplies in the ordinary course of business consistent with past practice; or

(t)any Contract to do any of the foregoing.

Section 4.07.Material Contracts.

(a)Section 4.07(a) of the Disclosure Schedules lists each of the following Contracts (x) by which any of the Purchased Assets are bound or affected or (y) to which Seller is a party or by which it is bound in connection with the Business or the Purchased Assets, including any Personal Property Leases (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Acquired Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Section 4.10(a) of the Disclosure Schedules and all Contracts relating to Intellectual Property set forth in Section 4.11(c) and Section 4.11(e) of the Disclosure Schedules, being “Material Contracts”):

(i)all Contracts involving aggregate consideration in excess of $50,000 and which, in each case, cannot be cancelled without penalty or without more than thirty (30) days’ notice;

(ii)all Contracts that require Seller to purchase or sell a stated portion of the requirements or outputs of the Business or that contain “take or pay” provisions;

(iii)all Contracts that provide for the indemnification of any Person or the assumption of any Tax, environmental or other Liability of any Person;

(iv)all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(v)all broker, distributor, vendor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts;

(vi)all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) and which are not cancellable without material penalty or without more than thirty (30) days’ notice;

(vii)except for Contracts relating to trade receivables, all Contracts relating to Assumed Indebtedness;

(viii)all Contracts with any Governmental Authority;

(ix)all Contracts that limit or purport to limit the ability of Seller to compete in any line of business or with any Person or in any geographic area or during any period of time;

(x)all joint venture, partnership or similar Contracts;

(xi)all Contracts for the sale of any of the Purchased Assets or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Purchased Assets;

(xii)all powers of attorney with respect to the Business or any Purchased Asset;

(xiii)all collective bargaining agreements or Contracts with any labor organization, union or association;

(xiv)(A) all Contracts by which Seller grants to any Person a license, waiver, covenant not to sue, sublicense or other permission under any rights under or with respect to any Intellectual Property Assets or Intellectual Property Licenses; and (B) all Intellectual Property Licenses, other than standard desktop or similar, generally available commercial software licensed to Seller on nondiscriminatory terms; and

(xv)all other Contracts that are material to the Purchased Assets or the operation of the Business and not previously disclosed pursuant to this Section 4.07.

(b)Each Material Contract is valid and binding on Seller in accordance with its terms and is in full force and effect. Except as set forth in Section 4.07(b) of the Disclosure Schedules, none of Seller or, to Seller’s Knowledge, any other party thereto is in breach of or default under (or to Seller’s Knowledge is alleged to be in breach of or default under), nor has Seller provided or received any notice of any intention to terminate, any Material Contract.  To Seller's Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.  Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer. There are no material disputes pending or to Seller’s Knowledge threatened under any Contract included in the Purchased Assets.

Section 4.08.Title to Purchased Assets. Seller has good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

(a)those items set forth in Section 4.08 of the Disclosure Schedules;

(b)liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures and for which there are adequate accruals or reserves on the Financial Statement;

(c)mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Business or the Purchased Assets;

(d)easements, rights of way, zoning ordinances, minor encroachments and overlapping boundary lines and other similar encumbrances affecting Acquired Real Property which are not, individually or in the aggregate, material to the Business or the Purchased Assets, which do not prohibit or materially interfere with the current operation of any Acquired Real Property and which do not render title to any Acquired Real Property unmarketable;

(e)other than with respect to the Amarillo Owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business consistent with past practice which are not, individually or in the aggregate, material to the Business or the Purchased Assets; and

(f)any obligations or duties reserved to or vested in any municipality or other Governmental Authority to regulate any Purchased Asset in any manner including all applicable Laws.

Section 4.09.Condition and Sufficiency of Assets. Except as set forth in Section 4.09 of the Disclosure Schedules, (a) the buildings are structurally sound in all material respects, and (b) the buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and any other material items of Tangible Personal Property included in the Purchased Assets are in good operating condition and repair and are adequate for the uses to which they are being put, ordinary wear and tear excepted, and none of such buildings, plants, structures, furniture, fixtures, machinery, equipment, vehicles and other items of Tangible Personal Property is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost. The Purchased Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently conducted. None of the Excluded Assets are material to the Business, as presently conducted by Seller.  To Seller’s Knowledge there are no material latent defects in the material tangible Assets.

Section 4.10.Real Property.

(a)Section 4.10(a) of the Disclosure Schedules sets forth each parcel of the Owned Real Property and the address location and use of such Owned Real Property. Prior to the date hereof, Seller has delivered to Buyer or provided to Buyer access to copies of the deeds as recorded by which Seller acquired the Owned Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of Seller with respect to such parcel. Seller represents and warrants that:

(i)Except for the Owned Real Property, there is no other real property owned by Seller and used in or necessary for the conduct of the Business as currently conducted.

(ii)Seller shall at Closing convey good and marketable fee simple title to the Amarillo Owned Real Property to Buyer, free and clear of all Encumbrances, except Permitted Encumbrances;

(iii)Seller has not leased or otherwise granted to any Person the right to use or occupy the Amarillo Owned Real Property or any portion thereof; and

(iv)there are no unrecorded outstanding options, rights of first offer or rights of first refusal to purchase the Amarillo Owned Real Property or any portion thereof or interest therein.

(b)Section 4.10(b) of the Disclosure Schedules sets forth each parcel of real property leased by Seller and used in or necessary for the conduct of the Business as currently conducted (together with all rights, title and interest of Seller in and to leasehold improvements relating thereto, including, but not limited to, security deposits, reserves or prepaid rents paid in connection therewith, collectively, the “Leased Real Property”), and a true and complete list of all leases, subleases, licenses, concessions and other agreements (whether written or oral), including all amendments, extensions renewals, guaranties and other agreements with respect thereto, pursuant to which Seller holds any Leased Real Property (collectively, the “Leases”). Seller has delivered to Buyer a true and complete copy of each Lease. With respect to each Lease:

(i)such Lease is valid, binding, enforceable and in full force and effect, and Seller enjoys peaceful and undisturbed possession of the Leased Real Property;

(ii)Seller is not in breach or default under such Lease, and no event has occurred or to Seller’s Knowledge circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default, and Seller has paid all rent due and payable under such Lease;

(iii)Seller has not received nor given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by Seller under any of the Leases and, to the Knowledge of Seller, no other party is in default thereof, and no party to any Lease has exercised any termination rights with respect thereto;

(iv)Seller has not subleased, assigned or otherwise granted to any Person the right to use or occupy such Leased Real Property or any portion thereof; and

(v)Seller has not pledged, mortgaged or otherwise granted an Encumbrance on its leasehold interest in any Leased Real Property.

(c)Seller has not received any written notice of (i) material violations of building codes and/or zoning ordinances or other governmental or regulatory Laws affecting the Acquired Real Property, (ii) existing, pending or threatened condemnation proceedings affecting the Acquired Real Property, or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to materially and adversely affect the ability to operate the Acquired Real Property as currently operated. Neither the whole nor any material portion of any Acquired Real Property has been damaged or destroyed by fire or other casualty.

(d)The Acquired Real Property is sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitutes all of the real property necessary to conduct the Business as currently conducted.

Section 4.11.Intellectual Property.

(a)Section 4.11(a) of the Disclosure Schedules lists all (i) Intellectual Property Registrations, setting forth as to each such item, as applicable, the item or title, the application, registration or issuance number, the owner, the date of application, registration or issuance, and the jurisdiction in which such item is registered, issued or pending, and (ii) Intellectual Property Assets that are not registered or the subject of a pending application for registration or issuance but that are material to the operation of the Business. All required filings and fees related to the Intellectual Property Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Intellectual Property Registrations are otherwise in good standing.

(b)Except as set forth in Section 4.11(b) of the Disclosure Schedules, the Intellectual Property Registrations are valid and enforceable, are held of record in the name of Seller, and are not the subject of any claim, demand or proceeding alleging that any such item is invalid or unenforceable, or questioning Seller’s ownership thereof, including any reexamination, interference, cancellation, opposition or similar proceeding before any Governmental Authority, and to Seller’s Knowledge there is no basis for any such claim or proceeding.

(c)Except as set forth in Section 4.11(c) of the Disclosure Schedules, Seller owns exclusively all right, title and interest in and to the Intellectual Property Assets, free and clear of Encumbrances.  Seller has taken reasonably necessary steps to protect and safeguard Seller’s Intellectual Property rights in the Intellectual Property Assets, including through the execution of binding, written agreements with employees, former employees and independent contractors engaged by Seller in the development of Intellectual Property for Seller, by which such employees, former employees or independent contractors have assigned to Seller all of such Persons’ Intellectual Property rights in the Intellectual Property Assets.  Except as set forth in Section 4.11(c) of the Disclosure Schedules, Seller is in compliance in all material respects with all legal requirements applicable to the Intellectual Property Assets and Seller’s ownership and use thereof.

(d)Except as set forth in Section 4.11(d) of the Disclosure Schedules, (i) none of Seller or any employee, director or officer of Seller has been a member of, or has engaged or otherwise participated in the activities of any industry standards-setting organization; (ii) none of the Intellectual Property Assets was developed, in whole of in part, pursuant to any grant or other funding from a Governmental Authority, college, university or similar institution; and (iii) none of the Intellectual Property Assets was developed using, or comprises or incorporates, any computer software subject to any open source, copyleft or similar license.

(e)To Seller’s Knowledge the Intellectual Property Assets and Intellectual Property Licenses currently and formerly owned, licensed or used by Seller, and the conduct of the Business as currently and formerly conducted by Seller, have not and do not infringe, violate or misappropriate the Intellectual Property of any Person. Except as set forth in Section 4.11(e) of the Disclosure Schedules, Seller has not received any communication, and no Action has been instituted, settled or, to Seller’s Knowledge, threatened that alleges any such infringement, violation or misappropriation, and none of the Intellectual Property Assets is subject to any outstanding Governmental Order impairing or limiting its scope, extent, validity, enforceability or Seller’s ownership thereof. Except as set forth in Section 4.11(e) of the Disclosure Schedules, to Seller’s Knowledge, no Person has infringed, violated or misappropriated, or is infringing, violating or misappropriating, in any material respect, any Intellectual Property Assets.

(f)Seller has taken commercially appropriate steps to protect and safeguard its trade secrets and confidential and proprietary information, including through the execution of forms of non-disclosure and confidentiality agreements with its employees, contractors.  To Seller’s Knowledge, there has been no unauthorized use, dissemination or distribution of any Seller trade secrets or confidential and proprietary information.

Section 4.12.Inventory. All Inventory, whether or not reflected in the Balance Sheet, consists of a quality and quantity usable and salable in the ordinary course of business consistent with past practice, except for obsolete, damaged, defective or slow-moving items that have been written off or written down to fair market value or for which adequate reserves have been established. Except as set forth in Section 4.12 of the Disclosure Schedules, all Inventory is owned by Seller free and clear of all Encumbrances, and no Inventory is held on a consignment basis. Section 4.12 of the Disclosure Schedules sets forth by location the Inventory on consignment or in the possession of a Third Party and the related arrangements.  The quantities of each item of Inventory (whether raw materials, work-in-process or finished goods) are not excessive, but are reasonable in the present circumstances of Seller.

Section 4.13.Accounts Receivable. The Receivables represent bona fide claims that have arisen in the ordinary course of business, in accordance with good practice and except as set forth in Section 4.13 of the Disclosure Schedules, the amount due, or to become due, on each Receivable is not in dispute.  The amounts charged for Inventory, goods and services have been determined and statements rendered in all material respects in accordance with applicable Laws, and Contracts binding upon Seller.  The payment of the Receivables is not contingent upon the fulfillment of any Contract, past or future of Seller, other than the Contract giving rise to such Receivable.

Section 4.14.Customers and Suppliers.

(a)Section 4.14(a) of the Disclosure Schedules sets forth with respect to the Business (i) each customer who has paid consideration in excess of $50,000 to Seller for goods or services rendered for the most recent fiscal year (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such period. Except as set forth in Section 4.14(a) of the Disclosure Schedules, Seller has not received any notice, and Seller has no Knowledge, that any of the Material Customers has ceased, or intends to cease after the Closing, to use the goods or services of the Business or to otherwise terminate or materially reduce its relationship with the Business.

(b)Section 4.14(b) of the Disclosure Schedules sets forth with respect to the Business (i) each supplier to whom Seller has paid consideration in excess of $50,000 for goods or services rendered for the most recent fiscal year (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such period. Seller has not received any notice, and Seller has no Knowledge, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Business or to otherwise terminate or materially reduce its relationship with the Business.

Section 4.15.Insurance. Section 4.15 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of fire, liability, product liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by Seller or its Affiliates and relating to the Business, the Purchased Assets or the Assumed Liabilities (collectively, the “Insurance Policies”); and (b) with respect to the Business, the Purchased Assets or the Assumed Liabilities, a list of all pending claims and the claims history for Seller since January 1, 2008.  Except as set forth in Section 4.15 of the Disclosure Schedules, there are no claims related to the Business, the Purchased Assets or the Assumed Liabilities pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. Neither Seller nor any of its Affiliates has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies (a) are in full force and effect and enforceable in accordance with their terms; and (b) have not been subject to any lapse in coverage. None of Seller or any of its Affiliates is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. True and complete copies of the Insurance Policies have been made available to Buyer.

Section 4.16.Legal Proceedings; Governmental Orders.

(a)Except as set forth in Section 4.16(a) of the Disclosure Schedules, there are no Actions pending or, to Seller’s Knowledge, threatened against or by Seller (a) relating to or affecting the Business, the Purchased Assets or the Assumed Liabilities; or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.  To Seller’s Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

(b)There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against, relating to or affecting the Business.

Section 4.17.Compliance With Laws; Permits.

(a)General. Except as set forth in Section 4.17(a) of the Disclosure Schedules, Seller has complied, and is now complying in all material respects, with all Laws applicable to the conduct of the Business, including those of the FDA, as currently conducted or the ownership and use of the Purchased Assets.

(b)Permits. Except as set forth in Section 4.17(b) of the Disclosure Schedules, all Permits required for Seller to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets have been obtained by Seller and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 4.17(b) of the Disclosure Schedules lists all current Permits issued to Seller which are related to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, including the names of the Permits and their respective dates of issuance and expiration. To Seller’s Knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.17(b) of the Disclosure Schedules.

(c)FDA.  Except as set forth in Section 4.17(c) of the Disclosure Schedules, to Seller's Knowledge, the manufacture of the products of the Business is being, and has at all times been, conducted in compliance in all material respects with all applicable Laws, including the FDA's Good Manufacturing Practice regulations.  Except as set forth in Section 4.17(c) of the Disclosure Schedules, neither Seller nor any Subsidiary has received from the FDA any notice of inspectional observations or warning letters or any other correspondence alleging or describing potential or actual violations of applicable Law from any Governmental Authority, including the FDA.

(d)Pharmaceutical Products.

(i)Registration.  Except as set forth in Section 4.17(d) of the Disclosure Schedules, Seller has registered and is currently registered and in good standing as a distributor of Pharmaceutical Products with the applicable boards of pharmacy.  Section 4.17(d)(i) of the Disclosure Schedules lists all registrations, permits and licenses, which Seller has received to conduct the Business, as a distributor of Pharmaceutical Products, in the manner in which it has been conducted in the 12 months prior to Closing.  Except as set forth in Section 4.17(d)(i) of the Disclosure Schedules, no application for registration of Seller with the applicable boards of pharmacyhas ever been denied or withdrawn, and no registration of Seller once issued has been suspended, revoked, terminated or transferred.

(ii)Distribution of Pharmaceutical Products.  Except as set forth in Section 4.17(d)(ii), at all times, Seller has distributed, packaged, labeled, stored or dispensed prescription products, under the direction of a veterinarian, pursuant to any Applicable Law pertaining to manufacturing, distributing, transporting, labeling, packaging, dispensing, using, reporting, storing, disposing, importing, exporting, brokering or trading of prescription products.  Except as set forth in Section 4.17(d)(ii), at all times, Seller has complied with and has operated the Business in compliance in all material respects with, applicable Law pertaining to manufacturing, distributing, transporting, labeling, packaging, dispensing, using, reporting, storing, disposing, importing, exporting, brokering or trading of prescription products.

(iii)Pharmaceutical Handling.  Except as set forth in Section 4.17(d)(iii) of the Disclosure Schedules, each of the Limited Partners, General Partner, Seller and any director or officer of Seller, and to Seller’s Knowledge, any employee or agent of Seller, has not caused or Knowingly permitted any Pharmaceutical Product to be manufactured, distributed, transported, labeled, packaged, dispensed, used, stored, disposed, imported, exported, brokered or traded in, about, to or from Seller, except in compliance in all material respects with applicable Law.  Except as set forth in Section 4.17(d)(iii) of the Disclosure Schedules, Seller has (i) operated the Business in material compliance with applicable Law pertaining to the manufacture, distribution, transportation, labeling, packaging, dispensing, use, storage, disposition, importation, exportation, brokerage or trade of Pharmaceutical Products, (ii) maintained effective controls and procedures against theft or diversion of Pharmaceutical Products into other than legitimate medical, scientific and industrial channels, (iii) complied in all material respects with the physical security controls and operating procedures set forth in any applicable Law, (iv) made complete and accurate records, and preserved such records, of the Pharmaceutical Products and transactions relating to pharmaceuticals in compliance in all material respects with applicable Law, and (v) is in material compliance with applicable Law regulating the registration, manufacturing, distributing, transporting, labeling, packaging, dispensing, using, reporting, storing, disposing, importing, exporting, brokering or trading of Pharmaceutical Products.

(iv)No Claims, Notices, Investigation or Violations.  Each of the Limited Partners, General Partner, and Seller have not received from any Governmental Authority or third party any request for information, notice of claim, demand letter or other notification, notice or information that (i) Seller is or may be potentially liable for or in violation of any applicable Law relating to Pharmaceutical Products, or (ii) Seller’s registration or license under any applicable Law, relating to the Pharmaceutical Products, (a) is unauthorized, (b) is inconsistent with the public interest, health or safety, (c) may be revoked, or (d) may be suspended.  There have been no enforcement actions, or to Seller’s Knowledge, investigations or similar actions, the purpose of which was (i) to discover, identify or otherwise characterize any actual, alleged or potential violations of any Law relating to Pharmaceutical Products or (ii) to revoke, suspend, deny or prevent the issuance of the registration of Seller.  Seller has not (i) been charged with, (ii) been served a subpoena or search warrant relating to, (iii) been the subject of an administrative inspection or warrant relating to, (iv) settled any allegations relating to, (v) pled no contest to, (vi) conceded liability for, (vii) been convicted of, (viii) been assessed or paid any fines or penalties relating to, or (ix) been subject to cease and desist or similar orders relating to, any violations of any applicable Law relating to Pharmaceutical Products.

Section 4.18.Environmental Matters.

(a)The operations of Seller with respect to the Business and the Purchased Assets are currently and since January 1, 2006 have been in compliance in all material respects with all Environmental Laws. Seller has not received from any Person, with respect to the Business or the Purchased Assets, any Environmental Claim, notice of Environmental Claim or written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

(b)Seller has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 4.18(b) of the Disclosure Schedules) necessary for the conduct of the Business as currently conducted or the ownership, lease, operation or use of the Purchased Assets and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect by Seller through the Closing Date in accordance with Environmental Law, and to Seller’s Knowledge no environmental condition, event or circumstance has occurred that would reasonably be expected to prevent or impede, after the Closing Date, in any material respect, the conduct of the Business as currently conducted or the ownership, lease, operation or use of the Purchased Assets. With respect to any such Environmental Permits, Seller has undertaken, or will undertake prior to the Closing Date, all measures necessary to facilitate transfer of those Environmental Permits that may be Lawfully transferred, and Seller has not received any written notice or other written communications regarding any material adverse change in the status or terms or conditions of the same.

(c)There has been no Release of Hazardous Materials with respect to the Business or the Purchased Assets by Seller or any Affiliate or, to Seller’s Knowledge, any other Person, on, at, to or from any real property currently or formerly owned, leased or operated by Seller in connection with the Business in violation of applicable Environmental Laws or that would require investigation, remediation or other response action under Environmental Laws.

(d)None of the facilities or locations used by Seller in connection with the Business or Purchased Assets for the off-site treatment, storage or disposal of Hazardous Materials has been placed or proposed for placement on the National Priorities List (or CERCLIS) under CERCLA, or any similar state list, and Seller has not received any Environmental Claim or notice regarding potential liabilities with respect to such off-site Hazardous Materials treatment, storage, or disposal facilities or locations.

(e)Seller has not retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law.

(f)Seller has provided or otherwise made available to Buyer and listed in Section 4.18(f) of the Disclosure Schedules: (i) any and all environmental reports, studies, audits, records, sampling data, site assessments, risk assessments and other similar material documents with respect to the Business or the Purchased Assets or any real property currently or formerly owned, leased or operated by Seller in connection with the Business which are in the possession or control of Seller related to compliance with Environmental Laws, Environmental Claims or the Release of Hazardous Materials; and (ii) any and all material documents concerning planned or anticipated capital expenditures required to reduce, offset, limit or otherwise control pollution, discharges and/or emissions, manage waste or otherwise ensure compliance with current or future Environmental Laws (including, without limitation, costs of remediation, pollution control equipment and operational changes).

Section 4.19.Employees and Employment Matters.

(a)Section 4.19(a) of the Disclosure Schedules contains a complete and accurate list of all Employees, which accurately sets forth each Employee's (i) name, (ii) date of birth, (iii)  the existence and terms of all written and oral employment agreements, if any, (iv) title and position, (v) date of hire, (vi) rate of compensation, including any bonus potential, if applicable, together with a statement of the full amount of all remuneration paid to each such employee during the 12-month period ending on December 31, 2010, and (vii) amount of accrued vacation and sick leave pay, if any.

(b)Except as set forth in Section 4.19(b) of the Disclosure Schedules, as of the Closing Date, all salaries, wages, vacation pay, holiday pay, disability, pension, reimbursement of expenses, compensation for paid leave, bonuses of any kind, payroll taxes, payroll tax reporting compliance, workers compensation and benefits of any kind payable to any Employee, consultant, or contractor of the Business for services performed on or prior to the Closing Date shall have been paid in full.

(c)Seller is not a party to, or bound by, any collective bargaining or other Contract with a labor organization representing any of its Employees, and there are no labor organizations representing, purporting to represent or, to Seller’s Knowledge, attempting to represent any Employee. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute or threatened unfair labor practice, grievance or other proceedings or litigation with respect to or affecting Seller or any of its Employees.

(d)Access to, or copies of all written employment agreements, consulting agreements and independent contractor agreements or arrangements have been provided to Buyer.  Except as set forth in Section 4.19(d) of the Disclosure Schedules, Seller is not a party to any of the following described agreements, plans, or arrangements:  employment, consulting or independent contractor agreements.

(e)There are no Actions against Seller pending, or to Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former employee, consultant or independent contractor of the Business, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay or any other employment related matter arising under applicable Laws.

(f)Seller has complied with the WARN Act and all similar state and local laws and it has no plans to undertake any action in the future that would trigger the notice requirements of the WARN Act or any similar state or local law or impose any liability under such law.  Seller shall terminate the employment of all Employees effective as of the Closing in full compliance with the applicable Laws.

(g)Section 4.19(g) of the Disclosure Schedules sets forth a true and complete list of each (i) “employee benefit plan,” as defined in Section 3(3) of ERISA and (ii) all other pension, retirement, supplemental retirement, deferred compensation, excess benefit, profit sharing, bonus, incentive, stock purchase, stock ownership, stock option, stock appreciation right, profits interest, employment, severance, salary continuation, termination, change-of-control, health, life, disability, group insurance, vacation, holiday and fringe benefit plan, program, contract, or arrangement (whether written or unwritten, qualified or nonqualified, funded or unfunded and including any that have been frozen or terminated) maintained, contributed to, or required to be contributed to, by Seller or any ERISA Affiliate for the benefit of any current or former employee, director, officer or independent contractor of Seller or under which Seller or any ERISA Affiliate has any liability with respect to any current or former employee, director, officer or independent contractor of Seller but in all cases, excluding any multiemployer plan, as described in Section 3(37) of ERISA (each, a “Benefit Plan” and, together, the “Benefit Plans”).  None of the Benefit Plans are maintained, contributed to or required to be contributed to outside the United States.

(h)There are no multiemployer plans, as described in Section 3(37) of ERISA, contributed to or required to be contributed to by Seller or any ERISA Affiliate or with respect to which Seller or any ERISA Affiliate has any liability (the “Multiemployer Plans”).

(i)As applicable with respect to each Benefit Plan, Seller has delivered to Buyer, or provided Buyer access to, true and complete copies of (i) each Benefit Plan, including all amendments thereto, and in the case of an unwritten Benefit Plan, a written description thereof, (ii) all current trust documents, investment management contracts, custodial agreements and insurance contracts relating thereto, (iii) the current summary plan description and each summary of material modifications thereto, (iv) the most recently filed annual reports (Form 5500 and all schedules thereto), (v) the most recent Internal Revenue Service (“IRS”) determination or opinion letter and each currently pending application to the IRS for a determination letter, (vi) the three most recent summary annual reports, actuarial reports, financial statements and trustee reports, (vii) the most recent annual premium payment forms filed with the Pension Benefit Guaranty Corporation (“PBGC”) and (viii) all records, notices and filings concerning IRS or Department of Labor audits or investigations, “prohibited transactions” within the meaning of Section 406 of ERISA or Section 4975 of the Code and “reportable events” within the meaning of Section 4043 of ERISA.

(j)Seller and each ERISA Affiliate are in compliance in all material respects with the provisions of ERISA, the Code and other Laws applicable to the Benefit Plans. Each Benefit Plan has been maintained, operated and administered in compliance in all material respects with its terms and any related documents or agreements and the applicable provisions of ERISA, the Code and other Laws except that in any case in which any Benefit Plan is currently required to comply with a provision of ERISA or of the Code, but is not yet required to be amended to reflect such provision, it has been maintained, operated and administered in accordance with such provision.

(k)The Benefit Plans which are “employee pension benefit plans” within the meaning of Section 3(2) of ERISA and which are intended to meet the qualification requirements of Section 401(a) of the Code (each, a “Pension Plan”) have received determination letters from the IRS to the effect that such plans are qualified and exempt from federal income taxes under Sections 401(a) and 501(a) of the Code, respectively, and nothing has occurred that would reasonably be expected to adversely affect the qualification of such Benefit Plan.

