10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2011

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

Commission File Number: 001-16783

VCA Antech, Inc.

(Exact name of registrant as specified in its charter)

Delaware	95-4097995
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

12401 West Olympic Boulevard

Los Angeles, California 90064-1022

(Address of principal executive offices)

(310) 571-6500

(Registrant’s telephone number, including area code)

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

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ].

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

Large accelerated filer [X]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [  ]
(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 Exchange Act). Yes [  ] No [X].

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: common stock, $0.001 par value, 86,701,838 shares as of November 1, 2011.

VCA Antech, Inc. and Subsidiaries

Form 10-Q

September 30, 2011

Table of Contents

Part I.	Financial Information	Page Number
Item 1.	Financial Statements (Unaudited)
	Condensed, Consolidated Balance Sheets as of September 30, 2011 and December 31, 2010	1
	Condensed, Consolidated Income Statements for the Three and Nine Months Ended September 30, 2011 and 2010	2
	Condensed, Consolidated Statements of Equity for the Nine Months Ended September 30, 2011 and 2010	3
	Condensed, Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2011 and 2010	4
	Notes to Condensed, Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	35
Part II.	Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 5.	Other Information	36
Item 6.	Exhibits	36
	Signature	37
	Exhibit Index	38

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Balance Sheets

(Unaudited)

(In thousands, except par value)

	September 30, 2011		December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	79,243	$	97,126
Trade accounts receivable, less allowance for uncollectible accounts of $14,661 and $13,801 at September 30, 2011 and December 31, 2010, respectively		53,445		49,224
Inventory		46,876		40,760
Prepaid expenses and other		23,203		21,138
Deferred income taxes		20,129		19,019
Prepaid income taxes		10,765		19,047
Total current assets		233,661		246,314
Property and equipment, net		361,451		331,687
Goodwill		1,254,061		1,092,480
Other intangible assets, net		94,072		46,986
Notes receivable, net		6,441		6,429
Deferred financing costs, net		5,711		6,700
Other		41,417		35,826
Total assets	$	1,996,814	$	1,766,422
Liabilities and Equity
Current liabilities:
Current portion of long-term debt	$	28,480	$	28,101
Accounts payable		34,178		31,970
Accrued payroll and related liabilities		46,594		35,754
Other accrued liabilities		45,179		45,769
Total current liabilities		154,431		141,594
Long-term debt, less current portion		598,918		498,935
Deferred income taxes		95,745		82,131
Other liabilities		26,247		28,478
Total liabilities		875,341		751,138
Commitments and contingencies
Redeemable noncontrolling interests		6,891		5,799
Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding		-		-
VCA Antech, Inc. stockholders’ equity:
Common stock, par value $0.001, 175,000 shares authorized, 86,662 and 86,179 shares outstanding as of September 30, 2011 and December 31, 2010, respectively		87		86
Additional paid-in capital		355,077		347,848
Retained earnings		748,873		650,253
Accumulated other comprehensive income		138		737
Total VCA Antech, Inc. stockholders’ equity		1,104,175		998,924
Noncontrolling interests		10,407		10,561
Total equity		1,114,582		1,009,485
Total liabilities and equity	$	1,996,814	$	1,766,422

The accompanying notes are an integral part of these condensed, consolidated financial statements.

1

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Income Statements

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenue	$	385,135		$	358,703		$	1,116,363		$	1,043,356
Direct costs		294,998			273,404			849,616			781,778
Gross profit		90,137			85,299			266,747			261,578
Selling, general and administrative expense		32,488			27,105			85,334			94,290
Net (gain) loss on sale of assets		(192	)		152			(43	)		163
Operating income		57,841			58,042			181,456			167,125
Interest expense, net		4,222			3,619			12,816			9,564
Debt retirement costs		2,764			2,550			2,764			2,550
Other expense (income)		8			(180	)		(1	)		(490	)
Income before provision for income taxes		50,847			52,053			165,877			155,501
Provision for income taxes		19,488			23,466			63,957			63,465
Net income		31,359			28,587			101,920			92,036
Net income attributable to noncontrolling interests		1,190			1,156			3,300			3,266
Net income attributable to VCA Antech, Inc	$	30,169		$	27,431		$	98,620		$	88,770
Basic earnings per share	$	0.35		$	0.32		$	1.14		$	1.03
Diluted earnings per share	$	0.35		$	0.32		$	1.13		$	1.02
Weighted-average shares outstanding for basic earnings per share		86,697			86,086			86,531			85,985
Weighted-average shares outstanding for diluted earnings per share		87,253			86,964			87,293			86,998

The accompanying notes are an integral part of these condensed, consolidated financial statements.

2

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Equity

(Unaudited)

(In thousands)

	Common Stock				Additional Paid-In			Retained		Accumulated Other Comprehensive			Noncontrolling
	Shares		Amount		Capital			Earnings		(Loss) Income			Interests			Total
Balances, December 31, 2009		85,584	$	86	$	335,114		$	540,010	$	(163	)	$	11,429		$	886,476
Net income (excludes $582 and $333 related to redeemable and mandatorily redeemable noncontrolling interests, respectively)		-		-		-			88,770		-			2,351			91,121
Foreign currency translation adjustment		-		-		-			-		103			-			103
Unrealized gain on foreign currency, net of tax		-		-		-			-		175			-			175
Unrealized loss on hedging instruments, net of tax		-		-		-			-		(1	)		-			(1	)
Losses on hedging instruments reclassified to income, net of tax		-		-		-			-		233			-			233
Formation of noncontrolling interests		-		-		-			-		-			3,169			3,169
Distribution to noncontrolling interests		-		-		-			-		-			(2,479	)		(2,479	)
Purchase of noncontrolling interests		-		-		-			-		-			(484	)		(484	)
Share-based compensation		-		-		7,490			-		-			-			7,490
Issuance of common stock under stock incentive plans		503		-		4,781			-		-			-			4,781
Stock repurchases		-		-		(2,292	)		-		-			-			(2,292	)
Excess tax benefit from stock options		-		-		370			-		-			-			370
Tax shortfall and other from stock options and awards		-		-		(568	)		-		-			-			(568	)
Balances, September 30, 2010		86,087	$	86	$	344,895		$	628,780	$	347		$	13,986		$	988,094
Balances, December 31, 2010		86,179	$	86	$	347,848		$	650,253	$	737		$	10,561		$	1,009,485
Net income (excludes $1,207 and $326 related to redeemable and mandatorily redeemable noncontrolling interests, respectively).		-		-		-			98,620		-			1,767			100,387
Foreign currency translation adjustment		-		-		-			-		(373	)		-			(373	)
Unrealized loss on foreign currency, net of tax		-		-		-			-		(226	)		-			(226	)
Distribution to noncontrolling interests		-		-		-			-		-			(1,046	)		(1,046	)
Purchase of noncontrolling interests		-		-		263			-		-			(875	)		(612	)
Share-based compensation		-		-		6,610			-		-			-			6,610
Issuance of common stock under stock incentive plans		483		1		2,595			-		-			-			2,596
Stock repurchases		-		-		(2,663	)		-		-			-			(2,663	)
Excess tax benefit from stock options		-		-		963			-		-			-			963
Tax shortfall and other from stock options and awards		-		-		(539	)		-		-			-			(539	)
Balances, September 30, 2011		86,662	$	87	$	355,077		$	748,873	$	138		$	10,407		$	1,114,582

The accompanying notes are an integral part of these condensed, consolidated financial statements.

3

VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Nine Months Ended September 30,
	2011			2010
Cash flows from operating activities:
Net income	$	101,920		$	92,036
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		41,386			33,387
Amortization of debt issue costs		1,169			461
Provision for uncollectible accounts		4,510			5,388
Debt retirement costs		2,764			2,550
Net (gain) loss on sale of assets		(43	)		163
Share-based compensation		6,610			7,490
Deferred income taxes		14,649			10,992
Excess tax benefit from exercise of stock options		(963	)		(370	)
Other		(489	)		(550	)
Changes in operating assets and liabilities:
Trade accounts receivable		(7,018	)		(7,533	)
Inventory, prepaid expense and other assets		(9,806	)		(1,754	)
Accounts payable and other accrued liabilities		(8,328	)		7,038
Accrued payroll and related liabilities		8,523			3,717
Income taxes		8,707			(9,545	)
Net cash provided by operating activities		163,591			143,470
Cash flows from investing activities:
Business acquisitions, net of cash acquired		(190,363	)		(44,126	)
Real estate acquired in connection with business acquisitions		(1,900	)		(5,834	)
Property and equipment additions		(43,275	)		(47,675	)
Proceeds from sale of assets		447			15
Other		(723	)		188
Net cash used in investing activities		(235,814	)		(97,432	)
Cash flows from financing activities:
Repayment of debt		(90,945	)		(548,560	)
Proceeds from issuance of long-term debt		150,000			500,000
Proceeds from revolving credit facility		50,000			-
Repayment of revolving credit facility		(50,000	)		-
Payment of financing costs		(2,944	)		(9,112	)
Distributions to noncontrolling interest partners		(1,959	)		(3,314	)
Proceeds from issuance of common stock under stock option plans		2,596			4,781
Excess tax benefit from exercise of stock options		963			370
Stock repurchases		(2,663	)		(2,292	)
Other		(345	)		(897	)
Net cash provided by (used in) financing activities		54,703			(59,024	)
Effect of currency exchange rate changes on cash and cash equivalents		(363	)		38
Decrease in cash and cash equivalents		(17,883	)		(12,948	)
Cash and cash equivalents at beginning of period		97,126			145,181
Cash and cash equivalents at end of period	$	79,243		$	132,233
Supplemental disclosures of cash flow information:
Interest paid	$	12,214		$	9,207
Income taxes paid	$	40,601		$	62,018
Supplemental schedule of noncash investing and financing activities:
Detail of acquisitions:
Fair value of assets acquired	$	241,688		$	104,251
Cash paid for acquisitions		(189,255	)		(42,827	)
Cash paid to bondholders/debt holders		(26,048	)		(29,532	)
Contingent consideration		(481	)		(259	)
Holdbacks		(800	)		-
Liabilities assumed	$	25,104		$	31,633

The accompanying notes are an integral part of these condensed, consolidated financial statements.

4

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements

September 30, 2011

(Unaudited)

1. Nature of Operations

Our company, VCA Antech, Inc. (“VCA”) is a Delaware corporation formed in 1986 and is based in Los Angeles, California. We are an animal healthcare company with the following strategic operating segments: animal hospitals (“Animal Hospital”), veterinary diagnostic laboratories (“Laboratory”), veterinary medical technology (“Medical Technology”) and veterinary support group (“Vetstreet”).

Our animal hospitals offer a full range of general medical and surgical services for companion animals. Our animal hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet-wellness programs, including health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care. At September 30, 2011, we operated 540 animal hospitals throughout 41 states and in Canada.

We operate a full-service veterinary diagnostic laboratory network serving all 50 states and certain areas in Canada. Our laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2011, we operated 52 laboratories of various sizes located strategically throughout the United States and Canada.

Our Medical Technology business sells digital radiography and ultrasound imaging equipment, provides education and training on the use of that equipment, provides consulting and mobile imaging services, and sells software and ancillary services to the veterinary market.

Our Vetstreet business provides online communications, professional education, marketing solutions and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a robust selection of products, information and services to the pet-owning community.

2. Basis of Presentation

Our accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements as permitted under applicable rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011. For further information, refer to our consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K.

Certain reclassifications have been made herein to 2010 amounts to conform to the current year presentation. In our condensed, consolidated balance sheet as of December 31, 2010, we corrected certain errors in presentation by reclassifying $5.8 million to temporary equity (mezzanine) from noncontrolling interests included in permanent equity related to partnership agreements that contain certain terms which may require us to purchase the partners’ equity based upon certain contingencies. As these agreements do not contain a mandatory redemption clause, the balances are now correctly classified in temporary equity (mezzanine). Additionally, we reclassified $506,000 from noncontrolling interests in permanent equity to other liabilities related to our mandatorily redeemable partnership interests. The change in classification of our redeemable noncontrolling interests also impacts our condensed, consolidated statement of equity for the nine months ended September 30, 2010, accordingly, certain amounts related to redeemable noncontrolling interests were reclassified from the noncontrolling interests column in the statement, see Note 13, Noncontrolling Interests, which presents a summary of the amounts reclassified.

During the quarter ended March 31, 2011, we corrected an error related to our deferred revenue and related deferred cost for certain equipment sales governed by recently revised accounting guidance related to multiple element arrangements. The correction resulted in the recognition of $4.0 million of previously deferred revenue and $3.8 million of previously deferred costs.

5

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

2. Basis of Presentation, continued

The preparation of our condensed, consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed, consolidated financial statements and notes thereto. Actual results could differ from those estimates.

3. Goodwill and Other Intangible Assets

Goodwill

The following table presents the changes in the carrying amount of our goodwill for the nine months ended September 30, 2011 (in thousands):

	Animal Hospital			Laboratory			All Other			Total
Balance as of December 31, 2010	$	965,999		$	96,818		$	29,663		$	1,092,480
Goodwill acquired		64,459			6			99,087			163,552
Other (1)		(1,807	)		(30	)		(134	)		(1,971	)
Balance as of September 30, 2011	$	1,028,651		$	96,794		$	128,616		$	1,254,061

⁽¹⁾  Other includes acquisition-price adjustments which consist primarily of an adjustment related to deferred taxes, buy- outs and foreign currency translation adjustments.

We had no accumulated impairment losses as of September 30, 2011.

Other Intangible Assets

Our amortizable intangible assets at September 30, 2011 and December 31, 2010 are as follows (in thousands):

	As of September 30, 2011							As of December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Noncontractual customer relationships	$	80,613	$	(18,297	)	$	62,316	$	48,686	$	(14,188	)	$	34,498
Covenants not-to-compete		12,990		(8,030	)		4,960		14,459		(8,311	)		6,148
Favorable lease asset		5,571		(3,076	)		2,495		5,486		(2,672	)		2,814
Trademarks		7,545		(1,463	)		6,082		3,749		(986	)		2,763
Contracts		3,500		(74	)		3,426		-		-			-
Technology		16,589		(1,852	)		14,737		2,189		(1,447	)		742
Client lists		84		(28	)		56		35		(14	)		21
Total	$	126,892	$	(32,820	)	$	94,072	$	74,604	$	(27,618	)	$	46,986

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VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

3. Goodwill and Other Intangible Assets, continued

The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Aggregate amortization expense	$	3,833	$	2,484	$	9,092	$	6,825

The estimated amortization expense related to intangible assets for the remainder of 2011 and each of the succeeding years thereafter as of September 30, 2011 is as follows (in thousands):

Remainder of 2011	$	4,403
2012		16,952
2013		14,680
2014		12,348
2015		10,492
Thereafter		35,197
Total	$	94,072

4. Acquisitions

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2011:

Animal Hospitals:
Animal Hospital acquisitions, excluding BrightHeart	10
Acquisitions, merged	(1	)
BrightHeart (1)	9
Sold, closed or merged	(6	)
Total	12
Laboratories:
Acquisitions	1
Created	1
Total	2

⁽¹⁾  BrightHeart Veterinary Centers (“BrightHeart) was acquired on July 11, 2011.

Animal Hospital and Laboratory Acquisitions, excluding BrightHeart

The following table summarizes the aggregate consideration, including acquisition costs, paid by us for our acquired animal hospitals and laboratories, excluding BrightHeart and the final allocation of the purchase price (in thousands):

7

VCA Antech, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

4. Acquisitions, continued

Consideration:
Cash	$	19,499
Holdback		800
Fair value of total consideration transferred	$	20,299
Allocation of the Purchase Price:
Tangible assets	$	446
Identifiable intangible assets		3,620
Goodwill (1)		16,233
Total	$	20,299

⁽¹⁾  We expect that $16.2 million, of the goodwill recorded for these acquisitions as of September 30, 2011 will be fully deductible for income tax purposes.

In addition to the purchase price listed above are cash payments made for real estate acquired in connection with our purchase of animal hospitals totaling $1.9 million for the nine months ended September 30, 2011.

BrightHeart Acquisition

On July 11, 2011, we acquired 100% of the membership interests of BrightHeart for approximately $50 million in cash. BrightHeart operates nine animal hospitals, eight of which focus on the delivery of specialty and emergency medicine. The acquisition will increase our level of market recognition in areas where we have an existing market presence. Our consolidated financial statements reflect the operating results of BrightHeart since July 11, 2011.

The following table summarizes the preliminary purchase price and the preliminary allocation of the purchase price (in thousands):

Consideration:
Cash	$	23,490
Cash paid to holders of debt		26,048
Contingent consideration		481
Fair value of total consideration transferred	$	50,019
Allocation of the Purchase Price:
Tangible assets	$	15,985
Identifiable intangible assets (1)		7,335
Goodwill (2)		47,431
Other liabilities assumed		(20,732	)
Total	$	50,019

⁽¹⁾  Identifiable intangible assets primarily include customer relationships. The weighted average amortization period for both the total identifiable intangible assets and the customer-related intangible assets is approximately five years.

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VCA Antech, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

4. Acquisitions, continued

⁽²⁾  We expect that all of the goodwill related to the BrightHeart acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2011, were approximately $851,000 and $1.1 million, respectively.

The preliminary purchase price is pending the finalization of the working capital calculation.

The preliminary purchase price allocation listed above is primarily pending the finalization of values related to deferred income taxes, capital leases and assumed liabilities. Our internal management review with respect to these items has not yet been completed. The final purchase price and the valuation of net assets acquired are expected to be completed as soon as practicable, but no later than one year from the date of acquisition. We believe that any adjustments would not be material to the consolidated financial statements and we expect this review to be completed by the end of the third quarter of 2012.

Other Acquisitions

MediMedia Animal Health, LLC (“Vetstreet”)

On August 9, 2011, we acquired 100% of the securities interests of Vetstreet, the nation’s largest provider of online communications, professional education and marketing solutions to the veterinary community. The acquisition of Vetstreet expands the breadth of our product offerings to the veterinary community and is expected to provide long-term synergies to our existing businesses. We acquired Vetstreet for a preliminary purchase price of $146.4 million, net of cash acquired. The following table summarizes the preliminary purchase price and allocation of the preliminary purchase price (in thousands):

Consideration:
Cash	$	146,420
Allocation of the Purchase Price:
Tangible assets	$	5,952
Identifiable intangible assets (1)		45,810
Goodwill (2)		99,087
Other liabilities assumed		(4,429	)
Total	$	146,420

⁽¹⁾  Identifiable intangible assets include customer relationships, technology, trademarks, non-compete agreements and contracts. The weighted average amortization period for the total identifiable intangible assets is approximately nine years, for the customer-related intangible assets approximately ten years, for the technology and trademarks approximately seven years, for the non-compete agreements approximately two years and for the contracts approximately eight years.

⁽²⁾  We expect that all of the goodwill related to the Vetstreet acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2011 were approximately $657,000 and $911,000, respectively.

The preliminary purchase price is pending the finalization of the working capital calculation, which at this time is under seller review.

The final purchase price allocation is pending the completion of the internal review of the final valuation. The provisional items pending finalization include, but are not limited to, accounts receivable, prepaid expenses, deferred income taxes, computer equipment, accounts payable and other accrued liabilities. The final purchase price and the valuation of the net assets acquired are expected to be completed as soon as practicable, but no later than one year from the date of acquisition. We believe that any adjustments would not be material to the consolidated financial statements and we expect this review to be completed by the end of the third quarter of 2012.

Vetstreet is reported within our “All Other” category in our segment disclosures combined with our Medical Technology operating segment.

9

VCA Antech, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

(Unaudited)

4. Acquisitions, continued

Pro Forma Information (unaudited)

The following unaudited pro forma financial information for the three and nine months ended September 30, 2011 and 2010 presents, (i) the actual results of operations of our 2011 acquisitions and (ii) the combined results of operations for our company and our 2011 acquisitions as if those acquisitions had been completed on January 1, 2010, the first day of the earliest period presented. The pro forma financial information considers principally (i) our company’s unaudited financial results, (ii) the unaudited historical financial results of our acquisitions, and (iii) select pro forma adjustments to the historical financial results of our acquisitions. Such pro forma adjustments represent principally estimates of (i) the impact of the hypothetical amortization of acquired intangible assets, (ii) the recognition of fair value adjustments relating to tangible assets, (iii) adjustments reflecting the new capital structure, including additional financing or repayments of debt as part of the acquisitions and (iv) the tax effects of the acquisitions and related adjustments as if those acquisitions had been completed on January 1, 2010. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition at the beginning of each year presented. In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of our company:

	Revenue		Net Income
(In thousands):	(Unaudited)
Actual from July 1, 2011 to September 30, 2011	$	19,318	$	1,108
2011 supplemental pro forma from July 1, 2011 to September 30, 2011 (1)	$	389,648	$	30,624
2010 supplemental pro forma from July 1, 2010 to September 30, 2010	$	383,333	$	27,639
Actual from January 1, 2011 to September 30, 2011	$	23,341	$	1,616
2011 supplemental pro forma from January 1, 2011 to September 30, 2011 (1)	$	1,173,830	$	99,611
2010 supplemental pro forma from January 1, 2010 to September 30, 2010 (1)	$	1,117,245	$	87,375

⁽¹⁾  The July 1, 2011 to September 30, 2011 and January 1, 2011 to September 30, 2011 supplemental pro forma net income was adjusted to exclude $1.5 million and $2.0 million, respectively of acquisition-related costs incurred in 2011. The January 1, 2010 to September 30, 2010 supplemental pro forma net income was adjusted to include the $2.0 million of year-to-date acquisition-related costs.

5. Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

	September 30, 2011		December 31, 2010
Deferred revenue	$	6,533	$	8,617
Accrued health insurance		5,594		4,970
Deferred rent		3,918		3,456
Accrued consulting fees		2,760		2,760
Holdbacks and earnouts		2,536		2,447
Customer deposits		2,517		2,966
Accrued lab service rebates		212		2,535
Other		21,109		18,018
	$	45,179	$	45,769

10

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

6. Long-Term Obligations

Senior Credit Facility

On August 16, 2011, we amended and restated our existing senior credit facility to allow for additional senior term notes in the amount of $100 million and an additional $25.0 million aggregate principal amount of revolving commitments. The funds borrowed from the additional senior term notes were used to repay in full, amounts borrowed in connection with the acquisition of Vetstreet on August 9, 2011. The terms of the amended and restated senior credit facility are discussed below in this footnote. In connection with the amendment we incurred $2.9 million in financing costs, of which approximately $865,000 were recognized as part of income from continuing operations and approximately $2.0 million were capitalized as deferred financing costs. In addition, we expensed $1.1 million of previously deferred financing costs associated with lenders who exited the syndicate on the amendment date.

The following table summarizes our long-term obligations at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011			December 31, 2010
Revolver	$	-		$	-
Senior term notes at LIBOR + 1.75% (1.99% at September 30, 2011)		581,250			-
Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010)		-			493,750
Other debt and capital lease obligations		46,148			33,286
Total debt obligations		627,398			527,036
Less - current portion		(28,480	)		(28,101	)
	$	598,918		$	498,935

Interest Rate. In general, borrowings under the senior term notes and the revolving credit facility bear interest, at our option, on either:

• the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or

• the adjusted Eurodollar rate (as defined below) plus a margin of 1.75% (Level II, see table below) per annum until the date of delivery of the compliance certificate and the financial statements for the period ending September 30, 2011, at which time the applicable margin will be determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	> 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and > 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and > 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo’s prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”

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VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

6. Long-Term Obligations, continued

Maturity and Principal Payments. The amended and restated senior term notes mature on August 19, 2016. Principal payments on the senior term notes are paid quarterly in the amount of $7.3 million for the first two years beginning on December 31, 2011, quarterly payments of $10.9 million for the two years following, and quarterly payments of $14.5 million for the three quarters prior to maturity at which time the remaining balance is due. The following table sets forth the remaining scheduled principal payments for our senior term notes (in thousands):

2011 (1)	$	7,266
2012		29,063
2013		32,695
2014		43,594
2015		47,227
Thereafter		421,405
Total	$	581,250

⁽¹⁾  Relates to the period from October 1, 2011 through December 31, 2011.

The revolving credit facility matures on August 19, 2016. Principal payments on the revolving credit facility are made at our discretion with the entire unpaid amount due at maturity.

Guarantees and Security. We and each of our wholly-owned subsidiaries guarantee the outstanding debt under the senior credit facility. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of our consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar equity interests, of our wholly-owned subsidiaries.

Debt Covenants. The senior credit facility contains certain financial covenants pertaining to fixed charge coverage and leverage ratios. In addition, the senior credit facility has restrictions pertaining to capital expenditures, acquisitions and the payment of cash dividends on all classes of stock. We believe the most restrictive covenant is the fixed charge coverage ratio. At September 30, 2011 we had a fixed charge coverage ratio of 1.75 to 1.00, which was in compliance with the required ratio of no less than 1.20 to 1.00.

7. Fair Value Measurements

Fair Value of Financial Instruments

The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to their short-term nature, fair value approximates carrying value.

Long-Term Debt. The fair value of debt at September 30, 2011 and December 31, 2010 is based upon the ask price quoted from an external source, which is considered a Level 2 input.

12

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

7. Fair Value Measurements, continued

The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):

	As of September 30, 2011				As of December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	581,250	$	579,797	$	493,750	$	496,219

At September 30, 2011 and December 31, 2010, we did not have any material applicable nonrecurring measurements of nonfinancial assets and nonfinancial liabilities.

8. Share-Based Compensation

Stock Option Activity

A summary of our stock option activity for the nine months ended September 30, 2011 is as follows (in thousands):

	Stock      Options			Weighted- Average Exercise Price
Outstanding at December 31, 2010		3,323		$	16.45
Granted		894		$	15.98
Exercised		(262	)	$	9.90
Canceled		(3	)	$	17.04
Outstanding at September 30, 2011		3,952		$	16.78
Exercisable at September 30, 2011		2,719		$	17.00
Vested and expected to vest at September 30, 2011		3,896		$	16.78

There were 894,000 stock options granted during the nine months ended September 30, 2011, which had an estimated weighted- average grant date fair value of approximately $6.00. The aggregate intrinsic value of our stock options exercised during the three and nine months ended September 30, 2011 was $194,000 and $3.2 million, respectively, and the actual tax benefit realized on options exercised during these periods was $76,000 and $1.2 million, respectively.