(l)No Benefit Plan is now or at any time has been subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA.  Neither Seller nor any ERISA Affiliate has ever contributed to, or been required to contribute to any Multiemployer Plan and neither Seller nor any ERISA Affiliate has any liability (contingent or otherwise) relating to the withdrawal or partial withdrawal from a multiemployer plan.

(m)There are no pending audits or investigations by any governmental agency involving any Benefit Plan, and no pending or to Seller’s Knowledge threatened claims (except for individual claims for benefits payable in the normal operation of the Benefit Plans), suits or proceedings involving any Benefit Plan, any fiduciary thereof or service provider thereto, nor to Seller’s Knowledge is there any reasonable basis for any such claim, suit or proceeding.

(n)No Benefit Plan provides benefits, including, without limitation, death or medical benefits, beyond termination of service or retirement other than (A) coverage mandated by Law or (B) death or retirement benefits under a Benefit Plan qualified under Section 401(a) of the Code, and except for such benefits, neither Seller nor any ERISA Affiliate has made a written or oral representation to any current or former employee promising or guaranteeing any employer paid continuation of medical, dental, life or disability coverage for any period of time beyond retirement or termination of employment.

(o)Each Benefit Plan that constitutes a “non-qualified deferred compensation plan” within the meaning of Section 409A of the Code, complies in both form and operation with the requirements of Section 409A of the Code so that no amounts paid pursuant to any such Benefit Plan is subject to Tax under Section 409A of the Code.

(p)Except as set forth in Section 4.19(p) of the Disclosure Schedules, Seller’s execution of, and performance of the transactions contemplated by this Agreement will not constitute an event under any Benefit Plan that will result in any payment (whether as severance pay or otherwise), acceleration, vesting or increase in benefits with respect to any employee, former employee, director or agent of Seller.  No payment which is or may be made by, from or with respect to any Benefit Plan, to any employee, former employee, director or agent of Seller or any ERISA Affiliate, either alone or in conjunction with any other payment, event or occurrence, will or could property be characterized as an “excess parachute payment” under Section 280G of the Code.  No such employee, former employee, director or agent of Seller or any ERISA Affiliate has any “gross up” agreements or other assurance of reimbursement for any Taxes resulting from any such “excess parachute payments”.

(q)No award (and no agreement or promise by Seller to make an award) under any Benefit Plan that provides for the granting of equity, equity-based rights, equity derivatives or options to purchase equity has been backdated or otherwise granted with an effective grant date that is other than the date on which the committee or administrator having authority to make awards under such Benefit Plan governing such award (i) took all necessary action to complete such award (unless such committee or other administrator specified a future grant date at the time it so acted), and (ii) timely communicated the terms of such award to the recipient in accordance with Seller’s customary human resource practices and applicable accounting standards.  In addition, no award made under any such Benefit Plan has been (or will be) altered in any manner that would result in or have the effect of failing to comply with the foregoing sentence.  No option to purchase equity of Seller has been granted with a purchase price that is less than the fair market value of the equity available for purchase thereunder as of the applicable grant date.  In addition, no option to purchase equity of Seller provides for any additional payment, such as dividend equivalent payments or Tax gross ups, that could be interpreted as a reduction in the purchase price of such option.

(r)Except as would not give rise to material liability, Seller and each ERISA Affiliate has, for purposes of each Benefit Plan and for all other purposes, correctly classified all individuals performing services for Seller as common law employees, leased employees, independent contractors or agents, as applicable.

Section 4.20.Taxes. Except as set forth in Section 4.20 of the Disclosure Schedules:

(a)All Tax Returns required to be filed by Seller have been timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing by Seller (whether or not shown on any Tax Return) have been timely paid.

(b)Seller has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any Employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

(c)Seller has provided to Buyer complete and correct copies of (i) the federal, state or local income and excise Tax Returns for all Tax years ending between January 1, 2008 to December 31, 2010, as filed with the Internal Revenue Service or any state or local Taxing authority (ii) all audit reports received from any Taxing authority relating to any Tax return filed by Seller, and (iii) any agreements entered into by Seller with any Taxing authority.

(d)No extensions or waivers of statutes of limitations or of time within which to file any Tax Return (except with respect to such Tax Returns that have since been filed) have been given or requested with respect to any Taxes of Seller.

(e)All deficiencies asserted, or assessments made, against Seller as a result of any examinations by any Taxing authority have been fully paid.

(f)Seller is not a party to, and neither the Limited Partners nor the General Partner, to the extent related to the Business, is a party to, any Action by any Taxing authority. There are no pending or threatened Actions by any Taxing authority with respect to Seller or the Business.  Seller has not received and is not otherwise bound by any private Tax ruling. Neither the Limited Partners nor the General Partner, to the extent related to the Business, is bound by any private Tax ruling.  No taxing authority with which Seller does not file Tax Returns has asserted that Seller is or may be required to file Tax Returns with or pay Taxes to that Taxing authority.

(g)Seller is the survivor of a statutory conversion which occurred in October of 2000. Before the conversion, Seller was a corporation, named Micro Beef Technologies, Inc. Before December of 1999, Seller was named Micro Chemical, Inc. From the inception of Micro Chemical, Inc., to the conversion of Micro Beef Technologies, Inc., the Seller was taxed as an S corporation for income tax purposes. From the conversion of Seller to January 1, 2001, Seller was taxed as a disregarded entity for income tax purposes.  From January 1, 2001 to the present, Seller has been taxed as a partnership for income tax purposes.

(h)There are no Encumbrances for Taxes upon any of the Purchased Assets nor, to Seller’s Knowledge, is any Taxing authority in the process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

(i)Seller is not a party to any agreement relating to allocating or sharing of federal, state or local Taxes.

(j)Seller has not agreed to make, is not required to make, or is not contemplating making, any material adjustments under applicable Tax law by reason of a change in accounting method or otherwise.

(k)Seller is not a party to any indemnity agreement for the benefit of any third party in connection with any federal, state and local Tax that would be reasonably expected to result in an adverse effect to Seller.

(l)Seller is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b).

(m)None of the Purchased Assets is property that Seller is required to treat as being owned by any other Person pursuant to the so-called “safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended.

(n)None of the Purchased Assets is “tax-exempt use property” within the meaning of Section 168(h) of the Code.

Section 4.21.Affiliate Transactions.  Except as set forth in Section 4.21 of the Disclosure Schedules,  no (x) officer, director, partner, employee or Affiliate of Seller or (y) to Seller’s Knowledge, any individual related by blood, marriage or adoption to any such employee, officer or director (each such person or entity, a “Related Party”) is, or has been within the two (2) years preceding the date of this Agreement, a party to any Contract (other than employment Contracts) with Seller, its Limited Partners or its General Partner, nor does any such Related Party have any interest in any material property used by Seller, its Limited Partners or its General Partner with respect to the Business. Except as set forth in Section 4.21 of the Disclosure Schedules, no Related Party has a direct or indirect ownership in any firm or corporation with which Seller is affiliated or with which Seller has a business relationship or any firm or corporation which competes with Seller or Buyer.

Section 4.22.Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Seller.

Section 4.23.Investment Representations.

(a)Accredited Investor.  Seller is an “Accredited Investor” as defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).

(b)Investment.  Seller is acquiring the Parent Restricted Stock for investment for Seller’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof.  Seller understands that the Parent Restricted Stock has not been, and will not be when issued, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the representations as expressed herein.

(c)Knowledge and Experience.  Seller has such knowledge and experience in financial and business matters, and with respect to transactions of the kind and scope contemplated by this Agreement, that Seller is capable of evaluating the merits and risks of an investment in the Parent Restricted Stock and of making an informed investment decision. Seller understands that the acquisition of Parent Restricted Stock involves a high degree of risk, and there can be no assurance that the Parent’s business objectives will be obtained.

(d)Independent Investigation.  In making the decision to acquire the Parent Restricted Stock, Seller (i) has relied solely upon independent investigations made by it and (ii) has been given the opportunity to conduct such review and analysis of the business, assets, condition, operations and prospects of Parent and Buyer and to ask questions of, and to receive answers from, management or other persons acting on behalf of Parent and Buyer, to the extent such persons possess such information, each as Seller has deemed necessary.  Seller further acknowledges that it has had such opportunity to consult with such its own counsel, financial and tax advisors and other professional advisors it believes is sufficient for purposes of the acquisition of the Parent Restricted Stock.

(e)Registration.  Seller understands and acknowledges that neither the Parent nor Buyer has made any representations or agreements with respect to the registration of the Parent Restricted Stock under the Securities Act, that there are no current plans to effect such registration and it is not anticipated that there will be any market for the Parent Restricted Stock, and that, as a result, such Stockholder must be prepared to bear the economic risk of the Parent Restricted Stock investment therein for an indefinite period of time.

(f)Restrictions on Transfer; Legends.  Seller acknowledges, understands and agrees that the Parent Restricted Stock to be received will constitute “restricted securities” under the Securities Act and applicable regulations inasmuch as they will be acquired in transactions not involving a public offering, and that under such laws and applicable regulations the Parent Restricted Stock may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom. Seller acknowledges, understands and agrees that if the Parent Restricted Stock is ever in certificated form, then so long as such restrictions remain in effect such certificate(s) shall be stamped or otherwise imprinted with a legend substantially in the following form:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH APPLICABLE LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

Such certificate(s) shall not bear such legend referred to above if, in the opinion of counsel reasonably satisfactory to the Parent, the Parent Stock represented thereby may be publicly sold without registration under the Securities Act and any applicable state securities laws.

Section 4.24.Products.  Except as disclosed on Section 4.24 of the Disclosure Schedules, during the past five years, there have been no product liability Actions involving Seller or the Business or relating to products or services manufactured, distributed, sold or provided by Seller. To Seller’s Knowledge, no such Action has been threatened.  Except as set forth in Section 4.24 of the Disclosure Schedules, which contains a true and correct list of all products sold by Seller that to Seller's Knowledge have been the subject of a product recall requested by the FDA or any other Governmental Authority, there have been no voluntary or involuntary recalls relating to the products sold by the Business since January 1, 2008.

Section 4.25.Certain Business Practices.  Seller, and to Seller’s Knowledge each other Person associated with or acting for or on behalf of any of the Business, has not directly or indirectly: (a) made any unlawful contribution, gift, bribe, payoff, influence payment, kickback or other similar payment to any Person, private or public, regardless of form, whether in money, property or services, or (b) established or maintained any fund or asset that has not been recorded in its books and records.

Section 4.26.Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer or Parent pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

Section 4.27.Representations and Warranties Are Independent of Due Diligence.  Buyer and Parent are not and will not be required to undertake any independent due diligence investigation to determine the truth, accuracy and completeness of the representations, warranties and covenants made by Seller in this Agreement.  Seller’s representations, warranties and covenants made to Buyer and Parent in this Agreement are independent of any due diligence investigation done by Buyer or Parent.

ARTICLE V                                

REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT

Buyer and Parent represents and warrants to Seller that the statements contained in this ARTICLE V are true and correct.

Section 5.01.Organization of Buyer and Parent. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Idaho.  Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware.

Section 5.02.Authority of Buyer and Parent. Each ofBuyer and Parent has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which it is a party, to carry out its respective obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by each of Buyer and Parent of this Agreement and any other Transaction Document to which they are a party, the performance by Buyer and Parent of their respective obligations hereunder and thereunder and the consummation by Buyer and Parent of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer and Parent, as the case may be. This Agreement has been duly executed and delivered by Buyer and Parent, and (assuming due authorization, execution and delivery by the other parties hereto) this Agreement constitutes a legal, valid and binding obligation of Buyer and Parent enforceable against Buyer and Parent in accordance with its terms. When each other Transaction Document to which Buyer and Parent are or will be a party have been duly executed and delivered by Buyer and Parent (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer and Parent, as the case may be, enforceable against it in accordance with its terms.

Section 5.03.No Conflicts; Consents. The execution, delivery and performance by Buyer and Parent of this Agreement and the other Transaction Documents to which they are a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Buyer or Parent; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer or Parent; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer or Parent is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority or other Person is required by or with respect to Buyer or Parent in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, except for such filings as may be required under the HSR Act and such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a material adverse effect.

Section 5.04.Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer or Parent.

Section 5.05.Sufficiency of Funds. As ofimmediately prior to the Closing, Buyer will have sufficient cash on hand or other sources of immediately available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

Section 5.06.Legal Proceedings. There are no Actions pending or, to Buyer’s knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

Section 5.07.Parent Restricted Stock.

(a)The Parent Restricted Stock to be issued in accordance with this Agreement will, upon such issuance, be duly authorized, validly issued, fully paid and non-assessable, free of any Encumbrances, except under federal and state securities Laws, and not subject to any preemptive rights or rights of first refusal created by statute, the organizational documents of Buyer or Parent or any Contract to which Buyer or Parent is a party or is bound.

(b)Parent has sufficient authorized Parent Restricted Stock available to enable it to deliver the stock portion of the Purchase Price.

(c)Since October 1, 2010, Buyer has timely filed all material reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with the SEC pursuant to the Exchange Act. As of their respective dates, or as subsequently amended or modified by a subsequently filed report or statement, each of such reports and statements were true and correct and complied in all material respects with the relevant statues, rules and regulations enforced or promulgated by the SEC and such reports did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent corrected in a subsequently filed or amended report or statement.

Section 5.08.Full Disclosure. No representation or warranty by Buyer or Parent in this Agreement or any certificate or other document furnished or to be furnished to Seller pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

ARTICLE VI                                

COVENANTS

Section 6.01.Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), Seller shall (x) conduct the Business in the ordinary course of business consistent with past practice; and (y) use commercially reasonable efforts to maintain and preserve intact its current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of its Employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date, Seller shall:

(a)preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets;

(b)pay the debts, Taxes and other obligations of the Business when due;

(c)continue to collect Receivables in a manner consistent with past practice, without discounting such Receivables;

(d)maintain the properties and assets included in the Purchased Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;

(e)continue in full force and effect without modification all Insurance Policies, except as required by applicable Law;

(f)defend and protect the properties and assets included in the Purchased Assets from infringement or usurpation;

(g)perform all of its material obligations under all Assigned Contracts;

(h)maintain the Books and Records in accordance with past practice;

(i)comply in all material respects with all Laws applicable to the conduct of the Business or the ownership and use of the Purchased Assets;

(j)not (i) grant any increase in compensation or benefits, or make any award or grant under any Benefit Plan, to any current or former director, consultant, officer or Employee, except for increases in compensation to Employees other than directors or officers in the ordinary course of business consistent with past practice or as may be required under existing agreements (as in effect on the date hereof) set forth in Section 4.19(a) or Section 4.19(d) of the Disclosure Schedules, or (ii) make contributions to Benefit Plans except in accordance with past practice; and

(k)not take any action that would cause any of the changes, events or conditions described in Section 4.06to occur, except for such conditions described in Section 4.06(a), (d), and (j); provided, however, that Seller may make quarterly Tax distributions to the partners of Seller in an amount not to exceed 35% of the taxable income of Seller for any quarterly period with respect to which a Tax distribution is made; provided further that in no event shall the aggregate Tax distributions made with respect to a taxable year exceed 35% of the taxable income of Seller for such year.

Section 6.02.Access to Information.

(a)From the date hereof until the Closing, Seller shall (a) afford Buyer and its Representatives at Buyer’s sole expense, reasonable access to and the right to inspect all of the Acquired Real Property, properties, assets, premises, Books and Records, Contracts and other documents and data related to the Business, including for the purpose of conducting environmental due diligence; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Business as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives of Seller to cooperate with Buyer in its investigation of the Business. Notwithstanding the foregoing sentence of this Section 6.02, Seller shall not be required to provide or authorize the provision of requested material to the extent it includes customer-specific data or competitively-sensitive information relating to areas of the business of Seller in which Buyer competes against Seller or to the extent the provision of such material is otherwise prohibited by applicable Laws.  Any investigation pursuant to this Section 6.02 shall be conducted at times approved by Seller and in such manner as not to interfere unreasonably with the conduct of the Business. No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement or any ancillary agreement hereto.  The activities described in this Section 6.02 shall be referred to in this Agreement as the “Due Diligence Review.”

(b)Buyer’s Due Diligence Review shall also be subject to the following terms and conditions:

(i)The Due Diligence Review shall be scheduled through designated representative(s) of Seller and Seller shall have the right to accompany Buyer’s Representatives as they perform the Due Diligence Review;

(ii)Buyer shall not disclose or allow its Representatives to disclose the purposes for the Due Diligence Review;

(iii)Buyer shall obtain the prior approval of Seller before conducting any discussions with Sellers’ employees, vendors, customers or service providers; and

(iv)Buyer shall be responsible for the proper disposal of any wastes generated by its actions.

(c)All information disclosed by Seller, its Affiliates, or their Representatives to Buyer or its Representatives, and any other information gathered by Buyer or its Representatives as the result of, or in connection with the Due Diligence Review, shall be held subject to the confidentiality provisions contained in the Confidential Disclosure Agreement between Seller and Buyer dated September 22, 2009.

Section 6.03.No Solicitation of Other Bids.

(a)Seller shall not, and shall not authorize or permit any of its Affiliates or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” means any inquiry, proposal or offer from any Person (other than Buyer or any of its Affiliates) relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any substantial portion of the Business or the Purchased Assets, other than sales of inventory in the ordinary course of business, consistent with past practices, and disposition of obsolete assets.

(b)In addition to the other obligations under this Section 6.03, Seller shall promptly (and in any event within three (3) Business Days after receipt thereof by Seller or its Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

(c)Seller agrees that the rights and remedies for noncompliance with this Section 6.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

Section 6.04.Notice of Certain Events.

(a)From the date hereof until the Closing, Seller shall promptly notify Buyer in writing of:

(i)any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Seller hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 to be satisfied;

(ii)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(iii)any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

(iv)any Actions commenced or, to Seller’s Knowledge, threatened against, relating to or involving or otherwise affecting the Business, the Purchased Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 4.16 or that relates to the consummation of the transactions contemplated by this Agreement.

(b)Buyer’s receipt of information pursuant to this Section 6.04 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement (including Section 8.02and Section 9.01(b)) and shall not be deemed to amend or supplement the Disclosure Schedules.

(c)From the date hereof until the Closing, Buyer shall promptly notify Seller in writing of:

(i)any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to, individually or in the aggregate, materially impact the ability of Buyer to consummate the transactions contemplated hereby, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by Buyer hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.03 to be satisfied;

(ii)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with Buyer’s consummation of the transactions contemplated by this Agreement; and

(iii)any notice or other communication from any Governmental Authority in connection with Buyer’s consummation of the transactions contemplated by this Agreement.

Section 6.05.Employees and Employee Benefits.

(a)For the purposes of this Section 6.05, the term “Active Employees” shall mean all Seller’s employees employed on the Closing Date, including employees on temporary leave of absence, including sick leave, family and medical leave, short term disability, workers compensation or military leave, but excluding employees on long-term disability leave.  Seller shall, at least five (5) Business Days prior to Closing, provide Buyer with a then current list of all Active Employees, and Buyer shall, at least two (2) Business Days prior to the Closing Date, provide to all of such Active Employees, except for those Employees listed on Section 6.05 of the Disclosures Schedules (as such schedule may be amended from time to time by mutual consent of Buyer and Seller), offers of employment, to be effective on the Closing Date.  The Active Employees who accept such offer of employment with Buyer are hereinafter referred to as the “Transferred Employees.”  On the Closing Date, Seller will terminate the employment of all of its Transferred Employees, it being agreed that, for the purpose of the obligation to provide compensation and benefits, the termination of Transferred Employees shall be deemed to be effective at 11:59 p.m. CT on the Closing Date.  To the extent that Seller enters into any arrangements to pay severance payments to Active Employees that do not accept Buyer’s offer of employment (collectively, the “Non-Transferred Employees”), Seller shall exercise commercially reasonable efforts to obtain a release (each, an “Employee Release”) waiving any rights and claims such Non-Transferred Employees may have against Seller and Buyer arising out of his or her employment relationship prior to Closing, the failure of Buyer to hire such person or the consummation of the transactions contemplated by this Agreement.

(b)Transferred Employee’s active participation in the Benefit Plans that are “employee welfare benefit plans” (as defined in Section 3(1) of ERISA) sponsored by Seller or any of its subsidiaries (the “Seller’s Welfare Plans”) shall cease as of the Closing Date or as otherwise provided under the terms of such Benefit Plan.  Notwithstanding the preceding sentence, Seller’s Welfare Plans shall retain liability for all claims incurred by the Employees and their dependents prior to the Closing Date including claims which are not submitted until after the Closing Date.  A claim shall be deemed incurred (i) on the date of the occurrence of death or dismemberment in the case of claims under life insurance and accidental death and dismemberment plans and (ii) on the date on which the service or treatment is provided in the case of claims under medical, hospital, dental and similar plans.

(c)Nothing contained in this Agreement shall confer upon any Transferred Employee any right with respect to employment by Buyer or its Affiliates, nor shall anything herein interfere with the right of Buyer or its Affiliates, following any employment of any Transferred Employee, to terminate the employment of any such Transferred Employee at any time, with or without cause, or restrict Buyer or its Affiliates in the exercise of their independent business judgment in modifying any of the terms and conditions of the employment of any such Transferred Employee.

(d)Buyer represents and warrants to Seller that it does not intend to engage in any plant closings or mass layoffs within the meaning of the WARN Act that would affect the Transferred Employees within ninety (90) days of the Closing.

Section 6.06.Noncompetition and Confidential Information Agreements and other Restrictive Covenants.  Seller (the “Restricted Party”) acknowledges that Buyer is purchasing the Purchased Assets and is assuming the Assumed Liabilities with the expectation of continuing the general business of Seller and continuing the services to Seller’s existing and expected future customers and clients.  The Restricted Party further acknowledges that Buyer has legitimate business interests in preserving and protecting Seller’s (i) confidential information; (ii) goodwill, technologies, intellectual property, business plans, proprietary business processes, and proprietary methods of operation, vendors and vendor contacts, financial and marketing information, and Trade Secrets, as defined in the Uniform Trade Secrets Act; (iii) customers, customer lists, customer contacts and referral sources;  and (iv) relationships with its customers and employees (collectively referred to herein as “Legitimate Business Interests”).  The Restricted Party agrees that Buyer is entitled to a period of time to benefit from the purchase and that the Restricted Party should be restricted from competing with Buyer or benefiting from the proprietary information and goodwill purchased by Buyer.  Based on the first three sentences of this Section 6.06 and for the purpose of protecting Buyer’s Legitimate Business Interests:

(a)Confidentiality.From and after the date hereof the Restricted Party shall, and shall cause any of its controlled Affiliates, officers, directors and employees to hold in confidence any and all information, whether written or oral, concerning the Business, this Transaction or Buyer, except to the extent that the disclosing party can show that such information (a) is generally available to and known by the public through no fault of any of the Restricted Party any of its controlled Affiliates, officers, directors or employees; or (b) is Lawfully acquired by the Restricted Party, any of its respective controlled Affiliates, officers, directors or employees from and after the date hereof from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Restricted Party or any of its controlled Affiliates, officers, directors or employees is compelled to disclose any information by judicial or administrative process or by other requirements of Law, such disclosing party shall promptly notify Buyer in writing and shall disclose only that portion of such information which he, she or it is advised by its counsel in writing is legally required to be disclosed, provided that the Restricted Party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

(b)Non-Competition.  For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of five (5) years following the Closing Date, within the United States, Canada, the United Kingdom, and Australia, the Restricted Party agrees not to Compete with Buyer.  “Compete” means to directly or indirectly solicit, sell or render any services or products in a Competitive Business including, but not limited to, as a proprietor, member, partner, investor, shareholder, director, officer, employee, consultant, or independent contractor.  “Competitive Business” means to engage in the business of (i) manufacturing, developing, distributing, selling, or supplying computerized management systems for individual animal information collection and management, and related marketing, health and nutrition systems (including animal identification and food safety assurance traceback systems), (ii) research and development related to the business of clause (i) above, (iii) manufacturing, developing, distributing, selling, or supplying feed additives or animal health products or (iv) any other business carried on by Seller in the twelve (12) months preceding the Closing Date.  Notwithstanding anything herein to the contrary, the passive investment in, and becoming a shareholder of, a publicly traded company engaged in a Competitive Business, including Buyer, shall not constitute a violation of the provisions of this Section 6.06(b); provided that such interest is no greater than 1% of the publicly traded company.

(c)Non-Solicitation Covenants.

(i)For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of five (5) years following the Closing Date, the Restricted Party shall not directly or indirectly, solicit any customer, client, supplier, or manufacturer’s representative of Buyer, for the purpose of (x) establishing a relationship for any business or services in a Competitive Business, (y) causing any client, customer, supplier, or manufacturer’s representative to terminate any relationship with Buyer, or  (z) interfering with the relationship between Buyer and any of Buyer’s customers, clients, employees, independent contractors, suppliers, or manufacturer’s representatives in the Competitive Business.

(ii)For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of five (5) years following the Closing Date, the Restricted Party shall not hire, employ or attempt to hire or employ a Protected Person.  A “Protected Person” is any person who is as of date hereof an employee of Seller.  Notwithstanding anything herein to the contrary, a general advertisement, posting or a similar form of generalized solicitation that leads to the hiring or employment of a Protected Person shall not constitute a violation of the provisions of this Section 6.06, so long as such general advertisement is not directly or indirectly related to a Competitive Business.

(d)Non-Interference Covenant.  For a period of five (5) years following the Closing Date, the Restricted Party shall not, whether on its own behalf or on behalf of a third party, directly or indirectly induce or attempt to induce any customer, contractor or vendor of Buyer to terminate the customer’s, contractor’s or vendor’s relationship with Buyer or otherwise attempt to harm, obstruct, or otherwise hinder Buyer’s relationship with any such customer, contractor or vendor.

(e)Non-Disparagement Covenant.  For a period of five (5) years following the Closing Date, the Restricted Party will not intentionally make any statements injurious to the business reputation or goodwill of the Business or Buyer.  Nothing in this provision shall prevent the Restricted Party from giving truthful Confidential Information at any time to the extent required by subpoena or other legal process.

(f)If the Restricted Party breaches, or threatens to commit a breach of, any of the provisions of this Section 6.06, Buyer shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Buyer under law or in equity:

(i)the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Buyer and that money damages may not provide an adequate remedy to Buyer; and

(ii)the right and remedy to recover from Seller all monetary damages suffered by Buyer as the result of any acts or omissions constituting a breach of this Section 6.06.

(g)In the event that any covenant contained in this Section 6.06 should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.06 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

Section 6.07.Governmental Approvals and Consents.