Calculation of Fair Value

The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize the fair value of our options on a straight-line basis over the requisite service period. The following assumptions were used to determine the preliminary fair value of those options granted during the nine months ended September 30, 2011:

Expected volatility (1)	41.6%
Weighted-average volatility (1)	42.0%
Expected dividends	0.0%
Expected term	4.85 years
Risk-free rate (2)	0.94%

⁽¹⁾  We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

13

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

8. Share-Based Compensation, continued

⁽²⁾  The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

At September 30, 2011 there was $5.7 million of total unrecognized compensation cost related to our stock options. This cost is expected to be recognized over a weighted-average period of 3.7 years.

The compensation cost that has been charged against income for stock options for the three months ended September 30, 2011 and 2010 was $347,000 and $414,000, respectively. The corresponding income tax benefit recognized was $136,000 and $161,000 for the three months ended September 30, 2011 and 2010, respectively.

The compensation cost that has been charged against income for stock options for the nine months ended September 30, 2011 and 2010 was $1.0 million and $2.2 million, respectively. The corresponding income tax benefit recognized was $407,000 and $872,000 for the nine months ended September 30, 2011 and 2010, respectively.

Nonvested Stock Activity

During the nine months ended September 30, 2011 we granted 1,225,046 shares of nonvested common stock, 1,130,000 of which were granted to certain of our executives and contain performance conditions. The performance-based awards provide that the number of shares that will ultimately vest will be between 0% and 100% of the total shares granted, based on the attainment of certain performance targets. Assuming continued service through each vesting date, these awards will vest in four equal annual installments beginning June 2012 through June 2015.

Total compensation cost charged against income related to nonvested stock awards was $3.7 million and $1.2 million for the three months ended September 30, 2011 and 2010, respectively. The corresponding income tax benefit recognized in the income statement was $1.5 million and $476,000 for the three months ended September 30, 2011 and 2010, respectively.

Total compensation cost charged against income related to nonvested stock awards was $5.6 million and $5.2 million for the nine months ended September 30, 2011 and 2010, respectively. The corresponding income tax benefit recognized in the income statement was $2.2 million and $2.0 million for the nine months ended September 30, 2011 and 2010, respectively.

At September 30, 2011, there was $25.8 million of unrecognized compensation cost related to these nonvested shares, which will be recognized over a weighted-average period of 3.5 years. A summary of our nonvested stock activity for the nine months ended September 30, 2011 is as follows:

	Shares			Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2010		686,511		$	26.16
Granted		1,225,046		$	20.00
Vested		(334,370	)	$	28.84
Forfeited/Canceled		(2,275	)	$	30.35
Outstanding at September 30, 2011		1,574,912		$	20.80

14

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

9. Calculation of Earnings per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to VCA Antech, Inc. by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Net income attributable to VCA Antech, Inc	$	30,169	$	27,431	$	98,620	$	88,770
Weighted-average common shares outstanding:
Basic		86,697		86,086		86,531		85,985
Effect of dilutive potential common shares:
Stock options		445		632		593		812
Nonvested shares		111		246		169		201
Diluted		87,253		86,964		87,293		86,998
Basic earnings per share	$	0.35	$	0.32	$	1.14	$	1.03
Diluted earnings per share	$	0.35	$	0.32	$	1.13	$	1.02

For the three months ended September 30, 2011 and 2010, potential common shares of 2,104,547 and 1,162,389, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect. For the nine months ended September 30, 2011 and 2010, potential common shares of 1,139,567 and 13,919, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

10. Comprehensive Income

Total comprehensive income consists of net income and the other comprehensive income during the three and nine months ended September 30, 2011 and 2010. The following table provides a summary of comprehensive income (in thousands):

15

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

10. Comprehensive Income, continued

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2011			2010			2011			2010
Net income(1)	$	31,359		$	28,587		$	101,920		$	92,036
Other comprehensive income:
Foreign currency translation adjustments		(669	)		172			(373	)		103
Unrealized (loss) gain on foreign currency		(608	)		364			(371	)		287
Tax benefit (expense)		237			(142	)		145			(112	)
Unrealized loss on hedging instruments		-			-			-			(2	)
Tax benefit		-			-			-			1
Losses on hedging instruments reclassified to income		-			-			-			382
Tax benefit		-			-			-			(149	)
Other comprehensive (loss) income		(1,040	)		394			(599	)		510
Total comprehensive income		30,319			28,981			101,321			92,546
Comprehensive income attributable to noncontrolling interests(1)		1,190			1,156			3,300			3,266
Comprehensive income attributable to VCA Antech, Inc	$	29,129		$	27,825		$	98,021		$	89,280

⁽¹⁾ Includes $1.5 million and $915,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively, related to redeemable and mandatorily redeemable noncontrolling interests.

11. Lines of Business

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments included in “All Other” in the following tables are our Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet business, which provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a selection of products, information and services to the pet-owning community. These operating segments do not meet the quantitative or qualitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our other segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2010 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

16

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

11. Lines of Business, continued

The following is a summary of certain financial data for each of our segments (in thousands):

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344	$	-		$	-		$	385,135
Intercompany revenue		-			11,397		4,538		-			(15,935	)		-
Total revenue		303,203			78,985		18,882		-			(15,935	)		385,135
Direct costs		251,613			43,657		14,149		-			(14,421	)		294,998
Gross profit		51,590			35,328		4,733		-			(1,514	)		90,137
Selling, general and administrative expense		6,126			7,088		4,669		14,605			-			32,488
Net (gain) loss on sale and disposal of assets		(213	)		1		20		-			-			(192	)
Operating income (loss)	$	45,677		$	28,239	$	44	$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606	$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986	$	1,338		$	(629	)	$	14,841
Three Months Ended September 30, 2010
External revenue	$	276,739		$	67,872	$	14,092	$	-		$	-		$	358,703
Intercompany revenue		-			9,420		3,314		-			(12,734	)		-
Total revenue		276,739			77,292		17,406		-			(12,734	)		358,703
Direct costs		230,113			42,579		12,152		-			(11,440	)		273,404
Gross profit		46,626			34,713		5,254		-			(1,294	)		85,299
Selling, general and administrative expense		5,599			6,804		3,731		10,971			-			27,105
Net loss on sale and disposal of assets		114			20		17		1			-			152
Operating income (loss)	$	40,913		$	27,889	$	1,506	$	(10,972	)	$	(1,294	)	$	58,042
Depreciation and amortization	$	8,258		$	2,464	$	606	$	616		$	(263	)	$	11,681
Property and equipment additions	$	16,969		$	1,599	$	428	$	1,394		$	(640	)	$	19,750

17

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

11. Lines of Business, continued

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639	$	42,248	$	-		$	-		$	1,116,363
Intercompany revenue		-			33,280		11,939		-			(45,219	)		-
Total revenue		864,476			242,919		54,187		-			(45,219	)		1,116,363
Direct costs		720,393			130,192		40,206		-			(41,175	)		849,616
Gross profit		144,083			112,727		13,981		-			(4,044	)		266,747
Selling, general and administrative expense		18,253			20,577		11,809		34,695			-			85,334
Net (gain) loss on sale and disposal of assets		(84	)		19		22		-			-			(43	)
Operating income (loss)	$	125,914		$	92,131	$	2,150	$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542	$	2,931	$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049	$	3,003	$	3,923		$	(1,532	)	$	43,275
Nine Months Ended September 30, 2010
External revenue	$	791,002		$	210,531	$	41,823	$	-		$	-		$	1,043,356
Intercompany revenue		-			27,913		5,982		-			(33,895	)		-
Total revenue		791,002			238,444		47,805		-			(33,895	)		1,043,356
Direct costs		653,671			126,647		33,373		-			(31,913	)		781,778
Gross profit		137,331			111,797		14,432		-			(1,982	)		261,578
Selling, general and administrative expense		16,859			19,485		10,650		47,296			-			94,290
Net loss on sale and disposal of assets		63			21		71		8			-			163
Operating income (loss)	$	120,409		$	92,291	$	3,711	$	(47,304	)	$	(1,982	)	$	167,125
Depreciation and amortization	$	23,240		$	7,273	$	1,812	$	1,815		$	(753	)	$	33,387
Property and equipment additions	$	39,946		$	3,937	$	634	$	4,579		$	(1,421	)	$	47,675
At September 30, 2011
Total assets	$	1,417,062		$	229,252	$	220,964	$	149,801		$	(20,265	)	$	1,996,814
At December 31, 2010
Total assets	$	1,320,619		$	215,483	$	69,082	$	175,297		$	(14,059	)	$	1,766,422

12. Commitments and Contingencies

We have certain commitments, including operating leases and acquisition agreements. These items are discussed in detail in our consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K. We also have contingencies as follows:

a. Earn-Out Payments

We have contractual arrangements in connection with certain acquisitions that were accounted for under previous business combinations accounting guidance, whereby additional cash may be paid to former owners of acquired companies upon attainment of specified financial criteria as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria are attained we will be obligated to pay an additional $1.3 million. Under the current business combination accounting guidance contingent consideration, such as earn-out liabilities, are recognized as part of the consideration transferred on the acquisition date and a corresponding liability is recorded based on the fair value of the liability if the fair value is known or determinable. The changes in fair value are recognized in earnings where applicable at each reporting period.

18

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

12. Commitments and Contingencies, continued

b. Other Contingencies

We have certain contingent liabilities resulting from litigation and claims incident to the ordinary course of our business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

13. Noncontrolling Interests

We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our partnerships in our consolidated financial statements because our ownership interest in these partnerships is equal to or greater than 50.1% and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our partners’ percentage ownership of the partnerships’ income. We also record changes in the redemption value of our redeemable noncontrolling interests in net income attributable to noncontrolling interests in our condensed, consolidated income statements. We reflect our noncontrolling partners’ cumulative share in the equity of the respective partnerships as either noncontrolling interests in equity, mandatorily redeemable noncontrolling interests in other liabilities or redeemable noncontrolling interests in temporary equity (mezzanine).

a. Mandatorily Redeemable Noncontrolling Interests

The terms of some of our partnership agreements require us to purchase the partner’s equity in the partnership in the event of the partner’s death. We report these redeemable noncontrolling interests at their estimated redemption value and classify them as liabilities due to the certainty of the related event. We recognize redemption value changes in the obligation in interest expense. At September 30, 2011 and December 31, 2010, these liabilities were $3.1 million and $1.7 million, respectively, and are included in other liabilities in our consolidated balance sheets.

b. Redeemable Noncontrolling Interests

We also enter into partnership agreements whereby the minority partner is issued certain “put” rights. These rights are normally exercisable at the sole discretion of the minority partner. We report these redeemable noncontrolling interests at their estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the obligation in net income attributable to noncontrolling interests.

The following table provides a summary of redeemable noncontrolling interests (in thousands):

19

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

13. Noncontrolling Interests, continued

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2009			$	4,369
Noncontrolling interest	$	582
Redemption value change		-		582
Formation of noncontrolling interests				1,390
Distribution to noncontrolling interests				(515	)
Balance as of September 30, 2010			$	5,826
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change		547		1,207
Formation of noncontrolling interests				510
Distribution to noncontrolling interests				(625	)
Balance as of September 30, 2011			$	6,891

14. Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) amended the accounting guidance for Fair Value Measurement to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS (International Financial Reporting Standards). The amendments explain how to measure fair value, however they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption of this new guidance is not expected to have a significant impact on our consolidated financial statements.

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder’s equity and requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The statement of other comprehensive income should immediately follow the statement of net income. Regardless of which option is chosen it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects; and does not affect how earnings per share is calculated or presented.

The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted. The adoption of the new disclosure requirements will have no effect on our consolidated financial statements other than the changes to presentation outlined.

20

VCA Antech, Inc. and Subsidiaries

Notes to Condensed, Consolidated Financial Statements (Continued)

(Unaudited)

14. Recent Accounting Pronouncements, continued

In September 2011, the FASB amended the accounting guidance on Intangibles—Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit’s fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The adoption of the amended goodwill impairment testing procedures will not significantly impact our consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	Page
Introduction	23
Executive Overview	23
Critical Accounting Policies	25
Consolidated Results of Operations	25
Segment Results	26
Liquidity and Capital Resources	30

22

Introduction

The following discussion should be read in conjunction with our condensed, consolidated financial statements provided under Part I, Item I of this Quarterly report on Form 10-Q. We have included herein statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We generally identify forward-looking statements in this report using words like “believe,” “intend,” “expect,” “estimate,” “may,” “plan,” “should plan,” “project,” “contemplate,” “anticipate,” “predict,” “potential,” “continue,” or similar expressions. You may find some of these statements below and elsewhere in this report. These forward-looking statements are not historical facts and are inherently uncertain and outside of our control. Any or all of our forward-looking statements in this report may turn out to be wrong. They can be affected by inaccurate assumptions we might make, or by known or unknown risks and uncertainties. Many factors mentioned in our discussion in this report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. Factors that may cause our plans, expectations, future financial condition and results to change are described throughout this report and in our Annual Report on Form 10-K, particularly in “Risk Factors,” Part I, Item 1A of that report.

The forward-looking information set forth in this Quarterly Report on Form 10-Q is as of November 9, 2011, and we undertake no duty to update this information unless required by law. Shareholders and prospective investors can find information filed with the SEC after November 9, 2011 at our website at http://investor.vcaantech.com or at the SEC’s website at www.sec.gov.

We are a leading national animal healthcare company. We provide veterinary services and diagnostic testing to support veterinary care. We sell diagnostic imaging equipment, other medical technology products and related services to veterinarians, as well as, provide them with online communications, professional education, marketing solutions and an ecommerce platform. We also provide products, information and services to the pet owning community through Vetstreet.com. Our reportable segments are as follows:

• Our Animal Hospital segment operates the largest network of freestanding, full-service animal hospitals in the nation. Our animal hospitals offer a full range of general medical and surgical services for companion animals. We treat diseases and injuries, offer pharmaceutical and retail products and perform a variety of pet wellness programs, including health examinations, diagnostic testing, routine vaccinations, spaying, neutering and dental care. At September 30, 2011, our animal hospital network consisted of 540 animal hospitals in 41 states and in Canada.

• Our Laboratory segment operates the largest network of veterinary diagnostic laboratories in the nation. Our laboratories provide sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2011, our laboratory network consisted of 52 laboratories serving all 50 states and certain areas in Canada.

The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of flea infestation, heartworm and ticks, and the number of daylight hours.

Our revenue has been adversely impacted by the current economic recession and competition. We are unable to forecast the timing or degree of any economic recovery. Further, trends in the general economy may not be reflected in our business at the same time or in the same degree as in the general economy. The timing and degree of any economic recovery, and its impact on our business, are among the important factors that could cause our actual results to differ from our forward-looking information.

Executive Overview

During the three and nine months ended September 30, 2011, we achieved an increase in consolidated revenue primarily from acquired animal hospitals. Our Animal Hospital same-store revenue, adjusted for one less business day, increased 1.0% and decreased 1.2% for the three and nine months ended September 30, 2011, respectively. Our Laboratory internal revenue increased 2.2% and 1.9% for the three and nine months ended September 30, 2011, respectively. Our acquired animal hospitals and continued cost control measures resulted in an increase in our operating income. Improved operating results in our Animal Hospital and Laboratory business segments was largely offset by increased selling, general and administrative expenses resulting in essentially flat operating income in comparison to the prior year quarter.

23

Financing Transaction

On August 16, 2011 we amended and restated our senior credit facility. The amended and restated senior credit facility provides for $100 million of additional senior term notes and a $25 million increase to our revolving credit facility. Both the senior term notes and the revolving credit facility are priced at LIBOR plus 175 basis points, a 50 basis point decrease from our existing credit facility, see Note 6, Long-Term Obligations, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion of applicable interest rates on our new debt. In conjunction with these refinancing transactions, we incurred $2.9 million in debt financing costs, of which approximately $865,000 were recognized as part of income from continuing operations for the three and nine months ended September 30, 2011, and approximately $2.0 million were capitalized as deferred financing costs which will be amortized over the amended term of the credit facility. In addition, we expensed $1.1 million of previously deferred financing costs associated with lenders who exited the syndicate on the amendment date.

Acquisitions

Our growth strategy includes the acquisition of independent animal hospitals. We currently anticipate that we will acquire $30 million to $40 million of annualized Animal Hospital revenue in 2011. We also evaluate the acquisition of animal hospital chains and laboratories, or related businesses if favorable opportunities are presented. The following table summarizes the changes in the number of facilities operated by our Animal Hospital and Laboratory segments during the nine months ended September 30, 2011:

Animal Hospitals:
Beginning of period	528
Acquisitions, excluding BrightHeart	10
Acquisitions, merged	(1	)
BrightHeart	9
Sold, closed or merged	(6	)
End of period	540
Laboratories:
Beginning of period	50
Acquisitions	1
Created	1
End of period	52

BrightHeart Veterinary Centers (“BrightHeart”) Acquisition

On July 11, 2011, we acquired BrightHeart for approximately $50.0 million in cash. BrightHeart operates nine animal hospitals, eight of which focus on the delivery of specialty and emergency medicine. We expect the acquisition will increase our level of market recognition in areas where we have an existing market presence. At the time of the acquisition BrightHeart had annualized revenue of approximately $53.0 million. Our consolidated financial statements reflect the operating results of BrightHeart since July 11, 2011.

Other Acquisitions

MediMedia Animal Health, LLC (“Vetstreet”)

On August 9, 2011, we acquired Vetstreet, the nation’s largest provider of online communications, professional education and marketing solutions to the veterinary community. The acquisition of Vetstreet expands the breadth of our product offerings to the veterinary community and provides long-term synergies to our existing businesses. At the time of the acquisition Vetstreet had annualized revenue of approximately $23.0 million. We acquired Vetstreet for a preliminary purchase price of $146 million. Our consolidated financial statements reflect the operating results of Vetstreet since August 9, 2011.

24

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), which require management to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that management believes to be reasonable. Actual results may differ from those estimates. Critical accounting policies represent the areas where more significant judgments and estimates are used in the preparation of our consolidated financial statements. A discussion of such critical accounting policies, which include revenue recognition, valuation of goodwill and other intangible assets, income taxes, and self-insured liabilities can be found in our 2010 Annual Report on Form 10-K. There have been no material changes to the policies noted above as of this quarterly report on Form 10-Q for the period ended September 30, 2011.

Consolidated Results of Operations

The following table sets forth components of our condensed, consolidated income statements expressed as a percentage of revenue:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenue:
Animal Hospital		78.7	%		77.1	%		77.4	%		75.8	%
Laboratory		20.5			21.5			21.8			22.9
All Other		4.9			4.9			4.9			4.6
Intercompany		(4.1	)		(3.5	)		(4.1	)		(3.3	)
Total revenue		100.0			100.0			100.0			100.0
Direct costs		76.6			76.2			76.1			74.9
Gross profit		23.4			23.8			23.9			25.1
Selling, general and administrative expense		8.4			7.6			7.6			9.0
Net loss on sale of assets		-			-			-			0.1
Operating income		15.0			16.2			16.3			16.0
Interest expense, net		1.1			1.0			1.2			0.9
Debt retirement costs		0.7			0.7			0.2			0.2
Income before provision for income taxes		13.2			14.5			14.9			14.9
Provision for income taxes		5.1			6.5			5.8			6.1
Net income		8.1			8.0			9.1			8.8
Net income attributable to noncontrolling interests		0.3			0.4			0.3			0.3
Net income attributable to VCA Antech, Inc		7.8	%		7.6	%		8.8	%		8.5	%

Revenue

The following table summarizes our revenue (in thousands, except percentages):

	Three Months Ended September 30,															Nine Months Ended September 30,
	2011						2010									2011						2010
	$			% of Total			$			% of Total			% Change			$			% of Total			$			% of Total			% Change
Animal Hospital	$	303,203			78.7	%	$	276,739			77.1	%		9.6	%	$	864,476			77.4	%	$	791,002			75.8	%		9.3	%
Laboratory		78,985			20.5	%		77,292			21.5	%		2.2	%		242,919			21.8	%		238,444			22.9	%		1.9	%
All Other		18,882			4.9	%		17,406			4.9	%		8.5	%		54,187			4.9	%		47,805			4.6	%		13.4	%
Intercompany		(15,935	)		(4.1	)%		(12,734	)		(3.5	)%		25.1	%		(45,219	)		(4.1	)%		(33,895	)		(3.3	)%		33.4	%
Total revenue	$	385,135			100.0	%	$	358,703			100.0	%		7.4	%	$	1,116,363			100.0	%	$	1,043,356			100.0	%		7.0	%

25

Consolidated revenue increased $26.4 million for the three months ended September 30, 2011 and $73.0 million for the nine months ended September 30, 2011 as compared to the same periods in the prior year. The increase was primarily attributable to revenue from acquired animal hospitals and an increase in our laboratory revenue due to internal growth.

Gross Profit

The following table summarizes our gross profit in both dollars and as a percentage of applicable revenue, or gross margin (in thousands, except percentages):

	Three Months Ended September 30,															Nine Months Ended September 30,
	2011						2010									2011						2010
	$			Gross Margin			$			Gross Margin			% Change			$			Gross Margin			$			Gross Margin			% Change
Animal Hospital	$	51,590			17.0	%	$	46,626			16.8	%		10.6	%	$	144,083			16.7	%	$	137,331			17.4	%		4.9	%
Laboratory		35,328			44.7	%		34,713			44.9	%		1.8	%		112,727			46.4	%		111,797			46.9	%		0.8	%
All Other		4,733			25.1	%		5,254			30.2	%		(9.9	)%		13,981			25.8	%		14,432			30.2	%		(3.1	)%
Intercompany		(1,514	)					(1,294	)								(4,044	)					(1,982	)
Total gross profit	$	90,137			23.4	%	$	85,299			23.8	%		5.7	%	$	266,747			23.9	%	$	261,578			25.1	%		2.0	%

Consolidated gross profit increased $4.8 million for the three months ended September 30, 2011 and $5.2 million for the nine months ended September 30, 2011 as compared to the same periods in the prior year. The increase was primarily due to gross profit from our acquired animal hospitals and to a lesser extent internal revenue growth at our Laboratory segment.

Segment Results

Animal Hospital Segment

The following table summarizes revenue, gross profit and gross margin for our Animal Hospital segment (in thousands, except percentages):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2011			2010			% Change			2011			2010			% Change
Revenue	$	303,203		$	276,739			9.6	%	$	864,476		$	791,002			9.3	%
Gross profit	$	51,590		$	46,626			10.6	%	$	144,083		$	137,331			4.9	%
Gross margin		17.0	%		16.8	%					16.7	%		17.4	%

Animal Hospital revenue increased $26.5 million for the three months ended September 30, 2011 and $73.5 million for the nine months ended September 30, 2011, as compared to the same periods in the prior year. The components of the increases are summarized in the following table (in thousands, except percentages and average revenue per order):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2011		2010		% Change			2011		2010		% Change
Same-store facilities:
Orders (1)		1,709		1,754		(2.6	)%		4,688		4,883		(4.0	)%
Average revenue per order (2)	$	159.04	$	153.35		3.7	%	$	160.01	$	155.44		2.9	%
Same-store revenue (1)	$	271,830	$	269,007		1.0	%	$	750,155	$	758,974		(1.2	)%
Business day adjustment (3)		-		2,383					-		1,690
Net acquired revenue (4)		31,373		5,349					114,321		30,338
Total $		303,203	$	276,739		9.6	%	$	864,476	$	791,002		9.3	%

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⁽¹⁾ Same-store revenue and orders were calculated using Animal Hospital operating results, adjusted to exclude the operating results for newly acquired animal hospitals that we did not own as of the beginning of the comparable period in the prior year. Same-store revenue also includes revenue generated by customers referred from our relocated or combined animal hospitals, including those merged upon acquisition.

⁽²⁾ Computed by dividing same-store revenue by same-store orders. The average revenue per order may not calculate exactly due to rounding.

⁽³⁾ The 2010 business day adjustment reflects the impact of one fewer business day in 2011 as compared to 2010.

⁽⁴⁾ Net acquired revenue represents the revenue from those animal hospitals acquired, net of revenue from those animal hospitals sold or closed, on or after the beginning of the comparable period, which was July 1, 2010 for the three month analysis and January 1, 2010 for the nine month analysis. Fluctuations in net acquired revenue occur due to the volume, size, and timing of acquisitions and dispositions during the periods from this date through the end of the applicable period.

We believe that factors contributing to the continued decline in our volume of same-store orders during the three and nine months ended September 30, 2011 include the continued impact of the current economic environment and the wide availability of many pet-related products, traditionally sold in our animal hospitals, in retail stores and other distribution channels such as the Internet.

In addition, our business strategy is to place a greater emphasis on comprehensive wellness visits and advanced medical procedures, which typically generate higher priced orders. The migration of lower priced orders from our animal hospitals to other distribution channels mentioned above and our emphasis on comprehensive wellness visits has over the past several years resulted in a decrease in lower priced orders and an increase in higher priced orders. However, this trend did not continue during the three months ended September 30, 2011 when we experienced a decrease in the number of both lower and higher priced orders, which we believe is primarily a consequence of current economic conditions in the United States, and the impact of changes in our overall business environment on the mix of tests performed.

Price increases contributed to the increase in the average revenue per order. Prices at each of our animal hospitals are reviewed regularly and adjustments are made based on market considerations, demographics and our costs. Price increases are typically implemented in February of each year. Price increases in 2011 approximated 3% to 4% on most services at the majority of our animal hospitals.

Animal Hospital gross profit is calculated as Animal Hospital revenue less Animal Hospital direct costs. Animal Hospital direct costs are comprised of all costs of services and products at the animal hospitals, including, but not limited to, salaries of veterinarians, technicians and all other animal hospital-based personnel, facilities rent, occupancy costs, supply costs, depreciation and amortization, certain marketing and promotional expense, and costs of goods sold associated with the retail sales of pet food and pet supplies.

Our combined Animal Hospital gross margin increased to 17.0% for the three months ended September 30, 2011 and decreased to 16.7% for the nine months ended September 30, 2011, as compared to 16.8% and 17.4% for the three and nine months ended September 30 2010, respectively. Our same-store gross margin increased to 17.1% for the three months ended September 30, 2011 and decreased to 16.9% for the nine months ended September 30, 2011, as compared to 17.0% and 17.6% for the respective prior year periods.

The increase in same-store gross margin, for the three months ended September 30, 2011, was primarily due to cost control measures offset by increased depreciation and amortization. The decrease in same-store gross margin, for the nine months ended September 30, 2011 was primarily due to the overall decline in same-store revenue, and the impact of increased depreciation and amortization. The combined Animal Hospital gross margin was further impacted by slightly lower gross margin from our acquired animal hospitals.

Over the last several years we have acquired a significant number of animal hospitals. Many of these newly acquired animal hospitals have a lower gross margin at the time of acquisition than our same-store facilities. Subsequently, we have improved the gross margin at our acquired animal hospitals, in the aggregate, by reducing costs and/or increasing operating leverage.

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Laboratory Segment

The following table summarizes revenue and gross profit for our Laboratory segment (in thousands, except percentages):

	Three Months Ended September 30,									Nine Months Ended September 30,
	2011			2010			% Change			2011			2010			% Change
Revenue	$	78,985		$	77,292			2.2	%	$	242,919		$	238,444			1.9	%
Gross profit	$	35,328		$	34,713			1.8	%	$	112,727		$	111,797			0.8	%
Gross margin		44.7	%		44.9	%					46.4	%		46.9	%

Laboratory revenue increased $1.7 million for the three months ended September 30, 2011 and increased $4.5 million for the nine months ended September 30, 2011, as compared to the same periods in the prior year. The components of the changes in Laboratory revenue are detailed below (in thousands, except percentages and average revenue per requisition):

	Three Months Ended September 30,							Nine Months Ended September 30,
	2011		2010		% Change			2011		2010		% Change
Internal growth:
Number of requisitions (1)		3,242		3,235		0.2	%		9,998		10,022		(0.2	)%
Average revenue per requisition (2)	$	24.36	$	23.89		2.0	%	$	24.29	$	23.79		2.1	%
Total internal revenue (1)	$	78,964	$	77,292		2.2	%	$	242,859	$	238,444		1.9	%
Acquired revenue (3)		21		-					60		-
Total	$	78,985	$	77,292		2.2	%	$	242,919	$	238,444		1.9	%

⁽¹⁾ Internal revenue and requisitions were calculated using Laboratory operating results, adjusted to exclude the operating results of acquired laboratories that we did not own as of the beginning of the comparable period in the prior year, and adjusted for the impact resulting from any differences in the number of billing days in comparable periods, if applicable.

⁽²⁾ Computed by dividing internal revenue by the number of requisitions.

⁽³⁾ Acquired revenue represents the current year period revenue recognized from our acquired laboratories that we did not own as of the beginning of the comparable period in the prior year.

The increase in Laboratory revenue, for the three and nine months ended September 30, 2011, was due to an increase in internal revenue primarily attributable to an increase in average revenue per requisition. In prior years, requisitions from internal growth have been driven by an ongoing trend in veterinary medicine to focus on (i) the importance of laboratory diagnostic testing in the diagnosis, (ii) early detection and treatment of diseases, and (iii) the migration of certain tests to outside laboratories that have historically been performed in animal hospitals. While these factors historically have resulted in significant increases in internal requisitions, the economic environment and increased competition continue to impact requisitions in the current year.

The average revenue per requisition increased slightly for the three and nine months ended September 30, 2011, as compared to prior periods, due to price increases that occurred in February 2011. We estimate that the price increases yielded a 3% to 4% impact on the average price per requisition. The average revenue per requisition was also impacted by various factors including changes in the mix, performing lower-priced tests historically performed at the animal hospitals and a decrease in higher-priced tests as a result of the current economic environment.

Laboratory gross profit is calculated as Laboratory revenue less Laboratory direct costs. Laboratory direct costs comprises all costs of laboratory services, including but not limited to, salaries of veterinarians, specialists, technicians and other laboratory-based personnel, transportation and delivery costs, facilities rent, occupancy costs, depreciation and amortization and supply costs.

Our Laboratory gross margin decreased to 44.7% and 46.4% for the three and nine months ended September 30, 2011, respectively, as compared to 44.9% and 46.9% in the prior year periods. The decrease in gross margin was primarily due to increased transportation costs.

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Intercompany Revenue

Laboratory revenue for the three and nine months ended September 30, 2011, included intercompany revenue of $11.4 million and $33.3 million, respectively, generated by providing laboratory services to our animal hospitals. For purposes of reviewing the operating performance of our segments, all intercompany transactions are accounted for as if the transaction was with an independent third party at current market prices. For financial reporting purposes, intercompany transactions are eliminated as part of our consolidation.

Selling, General and Administrative Expense

The following table summarizes our selling, general and administrative expense (“SG&A”) in both dollars and as a percentage of applicable revenue (in thousands, except percentages):

	Three Months Ended September 30,										Nine Months Ended September 30,
	2011				2010						2011				2010
	$		% of Revenue		$		% of Revenue		% Change		$		% of Revenue		$		% of Revenue		% Change
Animal Hospital	$	6,126		2.0%	$	5,599		2.0%		9.4%	$	18,253		2.1%	$	16,859		2.1%		8.3%
Laboratory		7,088		9.0%		6,804		8.8%		4.2%		20,577		8.5%		19,485		8.2%		5.6%
All Other		4,669		24.7%		3,731		21.4%		25.1%		11,809		21.8%		10,650		22.3%		10.9%
Corporate		14,605		3.8%		10,971		3.1%		33.1%		34,695		3.1%		47,296		4.5%		(26.6)%
Total SG&A	$	32,488		8.4%	$	27,105		7.6%		19.9%	$	85,334		7.6%	$	94,290		9.0%		(9.5)%

Consolidated SG&A increased by $5.4 million for the three months ended September 30, 2011, primarily due to increased Corporate SG&A related to $2.4 million of share-based compensation for non-vested stock granted at the end of the last quarter, see Note 8, Share-based Compensation, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion, and $1.5 million of transaction costs related to the Vetstreet and BrightHeart acquisitions. Consolidated SG&A decreased $9.0 million for the nine months ended September 30, 2011, primarily due to the prior year accrual of $14.5 million for estimated future consulting and SERP payments recorded in accordance with agreements entered into in the June 2010 quarter.

Operating Income

The following table summarizes our operating income in both dollars and as a percentage of applicable revenue (in thousands, except percentages):

	Three Months Ended September 30,												Nine Months Ended September 30,
	2011					2010							2011					2010
	$			% of Revenue		$			% of Revenue		% Change		$			% of Revenue		$			% of Revenue		% Change
Animal Hospital	$	45,677			15.1%	$	40,913			14.8%		11.6%	$	125,914			14.6%	$	120,409			15.2%		4.6%
Laboratory		28,239			35.8%		27,889			36.1%		1.3%		92,131			37.9%		92,291			38.7%		(0.2)%
All Other		44			0.2%		1,506			8.7%		(97.1)%		2,150			4.0%		3,711			7.8%		(42.1)%
Corporate		(14,605	)				(10,972	)				33.1%		(34,695	)				(47,304	)				(26.7)%
Intercompany		(1,514	)				(1,294	)				17.0%		(4,044	)				(1,982	)				104.0%
Total operating income	$	57,841			15.0%	$	58,042			16.2%		(0.3)%	$	181,456			16.3%	$	167,125			16.0%		8.6%

The decrease in our consolidated operating income during the three months ended September 30, 2011, was primarily due to the aforementioned increase in SG&A, which more than offset increased gross profit. The increase in our consolidated operating income during the nine months ended September 30, 2011, was primarily due to the aforementioned decrease in SG&A and increased gross profit.

29

Interest Expense, Net

The following table summarizes our interest expense, net of interest income (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Interest expense:
Senior term notes	$	3,086		$	2,892		$	9,267		$	7,467
Interest rate hedging agreements		-			-			-			382
Capital leases and other		872			732			2,846			1,855
Amortization of debt costs		395			222			1,169			461
		4,353			3,846			13,282			10,165
Interest income		(131	)		(227	)		(466	)		(601	)
Total interest expense, net of interest income	$	4,222		$	3,619		$	12,816		$	9,564

The increase in net interest expense for the three months ended September 30, 2011, was attributable to an increase in the average debt balance due to the amendment of our existing credit and guaranty agreement, which allowed for an increase to our senior term notes in the amount of $100 million. The increase in net interest for the nine months ended September 30, 2011 was attributable to an increase in the overall weighted average interest rate. See Note 6, Long-Term Obligations, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion of applicable interest rates on our amended debt.

Liquidity and Capital Resources

Introduction

We generate cash primarily from payments made by customers for our veterinary services, payments from animal hospitals and other clients for our laboratory services, proceeds received from the sale of our imaging equipment and other related services and payments received from participating hospitals for Vetstreet subscriptions and reminder notices. Our business historically has experienced strong liquidity, as fees for services provided in our animal hospitals are due at the time of service and fees for laboratory services are collected under standard industry terms. Our cash disbursements are primarily for payments related to the compensation of our employees, supplies and inventory purchases for our operating segments, occupancy and other administrative costs, interest expense, payments on long-term borrowings, capital expenditures and animal hospital acquisitions. Cash outflows fluctuate with the amount and timing of the settlement of these transactions.

We manage our cash, investments and capital structure so we are able to meet the short-term and long-term obligations of our business while maintaining financial flexibility and liquidity. We forecast, analyze and monitor our cash flows to enable investment and financing within the overall constraints of our financial strategy.

At September 30, 2011, our consolidated cash and cash equivalents totaled $79.2 million, representing a decrease of $17.9 million as compared to December 31, 2010. The decrease was primarily due to cash used for the acquisition of Vetstreet. Cash flows generated from operating activities totaled $163.6 million for the nine months ended September 30, 2011, representing an increase of $20.1 million as compared to the nine months ended September 30, 2010.

We have historically funded our working capital requirements, capital expenditures and investment in individual acquisitions from internally generated cash flows and we expect to continue to do so in the future. As of September 30, 2011, we have access to an unused $125 million revolving credit facility, which was increased by $25 million during the September 2011 quarter as part of the new terms under our August 16, 2011 amended and restated credit and guaranty agreement; this allows us to maintain further operating and financial flexibility.

In addition to the increase in our revolving credit facility, the aforementioned August 16, 2011 amended and restated credit and guaranty agreement provided for $100 million of additional senior term debt, which was used to pay in full amounts borrowed to partially fund our August 9, 2011 acquisition of Vetstreet. The new senior term notes and revolving credit facility bear interest based on the interest rate offered to our administrative agent on the London interbank market, or LIBOR, plus a current margin of 1.75% per annum. See Note 6, Long-Term Obligations, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion.

30

Historically we have been able to obtain cash from other borrowings. The availability of financing in the form of debt or equity however is influenced by many factors including our profitability, operating cash flows, debt levels, debt ratings, contractual restrictions, and market conditions. Although in the past we have been able to obtain financing for material transactions on terms we believe to be reasonable, there is a possibility that we may not be able to obtain financing on favorable terms in the future.

Future Cash Flows

Short-Term

Other than our acquisitions of certain animal hospital chains, we historically have funded our working capital requirements, capital expenditures and investments in animal hospital acquisitions from internally generated cash flows. We anticipate that our cash on hand and net cash provided by operations will be sufficient to meet our anticipated cash requirements for the next 12 months. If we consummate significant acquisitions of animal hospital chains or other businesses during this period, we may seek additional debt or equity financing.

For the year ended December 31, 2011, we expect to spend $30 million to $40 million for animal hospital acquisitions, excluding real estate and animal hospital chains, such as BrightHeart. The ultimate number of acquisitions and cash used is largely dependent upon the attractiveness of the candidates and the strategic fit within our operations and as a consequence, our actual number of acquisitions and cash expenditures may be more or less than amounts currently estimated. From January 1, 2011 through September 30, 2011, we spent $19.5 million in connection with the acquisition of ten animal hospitals and one laboratory, as well as $1.9 million for the related real estate. In July 2011, we spent approximately $50 million for the acquisition of BrightHeart. In addition, we expect to spend approximately $75.0 million in 2011 for both property and equipment additions and capital costs necessary to maintain our existing facilities, of which approximately $43.3 million had been expended at September 30, 2011.

Long-Term

Our long-term liquidity needs, other than those related to the day-to-day operations of our business, including commitments for operating leases, generally comprises scheduled principal and interest payments for our outstanding long-term indebtedness, capital expenditures related to the expansion of our business, and acquisitions in accordance with our growth strategy.

We are unable to project with certainty whether our long-term cash flow from operations will be sufficient to repay our long-term debt when it comes due. If this cash flow is insufficient, we expect that we will need to refinance such indebtedness, amend its terms to extend maturity dates, or issue common stock of our company. Our management cannot make any assurances that such refinancing, amendments or equity offerings, if necessary, will be available on attractive terms, if at all.

Debt Related Covenants

Our senior credit facility contains certain financial covenants pertaining to fixed-charge coverage and leverage ratios. In addition, the senior credit facility has restrictions pertaining to capital expenditures, acquisitions and the payment of cash dividends. As of September 30, 2011, we were in compliance with these covenants, including the two covenant ratios, the fixed-charge coverage ratio and the leverage ratio.

At September 30, 2011, we had a fixed-charge coverage ratio of 1.75 to 1.00, which was in compliance with the required ratio of no less than 1.20 to 1.00. The senior credit facility defines the fixed-charge coverage ratio as that ratio that is calculated on a last 12-month basis by dividing pro forma earnings before interest, taxes, depreciation and amortization, as defined by the senior credit facility (“pro forma earnings”), by fixed charges. Fixed charges are defined as cash interest expense, scheduled principal payments on debt obligations, capital expenditures, and provision for income taxes. Pro forma earnings include 12 months of operating results for businesses acquired during the period.

At September 30, 2011, we had a leverage ratio of 2.16 to 1.00, which was in compliance with the required ratio of no more than 3.00 to 1.00. The senior credit facility defines the leverage ratio as that ratio which is calculated as total debt divided by pro forma earnings.

31

Historical Cash Flows

The following table summarizes our cash flows (in thousands):

	Nine Months Ended September 30,
	2011			2010
Cash provided by (used in):
Operating activities	$	163,591		$	143,470
Investing activities		(235,814	)		(97,432	) (1)
Financing activities		54,703			(59,024	) (1)
Effect of currency exchange rate changes on cash and cash equivalents		(363	)		38
Decrease in cash and cash equivalents		(17,883	)		(12,948	)
Cash and cash equivalents at beginning of period		97,126			145,181
Cash and cash equivalents at end of period	$	79,243		$	132,233

(1) To conform to the current year presentation we have reclassed prior year cash paid for partnership buyouts and cash paid for earn-out payments from the cash flows from investing to the financing cash flows.

Cash Flows from Operating Activities

Net cash provided by operating activities increased $20.1 million in the nine months ended September 30, 2011 as compared to the prior year period. Operating cash flow for the nine months ended September 30, 2011 included $101.9 million of net income and net non-cash expenses of $69.6 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $7.9 million. The changes in operating assets and liabilities included a $9.8 million increase in inventory, prepaid expense and other assets, an $8.3 million decrease in accounts payable and other accrued liabilities and a $7.0 million increase in trade accounts receivable, partially offset by an $8.7 million increase in income taxes and an $8.5 million increase in accrued payroll and related liabilities. The increase in inventory, prepaid expense and other assets was primarily due to the build-up of inventory and an increase in lease receivables as a result of executing additional contracts. The decrease in accounts payable and other accrued liabilities and the increase in accrued payroll and related liabilities were all a result of timing of payment obligations. The increase in accounts receivable was primarily due to an increase in net revenues.

Cash provided by operating activities of $143.5 million for the nine months ended September 30, 2010 consisted of $92.0 million of net income and net non-cash expenses of $59.5 million, partially offset by net cash used as a result of changes in operating assets and liabilities of $8.0 million. The changes in operating assets and liabilities primarily included a $9.5 million decrease in income taxes and a $7.5 million increase in trade accounts receivable, partially offset by a $7.0 million increase in accounts payable and other accrued liabilities. The decrease in income taxes and the increase in accounts payable and other accrued liabilities were primarily due to the timing of payment obligations. The increase in trade accounts receivable was primarily due to an increase in net revenues.

Cash Flows from Investing Activities

The table below presents the components of the changes in investing cash flows (in thousands):

	Nine Months Ended September 30,
Investing Cash Flows:	2011			2010			Variance
Acquisition of independent animal hospitals and laboratories	$	(19,499	)	$	(38,294	)	$	18,795	(1)
Acquisition of BrightHeart		(23,490	)		-			(23,490	)
Acquisition of Pet DRx		-			(4,520	)		4,520
Acquisition of Vetstreet		(146,420	)		-			(146,420	)
Other		(954	)		(1,312	)		358	(2)
Total cash used for acquisitions		(190,363	)		(44,126	)		(146,237	)
Property and equipment additions		(43,275	)		(47,675	)		4,400	(3)
Real estate acquired with acquisitions		(1,900	)		(5,834	)		3,934
Proceeds from sale of assets		447			15			432
Other		(723	)		188			(911	)
Net cash used in investing activities	$	(235,814	)	$	(97,432	)	$	(138,382	)

⁽¹⁾  The number of acquisitions will vary from year to year based upon the available pool of suitable candidates. A discussion of our acquisitions is provided above in our Executive Overview.

⁽²⁾ In conformance with the current year presentation we have reclassed prior year cash paid for partnership buyouts and cash paid for earn-out payments to the cash flows from financing.

⁽³⁾ The cash used to acquire property and equipment will vary from period to period based on upgrade requirements and expansion of our animal hospital and laboratory facilities.

32

Cash Flows from Financing Activities

The table below presents the components of the changes in financing cash flows (in thousands):

	Nine Months Ended September 30,
Financing Cash Flows:	2011			2010			Variance
Repayment of debt	$	(90,945	)	$	(548,560	)	$	457,615	(1)
Proceeds from issuance of long-term debt		150,000			500,000			(350,000	)  (2)
Proceeds from revolving credit facility		50,000			-			50,000	(3)
Repayment of revolving credit facility		(50,000	)		-			(50,000	)  (3)
Payment of financing costs		(2,944	)		(9,112	)		6,168	(4)
Distributions to noncontrolling interest partners		(1,959	)		(3,314	)		1,355	(5)
Proceeds from issuance of common stock under stock option plans		2,596			4,781			(2,185	)  (6)
Excess tax benefit from exercise of stock options		963			370			593
Stock repurchases		(2,663	)		(2,292	)		(371	)
Other		(345	)		(897	)		552	(7)
Net cash used in financing activities	$	54,703		$	(59,024	)	$	113,727

⁽¹⁾  For the nine months ended September 30, 2011, we repaid $50 million borrowed from our incremental facilities as permitted under our August 19, 2010 credit and guaranty agreement. Additionally, we repaid $14.5 million of debt related to scheduled payments and we repaid approximately $26 million of debt related to the BrightHeart acquisition. The repayment of debt for the nine months ended September 30, 2010 was primarily attributable to the August 19, 2010 debt refinance.

⁽²⁾  The proceeds from issuance of long term debt for the nine months ended September 30, 2011 included $50 million of new term loans borrowed pursuant to our incremental facilities permitted under our August 19, 2010 credit and guaranty agreement, and $100 million of additional borrowings received in accordance with the amended and restated credit and guaranty agreement dated August 16, 2011. The proceeds from issuance of long-term debt for the nine months ended September 30, 2010 related to the refinance of our credit facility on August 19, 2010.

⁽³⁾  For the nine months ended September 30, 2011 we borrowed against our revolving credit facility to partially fund the Vetstreet acquisition, and subsequently repaid the funds with the proceeds from issuance of additional senior term debt under our August 16, 2011 restated and amended credit and guaranty agreement.

⁽⁴⁾  The payment of financing costs during the nine months ended September 30, 2011, was attributable to the costs incurred with the August 16, 2011 amended and restated credit and guaranty agreement. The payment of financing costs during the nine months ended September 30, 2010, was attributable to the costs incurred upon entering a new credit and guaranty agreement dated August 19, 2010.

⁽⁵⁾ The distributions to noncontrolling interest partners represent cash payments to noncontrolling interest partners for their portion of the partnerships’ excess cash.

⁽⁶⁾ The number of stock option exercises has decreased in comparison to the prior year as the prior year amount was impacted by the expiration of certain stock option grants.

⁽⁷⁾  In conformance with the current year presentation, we have reclassed prior year cash paid for partnership buyouts and cash paid for earn-out payments, from the cash flows from investing, to the financing cash flows.

33

Future Contractual Cash Requirements

The following table sets forth material changes from the amounts reported in our 2010 Form 10-K to our scheduled principal, interest and other contractual cash obligations due by us for each of the years indicated as of September 30, 2011 (in thousands):

	Payment due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Contractual Obligations:
Long-term debt	$	581,250	$	29,063	$	72,656	$	479,531		—
Variable cash interest expense Term A (1)		48,733		11,350		20,857		16,526		—
	$	629,983	$	40,413	$	93,513	$	496,057		—

⁽¹⁾  The interest payments on our variable-rate senior term notes are based on rates effective as of September 30, 2011.

Off-Balance-Sheet Financing Arrangements

Other than operating leases, as of September 30, 2011, we do not have any off-balance-sheet financing arrangements.

Interest Rate Swap Agreements

As of March 31, 2010, all of our interest rate swap agreements had expired and we have not entered into any new agreements. In the future, we may enter into additional interest rate strategies; however, we have not yet determined what those strategies will be or their possible impact.

Description of Indebtedness

Senior Credit Facility

At September 30, 2011, we had $581.3 million principal amount outstanding under our senior term notes and no borrowings outstanding under our $125 million revolving credit facility.

We pay interest on our senior term notes based on the interest rate offered to our administrative agent on LIBOR plus a current margin of 1.75% per annum. See Note 6, Long-Term Obligations, in our condensed, consolidated financial statements of this quarterly report on Form 10-Q for a more detailed discussion of applicable interest rates on our amended debt. The senior term notes and the revolving credit facility mature in August 2016.

Other Debt and Capital Lease Obligations

At September 30, 2011, we had seller notes secured by assets of certain animal hospitals and capital leases that totaled $46.1 million, which are included in long-term debt in our condensed, consolidated balance sheet of this quarterly report on Form 10-Q. Our seller notes have various maturities through 2013 and various interest rates ranging from 9.0% to 10.0%. Our capital leases have various maturities through 2030 and various interest rates ranging from 1.4% to 9.9%.

34

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At September 30, 2011, we had borrowings of $581.3 million under our senior credit facility with fluctuating interest rates based on market benchmarks such as LIBOR. Changes in interest rates could adversely affect the market value of our variable-rate debt. For every 1.0% increase in LIBOR we will pay an additional $5.7 million in pre-tax interest expense on an annualized basis on our senior term notes. Conversely for every 1.0% decrease in LIBOR we will save $5.7 million in pre-tax interest expense on an annualized basis. This represents an increase of approximately $900,000 in both additional interest payments and interest savings, in comparison to our estimate included in Item 7A of our 2010 Annual Report on Form 10-K, due to the August 2011 amendment of our senior credit facility which provided for $100 million in additional senior term notes. To mitigate our exposure to increasing interest rates we have historically entered into interest rate swap agreements that effectively convert a certain amount of our variable-rate debt to fixed-rate debt. As of September 30, 2011 we have no interest rate swap agreements.

In the future, we may enter into interest rate strategies to mitigate our exposure to increasing interest rates as well as to maintain an appropriate mix of fixed-rate and variable-rate debt. However, we have not yet determined what those strategies may be or their possible impact.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation required by the Exchange Act, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

During our most recent fiscal quarter, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur, or that all control issues and instances of fraud, if any, within the company have been detected.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any legal proceedings other than ordinarily routine litigation incidental to the conduct of our business.

ITEM 1A. RISK FACTORS

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our 2010 Annual Report on Form 10-K and Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.

35

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

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure, other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

2.1	Securities Purchase Agreement, dated as of July 10, 2011, among Vicar Operating, Inc., MediMedia Animal Health, LLC, and MediMedia USA, Inc.
10.1	Amended and Restated Credit and Guaranty Agreement, dated as of August 16, 2011, among Vicar Operating, Inc., VCA Antech, Inc., certain subsidiaries of Vicar Operating, Inc., as guarantors, various lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, collateral agent, issuing bank and swing line lender, Bank of America, N.A. and JP Morgan Chase Bank, N.A., as co-syndication agents, and U.S. Bank National Association, and Union Bank, N.A., as co-documentation agents. Portions of the schedules have been omitted pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed August 22, 2011.
10.2	Employment Agreement, dated as of August 18, 2011, by and between VCA Antech, Inc. and Josh Drake. Incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed August 22, 2011.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

* Furnished, not filed.

36

SIGNATURE

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 on November 9, 2011.

Date: November 9, 2011	By:	/s/ Tomas W. Fuller
	Tomas W. Fuller
	Chief Financial Officer

37

EXHIBIT INDEX

Exhibit No.	Description
2.1	Securities Purchase Agreement, dated as of July 10, 2011, among Vicar Operating, Inc., MediMedia Animal Health, LLC, and MediMedia USA, Inc.
10.1	Amended and Restated Credit and Guaranty Agreement, dated as of August 16, 2011, among Vicar Operating, Inc., VCA Antech, Inc., certain subsidiaries of Vicar Operating, Inc., as guarantors, various lenders from time to time party thereto, Wells Fargo Bank, National Association, as administrative agent, collateral agent, issuing bank and swing line lender, Bank of America, N.A. and JP Morgan Chase Bank, N.A., as co-syndication agents, and U.S. Bank National Association, and Union Bank, N.A., as co-documentation agents. Portions of the schedules have been omitted pursuant to a request for confidential treatment. Incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed August 22, 2011.
10.2	Employment Agreement, dated as of August 18, 2011, by and between VCA Antech, Inc. and Josh Drake. Incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed August 22, 2011.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance Document*
Exhibit 101.SCH	XBRL Extension Schema Document*
Exhibit 101.CAL	XBRL Extension Calculation Linkbase Document*
Exhibit 101.LAB	XBRL Extension Label Linkbase Document*
Exhibit 101.PRE	XBRL Extension Presentation Linkbase Document*
Exhibit 101.DEF	XBRL Extension Definition Linkbase Document*

*Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended (“Exchange Act”), or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filings.

38

EX-2.1

Exhibit 2.1

CONFIDENTIAL

EXECUTION COPY

SECURITIES PURCHASE AGREEMENT

DATED AS OF JULY 10, 2011

BY AND AMONG

MEDIMEDIA ANIMAL HEALTH, LLC,

MEDIMEDIA USA, INC.

AND

VICAR OPERATING, INC.