(a)Each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions (including those under the HSR Act) required under any Law applicable to such party or any of its Affiliates; and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents. In the case of the HSR Act, the parties agree to cause to be made all appropriate filings no later than five (5) Business Days following the date of this Agreement.  Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

(b)Seller and Buyer shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 4.03 of the Disclosure Schedules.

(c)Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use all commercially reasonable efforts to:

(i)timely respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any other Transaction Document; and

(ii)avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any other Transaction Document.

(d)All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller or Buyer with Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Notwithstanding the foregoing sentence of this Section 6.07(d), Seller shall not be required to provide or authorize the provision of requested material to the extent it includes competitively-sensitive information relating to areas of the business of Seller in which Buyer competes against Seller or to the extent the provision of such material is otherwise prohibited by applicable Laws.  Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

(e)Notwithstanding the foregoing, nothing in this Section 6.07 shall require, or be construed to require, Buyer or Seller or any of their Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Seller or Buyer or any of their Affiliates, including for the avoidance of doubt, the Purchased Assets; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer or Seller of the transactions contemplated by this Agreement and the other Transaction Documents; or (iii) any material modification or waiver of the terms and conditions of this Agreement.

(f)Notwithstanding anything to the contrary contained in this Agreement, Buyer or Seller shall not be obligated to defend any action or proceeding instituted (or threatened to be instituted) challenging the transaction contemplated by this Agreement as violative of any antitrust or competition law, or if any decree, judgment, injunction or other order is entered, enforced or attempted to be entered or enforced by a court or other Governmental Authority, which decree, judgment, injunction or other order would make the transactions contemplated by this Agreement illegal or would otherwise prohibit, prevent, restrict, impair or delay consummation of the transactions contemplated hereby, and Buyer or Seller is not required to take any action to contest or resist or any such action or proceeding or to have vacated, lifted, reversed or overturned any such decree, judgment, injunction or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by the Agreement or to have such decree, judgment, injunction or other order repealed, rescinded or made inapplicable so as to permit consummation of the transaction contemplated by this Agreement.

Section 6.08.Title Insurance Matters.

(a)Survey.  Within thirty (30) calendar days after execution of this Agreement, Seller shall cause an as-built survey of the each parcel of the Amarillo Owned Real Property (the “Survey”), to be prepared by a licensed surveyor reasonably acceptable to Buyer.  The Survey shall be made in accordance with the Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys for a Class A survey.  Once prepared, the Survey description will replace the legal description of the Amarillo Owned Real Property set forth in Section 4.10(a) of the Disclosure Schedules.

(b)Title Commitment.  Within ten (10) calendar days after execution of this Agreement, Seller shall apply to First American Title Insurance Company (the “Title Company”) for a title commitment (the “Title Commitment”) in an amount reasonably satisfactory to Buyer and Seller that shall constitute the commitment of such company to insure the title to the Amarillo Owned Real Property in the name of Buyer, and shall have ordered a search of filings under the Texas Uniform Commercial Code (the “UCC Search”).  The Title Commitment shall bind the Title Company to issue to Buyer an Owner’s Policy of Title Insurance (the “Title Policy”) issued on the standard TLTA form used in the State of Texas, insuring good and marketable title to the Amarillo Owned Real Property in Buyer, subject only to the Permitted Encumbrances and the standard printed exceptions appearing in the standard TLTA form of Owner’s Policy of Title Insurance used in the State of Texas; provided, however, that: (a)  at Buyer’s election and expense, the exception relating to discrepancies, conflicts or shortages in area or boundary lines, or any encroachment or any overlapping of improvements which a survey might show shall be modified to delete such exception, except as to shortages in area; (b)  the exception relating to ad valorem taxes shall except only standby fees and taxes owing for the current and subsequent years; (c)  there shall be no general exception for visible and apparent easements or roads and highways or similar items (with any specific exception to be specifically referenced to and shown on the Survey and identified by any applicable recording data); and (d)  there shall be no exception for parties in possession.

(c)Review of Title.

(i)Buyer shall have seven (7) Business Days from the date it has received all of the following: the Title Commitment; copies of all documents referenced in title exceptions disclosed therein; the Survey; and the UCC Search; within which to review same.  If any title defects or other matters objectionable to Buyer are disclosed by any of the items listed in the previous sentence, Buyer shall give Seller written notice of same (the “Title Objections”) prior to the expiration of such seven (7) Business Day period.

(ii)Seller shall be allowed a reasonable time, not in excess of twenty (20) days (the “Seller’s Cure Period”), within which to cure or agree to cure such Title Objections prior to Closing; provided, however, that Seller shall have no obligation to cure such Title Objections and in no event shall Seller’s Cure Period extend beyond the Closing Date without the express written consent of Buyer. Notwithstanding anything in this Section 6.08to the contrary, Seller shall be required to remove of record, by payment, bonding or otherwise: (x) any Title Objections evidenced by instruments which have been voluntarily recorded or otherwise placed or consented to by Seller against the Amarillo Owned Real Property and which are not required by applicable Law to be given for the benefit of any utility or governmental authority, (y) any mechanics’ liens relating to work done by or on behalf of Seller at the Amarillo Owned Real Property, and (z) any otherTitle Objections which can be removed by the payment of a liquidated sum of money not in excess of $50,000.

(iii)If Seller is unable to eliminate any Title Objections it is required to remove within the Seller’s Cure Period, unless the same are waived in writing by Buyer, then if such matter is capable of cure by the payment of money, the parties shall proceed to Closing and Seller shall deposit an amount with the Escrow Agent sufficient to satisfy such Title Objections if (x) the Title Company insures over such Title Objection, and (y) the underlying Title Objection does not involve an amount in issue greater than $50,000; provided, however, Buyer shall have the right to terminate this Agreement if such matter is incapable of cure by the payment of money by giving written notice to Seller within five (5) Business Days of the earlier to occur of (i) the receipt of Seller’s notice to not cure the Title Objections or (ii) the expiration of Seller’s Cure Period. If Buyer terminates this Agreement pursuant to this Section 6.08(c)(iii), the Pre-Closing Escrow Fund shall be returned to Buyer.

(iv)If Seller is unable to eliminate any Title Objections it is required to remove within the Seller’s Cure Period, then Buyer may elect to waive any such Title Objections and receive a credit against the Purchase Price in an amount equal to $50,000, less any sums that Seller expends to remove Title Objections that it removes pursuant to this Section 6.08(c). The defects waived by Buyer pursuant to this Section 6.08(c) shall be deemed Permitted Encumbrances pursuant to Section 4.08.

(d)Title at Closing.  At Closing, the Title Commitment, as approved by Buyer, shall be modified as provided in Section 6.08(b) and Section 6.08(c) above to show title to the Amarillo Owned Real Property vested in Buyer, and to update the effective date of the Title Commitment to the Closing Date, and, at Seller’s expense, the Title Company must issue the Title Policy at Closing in form and content consistent with the Title Commitment approved by Buyer through the recording date of the documents conveying the Acquired Real Property to Buyer.

Section 6.09.Books and Records.

(a)In order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing, or for any other reasonable purpose, for a period of six (6) years after the Closing, Buyer shall:

(i)retain the Books and Records (including personnel files) relating to periods prior to the Closing in a manner reasonably consistent with the prior practices of Seller; and

(ii)upon reasonable notice, afford Seller’s Representatives reasonable access (including the right to make, at Seller’s expense, photocopies), and subject to reasonable confidentiality safeguards, during normal business hours, to such Books and Records.

(b)Buyer shall not be obligated to provide Seller with access to any Books and Records (including personnel files) pursuant to this Section 6.09where such access would violate any Law.

Section 6.10.Closing Conditions.  Each party hereto shall use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in ARTICLE VII hereof.

Section 6.11.Public Announcements. Unless otherwise required by applicable Law or stock exchange requirements, no party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement; provided that Buyer and Seller hereby agree that notwithstanding this Section 6.11, Buyer shall issue a press release and shall make all appropriate filings required under state and federal securities Laws with respect to this Agreement and the consummation of the transactions contemplated hereby, with such press release to be in form and substance and issued at such time reasonably acceptable to Seller (such acceptance not be unreasonably withheld or delayed).

Section 6.12.Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer; it being understood that any Liabilities arising out of the failure of Seller to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction which would not otherwise constitute Assumed Liabilities shall be treated as Excluded Liabilities.

Section 6.13.Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid by the Seller when due.  Seller has prepared and delivered to Buyer a written estimate satisfactory to Buyer (the “Transfer Tax Estimate”) of (x) the value of the vehicles comprising the Tangible Personal Property based on Kelly Blue Book Value and (y) the value of the remaining Tangible Personal Property (excluding vehicles).  If Buyer takes the position for purposes of allocating Purchase Price pursuant to Section 2.07 that the valuation of the Tangible Personal Property is greater than the valuation for the Tangible Personal Property contained in the Transfer Tax Estimate, and such allocation causes an increase in Seller’s Tax liability over what Seller would have otherwise been required to pay based on the Transfer Tax Estimate, then Buyer will reimburse Seller for any additional Tax liability actually paid by Seller to the extent that Buyer’s position has caused such additional Tax liability.  If the Seller receives a refund (or a credit in lieu of a refund) of any of the Taxes described in this Section 6.13 for which the Seller was reimbursed by the Buyer, then Seller shall promptly pay to the Buyer an amount equal to the amount of such refund (or credit), together with any interest applicable thereto paid by the relevant Governmental Authority.

Section 6.14.Termination of Certain Agreements. Seller shall terminate, or cause to be terminated, and obtain any consents or releases required to terminate, as of Closing, the agreements listed on Section 6.14of the Disclosure Schedules without any liability to Buyer from and after the Closing.

Section 6.15.Non Solicitation of Employees. Neither Buyer nor Seller shall, from the period encompassing the Effective Date through the Closing Date, and, if Closing does not occur under this Agreement for any reason whatsoever, for a period of two (2) years following the date of termination of this Agreement, hire, employ, or attempt to hire or employ any employee of the other party. Notwithstanding anything herein to the contrary, a general advertisement, posting or a similar form of generalized solicitation that leads to the hiring or employment of an employee of Seller or Buyer or an employee of Seller or Buyer seeking employment on his or her own initiative without solicitation from Buyer or Seller (as the case may be), in any case, shall not constitute a violation of the provisions of this Section 6.15.

Section 6.16.Rule 144 Compliance. For a period of not less than one year after the date hereof, Buyer shall use its reasonable best efforts to file in a timely manner all reports with the SEC required to be filled by it pursuant to Section 13 and Section 15(d) of the Exchange Act.  Subject to satisfaction of the applicable holding period pursuant to Rule 144 of the Securities Act by Seller, to Buyer’s knowledge there is no event, circumstance or deficiency which would render the Parent Restricted Stock not eligible for resale pursuant to Rule 144 of the Securities Act.

Section 6.17.Receivables.  Following Closing, Seller will assist Buyer in the collection of the Receivables in the manner and to the extent that Buyer shall reasonably request.

Section 6.18.Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.

ARTICLE VII                                

CONDITIONS TO CLOSING

Section 7.01.Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a)The filings of Buyer and Seller pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated.

(b)No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

(c)Buyer and Seller shall have delivered to the Escrow Agent instructions directing the Escrow Agent to distribute the Pre-Closing Escrow Fund in accordance with Section 2.05(d).

Section 7.02.Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:

(a)Other than the representations and warranties of Seller contained in Section 4.01 (Organization and Qualification of Seller), Section 4.02 (Authority of Seller), Section 4.04 (Financial Statements), Section 4.20 (Taxes) and Section 4.21 (Affiliate Transactions), the representations and warranties of Seller contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Seller contained in Section 4.01 (Organization and Qualification of Seller), Section 4.02 (Authority of Seller), Section 4.04 (Financial Statements), Section 4.20 (Taxes) and Section 4.21 (Affiliate Transactions) shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

(b)Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Seller shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

(c)All consents, authorizations and approvals with respect to the Material Consents, in each case, in form and substance reasonably satisfactory to Buyer and Seller, shall have been received, and no such Material Consent shall have been revoked.

(d)No Action shall have been commenced against Buyer or Seller, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.

(e)From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

(f)Seller shall have delivered to Buyer duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(a), including instructions to the Escrow Agent and the employment and consulting agreements, as the case may be, with Key Management Employees.

(g)Each landlord that is required to deliver an estoppel to the tenant under a Lease shall have executed and delivered such estoppel to Buyer, and each such estoppel shall be “clean” and shall not state any material defaults or other material liabilities.

(h)All Encumbrances relating to the Purchased Assets shall have been released in full, other than Permitted Encumbrances, provided that those Encumbrances listed on Section 4.10 of the Disclosure Schedules shall have been released on or before the Closing, and Seller shall have delivered to Buyer written evidence, including the executed Pay-off Letters, in form satisfactory to Buyer in its sole discretion, of the release of such Encumbrances.

(i)Seller shall have delivered a certificate, dated the Closing Date and signed by a duly authorized officer of Seller, that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied (the “Seller Closing Certificate”).

(j)Seller shall have delivered a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying that attached thereto are true and complete copies of all (x) resolutions adopted by the board of directors of Seller and (y) consents of the Limited Partners and General Partner, in each case authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

(k)Seller shall have delivered a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying the names and signatures of the officers of Seller authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(l)Seller shall have delivered a certificate pursuant to Treasury Regulations Section 1.1445-2(b) (the “FIRPTA Certificate”) that Seller is not a foreign person within the meaning of Section 1445 of the Code duly executed by Seller.

(m)Seller shall have delivered to Buyer any Employee Releases.

(n)Seller shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

(o)Seller shall have delivered evidence of renewal or extension, in form and substance reasonably satisfactory to Buyer, of the agreement set forth on Section 7.02(o) of the Disclosure Schedules.

Section 7.03.Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:

(a)Other than the representations and warranties of Buyer contained in Section 5.01 (Organization of Buyer and Parent), Section 5.02 (Authority of Buyer and Parent), Section 5.04 (Brokers), and Section 5.07(Parent Restricted Stock), the representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Buyer contained in Section 5.01 (Organization of Buyer and Parent), Section 5.02 (Authority of Buyer and Parent), Section 5.04 (Brokers), and Section 5.07(Parent Restricted Stock), shall be true and correct in all respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date.

(b)Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Buyer shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

(c)No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

(d)Buyer shall have delivered to Seller duly executed counterparts to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(b), including instructions to the Escrow Agent.

(e)Buyer shall have delivered the Aggregate Post-Closing Escrow Amount to the Escrow Agent pursuant to Section 3.02(b)(x).

(f)Seller shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied (the “Buyer Closing Certificate”).

(g)Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying that the board of directors of Buyer has authorized the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

(h)Seller shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying the names and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(i)Buyer shall have delivered to Seller such other documents or instruments as Seller reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

ARTICLE VIII                                

INDEMNIFICATION

Section 8.01.Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months from the Closing Date; provided, that the representations and warranties in Section 4.01(Organization and Qualification of Seller), Section 4.02 (Authority of Seller), Section 4.08(Title to Purchased Assets), Section 4.21 (Affiliate Transactions), Section 5.01(Organization of Buyer and Parent), Section 5.02 (Authority of Buyer and Parent)and Section 5.04(Brokers) shall survive indefinitely and the representations and warranties in Section 4.20(Taxes) shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus sixty (60) days. All covenants and agreements of the parties contained herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 8.02.Indemnification By Seller. Subject to the other terms and conditions of this ARTICLE VIII, Seller shall indemnify and defend each of Buyer and its Affiliates and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a)any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement;

(c)any Excluded Asset or any Excluded Liability; or

(d)any Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller or any of its Affiliates (other than the Purchased Assets or Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date.

Section 8.03.Indemnification By Buyer. Subject to the other terms and conditions of this ARTICLE VIII, Buyer shall indemnify and defend each of Seller and its Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a)any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement;

(c)any physical damage or injury to property or Persons or for any loss or damage proximately arising from the Due Diligence Review;

(d)any liability under the WARN Act resulting from any plant closing or mass layoff that affects any employee of Seller who is not offered employment by Buyer following the Closing;

(e)any Assumed Liability; or

(f)any Third Party Claim based upon, resulting from or arising out of the Business, operations, properties, assets or obligations of Buyer or its Affiliates (other than the Excluded Assets or Excluded Liabilities) conducted subsequent to the Closing Date.

Section 8.04.Certain Limitations. The indemnification provided for in Section 8.02and Section 8.03 shall be subject to the following limitations:

(a)Seller shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.01(Organization and Qualification of Seller), Section 4.02(Authority of Seller), Section 4.08(Title to Purchased Assets), Section 4.20(Taxes) and Section 4.22(Brokers) (the “Seller Fundamental Reps”) or fraud), until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) exceeds (i) $20,000 with respect to any particular set of facts or circumstances or a series of reasonably related facts or circumstances and (ii) $450,000 in the aggregate, in which event Seller shall be required to pay or be liable for all such Losses in excess of $450,000, subject to Section 8.04(b).

(b)Seller shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any Seller Fundamental Reps or fraud) in excess of $6,000,000 (the “Indemnification Cap”).  The maximum liability for Seller under this Agreement for breach of any Seller Fundamental Reps shall be the Purchase Price.

(c)Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 5.01(Organization of Buyer and Parent), Section 5.02 (Authority of Buyer and Parent) and Section 5.04(Brokers) (the “Buyer Fundamental Reps”) or fraud) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) exceeds (i) $20,000 with respect to any particular set of facts or circumstances or a series of reasonably related facts or circumstances and (ii) $450,000 in the aggregate, in which event Buyer shall be required to pay or be liable for all such Losses in excess of $450,000, subject to Section 8.04(d).

(d)Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any Buyer Fundamental Rep or fraud) in excess of $6,000,000.   The maximum liability for Buyer under this Agreement for breach of any Buyer Fundamental Reps shall be the Purchase Price.

(e)For purposes of this ARTICLE VIII, any inaccuracy in or breach of any representation or warranty shall be determined and any damages related thereto shall be calculated without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

Section 8.05.Indemnification Procedures. The party making a claim under this ARTICLE VIII is referred to as the “Indemnified Party,” and the party against whom such claims are asserted under this ARTICLE VIII is referred to as the “Indemnifying Party.”

(a)Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party demonstrates that the defense of such Third Party Claim is materially and adversely prejudiced by the Indemnified Party’s failure to give such notice. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably ascertainable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that, if the Indemnifying Party is Seller, such Indemnifying Party shall not have the right to defend or direct the defense of any such Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Business, or (y) to the extent it seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion of counsel to the Indemnified Party, there exists a conflict of interest under applicable rules of professional responsibility between the Indemnifying Party and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.06) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b)Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c)Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party demonstrates that the defense of such Third Party Claim is materially and adversely prejudiced by the Indemnified Party’s failure to give such notice. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.

Section 8.06.Recoupment.

(a)Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this ARTICLE VIII, the Indemnifying Party, if Buyer shall satisfy its obligations within fifteen (15) Business Days of such final, non-appealable adjudication by wire transfer of immediately available funds, or if (x) to the extent there are sufficient funds available in the Escrow Account and (y) the Indemnifying Party is Seller, by Seller and Buyer issuing joint written instructions to the Escrow Agent directing the release of such amounts to Buyer from the Post-Closing Indemnification Escrow Fund. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such fifteen (15) Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to but excluding the date of payment at a rate per annum equal to the rate of interest published by The Wall Street Journal as the “prime rate” at large U.S. money center banks on the Closing Date, calculated on the basis of a 365 day year and the actual number of days elapsed, without compounding.

(b)From and after the Closing, subject to the provisions of this ARTICLE VIII, including, but not limited to Section 8.04(a) and Section 8.04(b) any indemnification to which Buyer is entitled under this Agreement as a result of any Loss (other than any Loss in respect of a breach of a Seller Fundamental Representation and other than any Loss resulting from fraud) shall be satisfied solely and exclusively by (1) first recouping all of such Loss from the then-remaining amount of the Post-Closing Indemnification Escrow Fund by Buyer in accordance with the terms of the Post-Closing Escrow Agreement and (2) to the extent the Post-Closing Indemnification Escrow Fund is insufficient to satisfy such Loss, second recouping the remainder of such Loss from Seller directly.  On the date which is eighteen (18) months following the Closing Date, Buyer and Seller shall direct the Escrow Agent to release to Seller the then-remaining amount of the Post-Closing Indemnification Escrow Fund less the aggregate amount of all Losses specified in any then-unresolved good faith claims for indemnification in accordance with the terms of the Post-Closing Escrow Agreement.

Section 8.07.Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 8.08.No Waiver.  The representations, warranties and covenants of the Indemnifying Party’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of the Indemnified Party’s waiver of any condition set forth in Section 7.02 or Section 7.03, as the case may be.

Section 8.09.Tax Benefits. The amount of any Losses suffered by a party will be reduced by the amount, if any, of the recovery or Tax benefit (net of reasonable expenses incurred in obtaining such recovery or benefit) such party has received or otherwise enjoyed with respect thereto from any other Person (including any recovery under any third party insurance policies); and if such a recovery or benefit is received or enjoyed by an Indemnified Party after it receives payment or other credit under this Agreement with respect to Losses, then a refund equal in the aggregate amount of the recovery, net of reasonable expenses and Tax or other costs incurred in obtaining or imposed on the recovery, will be made promptly to the Indemnifying Party.  For purposes of the foregoing, the phrase any “Tax benefit” to Buyer will consist solely of those Tax benefits actually realized by Buyer during the three (3) Taxable years following the Closing (counting the Taxable year in which the Closing occurs as one of such Taxable years).

Section 8.10.Independent Analysis. Buyer acknowledges that Buyer, either alone or together with any Representative Buyer has retained to advise it with respect to the transactions contemplated hereby, has knowledge and experience in transactions of the type contemplated pursuant to this Agreement and in the Business and is therefore capable of evaluating the risks and merits of acquiring the Purchased Assets and the Assumed Liabilities.  Buyer further acknowledges that, except as set forth in this Agreement, the Transaction Documents and any certificates delivered hereunder or thereunder, neither Seller nor any of its respective shareholders, partners, directors, officers, members or owners, nor any of their respective Affiliates or Representatives has made any representations or warranties.  Buyer further acknowledges, agrees and recognizes that any cost estimates, projections or other predictions contained or referred to in any document provided to Buyer or any of its Representatives are prepared for internal planning purposes only and are not deemed to be representations and warranties of Seller or Seller’s respective partners, directors, officers, or owners, or any of their respective Affiliates or Representatives.

Section 8.11.No Remote or Speculative Damages.  NO PARTY SHALL BE LIABLE, AND NO CLAIM FOR BREACH OF REPRESENTATION OR WARRANTY OR FOR INDEMNIFICATION OR ANY OTHER CLAIM, MAY IN ANY EVENT BE ASSERTED UNDER THIS ARTICLE VIII OR OTHERWISE ARISING UNDER THIS AGREEMENT, OR ANY OTHER DOCUMENTS ENTERED INTO IN CONNECTION HEREWITH, FOR ANY SPECULATIVE, REMOTE OR EXEMPLARY OR PUNITIVE DAMAGES (EXCEPT TO THE EXTENT EXEMPLARY OR PUNITIVE DAMAGES ARE AWARDED TO A THIRD PARTY).

Section 8.12.Mitigation.  Each Indemnified Party shall be obligated in connection with any claim for indemnification under this ARTICLE VIII to use all commercially reasonable efforts to mitigate Losses upon and after having become aware of any event which could reasonably be expected to give rise to any such Losses, provided, that such mitigation is not detrimental in any material respect to such Indemnified Party and does not disrupt the ongoing business operations of the Indemnified Party.  For the avoidance of doubt, any costs of the Indemnified Party incurred in connection with any mitigation undertaken pursuant to this Section 8.12 shall be deemed “Losses” of the Indemnified Party and such efforts to mitigate shall not include an obligation to litigate or initiate any Action or pursue any insurance or indemnification and, if mitigation first requires expenditure of funds, then the Indemnified Party shall have no obligation to seek such mitigation unless the Indemnifying Party advances such funds.

Section 8.13.Exclusive Remedies.  Other than with respect to Section 6.03, Section 6.06,Section 9.02(b) and Section 10.12, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this ARTICLE VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in this ARTICLE VIII or Section 6.03,6.06and9.02(b). Nothing in this Section 8.13 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any Person’s fraudulent, criminal or intentional misconduct.

Section 8.14.Exception for Fraud and Willful Misconduct.  Notwithstanding anything herein to the contrary, in no event shall any limitation or condition provided in this ARTICLE VIII apply to any Loss suffered or incurred by (a) Buyer as a result of, or arising out of, the fraud or willful misconduct of Seller or (b) Seller as a result of, or arising out of, the fraud or willful misconduct of Buyer.

ARTICLE IX                                

TERMINATION

Section 9.01.Termination. This Agreement may be terminated at any time prior to the Closing:

(a)by the mutual written consent of Seller and Buyer; or

(b)by Buyer by written notice to Seller (x) in accordance with Section 10.11(b) or (y) if:

(i)Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Seller within twenty (20) days of Seller’s receipt of written notice of such breach from Buyer; or

(ii)any of the conditions set forth in Section 7.01 or Section 7.02 shall not have been fulfilled by the six (6) month anniversary of the date hereof, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or

(iii)Seller has notified Buyer in writing on or after December 31, 2011 that one or more Material Consents cannot, in Seller's reasonable judgment, be obtained on or before the six (6) month anniversary of the date hereof; or

(c)by Seller by written notice to Buyer if:

(i)Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Buyer within twenty (20) days of Buyer’s receipt of written notice of such breach from Seller; or

(ii)any of the conditions set forth in Section 7.01or Section 7.03 shall not have been fulfilled by the six (6) month anniversary of the date hereof, unless such failure shall be due to the failure of Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or

(iii)if Buyer has not delivered the Purchase Price as provided in ARTICLE IIon or before the second (2nd) Business Day after all of the conditions to Closing set forth in ARTICLE VII are either satisfied or waived, or on or before such other date as Seller and Buyer may mutually agree upon in writing, provided that Seller shall be required to deliver written notice to Buyer stating that it is seeking to terminate the Agreement pursuant to Section 9.02(b); or

(iv)if Seller has notified Buyer in writing on or after December 31, 2011 that one or more Material Consents cannot, in Seller's reasonable judgment, be obtained on or before the six (6) month anniversary of the date hereof and Buyer has not, within ten (10) business days of the date of such written notice, affirmatively waived in writing the condition to Closing that such Material Consent(s) be obtained; or

(d)by Buyer or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.

Section 9.02.Effect of Termination.

(a)In the event of termination of this Agreement in accordance with this Agreement, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

(i)as set forth in this ARTICLE IX and ARTICLE X hereof; and

(ii)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.