TABLE OF CONTENTS

ARTICLE I DEFINITIONS	1
Section 1.1       Definitions	1
ARTICLE II PURCHASE AND SALE OF THE SECURITIES	9
Section 2.1       Purchase and Sale of the Securities	9
Section 2.2       Closing of the Transactions Contemplated by this Agreement	9
Section 2.3       Payment for and Surrender of the Securities	10
Section 2.4       Post-Closing Adjustment of the Estimated Purchase Price	10
Section 2.5       Allocation	12
ARTICLE III CONDITIONS TO CLOSING	13
Section 3.1       Conditions to Each Party’s Obligations	13
Section 3.2       Conditions to Buyer’s Obligations	13
Section 3.3       Conditions to Seller’s Obligations	15
Section 3.4       No Frustration of Closing Conditions	16
ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING SELLER	16
Section 4.1       Authority	16
Section 4.2       Execution and Delivery; Valid and Binding Agreement	16
Section 4.3       Noncontravention	16
Section 4.4       Ownership of the Securities	17
Section 4.5       Brokers’ Fees	17
Section 4.6       EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES	17
ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY	18
Section 5.1       Organization; Qualification; Limited Liability Company Power; Officers, Authorization	18
Section 5.2       Capitalization	19
Section 5.3       Noncontravention	19
Section 5.4       Brokers’ Fees	20
Section 5.5       Financial Statements	20
Section 5.6       No Undisclosed Liabilities	20
Section 5.7       Events Subsequent to Most Recent Fiscal Year End	20
Section 5.8       Assets	22
Section 5.9       Compliance with Laws	22
Section 5.10     Tax Matters	22
Section 5.11     Real Property	24
Section 5.12     Intellectual Property Rights	24
Section 5.13     Material Contracts	26
Section 5.14     Orders and Litigation	27
Section 5.15     Labor Matters	27
Section 5.16     Employee Benefits	28
Section 5.17     Environmental Matters	29

i

Section 5.18     Insurance	29
Section 5.19     Affiliate Transactions	29
Section 5.20     Customers and Suppliers	29
Section 5.21     EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES	30
ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING BUYER	30
Section 6.1       Organization and Power	30
Section 6.2       Authorization; Valid and Binding Agreement	30
Section 6.3       No Breach	31
Section 6.4       Governmental Consents, etc.	31
Section 6.5       Litigation	31
Section 6.6       Brokers’ Fees	31
Section 6.7       Available Cash	31
Section 6.8       Investment Representation	31
Section 6.9       Solvency	32
ARTICLE VII PRE-CLOSING COVENANTS	32
Section 7.1       Commercially Reasonable Efforts; Cooperation	32
Section 7.2       Conduct of Business	34
Section 7.3       Other Information and Events. Prior to the Closing, the Company shall use commercially reasonable efforts to furnish to Buyer:	34
Section 7.4       Access; Confidentiality	34
Section 7.5       Public Announcements	35
ARTICLE VIII POST-CLOSING COVENANTS	35
Section 8.1       Access to Books and Records	35
Section 8.2       Employee Benefits	36
Section 8.3       Change of Name	37
Section 8.4       Tax Matters	37
Section 8.5       Nonsolicitation; Noncompetition; Enforcement	38
Section 8.6       Business Confidential Information	39
Section 8.7       Further Assurances	40
ARTICLE IX TERMINATION	40
Section 9.1       Termination of Agreement	40
Section 9.2       Effect of Termination	41
ARTICLE X INDEMNIFICATION	42
Section 10.1     Limited Indemnification by Seller	42
Section 10.2     Indemnification Claim Procedures	42
ARTICLE XI MISCELLANEOUS	43
Section 11.1     No Survival of Representations, Warranties and Covenants	43
Section 11.2     Expenses	44
Section 11.3     Notices	44
Section 11.4     Assignment	45
Section 11.5     Severability	45

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Section 11.6       Construction	45
Section 11.7       Interpretation	46
Section 11.8       Exhibits and Schedules	46
Section 11.9       Amendment and Waiver	46
Section 11.10     Entire Agreement	46
Section 11.11     Counterparts	46
Section 11.12     Governing Law	46
Section 11.13     Dispute Resolution	47
Section 11.14     No Third Party Beneficiaries	47
Section 11.15     Limitation on Damages and Remedies	47
Section 11.16     No Recourse	47
Section 11.17     Waiver of Jury Trial	48
Section 11.18     Waiver of Conflicts	48
Section 11.19     Delivery by Electronic Means	49
Section 11.20     Time of the Essence; Computation of Time	49

EXHIBITS

Exhibit A	—	List of Potential Neutral Accounting Firms
Exhibit B	—	Transition Services Agreement
Exhibit C	—	Transitional Trademark License Agreement

SCHEDULES

Schedule 5.1	—	Names and Titles of the Officers of the Company
Schedule 5.11	—	Leased Real Property
Schedule 5.12	—	Intellectual Property Rights
Schedule 5.13	—	Material Contracts
Schedule 5.14	—	Orders and Litigation
Schedule 5.16	—	Seller Benefit Plans
Schedule 5.18	—	Insurance
Schedule 5.20	—	Material Customers and Suppliers

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SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of July 10, 2011, is made by and among MediMedia Animal Health, LLC, a Delaware limited liability company (the “Company”), MediMedia USA, Inc., a Delaware corporation (“Seller”), and Vicar Operating, Inc., a Delaware corporation (“Buyer”). Capitalized terms used and not otherwise defined herein have the meanings set forth in Article I.

WHEREAS, Seller is the sole equityholder of the Company and beneficially and of record owns all of the issued and outstanding limited liability company membership interests of the Company, consisting of 100 Common Units of the Company (the “Securities”); and

WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all of the Securities.

NOW, THEREFORE, in consideration of the premises, representations and warranties and mutual covenants contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. For purposes hereof, the following capitalized terms shall have the respective meanings set forth in this Article I:

“AAA” has the meaning set forth in Section 11.13.

“Accounting Arbitrator” has the meaning set forth in Section 2.4(d).

“Accounting Principles” means the accounting principles, policies, procedures, practices, applications and methodologies (with consistent classifications, judgments, inclusions, exclusions and valuation and estimation methodologies) used and applied by Seller and the Company in the preparation of the Most Recent Balance Sheet and the other Financial Statements.

“Adjustment Calculation Time” means 11:59 p.m. (New York, New York time) on the day immediately prior to the Closing Date.

“Affiliate” means, with respect to any Person, any other Person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” 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, and the terms “controlled” and “controlling” have meanings correlative thereto.

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

“Base Purchase Price” means $146,000,000.

“Board of Arbitration” has the meaning set forth in Section 11.13.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks are required or authorized by Law to be closed in New York, New York.

“Business Employees” means the employees of the Company.

“Business Intellectual Property Rights” has the meaning set forth in Section 5.12.

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

“Buyer Parties” means the Buyer, any Affiliate of Buyer (including, if the Closing occurs, the Company and its Subsidiaries) and their respective officers, directors, employees, partners, members, managers, agents, attorneys, representatives, successors or permitted assigns.

“Closing” has the meaning set forth in Section 2.2.

“Closing Balance Sheet” has the meaning set forth in Section 2.4(a).

“Closing Date” has the meaning set forth in Section 2.2.

“Closing Indebtedness” has the meaning set forth in Section 2.4(a).

“Closing Statement” has the meaning set forth in Section 2.4(a).

“Closing Working Capital” has the meaning set forth in Section 2.4(a).

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and of any similar state Law.

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

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

“Company Business” means, collectively, the business of (i) providing analytical information services related to animal product sales to the animal health industry, (ii) providing animal health clinical content and animal health continuing medical education via online websites for veterinarians and animal healthcare teams, and (iii) providing online animal health-related e-commerce, marketing and communication tools and media content for veterinarians and pet owners, in each case, in the manner conducted on the Closing Date by the Company anywhere in the United States of America.

“Confidentiality Agreement” has the meaning set forth in Section 7.4(b).

“Court” has the meaning set forth in Section 8.5(d).

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“Employee Benefit Plan” means an “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) or any other benefit or compensation plan, program, policy, agreement or arrangement.

“Environmental Laws” means all Laws concerning pollution or protection of the environment, as the foregoing are enacted or in effect prior to or on the Closing Date.

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.

“Estimated Closing Balance Sheet” has the meaning set forth in Section 2.3(a).

“Estimated Closing Indebtedness” has the meaning set forth in Section 2.3(a).

“Estimated Closing Statement” has the meaning set forth in Section 2.3(a).

“Estimated Closing Working Capital” has the meaning set forth in Section 2.3(a).

“Estimated Purchase Price” means the result equal to (i) the Base Purchase Price, minus (ii) the Estimated Closing Indebtedness, plus (iii) the amount, if any, by which the Estimated Closing Working Capital exceeds the Working Capital Target, minus (iv) the amount, if any, by which the Estimated Closing Working Capital is less than the Working Capital Target.

“Excluded Liabilities” means (i) any Liabilities of the Seller Parties for Taxes for any period prior to the Closing Date (in the case of Taxes of the Company, determined in accordance with Section 8.4(d)); (ii) any Liabilities of the Seller Parties for costs and expenses incurred in connection with the negotiation, execution, and performance under this Agreement and other transaction costs incurred in connection with the transactions contemplated by this Agreement, including all fees of counsel to the Seller Parties and all compensation to brokers, finders and agents with respect to the transactions contemplated by this Agreement (but, for the avoidance of doubt, excluding any amounts payable by the Company to Seller pursuant to the Transition Services Agreement); (iii) any Liabilities arising from the ownership and/or operation of the assets, or of any business, of the Seller Parties other than the Company Business conducted by the Company prior to the Closing Date; (iv) any Liabilities of the Seller Parties for Indebtedness other than the Closing Indebtedness; (v) any Liabilities of the Company to the Seller Parties following the Closing Date other than as expressly provided for in this Agreement, the Exhibits attached hereto (including the Transition Services Agreement) or any other agreement entered into by any Seller Party, on the one hand, and the Company, on the other hand, following the Closing; (vi) any Liabilities of the Company or any other Seller Party under the plan listed with respect to Section 5.7(f) on Schedule 5.7; and (vii) any Liabilities of the Seller Parties with respect to any indemnity or guaranty obligation for any Liability referenced in clauses (i) through (vi) above.

“Financial Statements” has the meaning set forth in Section 5.5.

“Fundamental Representations” means the representations and warranties set forth in Section 4.1, Section 4.2, Section 4.4, Section 5.1(a), and Section 5.2.

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“GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time, consistently applied.

“Governing Documents” means the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the Governing Documents of a corporation are its certificate of incorporation and by-laws, the Governing Documents of a limited partnership are its certificate of limited partnership and limited partnership agreement, and the Governing Documents of a limited liability company are its certificate of formation and limited liability company operating agreement.

“Governmental Authority” means the government of the United States of America and any state, commonwealth, territory, possession, county, or municipality thereof, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions.

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

“Income Tax” means any United States federal, state or local or non-United States Tax based on or measured by reference to net income, including any interest, penalty or addition thereto, whether disputed or not.

“Indebtedness” means, with respect to any Person, at any particular time, without duplication, (i) any obligations of such Person under any indebtedness for borrowed money (including all obligations for principal, interest, premiums, penalties, fees, make-whole payments, expenses, indemnities, breakage costs and bank overdrafts thereunder), (ii) any indebtedness of such Person evidenced by any note, bond, debenture or other debt security, (iii) any written commitment by which such Person assures a creditor against loss (including contingent reimbursement obligations with respect to acceptance, letters of credit or other similar facilities), (iv) any obligations under leases that are or should be recorded as capital leases in accordance with GAAP, (v) any borrowing of money secured by a Lien on such Person’s assets, (vi) all obligations of such Person for the deferred and unpaid purchase price of property or services (other than trade payables, deferred capital expenditures and accrued expenses incurred in the Ordinary Course of Business), (vii) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (whether or not the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (viii) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any partnership or membership or other equity interests of such Person, and (ix) all Indebtedness of other Persons referred to in clauses (i) through (viii) above to the extent guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person.

“Intellectual Property Rights” means all worldwide rights in and to (i) patents and patent applications (including reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations), (ii) trademarks, service marks, trade dress, trade, corporate and business

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names, Internet domain names, all applications and, registrations for the foregoing, including and renewals and extensions of same, and all goodwill associated with the foregoing, (iii) copyrights and mask works, including all applications, registrations and renewals, extensions, restorations and reversions in connection therewith, (iv) trade secrets (including those contained in designs, specifications, know-how, customer/vendor lists, sales records databases, technical information, marketing information, proprietary software and applications), and (v) all other intellectual property rights.

“Intercompany Obligations” means all Liabilities owed or owing from the Company to Seller Parties or any direct or indirect parent company of Seller.

“IT Resources” means all the equipment, networks, hardware, software, technical knowledge, expertise and other resources, including all information technology resources and computer systems, held, owned or used by or on behalf of the Company.

“Knowledge of Buyer” means the actual knowledge after reasonable good faith investigation (which shall in no event encompass constructive, imputed or similar concepts of knowledge) of Robert Antin or Thomas Fuller, none of whom shall have any personal liability or obligations regarding such knowledge or with respect to any of the representations or warranties made in this Agreement.

“Knowledge of Seller” means the actual knowledge after reasonable good faith investigation (which shall in no event encompass constructive, imputed or similar concepts of knowledge) of Steven Simcox and Michael Burnett, neither of whom shall have any personal liability or obligations regarding such knowledge or with respect to any of the representations or warranties made in this Agreement.

“Knowledge of the Company” means the actual knowledge after reasonable good faith investigation (which shall in no event encompass constructive, imputed or similar concepts of knowledge) of Steven Simcox, Michael Burnett, Derrick Kraemer and Jeff Gaidos, none of whom shall have any personal liability or obligations regarding such knowledge or with respect to any of the representations or warranties made in this Agreement.

“Law” means any applicable binding statute, law, treaty, rule, regulation, order, decree, writ or injunction of any Governmental Authority.

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, improvements, fixtures or other interest in the real property held by the Company.

“Leases” means all leases, subleases, licenses, and other agreements (written or oral), including all amendments, extensions, renewals and other agreements with respect thereto, pursuant to which the Company holds any interest in Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of the Company thereunder.

“Liabilities” has the meaning set forth in Section 5.6.

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“Lien” means any mortgage, pledge, lien, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest, or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. For the avoidance of doubt, a license of Intellectual Property Rights shall not be deemed a “Lien” hereunder.

“Losses” means any loss, damage, injury, liability, claim, demand, settlement, judgment, award, fine, penalty, cost or expense (including reasonable attorneys’ fees), including in respect of enforcement of indemnify rights hereunder.

“Material Adverse Effect” means any change or effect that is materially adverse (A) to the business, condition (financial or otherwise), results of operations, or prospects, of the Company, taken as a whole, or (B) to the Company’s or Seller’s ability to perform their respective obligations under this Agreement or to consummate the transactions contemplated by this Agreement; provided, however, that none of the following shall be deemed in and of itself, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any failure by the Company to meet internal projections or forecasts or published revenue or earnings predictions for any period ending (or for which revenues or earnings are released) on or after the Closing Date (provided that the underlying causes of such failure may be considered in determining whether there is a Material Adverse Effect); (ii) any change, effect, event, occurrence, state of facts or development attributable to the announcement or pendency of the transactions contemplated by this Agreement; (iii) any change, effect, event, occurrence, state of facts or development attributable to conditions affecting the banking industry (including a change in interest rates), the United States economy as a whole or the capital markets in general; (iv) any change, effect, event, occurrence, state of facts or development resulting from or relating to compliance with the terms of this Agreement; (v) any change, effect, event, occurrence, state of facts or development arising from or relating to any change in GAAP or any interpretation of GAAP; (vi) any change, effect, event, occurrence, state of facts or development arising from or relating to any change in Laws or the interpretation thereof; or (vii) any change, effect, event, occurrence, state of facts or development caused by acts of terrorism or war (whether or not declared) unless, solely in the case of the foregoing clauses (iii), (iv), (v), (vi) and (vii), such changes, effects, events, occurrences, state of facts or developments referred to therein materially and disproportionately impacts the Company relative to the industry or market in which the Company operates.

“Material Contracts” has the meaning set forth in Section 5.13.

“Most Recent Balance Sheet” has the meaning set forth in Section 5.5.

“Most Recent Balance Sheet Date” has the meaning set forth in Section 5.5.

“Neutral Accounting Firm” means members of the dispute resolution group of one of the independent accounting firms listed on Exhibit A attached hereto (which shall be selected in the order of priority listed on such exhibit), which firm shall be reasonably independent from the Company, Seller and Buyer and which members are not subject to any actual or potential conflict

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of interest in respect of the matters to be brought before them pursuant to the terms and conditions of this Agreement.

“New Plan” has the meaning set forth in Section 8.2(c).

“Objection Notice” has the meaning set forth in Section 2.4(c).

“Objection Period” has the meaning set forth in Section 2.4(c).

“Ordinary Course of Business” means the ordinary course of business of the Company consistent in all material respects with past custom and practice.

“Outside Date” has the meaning set forth in Section 9.1(e).

“Party” means any Person who is a party to this Agreement.

“Permitted Lien” means with respect to any asset or property of the Company: (i) taxes, assessments and other governmental levies, fees, or charges imposed with respect to such asset or property (real or personal) that are (A) not delinquent as of the Closing Date or (B) being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (ii) mechanics’ Liens and similar Liens for labor, materials, or supplies provided with respect to such asset or property incurred in the Ordinary Course of Business for amounts that are (A) not delinquent as of the Closing Date and which shall be paid in full and released at Closing or (B) being contested in good faith and for which appropriate reserves have been established in accordance with GAAP; (iii) in respect of the Securities, any restrictions on transferability imposed pursuant to applicable securities Laws; (iv) zoning, building codes and other land use Laws regulating the use or occupancy of Leased Real Property or the activities conducted thereon that are imposed by any Governmental Authority having jurisdiction over such Leased Real Property that are not violated by the current use or occupancy of such Leased Real Property or the operation of any of the businesses of the Company as currently conducted thereon or as does not have a Material Adverse Effect; and (v) easements, covenants, conditions, restrictions and other similar matters of record affecting title to Leased Real Property that do not impair the use or occupancy of Leased Real Property in the operation of the business of the Company as currently conducted thereon.

“Person” means any individual, partnership (including a limited partnership), corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization and Governmental Authority.

“Purchase Price” means an amount equal to (i) the Base Purchase Price, minus (ii) the Closing Indebtedness, plus (iii) the amount (if any) by which the Closing Working Capital exceeds the Working Capital Target, minus (iv) the amount (if any) by which the Working Capital Target exceeds the Closing Working Capital.

“Restricted Period” has the meaning set forth in Section 8.5(a).

“Revised Closing Statement” has the meaning set forth in Section 2.4(c).

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“Revised Objection Notice” has the meaning set forth in Section 2.4(c).

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

“Securities Act” means the United States Securities Act of 1933, as amended.

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

“Seller Benefit Plan” means each “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) and each other material benefit or compensation plan, program, policy or arrangement that is maintained, sponsored or contributed to by Seller or the Company and that provides benefits or compensation to any Business Employee.

“Seller Parties” means Seller, any Affiliate of Seller (including the Company prior the Closing Date) and their respective officers, directors, employees, partners, managers, agents, attorneys, representatives, successors or permitted assigns.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof and for this purpose, a Person or Persons own a majority ownership interest in such a business entity (other than a corporation) if such Person or Persons shall be allocated a majority of such business entity’s gains or losses or shall be or control any managing director or general partner of such business entity (other than a corporation). The term “Subsidiary” shall include all Subsidiaries of such Subsidiary.

“Tax” or “Taxes” means any United States federal, state, local, or non-United States income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, intellectual property, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, membership interest, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, or other similar tax, whether computed on a separate or consolidated, unitary or combined basis, including any interest, penalty or addition thereto.

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

“Taxing Authority” means, with respect to any Tax, the Governmental Authority that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such Governmental Authority.

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“Transfer Taxes” has the meaning set forth in Section 8.4(b).

“Transition Services Agreement” means that certain Transition Services Agreement, to be dated as of the Closing Date, by and between Seller and the Company, substantially in the form attached hereto as Exhibit B, with such changes as reasonably and in good faith agreed upon by the Parties prior to the Closing.

“Transitional Trademark License Agreement” means that certain Transitional Trademark License Agreement, to be dated as of the Closing Date, by and between Seller and the Company, substantially in the form attached hereto as Exhibit C, with such changes as reasonably and in good faith agreed upon by the Parties prior to the Closing.

“Treasury Regulations” means the Treasury regulations promulgated under the Code, including any successor regulations.

“Working Capital” means, with respect to the Company, as of any date of determination, (i) the sum of the Company’s current assets minus (ii) the sum of the Company’s current liabilities (exclusive of any amounts included in Closing Indebtedness), each as determined in accordance with GAAP applied on a basis consistent with the Accounting Principles, except that such determination: (A) shall not include any purchase accounting or other adjustment arising out of the consummation of the transactions contemplated by this Agreement; (B) shall be based on facts and circumstances as they exist immediately prior to the Closing and shall exclude the effect of any act, decision or event occurring at or after the Closing (other than the repayment or extinguishment of all Intercompany Obligations which expressly shall be included in such determination for all purposes of this definition); (C) shall follow the defined terms contained in this Agreement, whether or not such terms are consistent with GAAP; (D) shall calculate any reserves, accruals or other non-cash expense items on a pro rata (as opposed to monthly accrual) basis to account for a Closing that occurs on any date other than the last day of a calendar month; and (E) shall not include (x) any current asset arising after the Most Recent Balance Sheet Date to the extent it is recorded on the books and records of the Company with a debit to deferred revenue and (y) deferred revenue in current liabilities of the Company.

“Working Capital Target” means $2,110,000.

ARTICLE II

PURCHASE AND SALE OF THE SECURITIES

Section 2.1 Purchase and Sale of the Securities . At the Closing, upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, all of the Securities in exchange for the consideration specified in Section 2.3 (as adjusted following the Closing pursuant to Section 2.4).

Section 2.2 Closing of the Transactions Contemplated by this Agreement . The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Kirkland & Ellis LLP located at 601 Lexington Avenue, New York, New York 10022 commencing at 10:00 a.m., Eastern Time, on the third Business Day following the satisfaction

9

(or, to the extent permitted by applicable Law, the waiver by the Party entitled to the benefit thereof) of the conditions to the obligations of the respective Parties set forth in Article III (other than any such condition that by its nature is to be satisfied at the Closing, but subject to the satisfaction (or waiver) of such conditions) but in no event later than the Outside Date, or at such other place, time or date as Buyer and Seller may mutually agree in writing. The date on which the Closing occurs is referred to as the “Closing Date.” The Closing shall be deemed to be effective as of 12:01 a.m., Eastern Time, on the Closing Date.

Section 2.3 Payment for and Surrender of the Securities.

(a) No later than five Business Days prior to the Closing, Seller shall deliver to Buyer a statement (the “Estimated Closing Statement”) setting forth (i) Seller’s good faith estimate of the Working Capital of the Company as of the Adjustment Calculation Time (the “Estimated Closing Working Capital”), (ii) Seller’s good faith estimate of the Indebtedness of the Company as of the Adjustment Calculation Time (the “Estimated Closing Indebtedness”), and (iii) the Estimated Purchase Price resulting therefrom, together with an estimated balance sheet of the Company as of the Adjustment Calculation Time (the “Estimated Closing Balance Sheet”) (accompanied by supporting work papers and other similar material used by the Company to prepare the Estimated Closing Statement and the Estimated Closing Balance Sheet).

(b) At the Closing, on the terms and subject to the conditions set forth in this Agreement, Seller shall receive payment by Buyer in cash of an amount equal to the Estimated Purchase Price. Such payment to Seller shall be made by wire transfer of immediately available funds to an account or accounts specified by Seller to Buyer in writing at least two Business Days prior to the Closing Date (the “Seller Accounts”).

Section 2.4 Post-Closing Adjustment of the Estimated Purchase Price.

(a) Within ninety days following the Closing Date, Buyer shall (or shall cause the Company to) prepare and deliver to Seller: (i) an unaudited balance sheet of the Company as of the Adjustment Calculation Time (the “Closing Balance Sheet”); and (ii) a statement (the “Closing Statement”) setting forth the Buyer’s calculation of Working Capital as of the Adjustment Calculation Time (the “Closing Working Capital”), the Indebtedness of the Company as of the Adjustment Calculation Time (the “Closing Indebtedness”) and the Purchase Price resulting therefrom.

(b) The Closing Balance Sheet shall be prepared in good faith and in accordance with GAAP applied on a basis consistent with the Accounting Principles. The Closing Statement shall be prepared from the Closing Balance Sheet. Notwithstanding the foregoing, the Closing Statement shall not include any changes in assets or liabilities as a result of the transactions contemplated hereby (other than the repayment or extinguishment of all Intercompany Obligations which expressly shall be included in the Closing Statement), including any changes relating to (i) any purchase accounting or other adjustment arising out of the consummation of the transactions contemplated by this Agreement and (ii) any borrowings incurred on the Closing Date to finance the transactions contemplated hereby, and shall, with respect to Closing Working Capital and

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Closing Indebtedness, be prepared in accordance with the applicable definitions set forth in this Agreement.

(c) From Buyer’s delivery of the Closing Statement until the final determination of the Closing Working Capital in accordance with this Section 2.4, Buyer and the Company shall afford to Seller and its accountants reasonable access, during normal business hours (and at other times as may be mutually agreed), upon reasonable advance notice, to the books, tax and accounting records and the officers and other personnel of the Company who were involved in the preparation of the Closing Statement solely to permit Seller to verify the Closing Statement and to calculate the Closing Working Capital and Closing Indebtedness. The Closing Balance Sheet and the Closing Statement and the resulting calculation of Closing Working Capital and Closing Indebtedness and the Purchase Price resulting therefrom shall become final and binding upon the parties at 5:00 p.m. Eastern Time on the thirtieth day following Seller’s receipt thereof (the “Objection Period”) unless Seller gives written notice of its disagreement (the “Objection Notice”) to Buyer prior to such date. The Objection Notice may only be based on a claim that the Closing Statement (or the components thereof) was not prepared in accordance, or is otherwise inconsistent, with the terms of this Agreement. The Objection Notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved and the dollar amount of each such disagreement and provide reasonable supporting documentation for each such disagreement. After the delivery of the Objection Notice, any item not so identified shall be deemed to be agreed to by Seller and will be final and binding, and except to the extent that Seller makes a specific objection to a specific determination set forth on the Closing Statement pursuant to the Objection Notice delivered to Buyer within the Objection Period, the Closing Balance Sheet, the Closing Statement and the amounts contained therein shall be conclusive and binding on the Parties; provided, however, that if Seller delivers the Objection Notice to Buyer within the Objection Period, then Buyer shall have the right, within fifteen days after delivery of the Objection Notice, to modify the Closing Statement and to respond in writing to any matters that are the subject of the Objection Notice (such response, the “Revised Closing Statement”), and Seller shall have the right, within fifteen days after delivery of the Revised Closing Statement, to respond in writing to any items that were amended or otherwise modified in the Revised Closing Statement (such response, the “Revised Objection Notice”). Failure to provide a Revised Closing Statement or Revised Objection Notice shall not result in any waiver or loss of rights hereunder.