(b)In the event of termination of this Agreement in accordance with Section 9.01(c)(iii), then Seller shall be entitled to receive the entire amount of the Pre-Closing Escrow Fund, by wire transfer of immediately available funds.  In such event, Buyer shall promptly take all such actions as may be required to cause the Escrow Agent to pay the Pre-Closing Escrow Fund to Seller, including executing and delivering the appropriate instructions to the Escrow Agent.  The payment to Seller of the Pre-Closing Escrow Fund shall serve as full liquidated damages (and not as a penalty) under applicable Law, and Buyer shall not have any further liability under this Agreement.  Seller acknowledges and agrees that payment of such liquidated damages shall constitute the sole and exclusive remedy under such circumstances for Seller and its Affiliates, each of whom shall be deemed to have waived the right to sue Buyer for specific performance of this Agreement or to recover any damages or other amounts in excess of the Pre-Closing Escrow Fund under such circumstances.

(c)In the event of termination of this Agreement other than under the circumstances described in Section 9.02(b), then Buyer and Seller will take such action as may be required to cause the Escrow Agent to return the Pre-Closing Escrow Fund to Buyer (or an Affiliate of Buyer, if so directed by Buyer), including executing and delivering the appropriate instructions to the Escrow Agent.

(d)If the Agreement is terminated as provided in Section 9.01, Buyer and Seller shall use commercially reasonable efforts to cause, to the extent practicable, all filings applications and other submissions made pursuant to this Agreement to be withdrawn from the Governmental Authority or other Person to which they were made.

ARTICLE X                                

MISCELLANEOUS

Section 10.01.Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred; provided, however, Buyer and Seller shall be equally responsible for all filing and other similar fees payable in connection with any filings or submissions under the HSR Act.

Section 10.02.Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

If to Seller:	MicroBeef Technologies, LTD. 720 South Tyler Suite 300 P.O. Box 9262 Amarillo, TX 79105 Facsimile: 806-378-5512 E-mail: bpratt@microbeef.com Attention: William C. Pratt
with a copy to:	Sprouse Shrader Smith P.C. 701 South Taylor Suite 500 Amarillo, TX 79101 Facsimile:  806-373-3545 E-mail:  joel.howard@sprouselaw.com jack.howell@sprouselaw.com Attention:  Joel Howard, Esq. J.F. “Jack” Howell III, Esq.
If to Buyer:	MWI Veterinary Supply Co. 3041 W. Pasadena Dr. Boise, ID 83705 Facsimile:  208-955-8999 Email:  JCleary@mwivet.com Attention:  James F. Cleary, Jr.
with a copy to:	Dechert LLP Cira Center 2929 Arch Street Philadelphia, PA  19104-2808 Facsimile:                      215-994-2222 E-mail:                      Stephen.Leitzell@dechert.com Attention:                      Stephen M. Leitzell, Esq.

Section 10.03.Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. Any date specified for any Action that is not a Business Day shall be deemed to mean the first (1st) Business Day after such date. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04.Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 10.05.Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 10.06.Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 10.07.Successors and Assigns. Subject to any express provisions in this Agreement regarding restrictions on transfers or assignments, this Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, assigns, heirs and personal representatives. This Agreement may not be assigned by Buyer or Seller without the prior written consent of the other party; provided, however, that Buyer may assign all of its rights this Agreement to a wholly owned subsidiary of Buyer.  No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 10.08.No Third-party Beneficiaries. Except as provided in ARTICLE VIII, with respect to Buyer Indemnitees and Seller Indemnitees, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.09.Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 10.10.Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Idaho without giving effect to any choice or conflict of law provision or rule (whether of the State of Idaho or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Idaho.

(b)ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF IDAHO IN EACH CASE LOCATED IN THE CITY OF BOISE AND THE COUNTY OF ADA, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING, SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c).

Section 10.11.Exhibits and Schedules.

(a)All Exhibits and Schedules annexed hereto are expressly made a part of this Agreement as though fully set forth herein.  Any fact or item which is clearly disclosed on any Schedule or Exhibit attached hereto, and which is relevant on its face to any representations or warranties set forth herein or to the information called for by another Schedule or Schedules (or in an Exhibit or Exhibits) to this Agreement shall be deemed to be an exception to such representation or warranty or to be disclosed on such other Schedule or Schedules (or Exhibit or Exhibits), as the case may be, notwithstanding the omission of a reference or cross-reference thereto.

(b)Seller may notify Buyer with respect to any development to its Knowledge that, if existing, or occurring or Known on the date of this Agreement, would have been required to be set forth or described in the Disclosure Schedules at any time from the date hereof until three (3) days prior to the scheduled Closing Date and such notice shall state whether the Seller agrees for purposes of this Agreement that such development gives rise to a Material Adverse Effect.   A notice containing Seller's agreement that such development gives rise to a Material Adverse Effect is referred to as a "MAE Notice".  Buyer shall respond to Seller within ten (10) days of its receipt of a MAE Notice with written notice that either (i) such MAE Notice will be deemed to have amended the Disclosure Schedules, to have qualified the representations and warranties contained in Article IV above, and to have cured any misrepresentation or breach of warranty that might have existed hereunder by reason of the development and further that Buyer is prepared to proceed with the Closing or (ii) such MAE Notice will (x) not be deemed to have amended the Disclosure Schedule, (y) not be deemed to have so qualified such representations and warranties and (z) not be deemed to have so cured any misrepresentation or breach of warranty and further that Buyer is terminating this Agreement and such termination by Buyer shall not constitute a termination under Section 9.01(c)(iii) and in no way will affect Buyer’s right to recover the Pre-Closing Escrow Fund in accordance with Section 9.02(c).   If Seller notifies Buyer of a development and such notice is not a MAE Notice, such notice shall not (a) limit or otherwise affect Buyer's right to indemnification hereunder, or (b) affect the right of Buyer to terminate this Agreement as provided in Section 9.01 and any such election by Buyer to not close the transactions contemplated hereby shall not constitute a termination under Section 9.01(c)(iii) and in no way will affect Buyer’s right to recover the Pre-Closing Escrow Fund in accordance with Section 9.02(c).  If Seller identifies additional Contracts in any notice to Buyer, the Buyer shall have the right (but not the obligation) to assume such Contracts pursuant to the terms and conditions of this Agreement, with no increase in the Purchase Price.

Section 10.12.Specific Performance. SubjecttoSection 9.02(b), the parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Section 10.13.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

SELLER:

Micro Beef Technologies, Ltd.

By:  /s/ William C. Pratt

Name:  William C. Pratt

Title:  Chairman

[Signature Page to Asset Purchase Agreement]

BUYER:

MWI Veterinary Supply Co.

By:  /s/ James F. Cleary Jr.

Name:  James F. Cleary, Jr.

Title:  President and CEO

[Signature Page to Asset Purchase Agreement]

PARENT:

MWI Veterinary Supply, Inc.

By:  /s/ James F. Cleary Jr.

Name:  James F. Cleary, Jr.

Title:  President and CEO

[Signature Page to Asset Purchase Agreement]

EX-10.17

EXHIBIT 10.17

THIRD AMENDMENT TO CREDIT AGREEMENT

This THIRD AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is entered into as of November 1, 2011, among MWI VETERINARY SUPPLY CO., an Idaho corporation (the “Borrower”), MWI VETERINARY SUPPLY, INC., a Delaware corporation (the “Parent”), MEMORIAL PET CARE, INC., an Idaho corporation (“Memorial” and together with Parent, collectively, the “Guarantors” and individually, a “Guarantor”), BANK OF AMERICA, N.A., a national banking association (“Bank of America”), WELLS FARGO BANK, N.A., a national banking association (“Wells Fargo” and together with Bank of America and each other lender from time to time party hereto, collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., a national banking association, as issuer of letters of credit (in such capacity, the “L/C Issuer”) and as administrative agent (in such capacity, the “Administrative Agent”).

RECITALS

A.           The Borrower, the Guarantors, the Lenders, the Administrative Agent and the L/C Issuer are each a party to that certain Credit Agreement dated as of December 13, 2006 (as amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which and subject to the terms and conditions therein contained, the Lenders agreed to make Loans to the Borrower and the L/C Issuer agreed to issue Letters of Credit for the account of the Borrower (the “Credit Facility”) in an aggregate amount not to exceed $100,000,000 through March 1, 2013.

B.           Borrower has requested that the Lenders increase the amount of the Credit Facility from $100,000,000 to $150,000,000, extend the availability period of the Credit Facility from March 1, 2013 to November 1, 2016 and to make certain other modifications to the Credit Agreement, which the Lenders, the Administrative Agent and the L/C Issuer have agreed to do, subject to the terms and conditions of this Amendment.

NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration receipt of which is hereby acknowledged, the parties agree as follows:

AGREEMENT

1.           Definitions; Interpretation.  All capitalized terms used in this Amendment and not otherwise defined herein have the meanings specified in the Credit Agreement.  The rules of construction and interpretation specified in Sections 1.02 and 1.04 of the Credit Agreement also apply to this Amendment and are incorporated herein by this reference.

2.           Amendments to Credit Agreement.  The Credit Agreement is hereby amended as follows:

(a)           Amendment to Definitions.  In Section 1.01, amendments are made to the definitions, as follows:

(i)           Applicable Rate.  The table set forth in the definition of “Applicable Rate” is deleted and the following substituted in its stead:

Applicable Rate
Pricing Level	Funded Debt to EBITDA Ratio	Commitment Fee	Eurodollar Rate +	Letters of Credit	Base Rate +
1	≤1.75:1	0.15%	0.95%	0.95%	0.20%
2	≤2.50:1 but >1.75:1	0.20%	1.20%	1.20%	0.45%
3	>2.50:1	0.25%	1.50%	1.50%	0.75%

(ii)           Consignment Inventory.  The definition of “Consignment Inventory” is added to read as follows:

“Consignment Inventory” means any inventory held by Borrower or any of its Subsidiaries on a consignment basis, which inventory is not owned by Borrower or any of its Subsidiaries (and would not be reflected on a consolidated balance sheet of Borrower and its Subsidiaries prepared in accordance with GAAP).

(iii)           Factoring Agreement.  The definition of “Factoring Agreement” is deleted.

(iv)           Fortis.  The definition of “Fortis” is deleted.

(v)           Interest Payment Date.  The definition of “Interest Payment Date” is deleted and the following substituted in its stead:

“Interest Payment Date” means, (a) as to any Eurodollar Floating Rate Loan, the last Business Day of each month and the Maturity Date; (b) as to any Eurodollar Fixed Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; provided, however, that if any Interest Period for a Eurodollar Fixed Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (c) as to any Base Rate Loan, the last Business Day of each month and the Maturity Date.

(vi)           Interest Period.  In the definition of “Interest Period,” the words “ending on the date one month thereafter” are deleted and the words “ending on the date one, two, three or six months thereafter” are substituted in its stead.

(vii)           Maturity Date.  The definition of “Maturity Date” is deleted and the following substituted in its stead:

“Maturity Date” means November 1, 2016; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

(viii)           Permitted Acquisition Indebtedness.  The definition of “Permitted Acquisition Indebtedness” is added to read as follows:

“Permitted Acquisition Indebtedness” means Indebtedness in existence at the time of, and assumed by Borrower or any of its Subsidiaries in connection with, a Permitted Acquisition; provided that such Indebtedness was not created in contemplation of such Permitted Acquisition.

(ix)           Spot Rate.  The definition of “Spot Rate” is deleted.

(b)           Amendment to Section 2.02.  At the end of subsection (a) of Section 2.02, the following sentence is added:

If the Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Fixed Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.

(c)           Amendment to Section 2.14.  Section 2.14 is deleted.

(d)           Amendments to Section 7.01.  In Section 7.01, subsection (j) is deleted, and the following subsections (j) and (k) are substituted in its stead:

(j)           Liens on Consignment Inventory; and

(k)           Liens securing Permitted Acquisition Indebtedness; provided that such Liens do not (i) at any time encumber any property other than property acquired in such Permitted Acquisition (and improvements and attachments thereto) or (ii) secure any Indebtedness other than Permitted Acquisition Indebtedness existing immediately prior to the time of acquisition of such property.

(e)           Amendment to Section 7.02.  Subsection (g) of Section 7.02 is deleted and the following substituted in its stead:

(g)           other Investments not described in subsections (a) through (f) above; provided that (i) any such Investments made prior to November 1, 2011 are deemed to be permitted, and (ii) the aggregate amount of all such Investments made on or after November 1,, 2011 shall not exceed $15,000,000 at any time outstanding.

(f)           Amendments to Section 7.03. In Section 7.03, in subsection (e) the reference to the amount of $10,000,000 is deleted and the amount of $30,000,000 is substituted in its stead, the word “and” is added at the end of subsection (e), subsections (f) and (g) are deleted, and the following subsection (f) is substituted in their stead:

(f)           other Indebtedness not described in subsections (a) through (e) above; provided that (i) such Indebtedness is unsecured and (ii) the aggregate principal amount of such Indebtedness does not to exceed at any time outstanding (A) $30,000,000 minus (B) the aggregate outstanding amount of all Indebtedness permitted by subsection (e) above.

(g)           Amendment to Schedules.  Schedules 2.01, 5.13, 7.01 and 7.03 attached to the Credit Agreement are deleted and Schedules 2.01, 5.13, 7.01 and 7.03 attached hereto are substituted in their stead.

3.           Amendments to Notes.  The Notes are amended as follows:

(a)           Bank of America Note.  In the heading of the Note made by Borrower in favor of Bank of America, the amount of “$57,000,000” is deleted and the amount of “$85,500,000” substituted in its stead.

(b)           Wells Fargo Note.  In the heading of the Note made by Borrower in favor of Wells Fargo, the amount of “$43,000,000” is deleted and the amount of “$64,500,000” substituted in its stead.

4.           Conditions to Effectiveness.  Notwithstanding anything contained herein to the contrary, this Amendment shall become effective when each of the following conditions is fully and simultaneously satisfied; provided that each of the following conditions is fully and simultaneously satisfied on or before November 2, 2011:

(a)           Delivery of Amendment.  The Borrower, each Guarantor, the Administrative Agent, the L/C Issuer and each Lender shall have executed and delivered counterparts of this Amendment to the Administrative Agent, sufficient in number for distribution to the Administrative Agent, each Lender and the Borrower;

(b)           Payment of Fees.  The Borrower shall have paid to the Administrative Agent for the account of Lenders in proportion to their Applicable Percentage set forth in Schedule 2.01 attached hereto, an amendment fee in the amount of $100,000 in respect of the Lenders’ agreement to enter into this Amendment, which fee shall be fully earned when paid and shall not be refundable for any reason whatsoever;

(c)           Authorization.  The Administrative Agent shall have received the following, each in form and substance and dated as of a date satisfactory to the Administrative Agent and its legal counsel:

(i)           such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of the Borrower and each Guarantor as the Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents to which the Borrower or such Guarantor is a party; and

(ii)           such evidence as the Administrative Agent may reasonably require to verify that the Borrower and each Guarantor is duly organized or formed, validly existing, in good standing and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including certified copies of the Borrower’s and each Guarantor’s Organization Documents, certificates of good standing and/or qualification to engage in business.

(d)           Consents, Etc.  The Administrative Agent shall have received such evidence as the Administrative Agent or the Required Lenders may reasonably require to verify that the Borrower and each Guarantor has obtained all consents, approvals, permits or other authorizations from all relevant Governmental Authorities, required to be obtained in connection with the execution, delivery or performance by, or enforcement against, the Borrower and each Guarantor of this Amendment and the other Loan Documents.

(e)           Representations True; No Default.  The representations of the Borrower as set forth in Article V of the Credit Agreement shall be true on and as of the date of this Amendment with the same force and effect as if made on and as of this date or, if any such representation or warranty is stated to have been made as of or with respect to a specific date, as of or with respect to such specific date.  No Event of Default and no event which, with notice or lapse of time or both, would constitute an Event of Default, shall have occurred and be continuing or will occur as a result of the execution of this Amendment; and

(f)           Other Documents.  The Administrative Agent and the Lenders shall have received such other documents, instruments, and undertakings as the Administrative Agent and such Lender may reasonably request.

4.           Representations and Warranties.  The Borrower hereby represents and warrants to the Lenders, the Administrative Agent and the L/C Issuer that each of the representations and warranties set forth in Article V of the Credit Agreement is true and correct as if made on and as of the date of this Amendment or, if any such representation or warranty is stated to have been made as of or with respect to a specific date, as of or with respect to such specific date.  The Borrower expressly agrees that it shall be an additional Event of Default under the Credit Agreement if any representation or warranty made by the Borrower hereunder shall prove to have been incorrect in any material respect when made.

5.           No Further Amendment.  Except as expressly modified by this Amendment, the Credit Agreement and the other Loan Documents shall remain unmodified and in full force and effect.  The Borrower and each Guarantor hereby ratifies and confirms each of their respective debts, liabilities, obligations, covenants and duties to each Lender, the Administrative Agent and the L/C Issuer arising under the Credit Agreement and the other Loan Documents to which the Borrower or such Guarantor is a party.  Without limiting the foregoing, each Guarantor hereby confirms and agrees that its guarantee of the payment and performance of the Obligations remains in full force and effect, and that the Obligations shall include the debts, liabilities, obligations, covenants and duties of, the Borrower to each Lender, the Administrative Agent and the L/C Issuer arising under the Credit Agreement as amended by this Amendment.

6.           Reservation of Rights.  The Borrower and each Guarantor acknowledges and agrees that the execution and delivery by the Administrative Agent, the L/C Issuer and the Lenders of this Amendment shall not be deemed to create a course of dealing or otherwise obligate the Administrative Agent, the L/C Issuer or any Lender to forbear or execute similar amendments under the same or similar circumstances in the future.

7.           Miscellaneous.

(a)           Governing Law.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF IDAHO; PROVIDED THAT THE ADMINISTRATIVE AGENT, THE L/C ISSUER AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b)           Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(c)           Authorization.  Lenders hereby authorize and instruct the Administrative Agent to execute and deliver this Amendment.

(d)           Integration.  This Amendment, together with the other Loan Documents, comprises the complete, final and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter.

(e)           Severability.  Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions thereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.

MWI VETERINARY SUPPLY CO.

By:  /s/ Mary Pat Thompson                                                                         

Name:  Mary Pat Thompson                                                                         

Title:  Chief Financial Officer                                                                         

MWI VETERINARY SUPPLY, INC.

By:  /s/ Mary Pat Thompson                                                                           

Name:  Mary Pat Thompson                                                                           

Title:  Chief Financial Officer                                                                           

MEMORIAL PET CARE, INC.

By:  /s/ Mary Pat Thompson                                                                          

Name:  Mary Pat Thompson                                                                           

Title:  Chief Financial Officer                                                                           

BANK OF AMERICA, N.A., as Administrative Agent

By:  /s/ Dora A. Brown                                                                                     

Name:  Dora A. Brown                                                                           

Title:  Vice President                                                                           

BANK OF AMERICA, N.A., as a Lender and L/C Issuer

By:  /s/ Brad Ruland                                                                                         

Name:   Brad Ruland                                                                           

Title:  SVP

WELLS FARGO BANK, N.A., as a Lender

By:  /s/ Linda K. Armstrong                                                                           

Name:  Linda K. Armstrong                                                                           

Title:  VP/Senior Relationship Manager                                                                           

SCHEDULE 2.01

COMMITMENTS AND APPLICABLE PERCENTAGES

Lender	Commitment	Applicable Percentage
Bank of America, N.A.	$ 85,500,000.00	57.000000000%
Wells Fargo Bank, N.A.	$ 64,500,000.00	43.000000000%
Total	$150,000,000.00	100.000000000%

SCHEDULE 5.13

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS

AND EQUITY INTERESTS IN BORROWER

Part (a).                      Subsidiaries.

Name of Direct Owner	Name of Subsidiary	Jurisdiction of Formation	Percentage Ownership
MWI Veterinary Supply, Inc.	MWI Veterinary Supply Co.	Idaho	100%
MWI Veterinary Supply Co.	Memorial Pet Care, Inc.	Idaho	100%
MWI Veterinary Supply Co.	MWI Supply (UK Holdings) Limited	England	100%
MWI Supply (UK Holdings) Limited	MWI Supply (UK) Limited	England	100%
MWI Supply (UK) Limited	MWI Supply (UK Acquisition) Limited	England	100%
MWI Supply (UK Acquisition) Limited	Centaur Services Limited	England	100%
Centaur Services Limited	Labpak Limited	England	100%
Centaur Services Limited	Somervet Limited	England	100%

Part (b).                      Other Equity Investments.

Name of Owner	Name of Investment	Jurisdiction of Formation	Percentage Ownership
MWI Veterinary Supply Co.	Feeder’s Advantage LLC	Colorado	50%
MWI Veterinary Supply Co.	Securos Europe, GmbH	Germany	60%
MWI Veterinary Supply Co.	Cubex, LLC	Arizona	20%
MWI Veterinary Supply Co.	Durvet/PMR, L.P.	Missouri	3.2%
MWI Veterinary Supply Co.	ANIMALYTIX LLC	Delaware	16.67%
MWI Veterinary Supply Co.	WML, LLC	Delaware	50%

Part (c).                      Owners of Equity Interests in Borrower.

Name of Owner	Percentage Ownership
MWI Veterinary Supply, Inc.	100%

SCHEDULE 7.01

EXISTING LIENS

	Financing Statement Filing No.	Debtor	Secured Party	Collateral Description
1.	B813288	MWI Veterinary Supply Co.	Bayer Healthcare LLC	Baytril 100 (enrofloxacin) Injectable Solution
2.	B200309474235	MWI Veterinary Supply Co.	Bayer Healthcare LLC	Baytril 100 (enrofloxacin) Injectable Solution, Advantage© (imidacloprid) Topical Solution, K9 Advantix© (imidacloprid + permethrin), Advantage Multi ™ (imidacloprid + moxidectin) Topical Solution
3.	TBD	MWI Veterinary Supply Co.	AmerisourceBergen Drug Corporation	Inventory purchased from ABDC.

SCHEDULE 7.03

EXISTING INDEBTEDNESS

1. Indebtedness of Centaur Services Limited evidenced by that £12,500,000 Sterling Revolving Credit Facility dated November 5, 2010 between Wells Fargo Bank, National Association, London Branch and Centaur Services Limited.

2. £808,181.70 Capital Lease obligations of Centaur Services Limited.

EX-10.18

EXHIBIT 10.18

NON-COMPETITION AND CONFIDENTIAL

INFORMATION AGREEMENT

THIS NON-COMPETITION AND CONFIDENTIAL INFORMATION AGREEMENT (the “Agreement”), dated as of September 20, 2011, by and between MWI Veterinary Supply Co., an Idaho corporation (the “Buyer”), and William C. Pratt (the “Restricted Party”), will be effective as of the Closing Date.

Recitals

WHEREAS, pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”), dated as of the date hereof, by and among Micro Beef Technologies, Ltd., a Texas limited partnership (“Seller”), MWI Veterinary Supply, Inc., a Delaware corporation (“Parent”) and Buyer, a wholly-owned subsidiary of Parent, Buyer will purchase and assume from Seller substantially all the assets and certain specified liabilities of the Business. Defined terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Purchase Agreement;

WHEREAS, the Restricted Party is a limited partner of Seller and the economic benefit of the transactions contemplated by the Purchase Agreement shall inure to the direct and material benefit of the Restricted Party;

WHEREAS, the Restricted Party acknowledges that on the Closing Date pursuant to and on the terms set forth in the Purchase Agreement, Buyer will purchase the Purchased Assets and assume the Assumed Liabilities with the expectation of continuing the general business of Seller and continuing the services to Seller’s existing and expected future customers and clients;

WHEREAS, the Restricted Party further acknowledges that Buyer has legitimate business interests in preserving and protecting Seller’s (i) confidential information; (ii) goodwill, technologies, intellectual property, business plans, proprietary business processes, and proprietary methods of operation, vendors and vendor contacts, financial and marketing information, and Trade Secrets, as defined in the Uniform Trade Secrets Act; (iii) customers, customer lists, customer contacts and referral sources; and (iv) relationships with its customers and employees (collectively referred to herein as “Legitimate Business Interests”);

WHEREAS, the Restricted Party agrees that Buyer is entitled to a period of time to benefit from the purchase and that the Restricted Party should be restricted from competing with Buyer or benefiting from the proprietary information and goodwill purchased by Buyer; and

WHEREAS, the Restricted Party is a senior management employee of Seller and, pursuant to that certain consulting agreement dated as of the date hereof by and between the Restricted Party and Buyer, the Restricted Party shall provide Consulting Services (as defined therein) to Buyer with respect to the Business for a period of three (3) years beginning on the Closing Date;

NOW, THEREFORE, in consideration of the foregoing and for the purpose of protecting the Buyer’s Legitimate Business Interests, the parties, intending to be legally bound, hereby agree as follows:

Terms

Section 1.Confidentiality.  From and after the Closing Date the Restricted Party shall, and shall cause its respective Affiliates and Representatives to hold, in confidence any and all information, whether written or oral, concerning the Business, the Transaction or Buyer, except to the extent that the disclosing party can show that such information (a) is generally available to and known by the public through no fault of any of the Restricted Party, any of its Affiliates or their respective Representatives; or (b) is Lawfully acquired by the Restricted Party, any of its respective Affiliates or Representatives from and after the Closing Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Restricted Party or any of its Affiliates or Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such disclosing party shall promptly notify Buyer in writing and shall disclose only that portion of such information which he, she or it is advised by its counsel in writing is legally required to be disclosed, provided that the Restricted Party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

Section 2.Non-Competition.  For the purpose of protecting Buyer’s Legitimate Business Interests, and in consideration of the compensation received by the Restricted Party in connection with the transactions reflected in the Purchase Agreement, for a period of five (5) years following the Closing Date, within the United States, Canada, the United Kingdom, and Australia, the Restricted Party agrees not to Compete with Buyer. “Compete” means to directly or indirectly solicit, sell or render any services or products in a Competitive Business including, but not limited to, as a proprietor, member, partner, investor, shareholder, director, officer, employee, consultant, or independent contractor. “Competitive Business” means to engage in the business of (i) manufacturing, developing, distributing, selling, or supplying computerized management systems for individual animal information collection and management, and related marketing, health and nutrition systems (including animal identification and food safety assurance traceback systems), (ii) research and development related to the business of clause (i) above, (iii) manufacturing, developing, distributing, selling, or supplying feed additives or animal health products or (iv) any other business carried on by Seller in the twelve (12) months preceding the Closing Date.  Notwithstanding anything herein to the contrary, the passive investment in, and becoming a shareholder of, a publicly traded company engaged in a Competitive Business, including Buyer, shall not constitute a violation of the provisions of this Section 2; provided that such interest is no greater than 1% of the publicly traded company.

Section 3.Non-Solicitation Covenants.

(a)           For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of five (5) years following the Closing Date, the Restricted Party shall not directly or indirectly, solicit any customer, client, supplier, or manufacturer’s representative of Buyer, for the purpose of (x) establishing a relationship for any business or services in a Competitive Business, (y) causing any client, customer, supplier, or manufacturer’s representative to terminate any relationship with Buyer, or (z) interfering with the relationship between Buyer and any of Buyer’s customers, clients, employees, independent contractors, suppliers, or manufacturer’s representatives in the Competitive Business.

(b)           For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of five (5) years following the Closing Date, the Restricted Party shall not hire, employ or attempt to hire or employ a Protected Person. A “Protected Person” is any person who is as of the Closing Date an employee of Seller. Notwithstanding anything herein to the contrary, a general advertisement, posting or a similar form of generalized solicitation that leads to the hiring or employment of a Protected Person shall not constitute a violation of the provisions of this Section 3(b), so long as such general advertisement is not directly or indirectly related to a Competitive Business.

Section 4.Non-Interference Covenant. For a period of five (5) years following the Closing Date, the Restricted Party shall not, whether on its own behalf or on behalf of a third party, directly or indirectly induce or attempt to induce any customer, contractor or vendor of Buyer to terminate the customer’s, contractor’s or vendor’s relationship with Buyer or otherwise attempt to harm, obstruct, or otherwise hinder Buyer’s relationship with any such customer, contractor or vendor.

Section 5.           Non-Disparagement Covenant.    For a period of five (5) years following the Closing Date, the Restricted Party will not intentionally make any statements injurious to the business reputation or goodwill of the Business or Buyer.  Nothing in this provision shall prevent the Restricted Party from giving truthful Confidential Information at any time to the extent required by subpoena or other legal process.

Section 6.           Remedies.  If the Restricted Party breaches, or threatens to commit a breach of, any of the provisions of this Agreement, Buyer shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Buyer under law or in equity:

(a)           the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Buyer and that money damages may not provide an adequate remedy to Buyer; and

(b)           the right and remedy to recover from the Restricted Party all monetary damages suffered by Buyer as the result of any acts or omissions constituting a breach of this Agreement.

Section 7.Tolling of Restrictive Periods.  Buyer and the Restricted Party agree and intend that the Restricted Party’s obligations under Section 2 through Section 5 above shall be tolled during any period that the Restricted Party is in breach of any of the obligations under any such section, so that Buyer is provided with the full benefit of the restrictive periods set forth herein.

Section 8.           Reformation and Severability.  In the event that any covenant contained in this Agreement should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Agreement and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.  Whenever possible each provision and term of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable Law.

Section 9.           Termination.  In the event of termination of the Purchase Agreement in accordance with Article IX thereof, this Agreement shall forthwith become void and there shall be no obligations or liability on the part of any party hereto.

Section 10.           Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10):

If to the Buyer,to:

MWI Veterinary Supply Co.

3041 W. Pasadena Dr.

Boise, ID 83705

Facsimile:  208-955-8999

Email:  JCleary@mwivet.com

Attention:  James F. Cleary, Jr.

With a required copy to:

Dechert LLP

Cira Center

2929 Arch Street

Philadelphia, PA  19104-2808

Facsimile:  215-994-2222

E-mail:                      Stephen.Leitzell@dechert.com

Attention:  Stephen M. Leitzell, Esq.

If to Restricted Party, to:

William C. Pratt

P.O. Box  95

Canyon, Texas  79015

With a required copy to:

Sprouse Shrader Smith P.C.

701 South Taylor

Suite 500

Amarillo, TX 79101Facsimile:  806-373-3545

E-mail:  joel.howard@sprouselaw.com

              jack.howell@sprouselaw.com

Attention:  Joel Howard, Esq.

       J.F. “Jack” Howell III, Esq.

Section 11.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Idaho, without regard to the conflict of laws principles of any state or jurisdiction

Section 12.Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, assigns, heirs and personal representatives. This Agreement may not be assigned by Buyer or the Restricted Party without the prior written consent of the other party; provided, however, that Buyer may assign all of its rights under this Agreement to a wholly owned subsidiary of Buyer, or in connection with any merger, consolidation, sale of stock or assets or other transfer of control or ownership of Buyer or a subsidiary of Buyer, without the consent of the Restricted Party.  No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 13.Headings.  The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 14.Amendments and Modification; Waiver.This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 15.Entire Agreement.  This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter provided that the parties acknowledge the execution of the Purchase Agreement and ancillary agreements thereto.

Section 16.           Acknowledgments.  The Restricted Party agrees and acknowledges that none of the restrictions contained herein preclude the Restricted Party from earning a livelihood or unreasonably impose limitations on the Restricted Party’s ability to earn a living.

Section 17.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

BUYER:

MWI VETERINARY SUPPLY CO.

By:  /s/ James F. Cleary Jr.         

Name:  James F. Cleary, Jr.

Title:  President and CEO

RESTRICTED PARTY:

_/s/ William C. Pratt________________________________

WILLIAM C. PRATT

EX-10.19

EXHIBIT 10.19

NON-COMPETITION AND CONFIDENTIAL

INFORMATION AGREEMENT

THIS NON-COMPETITION AND CONFIDENTIAL INFORMATION AGREEMENT (this “Agreement”), dated as of September 20, 2011, by and between MWI Veterinary Supply Co., an Idaho corporation (the “Buyer”), and Mark Shaw (the “Restricted Party”), will be effective as of the Closing Date.

Recitals

WHEREAS, pursuant to that certain Asset Purchase Agreement (the “Purchase Agreement”), dated as of the date hereof, by and among Micro Beef Technologies, Ltd., a Texas limited partnership (“Seller”), MWI Veterinary Supply, Inc., a Delaware corporation (“Parent”) and Buyer, a wholly-owned subsidiary of Parent, Buyer will purchase and assume from Seller substantially all the assets and certain specified liabilities of the Business. Defined terms used herein, unless otherwise defined herein, shall have the meanings ascribed to them in the Purchase Agreement;

WHEREAS, the Restricted Party is a limited partner of Seller and the economic benefit of the transactions contemplated by the Purchase Agreement shall inure to the direct and material benefit of the Restricted Party;

WHEREAS, the Restricted Party acknowledges that on the Closing Date pursuant to and on the terms set forth in the Purchase Agreement, Buyer will purchase the Purchased Assets and assume the Assumed Liabilities with the expectation of continuing the general business of Seller and continuing the services to Seller’s existing and expected future customers and clients;

WHEREAS, the Restricted Party further acknowledges that Buyer has legitimate business interests in preserving and protecting Seller’s (i) confidential information; (ii) goodwill, technologies, intellectual property, business plans, proprietary business processes, and proprietary methods of operation, vendors and vendor contacts, financial and marketing information, and Trade Secrets, as defined in the Uniform Trade Secrets Act; (iii) customers, customer lists, customer contacts and referral sources; and (iv) relationships with its customers and employees (collectively referred to herein as “Legitimate Business Interests”);

WHEREAS, the Restricted Party agrees that Buyer is entitled to a period of time to benefit from the purchase and that the Restricted Party should be restricted from competing with Buyer or benefiting from the proprietary information and goodwill purchased by Buyer; and

WHEREAS, the Restricted Party is a senior management employee of Seller and, pursuant to that certain employment agreement dated as of the date hereof by and between the Restricted Party and Buyer, the Restricted Party shall serve as President of the division of Buyer that will conduct the Business;

NOW, THEREFORE, in consideration of the foregoing and for the purpose of protecting the Buyer’s Legitimate Business Interests, the parties, intending to be legally bound, hereby agree as follows:

Terms

Section 1.Confidentiality.  From and after the Closing Date the Restricted Party shall, and shall cause its respective Affiliates and Representatives to hold, in confidence any and all information, whether written or oral, concerning the Business, the Transaction or Buyer, except to the extent that the disclosing party can show that such information (a) is generally available to and known by the public through no fault of any of the Restricted Party, any of its Affiliates or their respective Representatives; or (b) is Lawfully acquired by the Restricted Party, any of its respective Affiliates or Representatives from and after the Closing Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Restricted Party or any of its Affiliates or Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such disclosing party shall promptly notify Buyer in writing and shall disclose only that portion of such information which he, she or it is advised by its counsel in writing is legally required to be disclosed, provided that the Restricted Party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

Section 2.Non-Competition.  For the purpose of protecting Buyer’s Legitimate Business Interests, and in consideration of the compensation received by the Restricted Party in connection with the transactions reflected in the Purchase Agreement, for a period of three (3) years following the Closing Date, within the United States, Canada, the United Kingdom, and Australia, the Restricted Party agrees not to Compete with Buyer. “Compete” means to directly or indirectly solicit, sell or render any services or products in a Competitive Business including, but not limited to, as a proprietor, member, partner, investor, shareholder, director, officer, employee, consultant, or independent contractor. “Competitive Business” means to engage in the business of (i) manufacturing, developing, distributing, selling, or supplying computerized management systems for individual animal information collection and management, and related marketing, health and nutrition systems (including animal identification systems and food safety assurance traceback systems), (ii) research and development related to the business of clause (i) above, (iii) distributing, selling, or supplying feed additives or animal health products or (iv) any other business carried on by Seller in the twelve (12) months preceding the Closing Date.  Notwithstanding anything herein to the contrary, the passive investment in, and becoming a shareholder of, a publicly traded company engaged in a Competitive Business, including Buyer, shall not constitute a violation of the provisions of this Section 2; provided that such interest is no greater than 1% of the publicly traded company.

Section 3.Non-Solicitation Covenants.

(a)           For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of three (3) years following the Closing Date, the Restricted Party shall not directly or indirectly, solicit any customer, client, supplier, or manufacturer’s representative of Buyer, for the purpose of (x) establishing a relationship for any business or services in a Competitive Business, (y) causing any client, customer, supplier, or manufacturer’s representative to terminate any relationship with Buyer, or (z) interfering with the relationship between Buyer and any of Buyer’s customers, clients, employees, independent contractors, suppliers, or manufacturer’s representatives in the Competitive Business.

(b)           For the purpose of protecting Buyer’s Legitimate Business Interests, for a period of three (3) years following the Closing Date, the Restricted Party shall not hire, employ or attempt to hire or employ a Protected Person. A “Protected Person” is any person who is as of the Closing Date an employee of Seller. Notwithstanding anything herein to the contrary, a general advertisement, posting or a similar form of generalized solicitation that leads to the hiring or employment of a Protected Person shall not constitute a violation of the provisions of this Section 3(b), so long as such general advertisement is not directly or indirectly related to a Competitive Business.

Section 4.Non-Interference Covenant. For a period of three (3) years following the Closing Date, the Restricted Party shall not, whether on its own behalf or on behalf of a third party, directly or indirectly induce or attempt to induce any customer, contractor or vendor of Buyer to terminate the customer’s, contractor’s or vendor’s relationship with Buyer or otherwise attempt to harm, obstruct, or otherwise hinder Buyer’s relationship with any such customer, contractor or vendor.

Section 5.           Non-Disparagement Covenant.    For a period of three (3) years following the Closing Date, the Restricted Party will not intentionally make any statements injurious to the business reputation or goodwill of the Business or Buyer.  Nothing in this provision shall prevent the Restricted Party from giving truthful Confidential Information at any time to the extent required by subpoena or other legal process.

Section 6.           Remedies.  If the Restricted Party breaches, or threatens to commit a breach of, any of the provisions of this Agreement, Buyer shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Buyer under law or in equity:

(a)           the right and remedy to have such provision specifically enforced by any court having jurisdiction, it being acknowledged and agreed that any such breach or threatened breach may cause irreparable injury to Buyer and that money damages may not provide an adequate remedy to Buyer; and

(b)           the right and remedy to recover from the Restricted Party all monetary damages suffered by Buyer as the result of any acts or omissions constituting a breach of this Agreement.

Section 7.Tolling of Restrictive Periods.  Buyer and the Restricted Party agree and intend that the Restricted Party’s obligations under Section 2 through Section 5 above shall be tolled during any period that the Restricted Party is in breach of any of the obligations under any such section, so that Buyer is provided with the full benefit of the restrictive periods set forth herein.

Section 8.           Reformation and Severability.  In the event that any covenant contained in this Agreement should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Agreement and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.  Whenever possible each provision and term of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable Law.

Section 9.           Termination.  In the event of termination of the Purchase Agreement in accordance with Article IX thereof, this Agreement shall forthwith become void and there shall be no obligations or liability on the part of any party hereto.

Section 10.           Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10):

If to the Buyer,to:

MWI Veterinary Supply Co.

3041 W. Pasadena Dr.

Boise, ID 83705

Facsimile:  208-955-8999

Email:  JCleary@mwivet.com

Attention:  James F. Cleary, Jr.

With a required copy to:

Dechert LLP

Cira Center

2929 Arch Street

Philadelphia, PA  19104-2808

Facsimile:  215-994-2222

E-mail:                      Stephen.Leitzell@dechert.com

Attention:  Stephen M. Leitzell, Esq.

If to Restricted Party, to:

Mark Shaw

20401 FM 1541

Canyon, TX  79015

With a required copy to:

Sprouse Shrader Smith P.C.

701 South Taylor

Suite 500

Amarillo, TX 79101Facsimile:  806-373-3545

E-mail:  shawn.twing@sprouselaw.com

Attention:  Shawn Twing, Esq.

Section 11.           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Idaho, without regard to the conflict of laws principles of any state or jurisdiction

Section 12.Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, assigns, heirs and personal representatives. This Agreement may not be assigned by Buyer or the Restricted Party without the prior written consent of the other party; provided, however, that Buyer may assign all of its rights under this Agreement to a wholly owned subsidiary of Buyer, or in connection with any merger, consolidation, sale of stock or assets or other transfer of control or ownership of Buyer or a subsidiary of Buyer, without the consent of the Restricted Party.  No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 13.Headings.  The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 14.Amendments and Modification; Waiver.This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

Section 15.Entire Agreement.  This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter provided that the parties acknowledge the execution of the Purchase Agreement and ancillary agreements thereto.

Section 16.           Acknowledgments.  The Restricted Party agrees and acknowledges that none of the restrictions contained herein preclude the Restricted Party from earning a livelihood or unreasonably impose limitations on the Restricted Party’s ability to earn a living.

Section 17.           Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

BUYER:

MWI VETERINARY SUPPLY CO.

By:  /s/ James F. Cleary Jr.           

Name:  James F. Cleary, Jr.

Title:  President and CEO

RESTRICTED PARTY:

__/s/ Mark Shaw_______________________________

MARK SHAW

EX-10.24

EXHIBIT 10.24

MWI VETERINARY SUPPLY CO.

NON-DISCLOSURE AND NON-COMPETITION AGREEMENT

WITH

KEVIN W. PRICE

Pursuant to the job change letter dated August 26, 2011, and the compensation stated therein, effective October 1, 2011, Kevin W. Price (“Employee”), and MWI Veterinary Supply Co., an Idaho corporation (the "Company"), as part of Employee’s employment with the Company agree as follows:

ARTICLE 1

FAIR COMPETITION COVENANTS

1.1    Noncompetition Covenant

 Employee agrees that Employee will not, directly or indirectly, during the term of Employee’s employment with the Company and for one year following the termination (for any reason) of Employee’s employment with the Company (the “Noncompete Period”), compete, either directly or indirectly, with the Company in the sale, marketing, distribution, warehousing, manufacturing, fabrication or shipping of animal health products for the customers of the Company.  Competition includes owning an interest in or being employed by, acting as a consultant to, or otherwise participating, associating, rendering services to, or engaging in, a proprietorship, partnership, corporation, limited liability company, or other entity or organization, or a business unit, division, subsidiary, or other component of such an entity or organization in any business that the Company conducts or has specific plans to conduct as of the date the employment of Employee is terminated.  Nothing herein shall prohibit Employee from being a passive investor of not more than 5% of the outstanding stock of any class of capital stock of a corporation which is publicly traded, so long as Employee has no active participation in the business of such corporation.

1.2    Nonsolicitation Covenant

During the Noncompete Period, Employee shall not, directly or indirectly through another entity, (i) induce or attempt to induce any employee of the Company or any Affiliate to leave the employment of the Company or such Affiliate, or in any way interfere with the relationship between the Company or any Affiliate and any employee thereof, (ii) hire any person who was an employee of the Company or any Affiliate at any time during the Employee’s employment or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business relation of the Company or any Affiliate to cease doing business with the Company or such Affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or business relation and the Company or any Affiliate.

1.3   Nondisparagement Covenant

Employee shall not make statements injurious to the business reputation or good will of the Company or any of the members of its board, its officers or employees.

1.4   Breach of Covenants

If, at the time of enforcement of Sections 1.1, 1.2, and 1.3 of this Agreement, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances shall be substituted for the stated period, scope or area.  Because Employee’s services are unique and because Employee has access to Confidential Information and Work Product, the parties hereto agree that money damages would not be an adequate remedy for any breach of this Agreement.  Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or assigns may, in addition to other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security).  In addition, in the event of an alleged breach or violation by Employee of Sections 1.1, 1.2, and 1.3, the Noncompete Period shall be tolled until such breach or violation has been duly cured.  Employee agrees that the restrictions contained in Sections 1.1, 1.2, and 1.3 are reasonable.

1.5   Noncompetition Payment

  If Employee’s employment with the Company is terminated, other than by (i) the Company for Cause, or (ii) pursuant to a voluntary termination by Employee which is not within 90 days of a Good Reason Event, then the Company shall continue to pay Employee at a rate equal to Employee’s base salary at the time of such termination for the Noncompetition Period, provided that such payments shall be made pursuant to the Company’s normal payroll practices and shall be subject to any required or authorized withholding and declarations.  Notwithstanding the foregoing, the Company shall not be obligated to make such noncompetition payments if the Company gives Employee written notice, within 15 days after the date of the termination of employment, that the Company has elected to waive the provisions of Section 1.1 hereof and thus not pay the noncompetition payment described above.

1.6   Definitions

1.6.1   “Cause”

  means (i) the continued failure by Employee to perform duties as reasonably directed by the Employee’s supervisor of the Company which such failure continues for ten days after written notice of such failure provided to Employee, (ii) willful misconduct by Employee in the performance of Employee’s duties, (iii) gross negligence by Employee in the performance of Employee’s duties which materially harms the Company, (iv) Employee’s commission of a felony or other offense involving dishonesty toward the Company or its subsidiaries or moral turpitude, or (v) any breach by Employee of Employee’s obligations set forth in Sections 1.1, 1.2, and 1.3.

1.6.2   “Confidential Information”

 includes, but is not limited to, any information relating to organizational structure, personnel data, marketing philosophy and objectives, project plans, business strategies, business initiatives, trade secrets, system design, methodologies, processes, competitive advantages and disadvantages, financial information and results, audit reports and materials related to same, marketing strategies, business plans, systems, operations, technology, existing or potential customer lists and addresses, product development, advertising or sales programs, and any other information which would give the Company or any Affiliate an opportunity to obtain an advantage over its competitors or which the Company or any Affiliate is ethically obligated to protect from unauthorized sources.  Confidential Information shall not include (i) such information that is otherwise available to the Employee from a source other than the Company, (ii) such information that becomes generally known to and available for use by the public other than as a result of Employee’s acts or omissions, or (iii) disclosure of such information is required by law.

1.6.3   “Good Reason Event”

  means (i) relocation of Employee out of Idaho, or (ii) a material reduction by the Company of Employee’s employment responsibilities or compensation.

1.6.4   “Work Product”

  means all inventions, innovations, improvements, developments, methods, designs, analyses, drawings, reports and all similar or related information (whether or not patentable) which relate to the Company’s or any of its Affiliates’ actual or anticipated business, research and development of existing or future products or services and which are conceived, developed or made by Employee while employed by the Company and its Affiliates.

1.7   Not An Employment Contract

Employee agrees that this Agreement is not an employment contract for any particular term and that Employee has the right to resign and the Company has the right to terminate Employee’s employment at will, at any time, for any or no reason, with or without cause.

1.8    Certification

       By signing below, Employee hereby certifies to the Company that he is not currently subject to any noncompetition or similar covenant with any previous employer or other third party that would prevent him for accepting employment with the company.

ARTICLE 2

Interpretation

2.1     Governing Law and Amendments

The laws of the State of Idaho shall govern the interpretation and enforcement of this Agreement

This Agreement may be amended, and any term of this Agreement may be waived, only by a written agreement signed by Employee and the President of the Company.

2.2    Nonwaiver of Remedies

  The failure or neglect of a party to enforce any remedy available by reason of the failure of another party to observe or perform a term or condition set forth in this Agreement shall not constitute a waiver of the term or condition.  A waiver by a party (i) shall not affect any term or condition other than the ones specified in the waiver, (ii) shall waive a specified term or condition only for the time and in the manner specifically stated in the waiver, and (iii) shall waive a specified term or condition only for the parties expressly named in the waiver and no other parties.

2.3   Entire Agreement

This Agreement constitutes the full and entire understanding and agreement between the parties regarding the subject matter of this Agreement.

EMPLOYEE

Dated:  September 9, 2011  /s/ Kevin W. Price                                                                 

Kevin W. Price, Vice President, Inventory Management

MWI VETERINARY SUPPLY CO.

Dated:  September 9, 2011                                                   By:  /s/ Mary Pat Thompson                                             

Mary Pat Thompson, Sr. Vice President of Finance

And Administration & Chief Financial Officer

EX-21.1

EXHIBIT 21.1

MWI Veterinary Supply, Inc.

Subsidiaries of the Registrant

Name	Jurisdiction of Incorporation/Organization
MWI Veterinary Supply Co.	Idaho
Memorial Pet Care, Inc.	Idaho
Securos Europe, GmbH	Germany
Centaur Services Limited	United Kingdom
MWI Supply (UK Holdings) Limited	United Kingdom
MWI Supply (UK) Limited	United Kingdom
MWI Supply (UK Acquisition) Limited	United Kingdom
Labpak Limited	United Kingdom
Somervet Limited	United Kingdom

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement No. 333-127879, 333-127880, and 333-149275 on Form S-8 and Registration Statement No. 333-141078 on Form S-3 of our reports dated November 28, 2011, relating to the consolidated financial statements and consolidated financial statement schedule of MWI Veterinary Supply, Inc. and subsidiaries and the effectiveness of MWI Veterinary Supply, Inc. and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of MWI Veterinary Supply, Inc. for the year ended September 30, 2011.

/s/ DELOITTE & TOUCHE LLP

Boise, Idaho

November 28, 2011

EX-31.1

EXHIBIT 31.1

MWI VETERINARY SUPPLY, INC.

CERTIFICATIONS PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

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

1.   I have reviewed this annual report on Form 10-K 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: November 28, 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

I, Mary Patricia B. Thompson, certify that:

1.   I have reviewed this annual report on Form 10-K 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: November 28, 2011	/s/ Mary Patricia B. Thompson
	Mary Patricia B. Thompson Senior Vice President of Finance and Administration,     and 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 Annual Report on Form 10-K of MWI Veterinary Supply, Inc. (the “Company”) for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, James F. Cleary, Jr., President and Chief Executive Officer of the Company, and Mary Patricia B. Thompson, Senior Vice President of Finance and Administration, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that 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.

November 28, 2011

/s/ James F. Cleary Jr.                           

James F. Cleary, Jr.