(d) If Buyer and Seller are unable to resolve all disagreements identified by Seller pursuant to Section 2.4(c) within forty-five days (or, if Buyer delivers the Revised Closing Statement, within sixty days) after delivery to Buyer of the Objection Notice notwithstanding their good faith efforts to resolve such disagreements, then all unresolved disagreements shall be submitted for final and binding resolution to a Neutral Accounting Firm to resolve such disagreements (the “Accounting Arbitrator”). The Accounting Arbitrator shall only consider those items and amounts set forth in the Closing Statement or the Revised Closing Statement, as the case may be, as to which Buyer and Seller have disagreed within the time periods set forth in Section 2.4(c) and on the terms specified above. The Accounting Arbitrator must resolve the matter in

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accordance with the terms and provisions of this Agreement. The Accounting Arbitrator shall deliver to Buyer and Seller, as promptly as practicable and in any event within thirty days after its appointment (unless Buyer and Seller mutually agree in writing to extend such period), a written report setting forth the resolution of any such disagreement determined in accordance with the terms of this Agreement and the resulting computation of the Closing Working Capital and Closing Indebtedness. The Accounting Arbitrator shall not assign a value to any item in dispute greater than the greatest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand, or less than the smallest value for such item assigned by Buyer, on the one hand, or Seller, on the other hand. The Accounting Arbitrator shall make its determination based on presentations and supporting material provided by the Parties and, at its election, pursuant to responses provided by the Parties to inquiries posed by the Accounting Arbitrator based on such presentations and supporting material but not pursuant to its independent review. The determination of the Accounting Arbitrator shall be final and binding. The Closing Working Capital and Closing Indebtedness as determined by the Accounting Arbitrator will be conclusive and binding upon the Parties and will constitute the Closing Working Capital and Closing Indebtedness for all purposes of this Section 2.4. The fees, costs and expenses of the Accounting Arbitrator shall be borne by Seller or Buyer, as the case may be, on the basis of a determination by the Accounting Arbitrator as to which Party was least correct (in net dollar terms) in its determination of the disputed items.

(e) As promptly as practicable and in all cases, within two Business Days (i) if no Objection Notice is delivered, after the Objection Period has expired, or (ii) if an Objection Notice is delivered, after all disputes are finally resolved pursuant to Section 2.4(d), (A) Seller shall pay to Buyer the amount, if any, by which the Estimated Purchase Price is greater than the Purchase Price, by wire transfer of immediately available funds to an account or accounts specified by Buyer to Seller in writing at least two Business Days prior to the date of expiration of the Objection Period or the date on which all disputes are finally resolved pursuant to Section 2.4(d), as applicable, or (B) Buyer shall pay to Seller the amount, if any, by which the Estimated Purchase Price is less than the Purchase Price, by wire transfer of immediately available funds to the Seller Accounts.

Section 2.5 Allocation. As soon as practicable, but no later than thirty days after the Closing Date, Buyer and Seller shall jointly prepare an allocation of the Estimated Purchase Price and the liabilities of the Company existing immediately prior to the Closing among the assets of the Company, based on the fair market value of such assets immediately prior to the Closing, including any allocation to any covenants entered into in connection with this Agreement (the “Allocation”). The Allocation shall be consistent with Section 1060 of the Code and the Treasury Regulations promulgated thereunder, and any analogous provisions of state, local or foreign Law. Promptly after obtaining the Closing Statement pursuant to Section 2.4, Buyer and Seller shall update the Allocation to reflect any adjustments in a manner consistent with past preparation of the Allocation. If any further adjustment is subsequently made to the Purchase Price or other relevant items Buyer and Seller will cooperate with each other to promptly amend the Allocation to reflect such adjustment. The Allocation (as so adjusted) shall be binding on Buyer, the Company, Seller and each of their respective Affiliates for all purposes, including for Tax and financial accounting purposes. Buyer, the Company, Seller and each of their respective Affiliates shall report, act, and file Tax Returns (including Internal Revenue

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Service Form 8594) in all respects and for all purposes consistent with the Allocation. Neither Buyer nor Seller nor their respective Affiliates shall take any position on any Tax Return, before any Governmental Authority or in any judicial proceeding that is inconsistent with the Allocation. If Buyer and Seller do not reach a written agreement as to the Allocation prior to the forty-fifth day after the Closing Date or, with respect to any revision of the Allocation, within a reasonable period of time (which shall be presumed to be forty-five days), then either Buyer or Seller may by notice to the other submit to the Accounting Arbitrator for determination of the Allocation in accordance with the procedural principles of Section 2.4(d) (including as to how the fees, costs and expenses of the Accounting Arbitrator are to be borne) and this Section 2.5.

ARTICLE III

CONDITIONS TO CLOSING

Section 3.1 Conditions to Each Party’s Obligations. The obligation of Buyer and Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction (or, to the extent permitted by applicable Law, the waiver by both Buyer and Seller in writing) of the following conditions as of the Closing Date:

(a) the waiting period under the HSR Act applicable to the transactions contemplated by this Agreement shall have expired or been terminated, and all other material authorizations, consents, orders or approvals of, or declarations or filings with, or expirations of waiting periods imposed by, any Governmental Authority necessary for the consummation of the transactions contemplated by this Agreement shall have been obtained or filed or shall have occurred; and

(b) no applicable Law enacted, entered, promulgated, enforced or issued by any Governmental Authority or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect.

If the Closing occurs, all closing conditions set forth in this Section 3.1 which have not been fully satisfied as of the Closing shall be deemed to have been fully and irrevocably waived by each of the Parties.

Section 3.2 Conditions to Buyer’s Obligations. The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction (or, to the extent permitted by applicable Law, the waiver by Buyer in writing) of the following conditions as of the Closing Date:

(a) the representations and warranties set forth in Articles IV and V (other than those representations and warranties that address matters as of a particular date, which shall be true and correct as of such particular date) shall be true and correct (without giving effect to any “material,” “materiality,” or “Material Adverse Effect” qualifications contained herein) at and as of the date of this Agreement and as of the Closing Date, except where the failure of such representations and warranties to be so true and correct would not reasonably be expected to, individually or in the aggregate, have a Material Adverse Effect;

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(b) the Company and Seller shall have performed in all material respects all of the covenants and agreements required to be performed by them under this Agreement at or prior to the Closing;

(c) there shall not have occurred since the Most Recent Balance Sheet Date any event, change, condition, circumstance or state of facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(d) no proceeding challenging or seeking to restrain or prohibit any of the transactions contemplated by this Agreement shall have been commenced by any Governmental Authority or any Person who is not a Party or an Affiliate thereof for the purpose of obtaining any order, decree, injunction, restraint or prohibition and be pending;

(e) Buyer shall have received payoff letters in customary form relating to the repayment of the Indebtedness as of the Closing Date together with UCC-3 termination statements and other terminations or releases necessary to terminate or release, as the case may be, all Liens relating to such Indebtedness and otherwise relating to the Company’s properties and assets (other than Permitted Liens);

(f) Seller shall have executed and delivered to Buyer a counterpart signature page to the Transitional Trademark License Agreement;

(g) Seller shall have executed and delivered to Buyer a counterpart signature page to the Transition Services Agreement; and

(h) Seller shall have delivered to Buyer each of the following:

(i) the certificate(s) representing the Securities, if any, in each case duly endorsed for transfer or accompanied by duly executed unit powers or similar transfer documents;

(ii) resignations effective as of the Closing Date from all non-Business Employee officers of the Company as Buyer shall have requested in writing and delivered to Seller not less than three Business Days prior to the Closing Date;

(iii) evidence that all Intercompany Obligations owed by the Company has been repaid or otherwise extinguished in full;

(iv) a copy of each of the certificate of formation and the certificate of good standing of the Company, certified by the Secretary of State of the State of Delaware, in each case, dated within ten days of the Closing Date;

(v) a certificate dated the Closing Date duly executed by an authorized officer of the Company (A) certifying as to an attached copy of the resolutions duly adopted by Seller as the managing member of the Company authorizing the Company to execute, deliver and perform this Agreement and the other

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agreements contemplated hereby and to consummate all of the transactions contemplated hereby and thereby and stating that such resolutions have not been amended, modified, revoked or rescinded, and (B) stating that the conditions specified in subsections (a) and (b) of this Section 3.2 have been satisfied; and

(vi) a certificate, in form and substance as required under Section 1445(b)(2) of the Code and the Treasury Regulations thereunder, stating that Seller is not a foreign person (as such term is defined in the Code).

If the Closing occurs, all closing conditions set forth in this Section 3.2 which have not been fully satisfied as of the Closing shall be deemed to have been fully and irrevocably waived by Buyer.

Section 3.3 Conditions to Seller’s Obligations. The obligations of Seller to consummate the transactions contemplated by this Agreement are subject to the satisfaction (or, to the extent permitted by Law, the waiver by Seller) of the following conditions as of the Closing Date:

(a) receipt by Seller of the Estimated Purchase Price pursuant to Section 2.3;

(b) the representations and warranties set forth in Article VI (other than those representations and warranties that address matters as of a particular date, which shall be true and correct as of such particular date) shall be true and correct in all material respects at and as of the Closing Date, except where the failure of such representations and warranties to be so true and correct would not, in the aggregate, have a material adverse effect on Buyer’s ability to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement;

(c) Buyer shall have performed in all material respects all the covenants and agreements required to be performed by it under this Agreement at or prior to the Closing (except that, for the avoidance of doubt, Buyer shall have performed in all respects the covenants and agreements set forth in Section 2.3);

(d) no proceeding challenging or seeking to restrain or prohibit any of the transactions contemplated by this Agreement shall have been commenced by any Governmental Authority or any Person who is not a Party or an Affiliate thereof for the purpose of obtaining any order, decree, injunction, restraint or prohibition and be pending;

(e) Buyer shall have delivered to Seller certified copies of the resolutions duly adopted by Buyer’s board of directors (or its equivalent governing body) authorizing Buyer’s execution, delivery and performance of this Agreement and the other agreements contemplated hereby, and the consummation of all transactions contemplated hereby and thereby; and

(f) Buyer shall have delivered to Seller a certificate, dated as of the Closing Date, stating that the conditions specified in subsections (a) and (b) of this Section 3.3 have been satisfied.

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If the Closing occurs, all closing conditions set forth in this Section 3.3 which have not been fully satisfied as of the Closing shall be deemed to have been fully and irrevocably waived by Seller.

Section 3.4 No Frustration of Closing Conditions. Neither Buyer nor Seller may rely on the failure of any condition to its obligation to consummate the transactions contemplated hereby set forth in Section 3.1, Section 3.2 or Section 3.3, as the case may be, to be satisfied if such failure was caused by such Party’s failure to use its reasonable best efforts (or commercially reasonable efforts, with respect to those matters contemplated by the applicable Sections of this Agreement) to satisfy the conditions to the consummation of the transactions contemplated hereby or other breach of a representation, warranty or covenant hereunder.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES REGARDING SELLER

Seller hereby represents and warrants to Buyer as follows:

Section 4.1 Authority. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Seller has all requisite power and authority and full legal capacity to execute and deliver this Agreement and to perform its obligations hereunder.

Section 4.2 Execution and Delivery; Valid and Binding Agreement. This Agreement has been duly executed and delivered by Seller, and each of the other agreements, documents and instruments contemplated hereby to be executed and delivered by Seller at the Closing, when so executed and delivered, shall have been duly executed and delivered by Seller. The execution, delivery and performance of this Agreement by Seller and the other agreements, documents and instruments contemplated hereby to be executed and delivered by Seller at the Closing and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement or the other agreements, documents and instruments contemplated hereby to be executed and delivered by Seller at the Closing. Assuming that this Agreement is the valid and binding agreement of Buyer and the Company, this Agreement constitutes, and each of the other agreements, documents and instruments contemplated hereby to be executed and delivered by Seller at the Closing, when so executed and delivered shall constitute, the valid and binding obligation of Seller, enforceable against such Seller in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and general principles of equity effecting the availability of specific performance and other equitable remedies.

Section 4.3 Noncontravention. Neither the execution and the delivery of this Agreement nor the consummation of the transactions contemplated hereby will (a) violate or conflict with, or require any authorization, consent, approval, exemption or other action by or

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notice to any Governmental Authority under any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Authority to which Seller is subject or any provision of its Governing Documents or (b) conflict with, result in a breach of, constitute a default under (or an event which, with notice or lapse of time or both, would constitute a default), result in the acceleration of, result in the loss of any material right under, create in any party the right to receive payment under, accelerate, terminate, modify or cancel, or require any notice under any written agreement, contract, lease, license, instrument or other written arrangement to which Seller is a party or by which it is bound or to which any of its assets is subject, except, in the case of clause (b) above, where the violation, conflict, breach, default, acceleration, termination, modification or cancellation would not have a Material Adverse Effect.

Section 4.4 Ownership of the Securities. Seller is the sole record and beneficial owner of the Securities. Seller has good and valid title to the Securities, free and clear of any and all Liens (other than Permitted Liens of the type described in clause (iii) of the definition thereof). The Securities will be sold, transferred and conveyed to Buyer pursuant to the procedures set forth in this Agreement, free and clear of all Liens (other than Permitted Liens of the type described in clause (iii) of the definition thereof).

Section 4.5 Brokers’ Fees. No broker, finder, financial advisor or investment banker, other than Piper Jaffray & Co. (whose fees will be paid by Seller), is entitled to any broker’s, finder’s, financial advisor’s, investment banker’s fee or commission or similar payment in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller.

Section 4.6 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ITS OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA), THE REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS ARTICLE IV ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF SELLER, INCLUDING ANY IMPLIED WARRANTIES. SELLER HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES, INCLUDING ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE SECURITIES OR THE BUSINESS OR ASSETS OF THE COMPANY, AND SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS OF THE COMPANY, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT EXCEPT TO THE EXTENT SET FORTH IN THIS AGREEMENT, SUCH ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND BUYER SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF

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SELLER AND THE COMPANY SET FORTH IN THIS ARTICLE IV AND IN ARTICLE V.

ARTICLE V

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

The Company hereby represents and warrants to Buyer as follows, except as disclosed in the Schedules (with specific reference to the particular section or subsection of this Agreement to which the information set forth in such Schedules relates; provided that any information set forth in one section of the Schedules shall be deemed to apply to each other section or subsection thereof or hereof to which (a) a specific cross reference to such other section or subsection is made, or (b) the applicability of such disclosure to such other section or subsection is reasonably apparent on its face):

Section 5.1 Organization; Qualification; Limited Liability Company Power; Officers, Authorization

(a) The Company is duly organized, validly existing and in good standing under the Laws of the State of Delaware. The Company is qualified to conduct business and is in good standing under the Laws of each jurisdiction where such qualification is necessary, except to the extent where failure to so qualify would not result in a Material Adverse Effect. The Company has all limited liability company power and authority to own, lease and use its properties and carry on its business as currently conducted, except where the failure to have such power or authority would not have a Material Adverse Effect.

(b) Schedule 5.1 lists the names and titles of the officers of the Company as of the date hereof. The Company has made available to Buyer correct and complete copies of the Governing Documents for the Company (as amended to date). The minute books (containing the written consents, and any other records of meetings, of Seller in its capacity as the sole member of the Company) and the unit certificate books for the Company are correct and complete in all material respects.

(c) The Company is not in default under or in violation in any material respect of any provision of its Governing Documents.

(d) The Company has the requisite limited liability company power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

(e) The execution, delivery and performance of this Agreement by the Company, and the execution, delivery and performance of the other agreements, documents and instruments contemplated hereby to be executed and delivered by the Company at the Closing, and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all requisite limited liability company action, and no other limited liability company proceedings are necessary to authorize the execution, delivery or performance of this Agreement and the other agreements, documents and instruments contemplated hereby to be executed and

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delivered by the Company at the Closing. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other Parties, this Agreement constitutes, and each of the other agreements, documents and instruments contemplated hereby to be executed and delivered by the Company at the Closing, when so executed and delivered shall constitute, the legal, valid and binding agreements of the Company, enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and general principles of equity effecting the availability of specific performance and other equitable remedies.

Section 5.2 Capitalization

(a) The limited liability company membership interests of the Company consist of 100 Common Units, all of which are issued and outstanding as of the date hereof. All of the Securities are owned beneficially and of record by Seller. All of the Securities have been duly authorized and validly issued and have not been issued in violation of any preemptive or similar right of any Person. There are no outstanding subscriptions, options, warrants, rights, convertible securities or other contracts or commitments of any character obligating the Company to issue limited liability company membership interests or any other equity interests of the Company or to repurchase or otherwise acquire any Securities. Except as set forth with respect to Section 5.7(f) on Schedule 5.7, there are no outstanding or authorized equity appreciation, phantom equity, profit participation or similar rights with respect to the Company. There are no outstanding contractual obligations binding on the Company restricting the transfer of, containing any right of first refusal with respect to, or granting any preemptive or anti-dilutive right with respect to, any of the Securities or any other equity interests in the Company. There are no voting trusts, proxies or other similar agreements or understandings with respect to voting the Securities.

(b) The Company has no, and never has had any, Subsidiaries and has no ownership interest in or right to acquire any ownership interest in any other Person. The Company is not a party to any agreement regarding the ownership or control of any Person.

Section 5.3 Noncontravention. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate or conflict with, or require any authorization, consent, approval, exemption or other action by or notice to any Governmental Authority under, (i) any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Authority to which Seller is subject or (ii) any provision of its Governing Documents or (b) conflict with, result in a breach of, constitute a default under (or an event which, with notice or lapse of time or both, would constitute a default), result in the acceleration of, result in the loss of any material right under, create in any party the right to receive payment under, accelerate, terminate, modify or cancel, or require any notice under any written agreement, contract, lease, license, instrument or other written arrangement to which the Company is a party or by which it is bound or to which any of its assets is subject, except, in the case of clauses (a)(i) and (b)

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above, where the violation, conflict, breach, default, acceleration, termination, modification or cancellation would not have a Material Adverse Effect, and except any such authorizations, consents, approvals, exemptions or other actions required under the HSR Act.

Section 5.4 Brokers’ Fees. No broker, finder, financial advisor or investment banker is entitled to any broker’s, finder’s, financial advisor’s, investment banker’s fee or commission or similar payment in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company.

Section 5.5 Financial Statements. Schedule 5.5 sets forth the following financial statements with respect to the Company’s business and operations (collectively, the “Financial Statements”): (a) the unaudited internal balance sheet as of December 31, 2008, December 31, 2009, December 31, 2010, and March 31, 2011; and (b) the unaudited internal income statements for the fiscal years ended December 31, 2008, December 31, 2009 and December 31, 2010 and the three months ended March 31, 2011. The balance sheet of the Company as of March 31, 2011 (the “Most Recent Balance Sheet Date”) is referred to herein as the “Most Recent Balance Sheet.” The Financial Statements have been prepared in accordance with GAAP throughout the periods covered thereby, present fairly, in all material respects, the financial condition of the Company’s business and operations as of such dates and the results of operations of the Company’s business and operations for such periods and are correct and complete in all material respects, except as otherwise set forth therein and subject to normal year-end adjustments (the effect of which would not, individually or in the aggregate, be material) and the absence of footnote disclosures normally made in the footnotes. The Financial Statements have been prepared from and are consistent in all material respects with the books and records of the Company. The Company is not a party to any off-balance sheet arrangements.

Section 5.6 No Undisclosed Liabilities The Company has no indebtedness, debts, liabilities, commitments or obligations of any kind whatsoever, whether or not fixed, contingent, accrued, asserted, matured or known, that would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto (collectively, “Liabilities”) arising out of facts or circumstances existing as of or prior to the Closing, except for Liabilities (a) shown, reflected, disclosed or reserved for on the Most Recent Balance Sheet, (b) incurred by the Company after the Most Recent Balance Sheet Date in the Ordinary Course of Business, (c) under Material Contracts, or (d) that, individually or in the aggregate, do not exceed $125,000 and have not had and would not reasonably be expected to have a Material Adverse Effect. Notwithstanding the foregoing, the representations and warranties contained in this Section 5.6 do not apply to any matter the subject matter of which is specifically covered by Section 5.3 (Noncontravention), Section 5.9 (Compliance with Laws), Section 5.10 (Tax Matters), Section 5.11 (Real Property), Section 5.12 (Intellectual Property Rights), Section 5.14 (Orders and Litigation), Section 5.16 (Employee Benefits) or Section 5.17 (Environmental Matters).

Section 5.7 Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent Balance Sheet Date (x) the Company has conducted its business in all material respects in the Ordinary Course of Business, and (y) there has not been any event, change, condition, state of facts or development, that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. In addition, and without limiting for the foregoing,

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expect as expressly permitted or expressly required by the terms of this Agreement, since the Most Recent Balance Sheet Date:

(a) the Company has not sold, leased, transferred or assigned any material portion of its tangible assets (other than the sale of inventory and property, plant and equipment in the Ordinary Course of Business);

(b) the Company has not sold, leased, transferred, assigned, licensed or otherwise transferred any rights under any patents, trademarks, trade names, copyrights, trade secrets or other intangible assets, in each case owned by the Company except, in each case, in the Ordinary Course of Business;

(c) the Company has not entered into, materially modified or amended, or terminated any Material Contract, other than, in each case, in the Ordinary Course of Business;

(d) no party (including the Company) has provided written notice of its election to accelerate, terminate, modify in a manner adverse to the Company or cancel any Material Contract;

(e) the Company has not experienced any material damage or destruction to any material portion of its assets taken as a whole;

(f) the Company has not granted any material bonus (including any transaction bonus or retention bonus), compensation or salary increase to any former or current employee (except for increases in base compensation in the prior to the date hereof not exceeding 5 percent individually or in the aggregate), or made, granted any increase in or established any employee benefit, severance, insurance, deferred compensation, pension, retirement or profit sharing plan or materially amended or terminated any existing Employee Benefit Plan (other than in the Ordinary Course of Business), or adopted any new Employee Benefit Plan;

(g) the Company has not paid, loaned or advanced any amount to, or sold, transferred or leased any of its material assets to, or entered into any agreement or arrangement with, any Affiliate of the Company (other than payments, loans, advances, sales, transfers, leases, agreements or arrangements between the Company and Seller);

(h) the Company has not made or committed to make any capital expenditure (or series of related capital expenditures) involving more than $100,000 individually, or $250,000 in the aggregate (other than capital expenditures in connection with the purchase of computers and related equipment in the Ordinary Course of Business, capitalized software or other budgeted capital expenditures disclosed to the Buyer prior to the date of this Agreement);

(i) the Company has not incurred, assumed or guaranteed any Indebtedness (other than Intercompany Obligations and any guaranty of Indebtedness that will be terminated at or prior to the Closing);

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(j) there has been no change in the Governing Documents of the Company;

(k) the Company has not declared, set aside or made any distribution with respect to its membership interests (whether in cash or in kind), or redeemed, purchased or otherwise acquired any of its membership interests;

(l) the Company has not settled or compromised any material Tax liability, nor has it made any new (or changed any existing) material Tax election, nor made any material change in accounting or material Tax principles, practices or policies; and

(m) the Company has not acquired, by merging or consolidating with, by purchasing equity securities or a material portion of the assets of, or by any other manner, any business or other Person or division of any Person;

(n) the Company has not changed any of its material accounting principles, policies, practices or methods from those in effect at the Most Recent Balance Sheet Date, except as may be required by GAAP;

(o) the Company has not settled or compromised any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy, including those relating to Taxes; and

(p) the Company has not committed to do any of the foregoing.

Section 5.8 Assets. The Company has good and indefeasible title to, or in the case of leased assets, valid leasehold interests in, all of its material assets shown on the Most Recent Balance Sheet unless disposed of in the Ordinary Course of Business since the Most Recent Balance Sheet Date, whether tangible or intangible, in all cases free and clear of any Liens (other than Permitted Liens).

Section 5.9 Compliance with Laws. The Company is, and, for the past two years has been, in compliance with all Laws that are or were applicable to it or to the conduct or operation of its business or the ownership, lease or use of any of its assets, except for any such non-compliance as would not have a Material Adverse Effect. The Company has not in the past two years received any written notice from any Governmental Authority or any other Person regarding any actual, alleged or potential violation of, or failure to comply with, any Law, or any actual, alleged or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, except, in each case, for any such violation, failure, undertaking or burden as would not have a Material Adverse Effect. Notwithstanding the foregoing, the representations and warranties contained in this Section 5.9 do not apply to any matter the subject matter of which is specifically covered by Section 5.10 (Tax Matters), Section 5.16 (Employee Benefits) or Section 5.17 (Environmental Matters).

Section 5.10 Tax Matters. The Company has properly filed (or has caused to be filed) all material Tax Returns that were required to be filed with respect to the Company when due (taking into account extensions), and all such material Tax Returns are true, complete and accurate in all material respects.

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(b) All material Taxes for which the Company is liable (regardless of whether or not such Taxes were shown as due on any Tax Return) have been timely paid. The Company has withheld and paid over to the appropriate Taxing Authority all material Taxes which it is required to withhold from amounts paid or owing to any employee, independent contractor, equityholder, creditor or other third party. All liability for material Taxes with respect to Tax Returns not filed through the date of the most recent Financial Statements has been adequately provided for in the Financial Statements in accordance with and to the extent required by GAAP.

(c) The Company is not the beneficiary of any extension of time within which to file any Tax Return.

(d) No Taxing Authority has at any time asserted any deficiency or assessment, or proposed in writing any adjustment, for any Taxes against the Company, and, to the Knowledge of the Company, there is no current audit or investigation by any Taxing Authority with respect to any Tax liability of the Company.

(e) There are no Liens on any of the assets or properties of the Company (including any Liens in respect of Taxes), other than Permitted Liens.