President and Chief Executive Officer

/s/ Mary Patricia B. Thompson           

Mary Patricia B. Thompson

Senior Vice President of Finance and Administration,

Chief Financial Officer

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Other Comprehensive Income (Table)

12 Months Ended

Sep. 30, 2011

Other Comprehensive Income

Schedule of Other Comprehensive Income (Loss) [Table Text Block]

				2011		2010		2009
Net income			$	42,580	$	33,440	$	24,905
Other comprehensive income:
	Foreign currency translation			(663)		536		-
	Actuarial gain/(loss) on pension valuation, net of deferred taxes			21		(457)		-
		Total comprehensive income	$	41,938	$	33,519	$	24,905

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Common Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Share-based Compensation Arrangement by Share-based Payment Award, Additional Disclosures [Abstract]
Compensation Expense	$ 1,387	$ 1,151
Nonvested Awards, Total Compensation Cost Not yet Recognized	6,380
Nonvested Awards Total Compensation Cost Not Yet Recognized Period For Recognition	1 to 5 years
Employee Stock Purchase Plan [Abstract]
Employee Stock Purchase Plan Discount Rate	95.00%
Employee Stock Purchase Plan Payroll Deduction Rate Minimum	1.00%
Employee Stock Purchase Plan Payroll Deduction Rate Maximum	10.00%
Employee Stock Purchase Plan Annual Limit	$ 20
Employee Stock Purchase Plan Share Limit Per Period	200
ESPP Shares Issued	6,058	5,852
Stock Plan 2002 [Member]
Share-Based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	67,032	164,788
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	The term of any option may not exceed ten years from the date of grant.
Stock Plan 2005 [Member]
Share-Based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	932,438	991,970
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	not to exceed ten years

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Property and Equipment (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Property And Equipment Details [Abstract]
Land	$ 1,723	$ 261
Buildings and Improvements, Gross	13,427	5,870
Machinery and Equipment, Gross	20,979	17,495
Computer Equipment Gross	5,864	4,886
Construction in Progress, Gross	2,203	1,626
Property, Plant and Equipment, Gross	44,196	30,138
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(18,987)	(14,900)
Property and equipment, net	25,209	15,238	9,313
Depreciation	$ 4,501	$ 3,692	$ 2,546

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Benefit Plans, Actuarial Assumptions (Details)	12 Months Ended
	Sep. 30, 2011
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract]
Discount Rate	3.10%
Rate of Compensation Increase	0.00%	[1]
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract]
Discount Rate, Periodic Benefit Costs	3.60%
Expected Return on Assets	4.30%
Net Periodic Benefit Cost, Rate of Compensation Increase	0.00%	[1]

[1] (1) There is no assumed rate of compensation increase as there have been no current active members since April 2006

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Common Stock, Options Activity (Details) (USD $) In Thousands, except Share data	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Common Stock Options Activity [Abstract]
Outstanding Shares, Beginning of Year	139,550	339,404	420,898
Weighted Average Price, Shares Outstanding, Beginning of Year	$ 4.65	$ 3.11	$ 2.87
Shares Exercised	(102,128)	(199,670)	(81,004)
Weighted Average Price, Shares Exercised	$ 0.96	$ 2.02	$ 1.77
Shares Cancelled or Expired	(37)	(184)	(490)
Weighted Average Price, Shares Cancelled or Expired	$ 17.00	$ 17.00	$ 17.57
Outstanding Shares, End of Year	37,385	139,550	339,404
Weighted Average Price, Shares Outstanding, End of Year	$ 14.73	$ 4.65	$ 3.11
Shares Exercisable, End of Year	37,385	139,550	339,404
Weighted Average Exercise Price	$ 14.73	$ 4.65	$ 3.11
Common Stock Intrinsic Value Details [Abstract]
Common Stock, Intrinsic Value	$ 2,022	$ 7,405

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Acquisitions, Segment Results (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2010	Sep. 30, 2009
Acquisitions Pro Forma Consolidated Results [Abstract]
Business Acquisition, Pro Forma Revenue	$ 1,314,046	$ 1,154,761
Business Acquisition, Pro Forma Net Income (Loss)	$ 34,726	$ 27,213

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Common Stock (Tables)

12 Months Ended

Sep. 30, 2011

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Common Stock Options Activity [Table Text Block]

A summary of common stock options activity under the 2002 and 2005 Plans are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	exercise		of		exercise		of		exercise
	Shares	price		Shares		price		Shares		price
Outstanding at beginning of year	139,550	$	4.65		339,404	$	3.11		420,898	$	2.87
Exercised	(102,128)		0.96		(199,670)		2.02		(81,004)		1.77
Cancelled or expired	(37)		17.00		(184)		17.00		(490)		17.57
Outstanding at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11
Exercisable at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

A summary of restricted stock awards activity under the 2005 Plan are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	grant date		of		grant date		of		grant date
	Shares	fair value		Shares		fair value		Shares		fair value
Nonvested at beginning of year	70,584	$	49.33		38,388	$	38.33		43,119	$	37.92
Granted	63,900		71.14		58,350		55.05		11,500		39.52
Vested	(25,934)		52.46		(25,994)		45.99		(15,551)		38.04
Forfeitures	(3,010)		51.92		(160)		39.27		(680)		39.27
Nonvested at end of year	105,540	$	61.69		70,584	$	49.33		38,388	$	38.33

Schedule of Outstanding and Exercisable Options [Table Text Block]

	Outstanding and exercisable options
			Weighted
			average
			remaining		Weighted
			contractual		average
		Number of	life		exercise
Range of exercise prices		Shares	(in years)		price
$ 0.18 - $16.99		6,592		0.7	$	0.18
$17.00 - $19.99		25,823		3.8	$	17.00
$20.00 - $22.60		4,970		4.0	$	22.20

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Geographic Information (Detail) (USD $) In Thousands	3 Months Ended								12 Months Ended
	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Segment Reporting Information [Line Items]
Revenues	$ 421,318	$ 410,736	$ 367,112	$ 366,174	$ 358,947	$ 347,687	$ 286,597	$ 236,111	$ 1,565,340	$ 1,229,342	$ 941,332
Property, Plant and Equipment, Net	25,209				15,238				25,209	15,238	9,313
United States Segment [Member]
Segment Reporting Information [Line Items]
Revenues									1,304,794	1,074,226	941,332
Property, Plant and Equipment, Net	18,953				9,762				18,953	9,762	9,313
International Segment [Member]
Segment Reporting Information [Line Items]
Revenues									260,546	155,116	0
Property, Plant and Equipment, Net	$ 6,256				$ 5,476				$ 6,256	$ 5,476	$ 0

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Common Stock, Restricted Stock Activity (Details) (USD $)	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Restricted Stock Activity
Nonvested, beginning of year	70,584	38,388	43,119
Weighted average price, nonvested, beginning of year	$ 49.33	$ 38.33	$ 37.92
Grants in Period	63,900	58,350	11,500
Weighted average price, grants in period	$ 71.14	$ 55.05	$ 39.52
Vested in Period	(25,934)	(25,994)	(15,551)
Weighted average price, vested in period	$ 52.46	$ 45.99	$ 38.04
Forfeited in Period	(3,010)	(160)	(680)
Weighted average price, forfeited in period	$ 51.92	$ 39.27	$ 39.27
Nonvested, end of year	105,540	70,584	38,388
Weighted average price, nonvested, end of year	$ 61.69	$ 49.33	$ 38.33

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Benefit Plans, Plan Assets (Details) (USD $) In Thousands, unless otherwise specified			12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Equities	Sep. 30, 2011 Corporate Bonds	Sep. 30, 2011 UK Government Bonds	Sep. 30, 2011 Cash	Sep. 30, 2011 Other Plan Assets
Defined Benefit Plan Disclosure [Line Items]
Fair Value of Plan Assets	$ 4,760	$ 4,771	$ 1,752	$ 977	$ 445	$ 26	$ 1,560
Actual Plan Asset Allocations	100.00%		36.00%	21.00%	9.00%	1.00%	33.00%
Fair Value Measurement Level			2	2	2	1	2

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Subsequent Events

3 Months Ended

Dec. 31, 2011

Subsequent Events [Abstract]

Subsequent Events [Text Block]

19.Subsequent events

On October 31, 2011, subsequent to our fiscal year end, we acquired substantially all of the assets of Micro Beef Technologies, Ltd. (“Micro”)for $60,000, including $53,400 in cash and 94,359 shares of common stock valued at $6,600. Micro is a value-added distributor to the production animal market, including the distribution of micro feed ingredients, pharmaceuticals, vaccines, parasiticides, supplies, and other animal health products. Micro also is a leading innovator of proprietary, computerized management systems for the production animal market.

The assets acquired and the certain liabilities assumed relate to (a) the development and implementation of proprietary computerized systems for feed, health, information and production animal management which include individual animal identification and management, food safety assurance, trace back and process verification systems, (b) ongoing research and development of such systems, and (c) the distribution and sale of micro feed ingredients, animal health products and dairy sanitation solutions.

On November 1, 2011 MWI Co. as borrower, entered into a Third Amendment to Credit Agreement (the “Third Amendment”) with MWI Veterinary Supply, Inc. and Memorial Pet Care, Inc., as guarantors, and Bank of America, N.A. and Wells Fargo Bank, N.A. as lenders (collectively, the “Lenders”), amending the Credit Agreement dated December 13, 2006, and as amended from time to time, by and among Supply Co., MWI Veterinary Supply, Inc., Memorial Pet Care, Inc. and the Lenders (the “Credit Agreement”). The Third Amendment increased the aggregate revolving commitment of the Lenders under the Credit Agreement from $100 million to $150 million and extended the maturity date of the Credit Agreement from March 1, 2013 to November 1, 2016. Under the Third Amendment, the margin on variable interest rate borrowings now ranges from 0.95% to 1.50%. The margin previously ranged from 1.50% to 2.25% under the Second Amendment.The Third Amendment also reduced the commitment fee from a range of 0.2% to 0.35% to a range of 0.15% to 0.25% depending on the funded debt to EBITDA ratio. On October 31, 2011, the borrowings outstanding on this credit facility were $45,100 as a result of the funding of the acquisition of Micro.

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Intangibles, Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified			12 Months Ended				12 Months Ended				12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Minimum [Member] Customer Relationships [Member] years	Sep. 30, 2011 Maximum [Member] Customer Relationships [Member] years	Sep. 30, 2011 Customer Relationships [Member] Amortizing [Member]	Sep. 30, 2010 Customer Relationships [Member] Amortizing [Member]	Sep. 30, 2011 Minimum [Member] Noncompete Agreements [Member] years	Sep. 30, 2011 Maximum [Member] Noncompete Agreements [Member] years	Sep. 30, 2011 Noncompete Agreements [Member] Amortizing [Member]	Sep. 30, 2010 Noncompete Agreements [Member] Amortizing [Member]	Sep. 30, 2011 Minimum [Member] Other Intangible Assets [Member] years	Sep. 30, 2011 Maximum [Member] Other Intangible Assets [Member] years	Sep. 30, 2011 Other Intangible Assets [Member] Amortizing [Member]	Sep. 30, 2010 Other Intangible Assets [Member] Amortizing [Member]	Sep. 30, 2011 Trade Name And Patents [Member] Non Amortizing [Member]	Sep. 30, 2010 Trade Name And Patents [Member] Non Amortizing [Member]
Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross					$ 24,981	$ 25,027			$ 808	$ 811			$ 455	$ 458
Accumulated Amortization	5,109	3,361
Indefinite-lived Intangible Assets															3,759	3,775
Intangible Assets, Net	$ 24,894	$ 26,710
Finite-Lived Intangible Assets, Useful Life			9	20			1	5			3	5

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General (Details)	12 Months Ended
	Sep. 30, 2011
United States [Member]
Number of Distribution Centers [Line Items]
Number Of Distribution Centers	thirteen
United Kingdom [Member]
Number of Distribution Centers [Line Items]
Number Of Distribution Centers	one

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Subsequent Events (Details) (USD $) In Thousands, except Share data	3 Months Ended
	Dec. 31, 2011
Micro Beef Technologies [Member]
Business Acquisition [Line Items]
Business Acquisition, Date of Acquisition Agreement	October 31, 2011
Business Acquisition, Cost of Acquired Entity, Purchase Price	$ 60,000
Business Acquisition, Cost of Acquired Entity, Cash Paid	53,400
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares	94,359
Business Acquisition, Cost of Acquired Entity, Equity Interests Issued and Issuable	6,600
Bank Of America And Wells Fargo Lenders [Member] | Third Amendment [Member]
Subsequent Events [Line Items]
Initiation Date	November 1, 2011
Maximum Borrowing Capacity	150,000
Termination Date	November 1, 2016
Interest Rate Description	the margin on variable interest rate borrowings now ranges from 0.95% to 1.50%
Commitment Fee Description	0.15% to 0.25%
Amount Outstanding	$ 45,100

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Commitments and Contingencies (Table)

12 Months Ended

Sep. 30, 2011

Commitments And Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments for Operating Leases and Capital Leases [Table Text Block]

	Lease Obligations
Fiscal Year	Operating Leases		Capital Leases
2012	$	3,286	$	909
2013		3,135		284
2014		2,387		55
2015		2,073		15
2016		2,042		-
Thereafter		9,414		-
Total future minimum obligations	$	22,337	$	1,263

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Debt (Details) (USD $) In Thousands	Sep. 30, 2011		Sep. 30, 2010
Line of Credit Facility [Line Items]
Notes Payable	$ 0	[1]	$ 2,000
Capital Lease Obligations	1,263	[2]	1,811	[2]
Term Note	0		773
Debt and Capital Lease Obligations	4,170		14,724
Long Term Debt And Capital Lease Obligations Non Current	(354)		(953)
Total debt included in current liabilities	3,816		13,771
Revolving credit facility
Line of Credit Facility [Line Items]
Amount Outstanding	0		9,600
Sterling revolving credit facility
Line of Credit Facility [Line Items]
Amount Outstanding	$ 2,907		$ 540

[1] (1) Note payable was related to the acquisition of Centaur and was paid in full on February 8, 2011.

[2] (2) The capital lease obligations have varying maturity dates.

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Benefit Plans (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Defined Benefit Plan Disclosure [Line Items]
Description of Defined Contribution Pension and Other Postretirement Plans	Contributions to the profit sharing portion of the Plans are discretionary, ranging from 0% to 3%, and are approved by our Board of Directors.
Profit Sharing Expense	$ 1,516	$ 1,244	$ 1,106
401(k) Plan
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year, Description	We are required to match 50% of the employee’s contribution to the 401(k) portion of the plan up to 6% of the employee’s salary.
Matching Contribution Expense	1,464	1,108	975
Centaur Plan
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Estimated Future Employer Contributions in Current Fiscal Year, Description	Contributions are currently payable at a minimum of 3% up to a maximum of 6% of eligible pay if matched by employee.
Matching Contribution Expense	$ 269	$ 207

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Income Taxes, Effective Tax Rate (Details)	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract]
Taxes computed at statutory rate	35.00%	35.00%	35.00%
State income taxes	3.70%	3.50%	3.80%
Foreign	(0.90%)	(1.10%)	0.00%
Other Adjustments	0.20%	1.00%	0.40%
Effective Income Tax Rate, Continuing Operations	38.00%	38.40%	39.20%

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Receivables (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2011	Sep. 30, 2010
Receivables Disclosure [Abstract]
Customer Concentration Risk	8.00%	8.00%
Receivable Details [Abstract]
Trade Accounts Receivable	$ 203,038	$ 177,317
Other Receivables	15,404	14,681
Accounts Receivable, Gross	218,442	191,998
Allowance for Doubtful Accounts Receivable	(2,581)	(2,570)
Accounts Receivable, Net	$ 215,861	$ 189,428

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Business Acquisition

12 Months Ended

Sep. 30, 2011

Business Combinations [Abstract]

Business Combination Disclosure Text Block

3.Business Acquisitions

On February 8, 2010, MWI Veterinary Supply Co. (“MWI Co.”) purchased all of the outstanding share capital of Centaur Services Limited (“Centaur”), based in the United Kingdom for a purchase price of $44,053, consisting of $42,053 in cash and $2,000 in a note payable due in one year. Subsequent to the acquisition of Centaur, we funded $2,047 to the pension plan as required by the terms of the share purchase agreement. The purchase price was reduced subsequent to the acquisition date by $1,868 as a result of a post-closing working capital and debt adjustment. Centaur is a supplier of animal health products to veterinarians in the United Kingdom. Centaur sells 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. 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.

On March 21, 2011, 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.

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

		2011		2010		2009
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)		1,823		9,483		(117)
Intangibles		140		17,658		-
Total assets acquired		11,498		83,771		(117)
Accounts payable		4,498		25,811		-
Accrued expenses		-		5,299		-
Other liabilities		-		10,476		-
Total liabilities assumed		4,498		41,586		-
Net assets acquired (2)	$	7,000	$	42,185	$	(117)
(1) Amount in 2009 relates to a post-closing working capital adjustment for the AAHA MarketLink acquisition.
(2) Net assets acquired does not include $2,000 paid in fiscal year 2011 to an escrow account for the acquisition of Micro.

The following table presents supplemental pro forma information for the Company as if the acquisition of Centaur had occurred on October 1, 2009 for the period ended September 30, 2010 and on October 1, 2008 for the period ended September 30, 2009 (unaudited):

		Unaudited Pro Forma Consolidated Results
		Fiscal year ended September 30,
		2010		2009
Revenues	$	1,314,046	$	1,154,761
Net Income	$	34,726	$	27,213

For the pro forma calculation, we used an average foreign currency exchange rate for each of the periods 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 and on October 1, 2008. 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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Income Taxes, Unrecognized Benefits (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Unrecognized Tax Benefits Details [Abstract]
Unrecognized Tax Benefits, Beginning of year	$ 198	$ 223	$ 523
Gross Decreases Resulting from Prior Period Tax Positions	(175)	0	(54)
Gross Increases Resulting from Current Period Tax Positions	0	175	182
Settlements	0	(200)	(428)
Unrecognized Tax Benefits, End of year	$ 23	$ 198	$ 223

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Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011 years	Sep. 30, 2010	Sep. 30, 2009
Accounting Policies [Abstract]
Gross Billings From Agency Contracts	$ 371,024	$ 328,053	$ 269,057
Commissions	20,655	16,780	14,223
Finite-Lived Intangible Assets, Useful Life, Minimum (in years)	1
Finite-Lived Intangible Assets, Useful Life, Maximum (in years)	20
Advertising Expense	$ 723	$ 717	$ 783
Minimum [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage	20.00%
Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage	50.00%
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	25 to 35 years
Machinery Furniture Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	3 to 7 years
Computer Hardware Software [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	3 to 7 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	1 to 10 years
Sales Revenue Banfield [Member]
Product Information [Line Items]
Sales Revenue, Goods, Net, Percentage	6.00%	9.00%	11.00%
Sales Revenue Feeders [Member]
Product Information [Line Items]
Sales Revenue, Goods, Net, Percentage	4.00%	4.00%	5.00%

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Receivables (Table)

12 Months Ended

Sep. 30, 2011

Accounts, Notes, Loans, and Financing Receivable Disclosure [Abstract]

Schedule of Accounts Receivable [Table Text Block]

		2011		2010
Trade	$	203,038	$	177,317
Vendor rebates and programs		15,404		14,681
		218,442		191,998
Allowance for doubtful accounts		(2,581)		(2,570)
	$	215,861	$	189,428

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Business Acquisitions (Tables)

12 Months Ended

Sep. 30, 2011

Business Combination Schedules [Abstract]

Fair Value By Balance Sheet Grouping [Table Text Block]

		2011		2010		2009
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)		1,823		9,483		(117)
Intangibles		140		17,658		-
Total assets acquired		11,498		83,771		(117)
Accounts payable		4,498		25,811		-
Accrued expenses		-		5,299		-
Other liabilities		-		10,476		-
Total liabilities assumed		4,498		41,586		-
Net assets acquired (2)	$	7,000	$	42,185	$	(117)
(1) Amount in 2009 relates to a post-closing working capital adjustment for the AAHA MarketLink acquisition.
(2) Net assets acquired does not include $2,000 paid in fiscal year 2011 to an escrow account for the acquisition of Micro.

Busniess Acquisition Pro Forma Information [Table Text Block]

		Unaudited Pro Forma Consolidated Results
		Fiscal year ended September 30,
		2010		2009
Revenues	$	1,314,046	$	1,154,761
Net Income	$	34,726	$	27,213

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Common Stock, Outstanding Options (Details) (USD $)	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Common Stock Outstanding [Line Items]
Shares Exercisable, End of Year	37,385	139,550	339,404
Weighted Average Exercise Price	$ 14.73	$ 4.65	$ 3.11
$0.18 to $16.99
Common Stock Outstanding [Line Items]
Shares Exercisable, End of Year	6,592
Weighted Average Remaining Contractual Life (in years)	0.7
Weighted Average Exercise Price	$ 0.18
$17.00 to $19.99
Common Stock Outstanding [Line Items]
Shares Exercisable, End of Year	25,823
Weighted Average Remaining Contractual Life (in years)	3.8
Weighted Average Exercise Price	$ 17.00
$20.00 to $22.60
Common Stock Outstanding [Line Items]
Shares Exercisable, End of Year	4,970
Weighted Average Remaining Contractual Life (in years)	4.0
Weighted Average Exercise Price	$ 22.20

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Acquisitions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011 years	Sep. 30, 2010 Centaur Services Limited [Member] years	Sep. 30, 2011 Nelson Laboratories [Member] years
Business Acquisition [Line Items]
Business Acquisition, Date of Acquisition Agreement		February 8, 2010	March 21, 2011
Business Acquisition, Cost of Acquired Entity, Purchase Price		$ 44,053	$ 7,000
Business Acquisition, Cost of Acquired Entity, Cash Paid		42,053
Business Acquisition, Cost of Acquired Entity, Transaction Costs		1,100
Business Acquisition Cost Of Acquired Entity Purchase Price Adjustment		1,868
Defined Benefit Plan, Business Combinations and Acquisitions, Benefit Obligation		2,047
Business Acquisition, Note Payable Assumed		$ 2,000
Finite-Lived Intangible Assets, Useful Life, Minimum (in years)	1	1
Finite-Lived Intangible Assets, Useful Life, Maximum (in years)	20	20	10
Business Acquisition, Description of Acquired Entity		Centaur is a supplier of animal health products to veterinarians in the United Kingdom. Centaur sells products to both the companion animal market and production animal market.	Nelson is a distributor of animal health products to over 1,100 veterinary practices
Business Acquisition Goodwill Tax Deductible Life			15

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Property and Equipment (Table)

12 Months Ended

Sep. 30, 2011

Property Plant And Equipment [Abstract]

Schedule of Property Plant And Equipment [Table Text Block]

		2011		2010
Land	$	1,723	$	261
Building and leasehold improvements		13,427		5,870
Machinery, furniture and equipment		20,979		17,495
Computer equipment		5,864		4,886
Construction in progress		2,203		1,626
		44,196		30,138
Accumulated depreciation and amortization		(18,987)		(14,900)
	$	25,209	$	15,238

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Intangibles (Tables)

12 Months Ended

Sep. 30, 2011

Goodwill Details [Abstract]

Schedule of Goodwill [Table Text Block]

		2011		2010
Goodwill - Beginning of year	$	47,330	$	37,610
Acquisition activity		1,823		9,483
Other (1)		(112)		237
Goodwill - End of year	$	49,041	$	47,330
(1) In fiscal year 2011, Other relates to foreign exchange. In fiscal year 2010, Other relates to foreign exchange and contingent consideration payment to the former Securos shareholders for the achievement of defined financial targets.

Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block]

		Useful Lives	2011		2010
Amortizing:
	Customer relationships	9-20 years	$	24,981	$	25,027
	Covenants not to compete	1-5 years		808		811
	Other	3-5 years		455		458
				26,244		26,296
Accumulated amortization				(5,109)		(3,361)
				21,135		22,935
Non-Amortizing:
	Trade names and patents			3,759		3,775
			$	24,894	$	26,710

Schedule of Expected Amortization Expense [Table Text Block]

	Amount
2012	$	1,607
2013		1,542
2014		1,511
2015		1,358
2016		1,261
Thereafter		13,856
	$	21,135

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Accounting Policies

12 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

2.Summary of Significant Accounting Policies

Principles of Consolidation — The accompanying consolidated financial statements consist of MWI Veterinary Supply, Inc. and its wholly-owned subsidiaries, collectively referred to herein as “MWI.” All intercompany transactions have been eliminated. We use the equity method of accounting for our investments in entities in which we have significant influence; generally this represents an ownership interest between 20% and 50%. Our share of income or loss from these investments is reported as increases or decreases in the respective investment with a corresponding amount reported as other income.

Basis of Accounting and Use of Estimates — The accompanying 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 from these estimates. Estimates are used when accounting for 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, 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.

Segment Information — We are a distributor of animal health products to veterinarians. Our financial results are disclosed as one reportable segment. We identified two operating segments based on geographic areas but aggregate based on applicable accounting standards. We determined that the two operating segments have similar operating margins and are expected to maintain this similarity into the future. Additionally, our products, customers, operations, delivery to market and regulatory environments are all similar in nature.

Foreign Currency Translation — For our international operations, local currencies have been determined to be the functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at rates in effect at the balance sheet date and record these translation adjustments in Stockholders' equity – Accumulated other comprehensive income/(loss). We translate functional currency statement of income amounts to their U.S. dollar equivalents at average rates for the period.

Other Comprehensive Income — Comprehensive income includes cumulative foreign currency translation adjustments and actuarial adjustments on pension valuation. Comprehensive income has been reflected in the consolidated statements of stockholders' equity and in Note 15 – Other Comprehensive Income.

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 not been significant to our financial statements. We record revenues net of sales tax. In an agency relationship, wegenerally 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 $371,024, $328,053and $269,057for the years ended September 30, 2011, 2010 and 2009, respectively, and generated commission revenue of $20,655, $16,780 and $14,223 for the years ended September 30, 2011, 2010 and 2009, respectively.

Cost of Product Sales and Vendor Rebates — Cost of product sales consist of our inventory product cost, including shipping costs to and from our distribution centers. Costs of fulfillment are included in selling, general and administrative costs. Vendor rebates are recorded based on the terms of the contracts or programs with each vendor. We receive quarterly, semi-annual and 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 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.

Customer Incentives — Customer incentives are accrued based on the terms of the contracts with each customer. These incentive programs provide that the customer receive an incentive based on their product purchases or attainment of performance goals. Incentives are estimated based on the specific terms in each agreement, historical experience and product growth rates. Incentives are recognized as a reduction to product sales.

Cash and Cash Equivalents — Cash equivalents consist of highly liquid investments with a maturity of three months or less from the date of purchase. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment.

Inventories — Inventories, consisting of pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies and nutritional products, are stated at the lower of cost (on a moving-average basis) or market.

Property and Equipment — Property and equipment are stated at cost and depreciation is computed using the straight-line method over the estimated useful lives, which includes the shorter of useful life or lease term for leasehold improvements, of the related assets as follows:

       Buildings25 to 35 years

       Machinery, furniture and equipment3 to 7 years

       Computer equipment3 to 7 years

       Leasehold improvements1 to 10 years

The cost and accumulated depreciation of items sold or retired are removed from the property accounts and any resulting gain or loss is reflected in net income. Repairs and maintenance are expensed as incurred and improvements are capitalized.

We periodically review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Goodwill and Intangible Assets —We recognize the excess purchase price over the fair value of net assets acquired and liabilities assumed in a business combination as goodwill on the consolidated balance sheet. We perform an annual impairment test on goodwill as of September 30theach year. We calculate the fair value of each reporting unit using a discounted cash flow analysis and compare the fair value to its book value. There were no indicators during this evaluation that would require additional testing. We have concluded that there was no impairment during the fiscal years ended September 30, 2011, 2010 and 2009. This impairment tests will continue to be performed at least annually and more frequently if circumstances indicate a possible impairment.

Identifiable intangible assets primarily include trademarks, patents, customer relationships and covenants not to compete and are amortized, as necessary, over their useful lives or contractual term which range from 1-20 years. We review identifiable intangible assets at least annuallyfor impairment or when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Other Assets — Included in other assets are our equity method investmentsand investments in entities accounted for under the cost method of accounting. We periodically evaluate these investments for other-than-temporary impairment using both qualitative and quantitative criteria, or when indicators of impairment are noted. In the event an investment is deemed to be other-than-temporarily impaired, we would recognize the loss component in the consolidated statements of income.Other assets also consist of debt issuance costs that are being amortized over the life of the related debt.

Earnings Per Common Share — Basic earnings per common share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per common share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. Potential common shares that would increase earnings per share amounts are antidilutive and are, therefore, excluded from the earnings per common share computations. Earnings per common share is computed separately for each period presented.

Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized to provide for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are measured using enacted tax rates in effect during the years in which the temporary differences are expected to reverse.

Concentrations of Risk — Our financial instruments that are exposed to concentrations of credit risk consist primarily of our receivables. Our customers are geographically dispersed throughout the United States and United Kingdom. We routinely assess the financial strength of our customers and review their credit history before extending credit. In addition, we establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Product sales to Banfield were approximately6% ofour total product sales in fiscal year 2011, 9% in fiscal year 2010 and 11% in fiscal year 2009. Product sales to Feeders' Advantage, a related party (See Note 13), were approximately 4%of our total product sales in fiscal year 2011 and 2010 and5% of our total product sales in2009.