(f) The Company has not engaged in any “listed transaction” as defined in Section 6707A(c)(2) of the Code and Treasury Regulations Section 1.6011-4(b)(2).

(g) The Company has been disregarded as an entity separate from its owner for U.S. federal Income Tax purposes at all times since its formation by Seller.

(h) The Company is not and has not been party to any Tax allocation or sharing agreement, nor does the Company have any liability for the Taxes of any other Person as a transferee or successor.

(i) There are no outstanding agreements, waivers, arrangements or requests for such agreements, waivers or arrangements extending the statutory period of limitations applicable to any claim for, or period of collection or assessment of, Taxes of or with respect to the Company.

(j) This Section 5.10 shall be the sole and exclusive representation and warranty with respect to Tax matters.

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Section 5.11 Real Property.

(a) The Company does not own any real property.

(b) Schedule 5.11 sets forth the address of the Leased Real Property (including the date and name of the parties to each Lease). The Company has made available to Buyer prior to the date hereof a true and complete copy of each Lease document. With respect to each Lease:

(i) such Lease is legal, valid, binding and in full force and effect, subject to proper authorization and execution of such Lease by the other party thereto and except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting the rights of creditors generally; and

(ii) neither the Company nor, to the Knowledge of the Company, any other party to the Lease is in material breach of or material default under such Lease, and, to the Knowledge of the Company, no event has occurred or circumstance exists that, with the delivery of notice, the passage of time or both, would constitute such a breach or default, or permit the termination, modification or acceleration of rent under such Lease.

Section 5.12 Intellectual Property Rights.

(a) Schedule 5.12 contains a true, correct and complete list, as of the date hereof, of (i) all patents, patent applications, trademark registrations, trademark applications, Internet domain name registrations, copyright registrations and copyright applications, in each case, that are (A) owned by the Company, (B) exclusively licensed to the Company, or (C) owned or exclusively licensed by Seller or an Affiliate of the Company and which comprises Business Intellectual Property Rights (collectively, the “Registered Intellectual Property Rights”), and (ii) all material unregistered trademarks included in the Business Intellectual Property Rights. For each of the Registered Intellectual Property Rights, Schedule 5.12 contains an indication of the jurisdiction of application or registration, the application or registration number (as applicable), and the owner of record (if other than the Company). To the Knowledge of the Company, all of the Intellectual Property Rights required to be listed on Schedule 5.12 as Registered Intellectual Property Rights are valid, subsisting and enforceable.

(b) The Company (i) exclusively owns, free and clear of all Liens (other than Permitted Liens) or (ii) has the right to use the Intellectual Property Rights material to the operation of its business as presently conducted by the Company (collectively, the “Business Intellectual Property Rights”).

(c) Schedule 5.12 identifies all Business Intellectual Property Rights that are owned by Seller or any other Affiliate of the Company.

(d) The Company has not, in the past two years, received any written claim or notice either (i) directly contesting the validity, enforceability, ownership,

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registerability, or use of, or the Company’s rights in or to, any of the Business Intellectual Property Rights, or (ii) alleging that the Company has infringed or misappropriated the Intellectual Property Rights of other any other Person.

(e) To the Knowledge of the Company, the operation of the business of the Company as currently conducted does not infringe, misappropriate or violate any Intellectual Property Rights or any other rights of any other Person. There is no pending or, to the Knowledge of the Company, threatened suit against the Company alleging that the Company infringed, misappropriated or otherwise violated the Intellectual Property Rights or other rights of other any other Person.

(f) The Company has taken commercially reasonable steps to protect and maintain (i) the security of its software, computer systems, network infrastructure, data, databases, and other information technology equipment and data used in the business of the Company and (ii) the confidentiality of all trade secrets and other confidential information owned by the Company.

(g) The Company maintains a policy whereby (i) all employees, consultants and independent contractors are required to maintain the confidentiality of any confidential information owned by the Company; and (ii) any employees, consultants and independent contractors that have contributed to the development of any invention, improvement, discovery or work of authorship made or conceived of in connection with their employment are required to assign their interest in such invention, improvement, discovery or work of authorship to Company.

(h) No employee, former employee, or past or present consultant or independent contractor of the Company, Seller or any of the Company’s Affiliates has any ownership right, title or interest, directly or indirectly, in whole or in part, in any Business Intellectual Property Rights.

(i) Upon and after the Closing, except for the rights granted under the Transitional Trademark License Agreement, the Company will own or have the right to use, license and transfer the Business Intellectual Property Rights in the same manner and on the same terms that the Company had immediately prior to the Closing.

(j) After Closing the IT Resources will be held by or will be available for use by the Company in accordance with the terms of the Transition Services Agreement.

(k) The IT Resources have been maintained in all material respects in accordance with industry standards applicable to the Company Business. The tangible IT Resources are in good working condition to perform all information technology operations necessary for the conduct of the Company Business. Seller has taken commercially reasonable steps to provide for the back-up and recovery of the data and information critical to the conduct of the business of the Company without material disruption to, or material interruption in, the conduct of such business.

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Section 5.13 Material Contracts. Schedule 5.13 lists the following written contracts and other written agreements to which the Company is a party (collectively, the “Material Contracts”):

(a) any agreement with the ten largest suppliers and the ten largest customers of the Company (by dollar amount), each on a consolidated basis for the fiscal year ended December 31, 2010 and setting forth the approximate dollar amount and the approximate percentage of consolidated gross purchases or consolidated gross sales, as applicable, attributable to such supplier or customer, as applicable;

(b) any agreement (or group of related agreements) for the lease of personal property to or from any Person providing for lease payments in excess of $100,000 per annum;

(c) except for any agreement entered into in the Ordinary Course of Business, any agreement (or group of related agreements) for the purchase or sale of supplies, products or other personal property, or for the furnishing or receipt of services;

(d) any agreement, commitment, or outstanding purchase order relating to capital expenditures that involves total remaining payments by the Company of more than $100,000.

(e) any agreement concerning a partnership or joint venture;

(f) any agreement containing a covenant not to compete granted by the Company in favor of a third party that impairs the business as currently conducted, or which expressly restricts the ability of the Company to conduct business of any type or in any location;

(g) any agreement (i) relating to the licensing by or to the Company of Business Intellectual Property Rights (other than licenses of commercially available, off-the-shelf software) and (ii) that is material to the business of the Company;

(h) any agreement (or group of related agreements) under which the Company has incurred, assumed or guaranteed any Indebtedness (other than Intercompany Obligations) or any agreement evidencing or under which the Company has imposed a Lien (other than a Permitted Lien) on any of its assets, tangible or intangible (other than any such agreement that will be terminated at or prior to the Closing);

(i) any agreement with any Affiliate of the Company (other than any such agreement that will be terminated at or prior to the Closing);

(j) any agreement, plan or arrangement by which the Company is bound with regard to employment, consulting services, compensation, bonus, incentive, equity purchase or other equity-based compensation or right, severance pay, retention bonuses, or success fees, other than (i) any Employee Benefit Plan set forth on Schedule 5.13, (ii) any agreements that either (A) require future payments by the Company of less than $100,000, (B) have a remaining term of less than one year and can be terminated by the

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Company upon notice of 60 days or less without material cost or penalty, or (iii) any oral “at will” employment arrangements;

(k) any agreement under which the Company has advanced or loaned any amount to any employee (other than advances in the Ordinary Course of Business);

(l) any settlement, conciliation or similar agreement entered by any Governmental Authority whereby the Company is under an obligation to perform activities, refrain from activities and/or pay money; and

(m) any other agreement, contract, lease, license, instrument or commitment binding upon the Company, in each case not included in clauses (a) through (l) above, which has future required payments to or by the Company in excess of $100,000 per annum and is not terminable by the Company upon notice of sixty days or less without substantial cost or penalty.

The Company has made available to Buyer an accurate and complete, in all material respects, copy of each Material Contract. With respect to each Material Contract: (i) such Material Contract is legal, valid, binding and enforceable against the Company, and, to the Knowledge of the Company, the other parties thereto, in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Law affecting the rights of creditors generally; (ii) the Company is not (with or without the lapse of time or the giving of notice, or both) in breach or default and, to the Knowledge of the Company, no other party to such Material Contract is in breach or default thereunder, and no event has occurred or circumstance exists that would constitute a breach or default by the Company or, to the Company’s Knowledge, by any such other party; (iii) the Company has performed all material obligations previously required to be performed by it under such Material Contract; (iv) to the Company’s Knowledge, no event has occurred or circumstance exists that would permit termination, cancellation, acceleration, suspension or adverse modification of any obligation or loss of any benefit under, result in any payment becoming due under, or result in the imposition of any Lien on any of the Company’s securities or any of the properties or assets of the Company under any such Material Contract (other than Permitted Liens) nor has the Company given or received written notice alleging the same; and (v) the other party to the Material Contract has not repudiated in writing any portion of such Material Contract.

Section 5.14 Orders and Litigation. Except as set forth in Schedule 5.14, the Company (a) is not subject to any outstanding injunction, judgment, order, decree, administrative proceeding, ruling or charge and (b) is not a party or, to the Knowledge of the Company, threatened to be made a party to, any material action, suit, proceeding, hearing, or investigation commenced, brought, conducted or heard by or before any Governmental Authority or any arbitrator or arbitration panel.

Section 5.15 Labor Matters. With respect to the Business Employees:

(a) there is no collective bargaining agreement with any labor organization;

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(b) to the Knowledge of the Company, as of the date hereof, no union organizing or decertification efforts are underway or threatened in writing, and the Company is not in receipt of written notice of any union representation petition or demand for recognition; and

(c) no labor strike, work stoppage, slowdown, or other material labor dispute is underway or, to the Knowledge of the Company, threatened in writing.

Section 5.16 Employee Benefits

(a) Schedule 5.16(a) sets forth a true and complete list of each material Seller Benefit Plan.

(b) The Company does not maintain, sponsor, contribute to, or have any liability, whether contingent or otherwise, in respect of any “multiemployer plan” as defined in Section 3(37) of ERISA or any defined benefit pension plan (as defined in Section 3(35) of ERISA) or plan subject to Section 412 of the Code or Section 302 of ERISA.

(c) Each Seller Benefit Plan has been maintained, funded and administered in compliance with its terms and the requirements of applicable Law, including ERISA and the Code.

(d) Each Seller Benefit Plan which is intended to qualify under Section 401(a) of the Code has either received a favorable determination letter from the Internal Revenue Service (the “IRS”) as to its qualified status or may rely upon an opinion letter for a prototype plan and, to the Knowledge of the Company, there are no facts or circumstances that could reasonably be expected to cause the loss of such qualification.

(e) Each Seller Benefit Plan or other arrangement that is a “nonqualified deferred compensation plan” (as defined for purposes of Section 409A(d)(1) of the Code) is in all material respects in documentary and operational compliance with Section 409A of the Code and the applicable guidance issued thereunder.

(f) No Seller Benefit Plan or other arrangement to which Seller or any Seller Subsidiaries is a party provides for the gross-up or reimbursement to Business Employees for any Taxes imposed under Section 4999 or 409A of the Code.

(g) Except as required by Law, no Seller Benefit Plan or other agreement or arrangement provides (or could require Seller or any Seller Subsidiary to provide) any post-employment medical or life insurance benefits to any Business Employees.

(h) The consummation of the transactions contemplated by this Agreement (including in combination with other events or circumstances) will not (i) entitle any Business Employee to any payment, (ii) result in the acceleration of the time of payment or vesting of compensation or benefits, as applicable, or (iii) increase the amount of any payment to any Business Employee, in each case, under any Seller Benefit Plan.

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Section 5.17 Environmental Matters

(a) The Company is in compliance with all Environmental Laws, except for any such non-compliance as would not have a Material Adverse Effect.

(b) The Company possesses and is in compliance with any permits, licenses or other authorizations required pursuant to Environmental Laws for the occupation of the Leased Real Property and the operation of the business of the Company as currently conducted, except for any such failure to possess or comply as would not have a Material Adverse Effect.

(c) The Company has not, prior to the date hereof, received any written notice of any actual or alleged violation of Environmental Laws, or any liability, including any investigatory, remedial or corrective obligations, under Environmental Laws, in each case, relating to the business of the Company, the subject matter of which notice would have a Material Adverse Effect.

(d) This Section 5.17 sets forth the sole and exclusive representations and warranties of the Company with respect to environmental matters, including all matters relating to Environmental Laws.

Section 5.18 Insurance. Schedule 5.18 contains a summary as of the date hereof of all current material policies or binders of insurance (showing as to each policy or binder the carrier, policy number, coverage limits, expiration dates, annual premiums, deductibles and a general description of the type of coverage provided and policy exclusions) maintained by Seller solely to the extent relating to the properties, assets, personnel and operation of the business of the Company. All such insurance policies (a) are in full force and effect, (b) are valid and enforceable, and (c) include the Company as an additional insured under such policy. The premiums due and payable under such insurance policies have been timely paid in accordance with the terms of such policies. As of the date hereof, neither the Company nor any Company Affiliate has received or given written notice of cancellation or non-renewal with respect to any of such insurance policies in the past two years. Neither the Company nor any Company Affiliate is in material default with respect to any such insurance policies and in the past two years there has not been any material claim by the Company or any Company Affiliate under any such insurance policies relating to the business of the Company that has been denied. The Company does not maintain any insurance policy.

Section 5.19 Affiliate Transactions.  As of the date hereof and the Closing Date, and during the past two years, no director, officer, employee or greater than 5 percent equityholder of the Company or Affiliate (other than a portfolio company of such Person) of any such Person is a party to any transaction with the Company, including any contract providing for the employment of, furnishing of services by, rental of real or personal property from or otherwise requiring payments to any such Person or firm, other than employment-at-will arrangements in the Ordinary Course of Business.

Section 5.20 Customers and Suppliers.  None of the Suppliers or Customers of the Company set forth on Schedule 5.20 has informed the Company in writing, or to the

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Knowledge of the Company by other means, that it intends to terminate or materially reduce its relationship with the Company.

Section 5.21 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES. NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO BUYER OR ITS RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION (INCLUDING ANY FINANCIAL PROJECTIONS OR OTHER SUPPLEMENTAL DATA) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS ARTICLE V, THE COMPANY EXPRESSLY DISCLAIMS ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED, AS TO THE CONDITION, VALUE OR QUALITY OF THE SECURITIES OR BUSINESS OR ASSETS OF THE COMPANY, AND THE COMPANY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS, ANY PART THEREOF, THE WORKMANSHIP THEREOF, AND THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT EXCEPT TO THE EXTENT SET FORTH IN THIS AGREEMENT, SUCH ASSETS ARE BEING ACQUIRED “AS IS, WHERE IS” ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND BUYER SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF AS WELL AS THE REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY SET FORTH IN ARTICLE IV AND THIS ARTICLE V.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES REGARDING BUYER

Buyer hereby represents and warrants to Seller and the Company as follows:

Section 6.1 Organization and Power. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder.

Section 6.2 Authorization; Valid and Binding Agreement. The execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action, and no other corporate proceedings on its part are necessary to authorize the execution, delivery or performance of this Agreement. This Agreement has been duly executed and delivered by Buyer and assuming the due authorization, execution and delivery by the other Parties constitutes a legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy Laws, other similar Laws affecting creditors’ rights and general principles of equity effecting the availability of specific performance and other equitable remedies.

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Section 6.3 No Breach. Subject to compliance with the requirements of the HSR Act, Buyer is not subject to or obligated under its Governing Documents, any Law, or any agreement, instrument, license, franchise or permit, or any order, writ, injunction or decree, which would be breached or violated by Buyer’s execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby.

Section 6.4 Governmental Consents, etc. Except as pursuant to the applicable requirements of the HSR Act, no consent, approval or authorization of any Governmental Authority or any other party or Person is required to be obtained by Buyer in connection with its execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. Buyer is not subject to any outstanding judgment, order or decree of any Governmental Authority.

Section 6.5 Litigation. As of the date hereof, there are no actions, suits or proceedings pending or, to the Knowledge of Buyer, threatened against or affecting Buyer at Law or in equity, or before or by any Governmental Authority, which challenge or seek to prevent, enjoin, alter or materially delay the transactions contemplated hereby.

Section 6.6 Brokers’ Fees. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Buyer.

Section 6.7 Available Cash. As of the date of this Agreement, Buyer has and, as of the Closing Date, will have sufficient cash in immediately available funds and/or available borrowing capacity to enable Buyer to timely perform its obligations hereunder subject to certain conditions set forth therein, including to (a) pay in full all amounts payable by Buyer pursuant to Section 2.3; (b) pay in full any obligation of the Company which may become due as a result of this Agreement or the consummation of the transactions contemplated hereby; (c) pay in full all fees, costs and expenses payable by Buyer in connection with this Agreement and the consummation of the transactions contemplated hereby; and (d) provide for the working capital needs of the Company following the consummation of the transactions contemplated hereby.

Section 6.8 Investment Representation. Buyer is purchasing the Securities for its own account for investment purposes and not with a view to or for sale in connection with any public distribution of such securities in violation of any federal or state securities Laws. Buyer is an “accredited investor” as defined in Regulation D promulgated by the United States Securities and Exchange Commission under the Securities Act. Buyer acknowledges that it is informed as to the risks of the transactions contemplated hereby and of ownership of the Securities. Buyer acknowledges that the Securities have not been registered under the Securities Act or any United States state or non-United States securities Laws and that the Securities may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless such transfer, sale, assignment, pledge, hypothecation or other disposition is pursuant to the terms of an effective registration statement under the Securities Act and are registered under any applicable state or non-United States securities Laws or pursuant to an exemption from registration under the Securities Act and any applicable state or non-United States securities Laws.

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Section 6.9 Solvency. Immediately after giving effect to the transactions contemplated by this Agreement, neither Buyer nor the Company will (a) be insolvent (either because its financial condition is such that the sum of its debts is greater than the fair value of its assets or because the fair salable value of its assets is less than the amount required to pay its probable liability on its existing debts as they mature), (b) have unreasonably small capital with which to engage in its business or (c) have incurred debts beyond its ability to pay as they become due.

ARTICLE VII

PRE-CLOSING COVENANTS

The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing (except as otherwise expressly stated to apply to a different period):

Section 7.1 Commercially Reasonable Efforts; Cooperation.

(a) Except as otherwise set forth in this Agreement, each of the Parties shall use its commercially reasonable efforts to take or cause to be taken all actions, and to do or cause to be done all things, reasonably necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable on or prior to the Outside Date. Without limiting the generality of the foregoing, (i) no Party shall take any action, or permit any of such Party’s directors, officers, managers, members, employees, Subsidiaries and other Affiliates to take any action to diminish the ability of any other Party to consummate, or delay any other Party’s ability to consummate, the transactions contemplated hereby, including taking any action that is intended or would reasonably be expected to result in any of the conditions to any other Party’s obligations to consummate the transactions specified in Article III to not be satisfied, and (ii) the Parties shall (and shall cause their respective directors, officers, managers, members, employees, Subsidiaries and other Affiliates, and use their reasonable best efforts to cause their respective Affiliates, employees, agents, attorneys, accountants and representatives) to consult and fully cooperate with and provide reasonable assistance to each other in (A) subject to the other provisions of this Section 7.1, obtaining all necessary consents or other permission or action by, and giving all necessary notices to and making all necessary filings, meetings or appearances with and applications and submissions to, any Governmental Authority or other Person and (B) in general, consummating and making effective the transactions contemplated by this Agreement. Notwithstanding the foregoing, in no event shall Seller or the Company be obligated to pay any consent fee or other monetary inducement or other financial or other accommodation to any Person or to offer in connection with its obligations under this Section 7.1.

(b) Each of Buyer and Seller shall (i) make or cause to be made all filings required of each of them or any of their respective Subsidiaries or Affiliates under the HSR Act with respect to this Agreement and the transactions contemplated hereby as promptly as practicable after the date hereof (but in any event within ten Business Days after the date hereof), (ii) supply as promptly as practicable any additional information

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and documentary materials that may be requested from the United States Federal Trade Commission, the Antitrust Division of the United States Department of Justice or any other Governmental Authority pursuant to the HSR Act, and to use its reasonable best efforts to take or cause to be taken all actions necessary, proper or advisable under applicable Laws to cause the expiration or early termination of the applicable waiting periods under the HSR Act, and (iii) cooperate with one another (A) in promptly determining whether any filings are required to be or should be made or consents, approvals, permits or authorizations are required to be or should be obtained under any other federal, state or foreign Law contemplated by this Agreement and (B) in promptly making any such filings, furnishing information required in connection therewith and seeking to obtain timely any such consents, permits, authorizations, approvals or waivers. Without limiting the foregoing, Buyer, Seller and the Company shall request, and shall cause their respective Affiliates to request, early termination of any waiting period under the HSR Act. Buyer shall pay the filing fees required under the HSR Act in connection with such filings.

(c) Upon the terms and subject to the conditions set forth in this Agreement and applicable Law, Buyer and Seller shall (i) promptly notify the other Party of any communication to that Party from any Governmental Authority in respect of any filing, investigation or inquiry concerning this Agreement or the transactions contemplated by this Agreement, (ii) subject to reasonable privilege or confidentiality restrictions, permit the other Party the opportunity to review in advance all the information relating to Seller and its Subsidiaries (and any parent included as part of such filing) or Buyer and its Subsidiaries, as the case may be, that appears in any filing made with, or written materials submitted to, any third party or any Governmental Authority in connection with the Agreement and the transactions contemplated by this Agreement and incorporate the other Party’s reasonable comments; (iii) to the extent practicable, not participate in any substantive meeting or discussion with any Governmental Authority in respect of any filing, investigation, or inquiry concerning this Agreement and the transactions contemplated by this Agreement unless it consults with the other Party in advance, and, to the extent permitted by such Governmental Authority, gives the other Party the opportunity to attend; and (iv) subject to reasonable privilege or confidentiality restrictions, furnish the other Party with copies of all correspondences, filings, and written communications between them and their Subsidiaries and representatives, on the one hand, and any Governmental Authority or its respective staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement. Seller and Buyer may, as each deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other under this Section 7.1(c) as “outside counsel only.” Such materials and the information contained therein shall be given only to the outside legal counsel and any retained consultants or experts of the recipient and will not be disclosed by such outside counsel to employees, officers or directors of the recipient, unless express written permission is obtained in advance from the source of the materials (Seller or Buyer, as the case may be). Each of Seller and Buyer shall promptly notify the other Party if such Party becomes aware that any third party has any objection to the Agreement on antitrust or anti-competitive grounds.

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(d) Each of Buyer and Seller shall use its reasonable best efforts to resolve any objections, if any, as may be asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement under the HSR Act in order to enable the transactions contemplated by this Agreement to be consummated as promptly as practicable. Notwithstanding anything to the contrary herein, neither Buyer nor any of its Affiliates shall be required to (i) initiate any legal action against, or defend any litigation brought by any Governmental Authority in order to avoid the entry of, or to effect the dissolution of, any injunction, temporary restraining order or other order in any suit or proceeding which would otherwise have the effect of preventing or materially delaying the Closing, or which may require any undertaking or condition set forth in clause (ii) below, or (ii) to propose or agree to accept any undertaking or condition, to enter into any consent decree, to make any divestiture or accept any operational restriction or to take or commit to take any action that could reasonably be expected to limit (A) the freedom of action of Buyer, the Company or their respective Subsidiaries and/or Affiliates, as applicable, with respect to the operation of, or Buyer’s or its Subsidiaries’ or Affiliates’ ability to retain, the Company, or any of its businesses or assets or (B) the ability to retain, own or operate any portion of the business of Buyer, the Company or their respective Subsidiaries and Affiliates or alter or restrict in any way the business or commercial practices of Buyer, the Company or their respective Subsidiaries and Affiliates.

Section 7.2 Conduct of Business. From and after the date hereof, Seller shall, and shall cause the Company to, conduct the Company Business in all material respects in the Ordinary Course of Business, and use commercially reasonable efforts to maintain in all material respects its relationships with key employees, suppliers, customers and others having business relationships with it. Without limiting the foregoing, except as otherwise expressly required by this Agreement or as may be consented to in advance in writing by Buyer (such consent not to be unreasonably withheld, delayed or conditioned), from and after the date hereof, Seller shall not, and Seller shall cause the Company not to, take any of the actions set forth in Section 5.7(a) through (p) with respect to the business of the Company.

Section 7.3 Other Information and Events. Prior to the Closing, the Company shall use commercially reasonable efforts to furnish to Buyer:

(a) promptly, and in any event within five Business Days, after the Company, or Seller, receives written notice from any party to any Material Contract that the Company is in default thereunder, a copy of such notice; and

(b)    promptly, and in any event within five Business Days, after the commencement thereof, notice in writing of all material legal proceedings by or before any Governmental Authority commenced against the Company or Seller during the period after the date hereof and prior to the Closing.

Section 7.4 Access; Confidentiality

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(a) During the period from the date of this Agreement to the earlier of the Closing and the date that this Agreement is terminated in accordance with its terms (the “Pre-Closing Period”), Buyer shall be entitled to reasonable access, during normal business hours and upon reasonable advance notice to Seller, to all premises, properties, personnel, records and contracts relating to the Company Business (for the sole purpose of evaluating the Company Business), and Seller shall cooperate to the extent such access does not unreasonably interfere with the operations, activities and employees of Seller or the Company; provided, however, that the foregoing access right shall not include the right to have access to any information the disclosure of which is restricted by contract or applicable Law or which could result in the waiver of any legal privileges. Except in response to a request contemplated by the first sentence of this Section 7.4(a), during the Pre-Closing Period, Buyer shall not, and shall cause its representatives and agents not to, contact or hold discussions with any suppliers, customers, vendors, licensors, licensees or employees of Seller or the Company regarding the transactions contemplated by this Agreement or the Company Business without the prior written consent of Seller (which consent shall not be unreasonably withheld, delayed or conditioned), and in any event only with the participation of representatives of Seller or the Company as determined in the sole discretion of Seller. No investigation pursuant to this Section 7.4, shall affect any representation or warranty by the Company or Seller in this Agreement or any condition to the obligations of Buyer hereunder.

(b) Buyer and its representatives shall hold any information furnished to it or its representatives pursuant to Section 7.4(a) in accordance with that certain letter agreement, dated as of April 12, 2011, by and between Seller and Parent (the “Confidentiality Agreement”).

Section 7.5 Public Announcements . During the Pre-Closing Period, Buyer, on the one hand, and Seller and the Company, on the other hand, shall consult with one another and seek one another’s approval before issuing any press release, or otherwise making any public statements, with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation and approval; provided that each Party may make any such announcement which it in good faith believes, based on advice of counsel, is necessary or advisable in connection with any requirement of Law, it being understood and agreed that each Party shall provide the other Parties with copies of any such announcement in advance of such issuance; provided, further, that each Party may make internal announcements to their respective employees that are not inconsistent in any material respects with the Parties’ prior public disclosures regarding the transactions contemplated by this Agreement.

ARTICLE VIII

POST-CLOSING COVENANTS

Section 8.1 Access to Books and Records. From and after the Closing, Buyer shall, and shall cause the Company to, provide Seller and its authorized representatives with reasonable access (for the purpose of examining and copying), during normal business hours, after appropriate advance notice to the books and records of the Company with respect to periods

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beginning on or prior to the Closing Date (i) in connection with any audit or investigation of, insurance claims by, legal proceedings against, disputes involving or governmental investigations of Seller or any of its Affiliates, or (ii) in order to enable Seller to comply with its financial or Tax reporting obligations or obligations under this Agreement, in either case in a manner so as not to unreasonably interfere with the Company’s business and subject to the confidentiality obligations set forth in Section 8.6. Unless otherwise consented to in writing by Seller, Buyer shall not permit the Company, for a period of seven years following the Closing Date, to destroy, alter or otherwise dispose of any books and records of the Company, relating to periods beginning on or prior to the Closing Date without first giving reasonable prior written notice to Seller and offering to surrender to Seller such books and records or such portions thereof. If Seller does not confirm its intention in writing to take ownership and possession of such books and records within thirty days after such notice is delivered, then the Company may proceed with the disposition of such books and records.

Section 8.2 Employee Benefits. Effective as of the Closing, Buyer shall, or shall cause the Company or its or their respective Affiliates to, (i) continue the employment of all Business Employees on terms and conditions that are substantially similar to the terms and conditions applicable to the Business Employees immediately prior to the Closing, and (ii) provide base compensation to the Business Employees that is equivalent to the compensation provided to such Business Employees immediately prior to the Closing.

(b) Effective as of the Closing, Buyer shall, or shall cause the Company or its or their respective Affiliates to provide benefit and compensation plans, programs, agreements and arrangements to the Business Employees on the same basis as and in the aggregate are substantially comparable to the benefit and compensation plans, programs, agreements and arrangements provided to similarly situated Buyer employees.

(c) For all purposes under the benefit and compensation plans, programs, agreements and arrangements of the Company, Buyer or any of their Affiliates providing benefits or compensation to Business Employees after the Closing Date (the “New Plans”), each Business Employee shall be credited with his or her years of service with Seller or any of its Affiliates (including the Company), as applicable, before the Closing Date, except to the extent such credit would result in a duplication of benefits. In addition, and without limiting the generality of the foregoing: (i) each Business Employee shall be immediately eligible to participate, without any waiting time, in each New Plan; and (ii) for purposes of each New Plan providing medical, dental, pharmaceutical or vision benefits to any Business Employee, Buyer shall cause all pre-existing condition exclusions and actively-at-work requirements of such New Plan to be waived for such Business Employee and his or her covered dependents, and Buyer shall cause any eligible expenses incurred by such Business Employee and his or her covered dependents under any Seller Benefit Plan or other New Plan during the portion of the plan year ending on the date such Business Employee’s participation in the corresponding New Plan begins to be taken into account under such New Plan for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Business Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such New Plan.

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(d) Nothing in this Section 8.2 shall cause any current or former Business Employee or employee, officer, manager, director or contractor of the Company (including, in each case, any of their eligible dependants or other beneficiaries) to be a third party beneficiary of, or have any right or claim under, this Agreement or to be interpreted as an amendment of any benefit and compensation plans, programs, agreements and arrangements of the Buyer or Seller.

Section 8.3 Change of Name. Except as set forth in the Transitional Trademark License Agreement, within three Business Days following the Closing, the Company shall change the corporate name of the Company to remove “MediMedia” from its corporate name, and, from and after the Closing Date, Buyer shall not, nor shall it permit any of its Affiliates (including the Company) or authorize any other Person to, use the trade name “MediMedia,” or any trade names similar thereto or derived therefrom, in any manner (including as a company name or d/b/a/, in any of its literature, sales materials or in connection with any products or services or otherwise).

Section 8.4 Tax Matters.

(a) Buyer, the Company and Seller shall cooperate fully, as and to the extent reasonably requested by the other Party(ies), in connection with any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party’s(ies’) request) the provision of records and information that are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Company and Seller agree to retain all books and records with respect to Tax matters pertinent to the Company relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority.

(b) Any real property transfer or gains, stamp, stock transfer, documentary, sales, use, registration and other such similar Taxes, together with all conveyance fees, recording charges and other fees and charges, incurred in connection with the transactions contemplated by this Agreement (collectively, “Transfer Taxes”), including any penalties or interest with respect thereto, shall be borne 50 percent by Buyer and 50 percent by Seller. Any Tax Returns required to be filed in connection with such Transfer Taxes shall be filed by the Party that customarily has primary responsibility for filing such Tax Returns pursuant to applicable Tax Laws. Buyer and Seller agree to cooperate in the filing of any returns with respect to Transfer Taxes, including promptly supplying any information in their possession that is reasonably necessary to complete such returns.

(c) Buyer acknowledges and agrees that the Company will not comply with the provisions of any bulk transfer or similar Laws of any jurisdiction in connection with the transactions contemplated by this Agreement.

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(d) Seller shall be liable for and shall pay all Taxes (whether assessed or unassessed) of the Company for periods (or portions thereof) ending prior to the Closing Date (including any Taxes arising solely as a result of the transactions contemplated by this Agreement other than any Taxes addressed by Section 8.4(b)), except to the extent such Taxes are reflected in Working Capital. Buyer shall be liable for and shall pay all Taxes (whether assessed or unassessed) of the Company for periods (or portions thereof) beginning on or after the Closing Date. For purposes of this Section 8.4(d), any period beginning before and ending after the Closing Date will be treated as two partial periods, one ending on the day immediately prior to the Closing Date and the other beginning on the Closing Date, except that Taxes (such as property Taxes) imposed on a periodic basis will be allocated on a daily basis.

(e) Seller will not at any time take any action that would result in the Company being treated as a corporation for United States federal income tax purposes.

(f) For the avoidance of doubt, the Parties acknowledge that any deductions for federal and applicable state and local income tax purposes attributable to the bonuses payable by the Company in connection with the transactions contemplated by this Agreement shall be allocated to the period of Seller’s ownership of the Securities.

Section 8.5 Nonsolicitation; Noncompetition; Enforcement.

(a) For a period beginning on the Closing Date and ending on the date which is two years following the Closing Date (such period, the “Restricted Period”), (i) Buyer and the Company will not, and will cause each of its respective Subsidiaries not to, and (ii) Seller will not, and will cause each of its Affiliates not to, recruit, solicit or lure or entice away any Person who is an employee of (A) in the case of Buyer or the Company, Seller or any of its Subsidiaries, or (B) in the case of Seller, Buyer or the Company or any of their respective Subsidiaries, in each case, without the prior written consent of the Party or Affiliate thereof that employs such Person; provided, however, the foregoing restriction shall not apply to the placement of a job posting and advertisements not directed to any particular Person in journals or general circulation or in otherwise publicly available sources such as the Internet.

(b) During the Restricted Period, Seller will not, and will cause each of MediMedia USA, Inc., MMUSA Acquisition Corp. and MMUSA Acquisition LLC, and their respective Subsidiaries (collectively, the “Seller Restricted Parties”), not to, engage in or own any interest in a business that engages in the Company Business; provided, however, that Buyer acknowledges that it understands that the Seller Restricted Parties will, during the Restrictive Period, provide services to or receive services from Persons that may be engaged in the Company Business and in no event shall the providing or receiving of any such services in and of itself be deemed to be a violation of this Section 8.5(b).

(c) Notwithstanding anything to the contrary in Section 8.5(b), the Seller Restricted Parties may, during the Restrictive Period own an interest of less than 5 percent of the voting securities of any publicly traded company.

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(d) If the final judgment of a court of competent jurisdiction (each, a “Court”) declares that any term or provision of this Section 8.5 is invalid or unenforceable, then the Parties agree that such Court making the determination of invalidity or unenforceability will have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

(e) Notwithstanding any provision to the contrary herein, (i) each Party may pursue, at its discretion, enforcement of this Section 8.5 in any Court, and (ii) in no event shall any Party be held liable for any other Party’s legal fees or costs in pursuit of such claim, unless there is a final determination by such Court that the Party pursuing such claim acted in manifest bad faith.

(f) The Parties agree that money damages would not be an adequate remedy for any breach of this Section 8.5, and any breach of the terms of this Section 8.5 would result in irreparable injury and damage for which no Party would have an adequate remedy at Law. Therefore, in the event of a breach or a threatened breach of this Section 8.5, each Party, in addition to any other rights and remedies existing in its favor at Law or in equity, shall be entitled to specific performance or immediate injunctive or other equitable relief from a Court in order to enforce, or prevent any violations of, the provisions of this Section 8.5 (without posting a bond or other security), without having to prove damages. The terms of this Section 8.5 shall not prevent any Party from pursuing any other available remedies for any breach or threatened breach of this Agreement.

Section 8.6 Business Confidential Information

(a) Seller acknowledges and agrees that the books, records, data and other documents and confidential information concerning the Company Business and/or the products, services, customer development information (including customer and prospect lists), sales activities and procedures, promotional and marketing techniques, pricing, plans and strategies, financing, development and expansion plans and credit and financial data concerning customers and suppliers and other information of or to the extent relating primarily to the Company Business are considered by Buyer to be confidential, and in some cases, are in the nature of trade secrets, and are valuable assets of the Company Business, access to and knowledge of which are essential to preserve the goodwill, customer relationships and ongoing business relationships of the Company Business for the benefit of Buyer. Seller further agrees that all knowledge and information described in the preceding sentence that is not in the public domain (unless such knowledge and information is in the public domain as a result of a breach of this or any other confidentiality agreement by Seller or any of its Affiliates) shall be considered confidential information (collectively, the “Business Confidential Information”). For the avoidance of doubt, the term Business Confidential Information shall not include information to the extent it (i) does not relate to the Company Business, (ii) becomes

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available to Seller or any of its Affiliates on a non-confidential basis from a source other than Buyer; provided that to Seller’s or any of its Affiliates’ knowledge such source is not bound by a confidentiality agreement with or similar obligation to Buyer or the Company with respect to such information, (iii) is independently developed by Seller or any of its Affiliates under circumstances not involving a breach of this Section 8.6, or (iv) is publicly disclosed pursuant to a lawful requirement or request from a Governmental Authority acting within its jurisdiction, or non-confidential disclosure is otherwise required by law or regulation.

(b) Seller hereby agrees that following the Closing Date it shall hold the Business Confidential Information in confidence and not use or disclosure or cause or permit to be used or disclosed any of the Business Confidential Information for any reason or purpose whatsoever, except and to the extent any disclosure of Business Confidential Information is required by law or regulation or appropriate court order and sufficient advance written notice thereof, if legally permitted, is provided to Buyer to permit Buyer to seek a protective order or other appropriate remedy. The provisions of this Section 8.6 shall expire on the fifth anniversary of the Closing.

Section 8.7 Further Assurances. From time to time, as and when requested by any Party and at such Party’s expense, any other Party shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions as the requesting Party may reasonably deem necessary to evidence and effectuate the transactions contemplated by this Agreement.

ARTICLE IX

TERMINATION

Section 9.1 Termination of Agreement. This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

(a) by mutual written consent of Buyer and Seller;

(b) by Buyer, if there has been a breach by Seller or the Company of any covenant, representation or warranty of Seller or the Company contained in this Agreement which would prevent the satisfaction of any condition to the obligations of Buyer at the Closing and such inaccuracy or breach has not been waived by Buyer or, in the case of a covenant breach capable of being cured, cured by the Company or Seller within the earlier of twenty days after written notice thereof from Buyer to Seller or the Outside Date, provided that Buyer is not then in material default or material breach of any of its covenants, representations or warranties set forth in this Agreement;

(c) by the Company, if there has been a breach by Buyer of any covenant, representation or warranty of Buyer contained in this Agreement which would prevent the satisfaction of any condition to the obligations of the Company at the Closing and such inaccuracy or breach has not been waived by the Company or, in the case of a covenant breach capable of being cured, cured by Buyer within the earlier of twenty days

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after written notice thereof from the Company to Buyer or the Outside Date, provided that Seller is not then in material default or material breach of any of its covenants, representations, warranties or agreements set forth in this Agreement;

(d) by either the Company or Buyer if any Governmental Authority of competent jurisdiction has issued a nonappealable final judgment, order, decree or similar ruling or taken any other nonappealable final action, in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement; or

(e) by Buyer or Seller, if the Closing shall not have occurred on or prior to the six-month anniversary of the date hereof, unless extended by written agreement of Buyer and Seller (the “Outside Date”); provided, however, that the right to terminate this Agreement pursuant to this clause (e) shall not be available to any Party whose failure to fulfill any obligation of such Party under this Agreement, whether directly or indirectly, has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date, provided, further, that such period will be extended for sixty additional days to the extent necessary to satisfy the conditions set forth in Section 3.1(a) (except in circumstances contemplated by clause (d) hereof.

Section 9.2 Effect of Termination.

(a) If Buyer or Seller terminates this Agreement pursuant to Section 9.1, written notice thereof shall immediately be provided to the other Party, and this Agreement and the transactions contemplated hereby shall become null and void and of no further force and effect (except that Section 7.4(b), this Article IX and Article X shall survive any such termination), and no Party shall have any liability to any other Party hereunder except as otherwise expressly set forth in this Agreement.

(b) If this Agreement and the transactions contemplated hereby are terminated as provided herein, all confidential or proprietary information received by Buyer, its directors, officers, managers, members, partners, employees, agents, representatives or advisors with respect to Seller, the Company, their respective Subsidiaries and other Affiliates or the Company Business shall be treated for all purposes (including with respect to the return or destruction of such information) in accordance with the Confidentiality Agreement, which shall remain in full force and effect in all respects notwithstanding the termination of this Agreement.

(c) Nothing in this Article IX shall be deemed to (i) relieve any Party from any liability for any breach by such Party occurring prior to any termination of this Agreement of any of the representations, warranties, covenants or agreements set forth in this Agreement or (ii) impair the right of any Party to compel specific performance by any other Party of its obligations under this Agreement.

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ARTICLE X

INDEMNIFICATION

Section 10.1 Limited Indemnification by Seller. Seller shall indemnify and hold the Buyer Parties harmless from and pay, without duplication, any and all Losses, directly or indirectly, resulting from, relating to, arising out of, or attributable to any of the following:

(a) The failure of any Fundamental Representation to be true and correct as of the date of this Agreement and as of the Closing Date as if made anew as of such date;

(b) Any breach of any covenant of Seller contained in this Agreement to be performed in whole or in part after the Closing; and

(c) Any of the Excluded Liabilities, except to the extent such Excluded Liabilities are reflected in Working Capital.

Section 10.2 Indemnification Claim Procedures

(a) If any third party notified any Buyer Party with respect to the commencement of any action, suit, proceeding, claim, demand, hearing, investigation or similar event that may give rise to a claim for indemnification against Seller hereunder (an “Indemnification Claim”), then the Buyer Party will promptly give notice to Seller. Failure to notify Seller will not relieve Seller of any obligation that it may have to the Buyer Party, except to the extent that the defense of such action, suit, proceeding, claim, demand, hearing, investigation or similar event is materially and irrevocably prejudiced by the Buyer Party’s failure to give such notice.

(b) Seller shall have the right to defend against an Indemnification Claim, with counsel of its choice reasonably satisfactory to the Buyer Party, if (i) within 10 days following the receipt of notice of the Indemnification Claim Seller notifies the Buyer Party in writing that Seller will indemnify the Buyer Party from and against the entirety of any Losses the Buyer Party may suffer resulting from, relating to, arising out of, or attributable to the Indemnification Claim, (ii) Seller provides the Buyer Party with evidence reasonably acceptable to the Buyer Party that Seller will have the financial resources to defend against the Indemnification Claim and pay, in cash, all Losses the Buyer Party may suffer resulting from, relating to, arising out of, or attributable to the Indemnification Claim, (iii) the Indemnification Claim involves only money Losses and does not seek an injunction or other equitable relief, (iv) settlement of, or an adverse judgment with respect to, the Indemnification Claim is not in the good faith judgment of the Buyer Party likely to establish a precedential custom or practice material and adverse to the continuing business interests of the Buyer Party, and (v) Seller conducts the defense of the Indemnification Claim actively and diligently. Seller will be liable for the reasonable fees and expenses of one counsel employed by the Buyer Party for any period during which Seller has not assumed the defense thereof (other than during any period in

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which the Buyer Party will have failed to give notice of the Indemnification Claim as provided above).

(c) So long as Seller is conducting the defense of the Indemnification Claim in accordance with Section 10.2(b), (i) the Buyer Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Indemnification Claim, (ii) the Buyer Party will not consent to the entry of any order with respect to the Indemnification Claim without the prior written consent of Seller (not to be withheld, delayed or conditioned unreasonably), and (iii) Seller will not consent to the entry of any order with respect to the Indemnification Claim without the prior written consent of the Buyer Party (not to be withheld, delayed or conditioned unreasonably, provided that it will not be deemed to be unreasonable for an Buyer Party to withhold its consent (A) with respect to any finding of or admission (1) of any breach of any Law, (2) of any violation of the rights of any Person, or (3) which Buyer Party believes could have a material and adverse effect on any other actions to which the Buyer Party or its Affiliates are a party or to which Buyer Party has a good faith belief it may become a party, or (B) if any portion of such order would not remain sealed).

(d) Notwithstanding the foregoing, if a Buyer Party determines in good faith that there is a reasonable probability that an Indemnification Claim may adversely affect it or its Affiliates other than as a result of monetary damages for which it would be entitled to indemnification under this Agreement, the Buyer Party may, by notice to Seller, assume the exclusive right to defend, compromise or settle such Indemnification Claim, but Seller will not be bound by any determination of any Indemnification Claim so defended for the purposes of this Agreement or any compromise or settlement effected without its consent (which may not be unreasonably withheld, delayed or conditioned).

(e) Seller hereby consents to the non-exclusive jurisdiction of any Governmental Authority, arbitrator, or mediator in which an action, suit, proceeding, claim, demand, hearing, investigation or similar event is brought against any Buyer Party for purposes of any Indemnification Claim that a Buyer Party may have under this Agreement with respect to such action, suit, proceeding, claim, demand, hearing, investigation or similar event or the matters alleged therein, and agrees that process may be served on Seller with respect to such claim anywhere in the world.

ARTICLE XI

MISCELLANEOUS

Section 11.1 No Survival of Representations, Warranties and Covenants. None of Seller’s or the Company’s representations, warranties, agreements and covenants in this Agreement (except the Fundamental Representations and those agreements and covenants to be performed, in whole or in part, by Seller after the Closing) shall survive the Closing, and all such representations, warranties, agreements and covenants shall terminate at the Closing and be of no further force and effect from and after the Closing.

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Section 11.2 Expenses. Whether or not the Closing takes place, and except as otherwise explicitly set forth in this Agreement, all fees, costs and expenses incurred by Buyer, on the one hand, and Seller and the Company, on the other hand, in connection with the preparation, negotiation and execution of this Agreement and each other agreement, document and instrument contemplated hereby and thereby, and the consummation of the transactions contemplated hereby and thereby (including fees, costs and expenses of legal counsel, financial advisors and other representatives, consultants and service providers), shall be borne solely by Buyer and Seller, respectively.

Section 11.3 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered, (b) one Business Day after deposit with Federal Express or similar overnight courier service, (c) three Business days after being mailed by first class mail, return receipt requested, or (d) by email, on the date shown on the receipt or confirmation therefor. Notices, demands and communications to Buyer, the Company and Seller shall, unless another address is specified in writing, be sent to the addresses indicated below:

Notices to Buyer or to the Company:

Vicar Operating, Inc.

c/o VCA Antech Inc.

12401 West Olympic Blvd.

Los Angeles, CA 90064

Attention:         Tomas Fuller

Email:               tom.fuller@vcaantech.com

with a copy (which shall not constitute notice to Buyer or the Company) to:

Akin Gump Strauss Hauer & Feld LLP

2029 Century Park East

Suite 2400

Los Angeles, CA 90067-3010

Attention:         C.N. Franklin Reddick III

Email:               freddick@akingump.com

Notices to Seller:

MediMedia USA, Inc.

26 Main Street

Chatham, NJ 07928

Attention:         Board of Directors

Email:               nalpert@vestarcapital.com

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with copies (which shall not constitute notice to Seller) to:

Kirkland & Ellis LLP

601 Lexington Avenue

New York, NY 10022

Attention:         Michael Movsovich and Kester Spindler

Email:               michael.movsovich@kirkland.com

                           kester.spindler@kirkland.com

Section 11.4 Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns, except that neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned or delegated (a) by Buyer without the prior written consent of Seller or (b) by the Company or Seller without the prior written consent of Buyer.

Section 11.5 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under Law, but if any provision of this Agreement is held to be prohibited by or invalid under Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

Section 11.6 Construction. The table of contents and the section and other headings and subheadings contained in this Agreement and the Exhibits hereto are solely for the purpose of reference, are not part of the agreement of the Parties, and shall not in any way affect the meaning or interpretation of this Agreement or any Exhibit hereto. The definitions in Section 1.1 and elsewhere in this Agreement shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references to “days” (without explicit reference to Business Days) or “months” shall be deemed references to calendar days or months, as applicable. If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day. All references to “$” shall be deemed references to United States dollars. Unless the context otherwise requires, any reference to a “Section,” “Exhibit,” or “Schedule” shall be deemed to refer to a section of this Agreement, exhibit to this Agreement or a schedule to this Agreement, as applicable. The words “hereof,” “herein” and “hereunder” and words of similar import referring to this Agreement refer to this Agreement as a whole (including the Schedules and Exhibits to this Agreement) and not to any particular provision of this Agreement. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The use of the words “or,” “either” and “any” in this Agreement shall not be exclusive. The phrases “made available to Buyer” or “furnished to Buyer” or similar phrases as used in this Agreement refer to all documents to which Buyer, its Affiliates or advisers have been provided with either through access to the documents posted to the “Project Tiger” data room at www.intralinks.com or delivered otherwise to such Persons on or prior to the date hereof. The phrase “transactions contemplated by this Agreement” or similar phrases as used in this Agreement means the sale of the Securities pursuant to Section 2.1.

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Section 11.7 Interpretation. The Parties acknowledge and agree that (a) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision, (b) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Agreement and (c) the terms and provisions of this Agreement shall be construed fairly as to all Parties, regardless of which Party was generally responsible for the preparation of this Agreement. Any statute, regulation, or other Law defined or referred to herein (or in any agreement or instrument that is referred to herein) means such statute, regulation or other Law as, from time to time, may be amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor statutes. References to a Person also refer to its predecessors and permitted successors and assigns.

Section 11.8 Exhibits and Schedules. All exhibits and Schedules, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. Any item disclosed in any Schedule referenced by a particular section in this Agreement shall be deemed to have been disclosed with respect to every other section in this Agreement. The specification of any dollar amount in the representations or warranties contained in this Agreement or the inclusion of any specific item in any Schedule is not intended to imply that such amounts, or higher or lower amounts or the items so included or other items, are or are not material, and no Party shall use the fact of the setting of such amounts or the inclusion of any such item in any dispute or controversy as to whether any obligation, items or matter not described herein or included in a Schedule is or is not material for purposes of this Agreement.

Section 11.9 Amendment and Waiver. Any provision of this Agreement or the Schedules or Exhibits may be amended or waived only in a writing signed by Buyer, the Company and Seller. No waiver of any provision hereunder or any breach or default thereof shall extend to or affect in any way any other provision or prior or subsequent breach or default.

Section 11.10 Entire Agreement. This Agreement and the documents referred to herein contain the entire agreement between the Parties with respect to the subject matter hereof and thereof and supersede any prior understandings, agreements or representations by or among the Parties, written or oral, which may have related to the subject matter hereof in any way (including the Confidentiality Agreement).

Section 11.11 Counterparts. This Agreement may be executed in multiple counterparts (including by means of telecopied or emailed signature pages), any one of which need not contain the signatures of more than one Party, but all such counterparts taken together shall constitute one and the same instrument.

Section 11.12 Governing Law.  ALL MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE

46

APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

Section 11.13 Dispute Resolution. The Parties hereby agree that any dispute arising out of or relating to this Agreement shall be settled by arbitration pursuant to this Section 11.13. All arbitration shall be finally and conclusively determined by the decision of a board of arbitration consisting of three members (the “Board of Arbitration”) selected as hereinafter provided. Each of Buyer, on the one hand, and Seller or the Company, on the other hand, shall select one member and the third member shall be a retired judge selected by mutual agreement of the other members, or if the other members fail to reach agreement on a third member within 20 days after their selection, such third member, who shall be a retired judge, shall thereafter be selected by the American Arbitration Association (“AAA”) upon application made to it for a third member jointly by Buyer and Seller or the Company, as applicable. The Board of Arbitration shall meet in New York, New York, and shall reach and render a decision in writing (concurred in by a majority of the members of the Board of Arbitration) specifying its finding of fact and conclusions of law. In connection with its proceedings, the Board of Arbitration shall follow the AAA Commercial Arbitration rules; provided, however, that if there is any conflict between the procedures set forth herein and the AAA rules, the provisions herein shall control. To the extent practical, decisions of the Board of Arbitration shall be rendered no more than sixty days following commencement of proceedings with respect thereto. The Board of Arbitration shall cause its written decision to be delivered to the Parties in the manner provided for the giving of notices in Section 11.3. Any decision made by the Board of Arbitration (either prior to or after the expiration of such sixty-day period) shall be final, binding and conclusive on the Parties and entitled to be enforced to the fullest extent permitted by Law and entered in any Court. The non-prevailing Party in any arbitration shall bear its own expense in relation thereto, including such Party’s attorneys’ fees, if any, and the expenses and fees of each member of the Board of Arbitration. In addition, the prevailing Party in any arbitration shall be entitled to recover from the non-prevailing Party(ies) its reasonable and documented out-of-pocket expenses, including such Party’s attorneys’ fees, and costs incurred in relation thereto or in the enforcement or collection of any judgment or award rendered therein.