Advertising — Advertising costs are expensed when incurred and are included as part of selling, general and administrative expenses. Advertising costs were $723, $717 and $783 in fiscal years 2011, 2010 and 2009, respectively.

Recently Issued and New Accounting Pronouncements — 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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Debt (Table)

12 Months Ended

Sep. 30, 2011

Debt Disclosure [Abstract]

Schedule of Debt [Table Text Block]

		2011		2010
Revolving credit facility, 1.61% as of September 30, 2011		$	-	$	9,600
Sterling revolving credit facility, 1.63% as of September 30, 2011			2,907		540
Note payable (1)			-		2,000
Capital lease obligations (2)			1,263		1,811
Term note			-		773
Total debt and capital lease obligations			4,170		14,724
	Less: Long-term debt and capital lease obligations		(354)		(953)
Total debt included in current liabilities		$	3,816	$	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.

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Geographic Information (Table)

12 Months Ended

Sep. 30, 2011

Geographic Information

Schedule of Revenue and Long-Lived Assets by Geographical Area [Table Text Block]

			2011		2010		2009
Revenues for the fiscal years ended September 30
	United States		$	1,304,794	$	1,074,226	$	941,332
	International			260,546		155,116		-
		Total	$	1,565,340	$	1,229,342	$	941,332
Long-lived assets as of September 30
	United States		$	18,953	$	9,762	$	9,313
	International			6,256		5,476		-
		Total	$	25,209	$	15,238	$	9,313

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Debt Description (Details) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011 Bank Of America And Wells Fargo Facilities [Member] Second Amendment [Member] USD ($)	Sep. 30, 2011 Fortis Facility [Member]	Sep. 30, 2010 Fortis Facility [Member] GBP (£)	Sep. 30, 2011 Wells Fargo Facility [Member] GBP (£)
Maximum Borrowing Capacity	$ 100,000		£ 12,000	£ 12,500
Initiation Date	August 10, 2010		September 30, 2010	November 5, 2010
Termination Date	March 1, 2013	November 5, 2010
Covenant Terms				maintain a minimum tangible net worth of £3,000
Interest Rate at Period End	1.61%			1.63%
Interest Rate Description	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%.		variable interest rate equal to a base rate of 0.50% plus GBP one-month LIBOR plus a margin of 0.85%.	Interest is based on LIBOR for the applicable interest period plus an applicable margin of 1.05% to 1.90%.
Commitment Fee Description	The commitment fee ranged from 0.2% to 0.35% depending on the funded debt to EBITDA ratio.

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Other Comprehensive Income (Details) (USD $) In Thousands	3 Months Ended								12 Months Ended
	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Other Comprehensive Income Details [Abstract]
Net Income	$ 10,030	$ 11,390	$ 10,332	$ 10,828	$ 8,798	$ 9,137	$ 7,671	$ 7,834	$ 42,580	$ 33,440	$ 24,905
Other Comprehensive Income
Foreign Currency Translation									(663)	536	0
Actuarial Gain (Loss) on Pension Valuation, Net of Deferred Taxes									21	(457)	0
Total Comprehensive Income									$ 41,938	$ 33,519	$ 24,905

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Revenues:
Product sales	$ 1,489,500	$ 1,169,545	$ 880,703
Product sales to related party	55,185	43,017	46,406
Commissions	20,655	16,780	14,223
Total revenues	1,565,340	1,229,342	941,332
Cost of product sales	1,359,755	1,064,339	806,677
Gross profit	205,585	165,003	134,655
Selling, general and administrative expenses	130,656	105,793	90,827
Depreciation and amortization	6,263	4,992	3,365
Operating income	68,666	54,218	40,463
Other income (expense):
Interest expense	(741)	(539)	(242)
Earnings of equity method investees	268	220	230
Other	507	427	540
Total other income (expense), net	34	108	528
Income before taxes	68,700	54,326	40,991
Income tax expense	(26,120)	(20,886)	(16,086)
Net income	$ 42,580	$ 33,440	$ 24,905
Earnings per common share
Basic	$ 3.42	$ 2.73	$ 2.06
Diluted	$ 3.40	$ 2.70	$ 2.02
Weighted average common shares outstanding:
Weighted Average Number of Shares Outstanding, Basic	12,464	12,241	12,088
Weighted Average Number of Shares Outstanding, Diluted	12,513	12,395	12,306

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Acquisitions, Price Allocation (Details) (USD $) In Thousands	Sep. 30, 2011		Sep. 30, 2010	Sep. 30, 2009
Business Acquisition Allocation Details [Abstract]
Business acquisition cash	$ 0		$ 674	$ 0
Business acquisition receivables	4,041		32,371	0
Business acquisition inventory	3,594		17,830	0
Business acquisition purchase price allocation other current assets	0		480	0
Business acquisition property and equipment	1,900		5,275	0
Business acquisition goodwill	1,823		9,483	(117)	[1]
Business acquisition intangibles	140		17,658	0
Total assets acquired	11,498		83,771	(117)
Business acquisition accounts payable	4,498		25,811	0
Busniess acquisition accrued expenses	0		5,299	0
Business acquisition other liabilities	0		10,476	0
Total liabilities assumed	4,498		41,586	0
Net assets acquired	$ 7,000	[2]	$ 42,185	$ (117)

[1] (1) Amount in 2009 relates to a post-closing working capital adjustment for the AAHA MarketLink acquisition.

[2] (2) Net assets acquired does not include $2,000 paid in fiscal year 2011 to an escrow account for the acquisition of Micro.

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Statement of Shareholders' Equity (USD $) In Thousands	Total	Common Stock Member	Additional Paid In Capital Member	Accumulated Other Comprehensive Income Member	Retained Earnings Member
Balance as of at Sep. 30, 2008	$ 181,003	$ 121	$ 122,319		$ 58,563
Shares Balance as of at Sep. 30, 2008		12,098
Net income	24,905				24,905
Issuance of common stock (shares)		9
Issuance of common stock	240		240
Exercises of common stock options (shares)		81
Exercises of common stock options	143	1	142
Tax benefit of common stock exercises	1,178		1,178
Stock Awards Issued (shares)		8
Issuance of stock awards, net of forfeitures	458		458
Balance as of at Sep. 30, 2009	207,927	122	124,337		83,468
Shares Balance as of at Sep. 30, 2009		12,196
Net income	33,440				33,440
Issuance of common stock (shares)		6
Issuance of common stock	248		248
Exercises of common stock options (shares)		199
Exercises of common stock options	403	2	401
Tax benefit of common stock exercises	3,611		3,611
Stock Awards Issued (shares)		56
Issuance of stock awards, net of forfeitures	1,079	1	1,078
Foreign currency translation	536			536
Other	(457)			(457)
Balance as of at Sep. 30, 2010	246,787	125	129,675	79	116,908
Shares Balance as of at Sep. 30, 2010		12,457
Net income	42,580				42,580
Issuance of common stock (shares)		6
Issuance of common stock	412		412
Exercises of common stock options (shares)		102
Exercises of common stock options	98	1	97
Tax benefit of common stock exercises	2,714		2,714
Stock Awards Issued (shares)		53
Issuance of stock awards, net of forfeitures	861		861
Foreign currency translation	(663)			(663)
Other	21			21
Balance as of at Sep. 30, 2011	$ 292,810	$ 126	$ 133,759	$ (563)	$ 159,488
Shares Balance as of at Sep. 30, 2011		12,618

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Income Taxes, Components (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Income Tax Expense Benefit Continuing Operations [Line Items]
Total Income Tax Expense (Benefit)	$ 26,120	$ 20,886	$ 16,086
US [Member]
Income Tax Expense Benefit Continuing Operations [Line Items]
Current Federal Tax Expense (Benefit)	20,741	17,060	13,868
Current State and Local Tax Expense (Benefit)	3,696	2,751	2,379
Deferred Federal Income Tax Expense (Benefit)	628	538	(136)
Deferred State and Local Income Tax Expense (Benefit)	120	95	(25)
Total Income Tax Expense (Benefit)	25,185	20,444	16,086
International [Member]
Income Tax Expense Benefit Continuing Operations [Line Items]
Current Federal Tax Expense (Benefit)	1,109	826	0
Deferred Federal Income Tax Expense (Benefit)	(174)	(384)	0
Total Income Tax Expense (Benefit)	$ 935	$ 442	$ 0

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Income Taxes (Tables)

12 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

			2011		2010		2009
United States
	Current payable
		Federal	$	20,741	$	17,060	$	13,868
		State		3,696		2,751		2,379
	Deferred
		Federal		628		538		(136)
		State		120		95		(25)
Total U.S. tax expense				25,185		20,444		16,086
International
	Current payable			1,109		826		-
	Deferred			(174)		(384)		-
Total international tax expense				935		442		-
Total income tax expense			$	26,120	$	20,886	$	16,086

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

		2011		2010
Deferred tax assets:
	Allowance for doubtful accounts	$	1,005	$	996
	Inventories		363		358
	Revenue recognition		-		175
	Lease expense		282		192
	Employee benefits		740		1,012
	Other		325		456
Total deferred tax assets			2,715		3,189
Deferred tax liabilities:
	Property and equipment		(6,534)		(6,481)
	Prepaid expenses		(316)		(306)
	Other		(182)		(156)
Total deferred tax liabilities			(7,032)		(6,943)
Net deferred tax assets/(liabilities)		$	(4,317)	$	(3,754)

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	2011		2010		2009
Taxes computed at statutory rate		35.0%		35.0%		35.0%
State income taxes (net of federal income tax benefit)		3.7		3.5		3.8
Foreign		(0.9)		(1.1)		-
Other		0.2		1.0		0.4
		38.0%		38.4%		39.2%

Summary of Income Tax Contingencies [Table Text Block]

	2011		2010		2009
Unrecognized tax benefits – Beginning of year	$	198	$	223	$	523
Gross decreases related to prior period tax positions		(175)		-		(54)
Gross increases related to current period tax positions		-		175		182
Settlements		-		(200)		(428)
Unrecognized tax benefits – End of year	$	23	$	198	$	223

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Commitments and Contingencies (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Commitments And Contingencies Details [Abstract]
Rent Expense	$ 4,259	$ 4,051	$ 3,968
Operating Lease Obligations [Abstract]
Future Minimum Payments (2012)	3,286
Future Minimum Payments (2013)	3,135
Future Minimum Payments (2014)	2,387
Future Minimum Payments (2015)	2,073
Future Minimum Payments (2016)	2,042
Future Minimum Payments Thereafter (After 2016)	9,414
Future Minimum Payments, Total	22,337
Capital Lease Obligations [Abstract]
Future Minimum Payments Due (2012)	909
Future Minimum Payments Due (2013)	284
Future Minimum Payments Due (2014)	55
Future Minimum Payments Due (2015)	15
Future Minimum Payments Due (2016)	0
Future Minimum Payments Due Thereafter (After 2016)	0
Future Minimum Payments Due, Total	$ 1,263

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Fair Value of Financial Instruments

12 Months Ended

Sep. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

16.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.

As of September 30, 2011 and 2010, financial instruments include cash and cash equivalents, receivables and accounts payable, and the fair values approximate book values due to their short maturities.

In November 2010, we amended our sterling revolving credit facility in the United Kingdom. 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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Cash Flow (Table)

12 Months Ended

Sep. 30, 2011

Schedule of Cash Flows - Supplemental and Noncash [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

	2011		2010		2009
Supplemental Disclosures
Cash paid for interest	$	505	$	340	$	173
Cash paid for income taxes		21,302		19,850		15,251
Noncash Activities
Capital lease asset additions and related obligations		455		-		-
Equipment acquisitions financed with accounts payable		124		23		119

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Quarterly Financial Data

12 Months Ended

Sep. 30, 2011

Quarterly Financial Data [Abstract]

Quarterly Financial Information [Text Block]

18.Quarterly Financial Data (Unaudited)

		Three-Months Ended
		Dec. 31,		Mar. 31,		June 30,		Sept. 30,		Year
			(Dollars and shares in thousands, except per share data) (1)
Fiscal Year 2011
Total revenues		$	366,174	$	367,112	$	410,736	$	421,318	$	1,565,340
Gross profit			50,072		50,986		54,087		50,440		205,585
Operating income			17,536		16,869		18,701		15,560		68,666
Net income			10,828		10,332		11,390		10,030		42,580
Earnings per common share — basic		$	0.87	$	0.83	$	0.91	$	0.80	$	3.42
Earnings per common share — diluted		$	0.87	$	0.83	$	0.91	$	0.80	$	3.40
Weighted average common shares
	outstanding:
	Basic		12,415		12,462		12,484		12,497		12,464
	Diluted		12,483		12,511		12,526		12,531		12,513
Fiscal Year 2010
Total revenues		$	236,111	$	286,597	$	347,687	$	358,947	$	1,229,342
Gross profit			36,009		39,522		43,937		45,535		165,003
Operating income			12,733		12,664		15,064		13,757		54,218
Net income			7,834		7,671		9,137		8,798		33,440
Earnings per common share — basic		$	0.64	$	0.63	$	0.74	$	0.71	$	2.73
Earnings per common share — diluted		$	0.63	$	0.62	$	0.74	$	0.71	$	2.70
Weighted average common shares
	outstanding:
	Basic		12,173		12,207		12,265		12,318		12,241
	Diluted		12,356		12,376		12,408		12,437		12,395
(1) The sums of the quarterly net income and earnings per share amounts may not agree to the year-to-date
earnings per common share amount as a result of rounding.

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Benefit Plans, Funded Pension Schedule (Details) (USD $) In Thousands	Sep. 30, 2011	Sep. 30, 2010
Funded Pension Liability Details [Abstract]
Fair Value of Plan Assets	$ 4,760	$ 4,771
Defined Benefit Plan, Benefit Obligation	(7,031)	(7,160)
Funded Status of Plan	$ (2,271)	$ (2,389)

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General

12 Months Ended

Sep. 30, 2011

General [Abstract]

Organization Consolidation And Presentation Of Financial Statements Disclosure Text Block

1.Business Description and Basis of Presentation

MWI Veterinary Supply, Inc. is a leading distributor of animal health products to veterinarians in the United States and United Kingdom. Wesellour products to veterinarians in both the companion and production animal markets. We operatethirteen distribution centers located across the United States and one distribution center in the United Kingdom.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands	Sep. 30, 2011	Sep. 30, 2010
Current Assets:
Cash and cash equivalents	$ 606	$ 911
Receivables, net	215,861	189,428
Inventories	170,065	175,292
Prepaid expenses and other current assets	10,079	8,729
Deferred income taxes	1,672	1,556
Total current assets	398,283	375,916
Property, Plant and Equipment, Net	25,209	15,238
Goodwill	49,041	47,330
Intangible Assets, Net	24,894	26,710
Other assets, net	6,792	2,738
Total assets	504,219	467,932
Current Liabilities:
Credit facilities	2,907	10,140
Accounts payable	182,594	183,604
Accrued expenses	16,385	15,118
Note payable	0	2,000
Current maturities of long-term debt and capital lease obligations	909	1,631
Total current liabilities	202,795	212,493
Deferred income taxes	5,989	5,310
Long-term debt and capital lease obligations	354	953
Other long-term liabilities	2,271	2,389
Stockholders Equity
Common stock	126	125
Additional paid in capital	133,759	129,675
Retained earnings	159,488	116,908
Accumulated other comprehensive (loss)/income	(563)	79
Total stockholders equity	292,810	246,787
Total liabilities and stockholders equity	$ 504,219	$ 467,932

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Statements of Cash flows - Supplemental and Non-Cash Disclosures

12 Months Ended

Sep. 30, 2011

Statement Of Cash Flows Supplemental [Abstract]

Cash Flow Supplemental Disclosures [Text Block]

11.Statements of Cash Flows — Supplemental and Noncash Disclosures

	2011		2010		2009
Supplemental Disclosures
Cash paid for interest	$	505	$	340	$	173
Cash paid for income taxes		21,302		19,850		15,251
Noncash Activities
Capital lease asset additions and related obligations		455		-		-
Equipment acquisitions financed with accounts payable		124		23		119

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Document and Entity Information (USD $) In Thousands, except Share data	12 Months Ended
	Sep. 30, 2011	Nov. 14, 2011	Mar. 31, 2011
Document And Entity Information [Abstract]
DocumentType	10-K
DocumentPeriodEndDate	Sep. 30, 2011
AmendmentFlag	false
DocumentFiscalPeriodFocus	Q4
Document Fiscal Year Focus	2011
CurrentFiscalYearEndDate	--09-30
EntityCentralIndexKey	0001323974
EntityCurrentReportingStatus	Yes
EntityFilerCategory	Large Accelerated Filer
EntityRegistrantName	MWI Veterinary Supply, Inc.
EntityVoluntaryFilers	No
EntityWellKnownSeasonedIssuer	No
EntityCommonStockSharesOutstanding		12,717,354
EntityPublicFloat			$ 947,000

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Commitments and Contingencies

12 Months Ended

Sep. 30, 2011

Commitments And Contingencies Disclosure [Abstract]

Commitments And Contingencies Disclosure [Text Block]

12.Commitments and Contingencies

We have operating leases for office and distribution center space and equipment for varying periods. We also lease some of our vehicles in the United Kingdom under capital leases. Certain leases have renewal options and require contingent payments for increases, including executory costs, property taxes, insurance and certain other costs in excess of a base year amount. Total rent expense for the years ended September 30, 2011, 2010 and 2009 were $4,259, $4,051and $3,968, respectively.

The aggregate future noncancelable minimum rental payments on operating leases and capital leases at September 30, 2011 are as follows:

	Lease Obligations
Fiscal Year	Operating Leases		Capital Leases
2012	$	3,286	$	909
2013		3,135		284
2014		2,387		55
2015		2,073		15
2016		2,042		-
Thereafter		9,414		-
Total future minimum obligations	$	22,337	$	1,263

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Statement of Financial Position (Parentheticals) (USD $) In Thousands, except Per Share data	Sep. 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	12,618	12,457

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Goodwill and Intangibles

12 Months Ended

Sep. 30, 2011

Goodwill Details [Abstract]

Goodwill And Intangible Assets Disclosure [Text Block]

6.Goodwill and Intangibles

The changes in the carrying value of goodwill for the fiscal years ended September 30, 2011and 2010are as follows:

		2011		2010
Goodwill - Beginning of year	$	47,330	$	37,610
Acquisition activity		1,823		9,483
Other (1)		(112)		237
Goodwill - End of year	$	49,041	$	47,330
(1) In fiscal year 2011, Other relates to foreign exchange. In fiscal year 2010, Other relates to foreign exchange and contingent consideration payment to the former Securos shareholders for the achievement of defined financial targets.

Intangible assets consist of the following as of September 30:

		Useful Lives	2011		2010
Amortizing:
	Customer relationships	9-20 years	$	24,981	$	25,027
	Covenants not to compete	1-5 years		808		811
	Other	3-5 years		455		458
				26,244		26,296
Accumulated amortization				(5,109)		(3,361)
				21,135		22,935
Non-Amortizing:
	Trade names and patents			3,759		3,775
			$	24,894	$	26,710

We recorded amortization expense of $1,783, $1,312and $831 for the years ended September 30, 2011, 2010 and 2009, respectively. Estimated amortization expense related to intangible assets as of September 30, 2011 is as follows:

	Amount
2012	$	1,607
2013		1,542
2014		1,511
2015		1,358
2016		1,261
Thereafter		13,856
	$	21,135

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Property and Equipment

12 Months Ended

Sep. 30, 2011

Property Plant And Equipment [Abstract]

Property And Equipment Disclosure [Text Block]

5.Property and Equipment

Property and equipment consists of the following at September 30:

		2011		2010
Land	$	1,723	$	261
Building and leasehold improvements		13,427		5,870
Machinery, furniture and equipment		20,979		17,495
Computer equipment		5,864		4,886
Construction in progress		2,203		1,626
		44,196		30,138
Accumulated depreciation and amortization		(18,987)		(14,900)
	$	25,209	$	15,238

We recorded depreciation expense of $4,501, $3,692and $2,546for the years ended September 30, 2011, 2010 and 2009, respectively.

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Geographic Information

12 Months Ended

Sep. 30, 2011

Geographic Information

Segment Reporting Disclosure [Text Block]

17.Geographic Information

Revenues and long-lived assets by geographic region are as follows:

			2011		2010		2009
Revenues for the fiscal years ended September 30
	United States		$	1,304,794	$	1,074,226	$	941,332
	International			260,546		155,116		-
		Total	$	1,565,340	$	1,229,342	$	941,332
Long-lived assets as of September 30
	United States		$	18,953	$	9,762	$	9,313
	International			6,256		5,476		-
		Total	$	25,209	$	15,238	$	9,313

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Related Parties

12 Months Ended

Sep. 30, 2011

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

13.Related Party Transactions

MWI Co., our subsidiary, holds a 50% membership interest in Feeders' Advantage that is accounted for as an investment using the equity method. Sales of products to Feeders' Advantage, which are at our cost, were $55,185, $43,017and $46,406for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. MWI Co. charged Feeders' Advantage for certain operating and administrative services of $919, $794 and $771 for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Our President and Chief Executive Officer and a member of our Board of Directors are each members of the board of managers of Feeders' Advantage.

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. As of September 30, 2011, MWI Co. had a receivable balance from Feeders' Advantage of $756 and as of September 30, 2010, MWI Co. had a payable balance to Feeders' Advantage of $281.

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Computation of Earnings per Share

12 Months Ended

Sep. 30, 2011

Earnings per common share

Earnings Per Share [Text Block]

9.Computation Of Earnings Per Common Share (In thousands, except per share data)

		2011				2010				2009
		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net income		$	42,580	$	42,580	$	33,440	$	33,440	$	24,905	$	24,905
Weighted average common
	shares outstanding		12,464		12,464		12,241		12,241		12,088		12,088
Effect of diluted securities
	Stock options and restricted stock				49				154				218
Weighted average shares
	outstanding				12,513				12,395				12,306
Earnings per share		$	3.42	$	3.40	$	2.73	$	2.70	$	2.06	$	2.02
There was no impact from anti-dilutive shares in fiscal years ended September 30, 2011, 2010 or 2009.

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Income Taxes, Deferred Tax Schedule (Details) (USD $) In Thousands	Sep. 30, 2011	Sep. 30, 2010
Components of Deferred Tax Assets [Abstract]
Allowance for Doubtful Accounts	$ 1,005	$ 996
Inventory	363	358
Revenue Recognition	0	175
Lease Expense	282	192
Employee Benefits	740	1,012
Other Deferred Tax Assets	325	456
Total Deferred Tax Assets	2,715	3,189
Components of Deferred Tax Liabilities [Abstract]
Property and Equipment	(6,534)	(6,481)
Deferred Tax Liability, Prepaid Expenses	(316)	(306)
Other Deferred Tax Liabilities	(182)	(156)
Total Deferred Tax Liabilities	(7,032)	(6,943)
Deferred Tax Assets (Liabilities), Net	$ (4,317)	$ (3,754)

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Debt

12 Months Ended

Sep. 30, 2011

Credit Facility And Long Term Debt [Abstract]

Debt Disclosure [Text Block]

7.Debt

Outstanding debt consists of the following as of September 30:

		2011		2010
Revolving credit facility, 1.61% as of September 30, 2011		$	-	$	9,600
Sterling revolving credit facility, 1.63% as of September 30, 2011			2,907		540
Note payable (1)			-		2,000
Capital lease obligations (2)			1,263		1,811
Term note			-		773
Total debt and capital lease obligations			4,170		14,724
	Less: Long-term debt and capital lease obligations		(354)		(953)
Total debt included in current liabilities		$	3,816	$	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 commitment fee ranged from 0.2% to 0.35% depending on the funded debt to EBITDA ratio. 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 September 30, 2011 and 2010. This facility was amended on November 1, 2011. See Note 19 – Subsequent events.

Sterling RevolvingCredit Facility—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 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. As of September 30, 2011, Centaur was in compliance with the covenant.

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 credit facility was terminated on November 5, 2010. 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%.

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Common Stock and Stock-Based Awards

12 Months Ended

Sep. 30, 2011

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Disclosure Of Compensation Related Costs Share Based Payments [Text Block]

8.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. At September 30, 2011 and 2010, we had 67,032and 164,788shares, 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.

2005 Stock Plan

We have a 2005 Stock-Based Award and Incentive Compensation Plan (the “2005 Plan”), under which we may offer restricted 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. At September 30, 2011 and 2010 we had 932,438and 991,970 shares, respectively, of our common stock available for issuance under the 2005 Plan.

The 2005 Plan permits us to grant stock options (both incentive stock options and non-qualified stock options), restricted 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.

A summary of common stock options activity under the 2002 and 2005 Plans are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	exercise		of		exercise		of		exercise
	Shares	price		Shares		price		Shares		price
Outstanding at beginning of year	139,550	$	4.65		339,404	$	3.11		420,898	$	2.87
Exercised	(102,128)		0.96		(199,670)		2.02		(81,004)		1.77
Cancelled or expired	(37)		17.00		(184)		17.00		(490)		17.57
Outstanding at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11
Exercisable at end of year	37,385	$	14.73		139,550	$	4.65		339,404	$	3.11

	Outstanding and exercisable options
			Weighted
			average
			remaining		Weighted
			contractual		average
		Number of	life		exercise
Range of exercise prices		Shares	(in years)		price
$ 0.18 - $16.99		6,592		0.7	$	0.18
$17.00 - $19.99		25,823		3.8	$	17.00
$20.00 - $22.60		4,970		4.0	$	22.20

The intrinsic value of the shares outstanding and exercisable was $2,022 as of September 30, 2011 and $7,405 as of September 30, 2010.

A summary of restricted stock awards activity under the 2005 Plan are as follows:
	2011			2010				2009
		Weighted				Weighted				Weighted
	Number	average		Number		average		Number		average
	of	grant date		of		grant date		of		grant date
	Shares	fair value		Shares		fair value		Shares		fair value
Nonvested at beginning of year	70,584	$	49.33		38,388	$	38.33		43,119	$	37.92
Granted	63,900		71.14		58,350		55.05		11,500		39.52
Vested	(25,934)		52.46		(25,994)		45.99		(15,551)		38.04
Forfeitures	(3,010)		51.92		(160)		39.27		(680)		39.27
Nonvested at end of year	105,540	$	61.69		70,584	$	49.33		38,388	$	38.33

As of September 30, 2011, total unrecognized stock based compensation expense related to nonvested awards was approximately $6,380 before income taxes, which is expected to be recognized over the remaining term of the awards which range from 1 to 5 years. During the fiscal years ended September 30, 2011 and 2010, we recognized $1,387and $1,151, respectively, in compensation expense related to common stock awards.

2008 Employee Stock Purchase Plan

In February 2008, we approved the 2008 Employee Stock Purchase Plan (the “ESPP”). The plan 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 period, which begins 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. We issued 6,058and 5,852shares of our common stock under the ESPP during fiscal years ended September 30, 2011 and 2010, respectively.

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Income Taxes

12 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10.Income Taxes

The components of income tax expense consist of the following:

			2011		2010		2009
United States
	Current payable
		Federal	$	20,741	$	17,060	$	13,868
		State		3,696		2,751		2,379
	Deferred
		Federal		628		538		(136)
		State		120		95		(25)
Total U.S. tax expense				25,185		20,444		16,086
International
	Current payable			1,109		826		-
	Deferred			(174)		(384)		-
Total international tax expense				935		442		-
Total income tax expense			$	26,120	$	20,886	$	16,086

Our deferred tax assets and liabilities consist of the following at September 30:

		2011		2010
Deferred tax assets:
	Allowance for doubtful accounts	$	1,005	$	996
	Inventories		363		358
	Revenue recognition		-		175
	Lease expense		282		192
	Employee benefits		740		1,012
	Other		325		456
Total deferred tax assets			2,715		3,189
Deferred tax liabilities:
	Property and equipment		(6,534)		(6,481)
	Prepaid expenses		(316)		(306)
	Other		(182)		(156)
Total deferred tax liabilities			(7,032)		(6,943)
Net deferred tax assets/(liabilities)		$	(4,317)	$	(3,754)

Additionally, other deferred tax assets totaling $758 and $780 as of September 30, 2011 and 2010, respectively, arising from the Company's foreign subsidiary, are subject to full valuation allowance.

Income tax expense differed from income taxes at the U.S. federal statutory tax rate for all periods presented as follows:

	2011		2010		2009
Taxes computed at statutory rate		35.0%		35.0%		35.0%
State income taxes (net of federal income tax benefit)		3.7		3.5		3.8
Foreign		(0.9)		(1.1)		-
Other		0.2		1.0		0.4
		38.0%		38.4%		39.2%

In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of September 30, 2011, the Company has not made a provision for U.S. or additional foreign withholding taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in foreign subsidiaries.

A reconciliation of the unrecognized tax benefits is as follows:

	2011		2010		2009
Unrecognized tax benefits – Beginning of year	$	198	$	223	$	523
Gross decreases related to prior period tax positions		(175)		-		(54)
Gross increases related to current period tax positions		-		175		182
Settlements		-		(200)		(428)
Unrecognized tax benefits – End of year	$	23	$	198	$	223

For the fiscal years ended September 30, 2011, 2010 and 2009, the amount included in our income tax expense for tax-related interest and penalties was not significant. Of the $23 unrecognized tax benefits as of September 30, 2011, $15 would impact our effective rate, if recognized. Of the $198 unrecognized tax benefits as of September 30, 2010, $15 would have impacted our effective rate, if recognized.Of the $223 unrecognized tax benefits as of September 30, 2009, $27 would have impacted our effective rate, if recognized. We expect no material changes to our unrecognized tax benefits during the next fiscal year. Our policy for classifying interest and penalties associated with unrecognized tax benefits is to include such items in income tax expense.

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 fiscal year 2011. Resolution decreased the liability for unrecognized tax benefits by approximately $175.

With few exceptions, we are no longer subject to income tax examination for years before 2006 in the U.S. and significant state and local jurisdictions. We are no longer subject to income tax examinations for years before 2009 in significant foreign jurisdictions.

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Cash Flows, Supplemental and Noncash Disclosures (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Supplemental Disclosures [Abstract]
Cash Paid For Interest	$ 505	$ 340	$ 173
Cash Paid for Income Taxes	21,302	19,850	15,251
Noncash Activities [Abstract]
Capital lease asset additions and related obligations	455	0	0
Equipment Acquisitions Financed With Accounts Payable	$ 124	$ 23	$ 119

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Related Party (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Schedule of Equity Method Investments [Line Items]
Product Sales to Related Party, Gross	$ 55,185	$ 43,017	$ 46,406
Operating And Administrative Services Revenue from Related Party	919	794	771
Due from (to) Related Party	$ 756	$ (281)
Feeders Advantage [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investment Ownership Percentage	50.00%

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Income Taxes, Description A (Details) (USD $) In Thousands	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Income Tax Disclosure [Abstract]
Unrecognized Tax Benefits that Would Impact Effective Tax Rate	$ 15	$ 15	$ 27
Deferred Tax Assets Other Gross	$ 758	$ 780

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Earnings Per Common Share (Table)

12 Months Ended

Sep. 30, 2011

Earnings per common share

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

		2011				2010				2009
		Basic		Diluted		Basic		Diluted		Basic		Diluted
Net income		$	42,580	$	42,580	$	33,440	$	33,440	$	24,905	$	24,905
Weighted average common
	shares outstanding		12,464		12,464		12,241		12,241		12,088		12,088
Effect of diluted securities
	Stock options and restricted stock				49				154				218
Weighted average shares
	outstanding				12,513				12,395				12,306
Earnings per share		$	3.42	$	3.40	$	2.73	$	2.70	$	2.06	$	2.02
There was no impact from anti-dilutive shares in fiscal years ended September 30, 2011, 2010 or 2009.

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Intangibles, Amortization (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Finite Lived Intangible Assets Amortization Expense [Abstract]
Amortization of Intangible Assets	$ 1,783	$ 1,312	$ 831
Future Amortization Details [Abstract]
Year One (2012)	1,607
Year Two (2013)	1,542
Year Three (2014)	1,511
Year Four (2015)	1,358
Year Five (2016)	1,261
Thereafter	13,856
Future Amortization Expense, Total	$ 21,135

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Other Comprehensive Income

12 Months Ended

Sep. 30, 2011

Comprehensive Income Disclosure [Abstract]

Comprehensive Income Disclosure [Text Block]

15.Other Comprehensive Income

The components of comprehensive income (loss) were as follows:

				2011		2010		2009
Net income			$	42,580	$	33,440	$	24,905
Other comprehensive income:
	Foreign currency translation			(663)		536		-
	Actuarial gain/(loss) on pension valuation, net of deferred taxes			21		(457)		-
		Total comprehensive income	$	41,938	$	33,519	$	24,905

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation — The accompanying consolidated financial statements consist of MWI Veterinary Supply, Inc. and its wholly-owned subsidiaries, collectively referred to herein as “MWI.” All intercompany transactions have been eliminated. We use the equity method of accounting for our investments in entities in which we have significant influence; generally this represents an ownership interest between 20% and 50%. Our share of income or loss from these investments is reported as increases or decreases in the respective investment with a corresponding amount reported as other income.

Basis Of Accounting And Use Of Estimates [Policy Text Block]

Basis of Accounting and Use of Estimates — The accompanying 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 from these estimates. Estimates are used when accounting for 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, 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.

Segment Reporting, Policy

Segment Information — We are a distributor of animal health products to veterinarians. Our financial results are disclosed as one reportable segment. We identified two operating segments based on geographic areas but aggregate based on applicable accounting standards. We determined that the two operating segments have similar operating margins and are expected to maintain this similarity into the future. Additionally, our products, customers, operations, delivery to market and regulatory environments are all similar in nature.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign Currency Translation — For our international operations, local currencies have been determined to be the functional currencies. We translate functional currency assets and liabilities to their U.S. dollar equivalents at rates in effect at the balance sheet date and record these translation adjustments in Stockholders' equity – Accumulated other comprehensive income/(loss). We translate functional currency statement of income amounts to their U.S. dollar equivalents at average rates for the period.

Other Comprehensive Income [Text Block]

Other Comprehensive Income — Comprehensive income includes cumulative foreign currency translation adjustments and actuarial adjustments on pension valuation. Comprehensive income has been reflected in the consolidated statements of stockholders' equity and in Note 15 – Other Comprehensive Income.

Revenue Recognition, Policy [Policy Text Block]

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 not been significant to our financial statements. We record revenues net of sales tax. In an agency relationship, wegenerally 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 $371,024, $328,053and $269,057for the years ended September 30, 2011, 2010 and 2009, respectively, and generated commission revenue of $20,655, $16,780 and $14,223 for the years ended September 30, 2011, 2010 and 2009, respectively.

Cost of Sales, Vendor Allowances, Policy [Policy Text Block]

Cost of Product Sales and Vendor Rebates — Cost of product sales consist of our inventory product cost, including shipping costs to and from our distribution centers. Costs of fulfillment are included in selling, general and administrative costs. Vendor rebates are recorded based on the terms of the contracts or programs with each vendor. We receive quarterly, semi-annual and 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 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.

Cost Of Sales Customer Incentives [Policy Text Block]

Customer Incentives — Customer incentives are accrued based on the terms of the contracts with each customer. These incentive programs provide that the customer receive an incentive based on their product purchases or attainment of performance goals. Incentives are estimated based on the specific terms in each agreement, historical experience and product growth rates. Incentives are recognized as a reduction to product sales.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents — Cash equivalents consist of highly liquid investments with a maturity of three months or less from the date of purchase. Our banking arrangements allow us to fund outstanding checks when presented to the financial institution for payment.

Inventory, Policy [Policy Text Block]

Inventories — Inventories, consisting of pharmaceuticals, vaccines, parasiticides, diagnostics, capital equipment, supplies and nutritional products, are stated at the lower of cost (on a moving-average basis) or market.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment — Property and equipment are stated at cost and depreciation is computed using the straight-line method over the estimated useful lives, which includes the shorter of useful life or lease term for leasehold improvements, of the related assets as follows:

       Buildings25 to 35 years

       Machinery, furniture and equipment3 to 7 years

       Computer equipment3 to 7 years

       Leasehold improvements1 to 10 years

The cost and accumulated depreciation of items sold or retired are removed from the property accounts and any resulting gain or loss is reflected in net income. Repairs and maintenance are expensed as incurred and improvements are capitalized.

We periodically review long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Intangible Assets —We recognize the excess purchase price over the fair value of net assets acquired and liabilities assumed in a business combination as goodwill on the consolidated balance sheet. We perform an annual impairment test on goodwill as of September 30theach year. We calculate the fair value of each reporting unit using a discounted cash flow analysis and compare the fair value to its book value. There were no indicators during this evaluation that would require additional testing. We have concluded that there was no impairment during the fiscal years ended September 30, 2011, 2010 and 2009. This impairment tests will continue to be performed at least annually and more frequently if circumstances indicate a possible impairment.

Identifiable intangible assets primarily include trademarks, patents, customer relationships and covenants not to compete and are amortized, as necessary, over their useful lives or contractual term which range from 1-20 years. We review identifiable intangible assets at least annuallyfor impairment or when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairments were identified during the fiscal years ended September 30, 2011, 2010 and 2009.

Other Assets Disclosure [Text Block]

Other Assets — Included in other assets are our equity method investmentsand investments in entities accounted for under the cost method of accounting. We periodically evaluate these investments for other-than-temporary impairment using both qualitative and quantitative criteria, or when indicators of impairment are noted. In the event an investment is deemed to be other-than-temporarily impaired, we would recognize the loss component in the consolidated statements of income.Other assets also consist of debt issuance costs that are being amortized over the life of the related debt.

Earnings Per Share, Policy [Policy Text Block]

Earnings Per Common Share — Basic earnings per common share is calculated based on the weighted-average number of outstanding common shares during the applicable period. Diluted earnings per common share is based on the weighted-average number of outstanding common shares plus the weighted-average number of potential outstanding common shares. Potential common shares that would increase earnings per share amounts are antidilutive and are, therefore, excluded from the earnings per common share computations. Earnings per common share is computed separately for each period presented.

Income Tax, Policy [Policy Text Block]

Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized to provide for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are measured using enacted tax rates in effect during the years in which the temporary differences are expected to reverse.

Receivables, Policy [Policy Text Block]

Concentrations of Risk — Our financial instruments that are exposed to concentrations of credit risk consist primarily of our receivables. Our customers are geographically dispersed throughout the United States and United Kingdom. We routinely assess the financial strength of our customers and review their credit history before extending credit. In addition, we establish an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Product sales to Banfield were approximately6% ofour total product sales in fiscal year 2011, 9% in fiscal year 2010 and 11% in fiscal year 2009. Product sales to Feeders' Advantage, a related party (See Note 13), were approximately 4%of our total product sales in fiscal year 2011 and 2010 and5% of our total product sales in2009.

Advertising Costs, Policy [Policy Text Block]

Advertising — Advertising costs are expensed when incurred and are included as part of selling, general and administrative expenses. Advertising costs were $723, $717 and $783 in fiscal years 2011, 2010 and 2009, respectively.

Recent And New Accounting Pronouncements [Policy Text Block]

Recently Issued and New Accounting Pronouncements — 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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Intangibles, Goodwill (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011		Sep. 30, 2010
Goodwill Details [Abstract]
Goodwill, Beginning Balance	$ 47,330		$ 37,610
Acquisition Additions Intangibles	1,823		9,483
Goodwill, Other	(112)	[1]	237	[1]
Goodwill, Ending Balance	$ 49,041		$ 47,330

[1] (1) In fiscal year 2011, Other relates to foreign exchange. In fiscal year 2010, Other relates to foreign exchange and contingent consideration payment to the former Securos shareholders for the achievement of defined financial targets.

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Quarterly Financial Data (Table)

12 Months Ended

Sep. 30, 2011

Quarterly Financial Data [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

		Three-Months Ended
		Dec. 31,		Mar. 31,		June 30,		Sept. 30,		Year
			(Dollars and shares in thousands, except per share data) (1)
Fiscal Year 2011
Total revenues		$	366,174	$	367,112	$	410,736	$	421,318	$	1,565,340
Gross profit			50,072		50,986		54,087		50,440		205,585
Operating income			17,536		16,869		18,701		15,560		68,666
Net income			10,828		10,332		11,390		10,030		42,580
Earnings per common share — basic		$	0.87	$	0.83	$	0.91	$	0.80	$	3.42
Earnings per common share — diluted		$	0.87	$	0.83	$	0.91	$	0.80	$	3.40
Weighted average common shares
	outstanding:
	Basic		12,415		12,462		12,484		12,497		12,464
	Diluted		12,483		12,511		12,526		12,531		12,513
Fiscal Year 2010
Total revenues		$	236,111	$	286,597	$	347,687	$	358,947	$	1,229,342
Gross profit			36,009		39,522		43,937		45,535		165,003
Operating income			12,733		12,664		15,064		13,757		54,218
Net income			7,834		7,671		9,137		8,798		33,440
Earnings per common share — basic		$	0.64	$	0.63	$	0.74	$	0.71	$	2.73
Earnings per common share — diluted		$	0.63	$	0.62	$	0.74	$	0.71	$	2.70
Weighted average common shares
	outstanding:
	Basic		12,173		12,207		12,265		12,318		12,241
	Diluted		12,356		12,376		12,408		12,437		12,395
(1) The sums of the quarterly net income and earnings per share amounts may not agree to the year-to-date
earnings per common share amount as a result of rounding.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010		Sep. 30, 2009
Cash Flows From Operating Activities:
Net income	$ 42,580	$ 33,440		$ 24,905
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,284	5,004		3,377
Amortization of debt issuance costs	65	58		43
Stock-based compensation	831	1,088		482
Deferred income taxes	597	249		(161)
Earnings of equity method investees	(268)	(220)		(230)
(Gain)/loss on disposal of property and equipment	0	(11)		29
Excess tax benefit of exercise of common stock options	(2,714)	(3,611)		(1,178)
Pension payment	0	(2,047)		0
Other	(76)	97		0
Changes in operating assets and liabilities (net of effects of business acquisitions):
Receivables	(23,021)	(14,154)		(14,019)
Inventories	8,553	(41,106)		2,072
Prepaid expenses and other current assets	3,398	(2,419)		(760)
Accounts payable	(5,150)	39,781		(4,712)
Accrued expenses	1,349	717		2,091
Net cash provided by operating activities	32,428	16,866		11,939
Cash Flows From Investing Activities:
Business acquisitions, net of cash acquired	(9,000)	(39,645)	[1]	117
Purchases of property and equipment	(12,516)	(4,388)		(2,662)
Other	(3,993)	(57)		25
Net cash used in investing activities	(25,509)	(44,090)		(2,520)
Cash Flows From Financing Activities:
Borrowings on credit facilities	249,978	151,616		183,300
Payments on credit facilities	(257,166)	(141,500)		(183,300)
Proceeds from issuance of common stock	412	248		240
Proceeds from exercise of stock options	98	403		143
Excess tax benefit of exercise of common stock options	2,714	3,611		1,178
Debt issuance costs	0	(116)		0
Payment on long-term debt and capital lease obligations	(3,327)	(477)		(97)
Net cash (used in)/provided by financing activities	(7,291)	13,785		1,464
Effect of Exchange Rate on Cash and Cash Equivalents	67	48		0
Net (Decrease)/Increase in Cash and Cash Equivalents	(305)	(13,391)		10,883
Cash and Cash Equivalents at Beginning of Period	911	14,302		3,419
Cash and Cash Equivalents at End of Period	$ 606	$ 911		$ 14,302

[1] Net of cash acquired in 2010 of $674.

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Receivables

12 Months Ended

Sep. 30, 2011

Accounts, Notes, Loans, and Financing Receivable Disclosure [Abstract]

Receivables Disclosure [Text Block]

4.Receivables

Receivables consist of the following at September 30:

		2011		2010
Trade	$	203,038	$	177,317
Vendor rebates and programs		15,404		14,681
		218,442		191,998
Allowance for doubtful accounts		(2,581)		(2,570)
	$	215,861	$	189,428

Approximately 8%of our trade receivables resulted from transactions with a single customer as of September 30, 2011 and 2010.

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Earnings Per Common Share (Details) (USD $) In Thousands, except Per Share data	3 Months Ended								12 Months Ended
	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Earnings Per Common Share Details [Abstract]
Net Income	$ 10,030	$ 11,390	$ 10,332	$ 10,828	$ 8,798	$ 9,137	$ 7,671	$ 7,834	$ 42,580	$ 33,440	$ 24,905
Weighted Average Number of Shares Outstanding, Basic	12,497	12,484	12,462	12,415	12,318	12,265	12,207	12,173	12,464	12,241	12,088
Effect Of Dilutive Securities [Abstract]
Stock Options And Restricted Stock Diluted Shares									49	154	218
Weighted Average Number of Shares Outstanding, Diluted	12,531	12,526	12,511	12,483	12,437	12,408	12,376	12,356	12,513	12,395	12,306
Basic EPS	$ 0.80	$ 0.91	$ 0.83	$ 0.87	$ 0.71	$ 0.74	$ 0.63	$ 0.64	$ 3.42	$ 2.73	$ 2.06
Diluted EPS	$ 0.80	$ 0.91	$ 0.83	$ 0.87	$ 0.71	$ 0.74	$ 0.62	$ 0.63	$ 3.40	$ 2.70	$ 2.02

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Benefit Plans, Periodic Benefit Expense (Details) (USD $) In Thousands	12 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Periodic Benefit Expense Details [Abstract]
Interest Cost	$ 255	$ 159
Expected Return on Plan Assets	(205)	(139)
Net Periodic Benefit Cost	50	20
Other Changes Recognized In Other Comprehensive Income [Abstract]
Actuarial (Gain) Loss	(88)	591
Total Recognized In Net Periodic Benefit Costs And Other Comprehensive Income	(38)	611
Defined Benefit Plan Total Recognized In Other Comprehensive Income Net Of Tax	$ (21)	$ 457

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Summary of Significant Accounting Policies (Table)

12 Months Ended

Sep. 30, 2011

Accounting Policies [Abstract]

Property And Equipment Useful Lives [Table Text Block]

Buildings	25 to 35 years
Machinery, furniture and equipment	3 to 7 years
Computer equipment	3 to 7 years
Leasehold improvements	1 to 10 years

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Quarterly Financial Data (Details) (USD $) In Thousands, except Per Share data	3 Months Ended								12 Months Ended
	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2009
Quarterly Financial Data Details [Abstract]
Revenues	$ 421,318	$ 410,736	$ 367,112	$ 366,174	$ 358,947	$ 347,687	$ 286,597	$ 236,111	$ 1,565,340	$ 1,229,342	$ 941,332
Gross profit	50,440	54,087	50,986	50,072	45,535	43,937	39,522	36,009	205,585	165,003	134,655
Operating Income Loss	15,560	18,701	16,869	17,536	13,757	15,064	12,664	12,733	68,666	54,218	40,463
Net Income	$ 10,030	$ 11,390	$ 10,332	$ 10,828	$ 8,798	$ 9,137	$ 7,671	$ 7,834	$ 42,580	$ 33,440	$ 24,905
Basic EPS	$ 0.80	$ 0.91	$ 0.83	$ 0.87	$ 0.71	$ 0.74	$ 0.63	$ 0.64	$ 3.42	$ 2.73	$ 2.06
Diluted EPS	$ 0.80	$ 0.91	$ 0.83	$ 0.87	$ 0.71	$ 0.74	$ 0.62	$ 0.63	$ 3.40	$ 2.70	$ 2.02
Weighted average common shares outstanding:
Weighted Average Number of Shares Outstanding, Basic	12,497	12,484	12,462	12,415	12,318	12,265	12,207	12,173	12,464	12,241	12,088
Weighted Average Number of Shares Outstanding, Diluted	12,531	12,526	12,511	12,483	12,437	12,408	12,376	12,356	12,513	12,395	12,306

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Employee Benefit Plans (Tables)

12 Months Ended

Sep. 30, 2011

Employee Benefit Plans Disclosure Schedules [Abstract]

Fair Value of Plan Assets [Table Text Block]

	2011		2010
Fair value of plan assets	$	4,760	$	4,771
Benefit obligation		(7,031)		(7,160)
Unfunded pension liability	$	(2,271)	$	(2,389)

Schedule of Net Periodic Benefit (Expense) [Table Text Block]

		2011		2010
Interest cost		$	255	$	159
Expected return on plan assets			(205)		(139)
Net periodic benefit cost			50		20
Other changes recognized in other comprehensive income
	Actuarial (gain)/loss		(88)		591
Total recognized in net periodic benefit costs and other comprehensive income		$	(38)	$	611
Total (gain)/loss recognized in other comprehensive income, net of tax		$	(21)	$	457

Schedule of Weighted Average Assumptions Used [Table Text Block]

		2011
Assumptions used to determine benefit obligations
	Discount rate	3.1%
	Rate of compensation increase (1)	N/A
Assumptions used to determine net periodic benefit cost
	Discount rate	3.6%
	Expected return on plan assets	4.3%
	Rate of compensation increase (1)	N/A
(1) There is no assumed rate of compensation increase as there have been no current active members since April 2006

Schedule of Allocation of Plan Assets [Table Text Block]

Asset Class		Market Value		Asset Allocation	Fair Value Level
Equities		$	1,752	36%	2
Corporate bonds			977	21%	2
UK Government bonds			445	9%	2
Cash			26	1%	1
Other assets			1,560	33%	2
	Total	$	4,760	100%

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Employee Benefit Plans

12 Months Ended

Sep. 30, 2011

Employee Benefit Plans Disclosure [Abstract]

Compensation and Employee Benefit Plans [Text Block]

14.Employee Benefit Plans

We have a multi-employer defined contribution profit sharing plan with a 401(k) arrangement for employees in the United States. To become eligible for the profit sharing portion of the plan, an employee must complete two years of service and attain the age of twenty-one. Participation is automatic beginning the following January or July. To become eligible for the 401(k) portion of the plan, the employee must complete three-months of service and attain the age of twenty-one.

Both portions of the plan allow for employer contributions. We are required to match 50% of the employee's contribution to the 401(k) portion of the plan up to 6% of the employee's salary. Our matching contributions for the 401(k) portion of the plan were $1,464, $1,108and $975 for the fiscal years ended September 30, 2011, 2010 and 2009, respectively. Employee's contributions are fully vested immediately while employer contributions vest over a five-year period.

Contributions to the profit sharing portion of the Plans are discretionary, ranging from 0% to 3%, and are approved by our Board of Directors. Total profit sharing expense for the fiscal years ended September 30, 2011, 2010 and 2009 were $1,516,$1,244and $1,106, respectively. Employer contributions are fully vested immediately.

Centaur sponsors a defined contribution plan for all other staff not participating in the defined benefit plan described below. The contributions made by the employer over the period are detailed below. Contributions are currently payable at a minimum of 3% up to a maximum of 6% of eligible pay if matched by employee. The matching contribution for the plan was $269and $207for the fiscal years ended September 30, 2011 and 2010, respectively.

Centauroperates a defined benefit pension plan which provides benefits based on pensionable pay and is closed to future benefit accrual. We recorded the liability at the estimated fair value at the date of the acquisition. Subsequent to the acquisition of Centaur in fiscal year 2010, we funded $2,047 to the pension plan as required by the terms of the share purchase agreement.

The fair value of plan assets, benefit obligation and funded status of the defined benefit plan as of September 30 is as follows:

	2011		2010
Fair value of plan assets	$	4,760	$	4,771
Benefit obligation		(7,031)		(7,160)
Unfunded pension liability	$	(2,271)	$	(2,389)

The unfunded pension liability is recognized as other long-term liabilities in the Consolidated Balance Sheets.Net periodic benefit expense for the fiscal year ended September 30 consisted of the following:

		2011		2010
Interest cost		$	255	$	159
Expected return on plan assets			(205)		(139)
Net periodic benefit cost			50		20
Other changes recognized in other comprehensive income
	Actuarial (gain)/loss		(88)		591
Total recognized in net periodic benefit costs and other comprehensive income		$	(38)	$	611
Total (gain)/loss recognized in other comprehensive income, net of tax		$	(21)	$	457

The estimated net actuarial loss that will be amortized from accumulated other comprehensive losses into net periodic benefit costs during fiscal year 2012 is not significant. The following table provides the weighted-average actuarial assumptions:

		2011
Assumptions used to determine benefit obligations
	Discount rate	3.1%
	Rate of compensation increase (1)	N/A
Assumptions used to determine net periodic benefit cost
	Discount rate	3.6%
	Expected return on plan assets	4.3%
	Rate of compensation increase (1)	N/A
(1) There is no assumed rate of compensation increase as there have been no current active members since April 2006

The assets of the plan are invested as follows as of September 30, 2011:

Asset Class		Market Value		Asset Allocation	Fair Value Level
Equities		$	1,752	36%	2
Corporate bonds			977	21%	2
UK Government bonds			445	9%	2
Cash			26	1%	1
Other assets			1,560	33%	2
	Total	$	4,760	100%