Section 11.14 No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

Section 11.15 Limitation on Damages and Remedies. Notwithstanding anything to the contrary set forth herein, no Party shall be liable for any consequential damages (including loss of revenue, income or profits, loss or diminution in value of assets or securities) or punitive, special, exemplary or indirect damages, relating to any breach of representation, warranty or covenant contained in this Agreement. Except in the case of fraud, no breach of any representation, warranty or covenant contained herein shall give rise to any right on the part of Buyer or Seller, after the consummation of the transactions contemplated hereby, to rescind this Agreement or any of the transactions contemplated hereby.

Section 11.16 No Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, Buyer agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement shall

47

be had against any current or future director, manager, officer, employee or member of Seller or of any Affiliate or assignee thereof, as such, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of Seller or any current or future equityholder of Seller or any current or future director, manager, officer, employee or member of Seller or of any Affiliate or assignee thereof, as such, for any obligation of Seller under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

Section 11.17 Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

Section 11.18 Waiver of Conflicts. Recognizing that Kirkland & Ellis LLP has acted as legal counsel to Seller, the Company and their respective Affiliates prior to the Closing and that Kirkland & Ellis LLP intends to act as legal counsel to Seller and its Affiliates (which will no longer include the Company) after the Closing, each of Buyer and the Company hereby waives, on its own behalf and agrees to cause its Affiliates to waive, any conflicts that may arise in connection with Kirkland & Ellis LLP representing Seller or its Affiliates after the Closing as such representation may relate to Buyer, the Company or the transactions contemplated hereby. In addition, all communications involving attorney-client confidences between Seller, the Company and their respective Affiliates and Kirkland & Ellis LLP in the course of the negotiation, documentation and consummation of the transactions contemplated hereby shall be deemed to be attorney-client confidences that belong solely to Seller and its Affiliates (and not the Company). Accordingly, the Company shall not have access to any such communications, or to the files of Kirkland & Ellis LLP relating to engagement, from and after the Closing. Without limiting the generality of the foregoing, upon and after the Closing, (a) Seller and its Affiliates (and not the Company) shall be the sole holders of the attorney-client privilege with respect to such engagement, and the Company shall not be a holder thereof, (b) to the extent that files of Kirkland & Ellis LLP in respect of such engagement constitute property of the client, only Seller and its Affiliates (and not the Company) shall hold such property rights and (c) Kirkland & Ellis LLP shall have no duty whatsoever to reveal or disclose any such

48

attorney-client communications or files to the Company by reason of any attorney-client relationship between Kirkland & Ellis LLP and the Company or otherwise.

Section 11.19 Delivery by Electronic Means. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or other electronic means, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party to any such agreement or instrument, each other Party thereto shall re-execute original forms thereof and deliver them to all other Parties. No Party to any such agreement or instrument shall raise the use of a facsimile machine or other electronic means to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or other electronic means as a defense to the formation or enforceability of a contract and each such Party to any such agreement or instrument forever waives any such defense.

Section 11.20 Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a day that is not a Business Day, the Party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular Business Day.

[END OF PAGE]

[SIGNATURE PAGE FOLLOWS]

49

SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first above written.

BUYER:

VICAR OPERATING, INC.

By:                                                    

Name:                                               

Its:                                                    

COMPANY:
MEDIMEDIA ANIMAL HEALTH, LLC
By:
Name:	Michael P. Burnett
Its:	Chief Financial Officer

SELLER:
MEDIMEDIA USA, INC.
By:
Name:	Michael P. Burnett
Its:	Chief Financial Officer

EXHIBIT A

List of Potential Neutral Accounting Firms

PricewaterhouseCoopers

BDO

Grant Thornton

EXHIBIT B

Form of Transition Services Agreement

Please see attached.

EXHIBIT C

Form of Transitional Trademark License Agreement

Please see attached.

EX-31.1

EXHIBIT 31.1

Certification of

Chief Executive Officer

of VCA Antech, Inc.

I, Robert L. Antin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of VCA Antech, 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(s) 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(s) 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 9, 2011

/s/ Robert L. Antin

Robert L. Antin

Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of

Chief Financial Officer

of VCA Antech, Inc.

I, Tomas W. Fuller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of VCA Antech, 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(s) 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(s) 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 9, 2011

/s/ Tomas W. Fuller

Tomas W. Fuller

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of

Chief Executive Officer & Chief Financial Officer

of VCA Antech, Inc.

This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and accompanies this quarterly report on Form 10-Q (the “Report”) for the period ended September 30, 2011 of VCA Antech, Inc. (the “Issuer”).

Each of the undersigned, who are the Chief Executive Officer and Chief Financial Officer, respectively, of VCA Antech, Inc., hereby certify that, to the best of each such officer’s knowledge:

(i) the Report fully complies with the requirements of section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

Dated: November 9, 2011

/s/ Robert L. Antin

Robert L. Antin

Chief Executive Officer

/s/ Tomas W. Fuller

Tomas W. Fuller

Chief Financial Officer

XML

Comprehensive Income (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Summary of comprehensive income
Net income	$ 31,359,000	$ 28,587,000	$ 101,920,000	$ 92,036,000
Other comprehensive income:
Foreign currency translation adjustment	(669,000)	172,000	(373,000)	103,000
Unrealized (loss) gain on foreign currency	(608,000)	364,000	(371,000)	287,000
Tax benefit (expense)	237,000	(142,000)	145,000	(112,000)
Unrealized loss on hedging instruments				(2,000)
Tax benefit				1,000
Losses on hedging instruments reclassified to income				382,000
Tax benefit				(149,000)
Other comprehensive (loss) income	(1,040,000)	394,000	(599,000)	510,000
Total comprehensive income	30,319,000	28,981,000	101,321,000	92,546,000
Comprehensive income attributable to noncontrolling interests	1,190,000	1,156,000	3,300,000	3,266,000
Comprehensive income attributable to VCA Antech, Inc	29,129,000	27,825,000	98,021,000	89,280,000
Comprehensive Income (Textuals) [Abstract]
Comprehensive income attributable to redeemable noncontrolling interests			$ 1,500,000	$ 915,000

XML

Condensed, Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Per Share data	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Allowance for uncollectible accounts	$ 14,661	$ 13,801
Liabilities and Equity
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	11,000	11,000
Preferred stock, shares outstanding
VCA Antech, Inc. stockholders' equity:
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	175,000	175,000
Common stock, shares outstanding	86,662	86,179

XML

Condensed, Consolidated Income Statements (Unaudited) (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Condensed, Consolidated Income Statements [Abstract]
Revenue	$ 385,135	$ 358,703	$ 1,116,363	$ 1,043,356
Direct costs	294,998	273,404	849,616	781,778
Gross profit	90,137	85,299	266,747	261,578
Selling, general and administrative expense	32,488	27,105	85,334	94,290
Net (gain) loss on sale of assets	(192)	152	(43)	163
Operating income	57,841	58,042	181,456	167,125
Interest expense, net	4,222	3,619	12,816	9,564
Debt retirement costs	2,764	2,550	2,764	2,550
Other expense (income)	8	(180)	(1)	(490)
Income before provision for income taxes	50,847	52,053	165,877	155,501
Provision for income taxes	19,488	23,466	63,957	63,465
Net income	31,359	28,587	101,920	92,036
Net income attributable to noncontrolling interests	1,190	1,156	3,300	3,266
Net income attributable to VCA Antech, Inc.	$ 30,169	$ 27,431	$ 98,620	$ 88,770
Basic earnings per share	$ 0.35	$ 0.32	$ 1.14	$ 1.03
Diluted earnings per share	$ 0.35	$ 0.32	$ 1.13	$ 1.02
Weighted-average shares outstanding for basic earnings per share	86,697	86,086	86,531	85,985
Weighted-average shares outstanding for diluted earnings per share	87,253	86,964	87,293	86,998

XML

Noncontrolling Interests (Details) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Summary of redeemable noncontrolling interests
Redeemable noncontrolling interests, Beginning balance	$ 5,799	$ 4,369
Noncontrolling interest	660	582
Redemption value change	547
Redeemable noncontrolling interests	1,207	582
Formation of noncontrolling interests	510	1,390
Distribution to noncontrolling interests	(625)	(515)
Redeemable noncontrolling interests, Ending balance	$ 6,891	$ 5,826

XML

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill

	Animal Hospital			Laboratory			All Other			Total
Balance as of December 31, 2010	$	965,999		$	96,818		$	29,663		$	1,092,480
Goodwill acquired		64,459			6			99,087			163,552
Other (1)		(1,807	)		(30	)		(134	)		(1,971	)
Balance as of September 30, 2011	$	1,028,651		$	96,794		$	128,616		$	1,254,061

⁽¹⁾  Other includes acquisition-price adjustments which consist primarily of an adjustment related to deferred taxes, buy- outs and foreign currency translation adjustments.

Other Intangible Assets

	As of September 30, 2011							As of December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Noncontractual customer relationships	$	80,613	$	(18,297	)	$	62,316	$	48,686	$	(14,188	)	$	34,498
Covenants not-to-compete		12,990		(8,030	)		4,960		14,459		(8,311	)		6,148
Favorable lease asset		5,571		(3,076	)		2,495		5,486		(2,672	)		2,814
Trademarks		7,545		(1,463	)		6,082		3,749		(986	)		2,763
Contracts		3,500		(74	)		3,426		-		-			-
Technology		16,589		(1,852	)		14,737		2,189		(1,447	)		742
Client lists		84		(28	)		56		35		(14	)		21
Total	$	126,892	$	(32,820	)	$	94,072	$	74,604	$	(27,618	)	$	46,986

Aggregate amortization expense

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Aggregate amortization expense	$	3,833	$	2,484	$	9,092	$	6,825

Estimated amortization expense related to intangible assets

Remainder of 2011	$	4,403
2012		16,952
2013		14,680
2014		12,348
2015		10,492
Thereafter		35,197
Total	$	94,072

XML

Document and Entity Information (USD $) In Billions, except Share data	9 Months Ended
	Sep. 30, 2011	Nov. 01, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	VCA ANTECH INC
Entity Central Index Key	0000817366
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 2.1
Entity Common Stock, Shares Outstanding		86,701,838

XML

Share-Based Compensation (Details Textuals) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Year	Sep. 30, 2010
Share-Based Compensation (Textuals) [Abstract]
Stock option granted			894,000
Estimated weighted- average grant date fair value of stock options			$ 6.00
Aggregate intrinsic value of stock options exercised	$ 194,000		$ 3,200,000
Actual tax benefit realized on options exercised	76,000		1,200,000
Nonvested common stock awards granted			1,225,046
Vesting rights of Performance-based shares			0% and 100%
Employee Stock Option [Member]
Share-Based Compensation (Textuals) [Abstract]
Weighted-average period of recognition of unrecognized compensation cost			3.7
Total unrecognized compensation cost	5,700,000		5,700,000
Compensation cost charged against income	347,000	414,000	1,000,000	2,200,000
Income tax benefit recognized during the period	136,000	161,000	407,000	872,000
Nonvested Stock Awards [Member]
Share-Based Compensation (Textuals) [Abstract]
Weighted-average period of recognition of unrecognized compensation cost			3.5
Total unrecognized compensation cost	25,800,000		25,800,000
Compensation cost charged against income	3,700,000	1,200,000	5,600,000	5,200,000
Income tax benefit recognized during the period	$ 1,500,000	$ 476,000	$ 2,200,000	$ 2,000,000
Executive Employees [Member]
Share-Based Compensation (Textuals) [Abstract]
Nonvested common stock awards granted			1,130,000
Employees [Member]
Share-Based Compensation (Textuals) [Abstract]
Nonvested common stock awards granted			1,225,046
Vesting period of shares			four equal annual installments beginning June 2012 through June 2015

XML

Long-Term Obligations (Tables)

9 Months Ended

Sep. 30, 2011

Long-Term Obligations [Abstract]

Summary of long-term obligations

	September 30, 2011			December 31, 2010
Revolver	$	-		$	-
Senior term notes at LIBOR + 1.75% (1.99% at September 30, 2011)		581,250			-
Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010)		-			493,750
Other debt and capital lease obligations		46,148			33,286
Total debt obligations		627,398			527,036
Less - current portion		(28,480	)		(28,101	)
	$	598,918		$	498,935

Summary of Leverage ratios in effect from time to time

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	> 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and > 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and > 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

Scheduled principal payments for senior term notes

2011 (1)	$	7,266
2012		29,063
2013		32,695
2014		43,594
2015		47,227
Thereafter		421,405
Total	$	581,250

⁽¹⁾  Relates to the period from October 1, 2011 through December 31, 2011.

XML

Share-Based Compensation (Details 1)	9 Months Ended
	Sep. 30, 2011 Hospital Year
Assumptions used to determine fair value of options granted
Expected volatility	41.60%
Weighted-average volatility	42.00%
Expected dividends	0.00%
Expected term	4.85
Risk-free rate	0.94%

XML

Other Accrued Liabilities

9 Months Ended

Sep. 30, 2011

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

5. Other Accrued Liabilities

Other accrued liabilities consisted of the following (in thousands):

	September 30, 2011		December 31, 2010
Deferred revenue	$	6,533	$	8,617
Accrued health insurance		5,594		4,970
Deferred rent		3,918		3,456
Accrued consulting fees		2,760		2,760
Holdbacks and earnouts		2,536		2,447
Customer deposits		2,517		2,966
Accrued lab service rebates		212		2,535
Other		21,109		18,018
	$	45,179	$	45,769

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Carrying value and fair value of variable rate long-term debt

	As of September 30, 2011				As of December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	581,250	$	579,797	$	493,750	$	496,219

XML

Long-Term Obligations (Details 2) (Senior Notes [Member], USD $) In Thousands	Sep. 30, 2011
Senior Notes [Member]
Scheduled principal payments for senior term notes
2011	$ 7,266
2012	29,063
2013	32,695
2014	43,594
2015	47,227
Thereafter	421,405
Total	$ 581,250

XML

Acquisitions (Details 2) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Business Acquisition Pro Forma Financial information
Revenue	$ 19,318		$ 23,341
Net Income	1,108		1,616
Supplemental proforma revenue	389,648	383,333	1,173,830	1,117,245
Supplemental pro forma net income (loss)	30,624	27,639	99,611
Supplemental pro forma net income (loss)				$ 87,375

XML

Other Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2011

Other Accrued Liabilities [Abstract]

Other Accrued Liabilities

	September 30, 2011		December 31, 2010
Deferred revenue	$	6,533	$	8,617
Accrued health insurance		5,594		4,970
Deferred rent		3,918		3,456
Accrued consulting fees		2,760		2,760
Holdbacks and earnouts		2,536		2,447
Customer deposits		2,517		2,966
Accrued lab service rebates		212		2,535
Other		21,109		18,018
	$	45,179	$	45,769

XML

Comprehensive Income

9 Months Ended

Sep. 30, 2011

Comprehensive Income [Abstract]

Comprehensive Income

10. Comprehensive Income

Total comprehensive income consists of net income and the other comprehensive income during the three and nine months ended September 30, 2011 and 2010. The following table provides a summary of comprehensive income (in thousands):

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2011			2010			2011			2010
Net income (1)	$	31,359		$	28,587		$	101,920		$	92,036
Other comprehensive income:
Foreign currency translation adjustments		(669	)		172			(373	)		103
Unrealized (loss) gain on foreign currency		(608	)		364			(371	)		287
Tax benefit (expense)		237			(142	)		145			(112	)
Unrealized loss on hedging instruments		-			-			-			(2	)
Tax benefit		-			-			-			1
Losses on hedging instruments reclassified to income		-			-			-			382
Tax benefit		-			-			-			(149	)
Other comprehensive (loss) income		(1,040	)		394			(599	)		510
Total comprehensive income		30,319			28,981			101,321			92,546
Comprehensive income attributable to noncontrolling interests (1)		1,190			1,156			3,300			3,266
Comprehensive income attributable to VCA Antech, Inc	$	29,129		$	27,825		$	98,021		$	89,280

⁽¹⁾ Includes $1.5 million and $915,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively, related to redeemable and mandatorily redeemable noncontrolling interests.

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Nature of Operations

9 Months Ended

Sep. 30, 2011

Nature of Operations and Basis of Presentation [Abstract]

Nature of Operations

1. Nature of Operations

Our company, VCA Antech, Inc. (“VCA”) is a Delaware corporation formed in 1986 and is based in Los Angeles, California. We are an animal healthcare company with the following strategic operating segments: animal hospitals (“Animal Hospital”), veterinary diagnostic laboratories (“Laboratory”), veterinary medical technology (“Medical Technology”) and veterinary support group (“Vetstreet”).

Our animal hospitals offer a full range of general medical and surgical services for companion animals. Our animal hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet-wellness programs, including health examinations, diagnostic testing, vaccinations, spaying, neutering and dental care. At September 30, 2011, we operated 540 animal hospitals throughout 41 states and in Canada.

We operate a full-service veterinary diagnostic laboratory network serving all 50 states and certain areas in Canada. Our laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. At September 30, 2011, we operated 52 laboratories of various sizes located strategically throughout the United States and Canada.

Our Medical Technology business sells digital radiography and ultrasound imaging equipment, provides education and training on the use of that equipment, provides consulting and mobile imaging services, and sells software and ancillary services to the veterinary market.

Our Vetstreet business provides online communications, professional education, marketing solutions and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a robust selection of products, information and services to the pet-owning community.

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Goodwill and Other Intangible Assets (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Goodwill
Goodwill, Beginning Balance			$ 1,092,480
Goodwill acquired			163,552
Other			(1,971)
Goodwill, Ending Balance	1,254,061		1,254,061
Other Intangible Assets
Gross Carrying Amount	126,892		126,892		74,604
Accumulated Amortization	(32,820)		(32,820)		(27,618)
Net Carrying Amount	94,072		94,072		46,986
Aggregate amortization expense
Aggregate amortization expense	3,833	2,484	9,092	6,825
Estimated amortization expense related to intangible assets
Remainder of 2011			4,403
2012			16,952
2013			14,680
2014			12,348
2015			10,492
Thereafter			35,197
Total			94,072
Goodwill and Other Intangible Assets (Textuals) [Abstract]
Accumulated impairment losses	0		0
Animal Hospital [Member]
Goodwill
Goodwill, Beginning Balance			965,999
Goodwill acquired			64,459
Other			(1,807)
Goodwill, Ending Balance	1,028,651		1,028,651
Laboratory [Member]
Goodwill
Goodwill, Beginning Balance			96,818
Goodwill acquired			6
Other			(30)
Goodwill, Ending Balance	96,794		96,794
All Other [Member]
Goodwill
Goodwill, Beginning Balance			29,663
Goodwill acquired			99,087
Other			(134)
Goodwill, Ending Balance	128,616		128,616
Noncontractual customer relationships [Member]
Other Intangible Assets
Gross Carrying Amount	80,613		80,613		48,686
Accumulated Amortization	(18,297)		(18,297)		(14,188)
Net Carrying Amount	62,316		62,316		34,498
Covenants not-to-compete [Member]
Other Intangible Assets
Gross Carrying Amount	12,990		12,990		14,459
Accumulated Amortization	(8,030)		(8,030)		(8,311)
Net Carrying Amount	4,960		4,960		6,148
Favorable lease asset [Member]
Other Intangible Assets
Gross Carrying Amount	5,571		5,571		5,486
Accumulated Amortization	(3,076)		(3,076)		(2,672)
Net Carrying Amount	2,495		2,495		2,814
Trademarks [Member]
Other Intangible Assets
Gross Carrying Amount	7,545		7,545		3,749
Accumulated Amortization	(1,463)		(1,463)		(986)
Net Carrying Amount	6,082		6,082		2,763
Contracts [Member]
Other Intangible Assets
Gross Carrying Amount	3,500		3,500
Accumulated Amortization	(74)		(74)
Net Carrying Amount	3,426		3,426
Technology [Member]
Other Intangible Assets
Gross Carrying Amount	16,589		16,589		2,189
Accumulated Amortization	(1,852)		(1,852)		(1,447)
Net Carrying Amount	14,737		14,737		742
Client lists [Member]
Other Intangible Assets
Gross Carrying Amount	84		84		35
Accumulated Amortization	(28)		(28)		(14)
Net Carrying Amount	$ 56		$ 56		$ 21

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Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

7. Fair Value Measurements

Fair Value of Financial Instruments

The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the accompanying condensed, consolidated balance sheets. Fair value as defined by the guidance is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Cash and Cash Equivalents. These balances include cash and cash equivalents with maturities of less than three months. The carrying amount approximates fair value due to the short-term maturities of these instruments.

Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued Liabilities. Due to their short-term nature, fair value approximates carrying value.

Long-Term Debt. The fair value of debt at September 30, 2011 and December 31, 2010 is based upon the ask price quoted from an external source, which is considered a Level 2 input.

The following table reflects the carrying value and fair value of our variable-rate long-term debt (in thousands):

	As of September 30, 2011				As of December 31, 2010
	Carrying Value		Fair Value		Carrying Value		Fair Value
Variable-rate long-term debt	$	581,250	$	579,797	$	493,750	$	496,219

At September 30, 2011 and December 31, 2010, we did not have any material applicable nonrecurring measurements of nonfinancial assets and nonfinancial liabilities.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

We have certain commitments, including operating leases and acquisition agreements. These items are discussed in detail in our consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K. We also have contingencies as follows:

a. Earn-Out Payments

We have contractual arrangements in connection with certain acquisitions that were accounted for under previous business combinations accounting guidance, whereby additional cash may be paid to former owners of acquired companies upon attainment of specified financial criteria as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria are attained we will be obligated to pay an additional $1.3 million. Under the current business combination accounting guidance contingent consideration, such as earn-out liabilities, are recognized as part of the consideration transferred on the acquisition date and a corresponding liability is recorded based on the fair value of the liability if the fair value is known or determinable. The changes in fair value are recognized in earnings where applicable at each reporting period.

b. Other Contingencies

We have certain contingent liabilities resulting from litigation and claims incident to the ordinary course of our business. We believe that the probable resolution of such contingencies will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

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Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

8. Share-Based Compensation

Stock Option Activity

A summary of our stock option activity for the nine months ended September 30, 2011 is as follows (in thousands):

	Stock      Options			Weighted- Average Exercise Price
Outstanding at December 31, 2010		3,323		$	16.45
Granted		894		$	15.98
Exercised		(262	)	$	9.90
Canceled		(3	)	$	17.04
Outstanding at September 30, 2011		3,952		$	16.78
Exercisable at September 30, 2011		2,719		$	17.00
Vested and expected to vest at September 30, 2011		3,896		$	16.78

There were 894,000 stock options granted during the nine months ended September 30, 2011, which had an estimated weighted- average grant date fair value of approximately $6.00. The aggregate intrinsic value of our stock options exercised during the three and nine months ended September 30, 2011 was $194,000 and $3.2 million, respectively, and the actual tax benefit realized on options exercised during these periods was $76,000 and $1.2 million, respectively.

Calculation of Fair Value

The fair value of our options is estimated on the date of grant using the Black-Scholes option pricing model. We amortize the fair value of our options on a straight-line basis over the requisite service period. The following assumptions were used to determine the preliminary fair value of those options granted during the nine months ended September 30, 2011:

Expected volatility (1)	41.6%
Weighted-average volatility (1)	42.0%
Expected dividends	0.0%
Expected term	4.85 years
Risk-free rate (2)	0.94%

⁽¹⁾  We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

⁽²⁾  The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

At September 30, 2011 there was $5.7 million of total unrecognized compensation cost related to our stock options. This cost is expected to be recognized over a weighted-average period of 3.7 years.

The compensation cost that has been charged against income for stock options for the three months ended September 30, 2011 and 2010 was $347,000 and $414,000, respectively. The corresponding income tax benefit recognized was $136,000 and $161,000 for the three months ended September 30, 2011 and 2010, respectively.

The compensation cost that has been charged against income for stock options for the nine months ended September 30, 2011 and 2010 was $1.0 million and $2.2 million, respectively. The corresponding income tax benefit recognized was $407,000 and $872,000 for the nine months ended September 30, 2011 and 2010, respectively.

Nonvested Stock Activity

During the nine months ended September 30, 2011 we granted 1,225,046 shares of nonvested common stock, 1,130,000 of which were granted to certain of our executives and contain performance conditions. The performance-based awards provide that the number of shares that will ultimately vest will be between 0% and 100% of the total shares granted, based on the attainment of certain performance targets. Assuming continued service through each vesting date, these awards will vest in four equal annual installments beginning June 2012 through June 2015.

Total compensation cost charged against income related to nonvested stock awards was $3.7 million and $1.2 million for the three months ended September 30, 2011 and 2010, respectively. The corresponding income tax benefit recognized in the income statement was $1.5 million and $476,000 for the three months ended September 30, 2011 and 2010, respectively.

Total compensation cost charged against income related to nonvested stock awards was $5.6 million and $5.2 million for the nine months ended September 30, 2011 and 2010, respectively. The corresponding income tax benefit recognized in the income statement was $2.2 million and $2.0 million for the nine months ended September 30, 2011 and 2010, respectively.

At September 30, 2011, there was $25.8 million of unrecognized compensation cost related to these nonvested shares, which will be recognized over a weighted-average period of 3.5 years. A summary of our nonvested stock activity for the nine months ended September 30, 2011 is as follows:

	Shares			Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2010		686,511		$	26.16
Granted		1,225,046		$	20.00
Vested		(334,370	)	$	28.84
Forfeited/Canceled		(2,275	)	$	30.35
Outstanding at September 30, 2011		1,574,912		$	20.80

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Noncontrolling Interests (Tables)

9 Months Ended

Sep. 30, 2011

Noncontrolling Interests [Abstract]

Summary of redeemable noncontrolling interests

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2009			$	4,369
Noncontrolling interest	$	582
Redemption value change		-		582
Formation of noncontrolling interests				1,390
Distribution to noncontrolling interests				(515	)
Balance as of September 30, 2010			$	5,826
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change		547		1,207
Formation of noncontrolling interests				510
Distribution to noncontrolling interests				(625	)
Balance as of September 30, 2011			$	6,891

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Long-Term Obligations

9 Months Ended

Sep. 30, 2011

Long-Term Obligations [Abstract]

Long-Term Obligations

6. Long-Term Obligations

Senior Credit Facility

On August 16, 2011, we amended and restated our existing senior credit facility to allow for additional senior term notes in the amount of $100 million and an additional $25.0 million aggregate principal amount of revolving commitments. The funds borrowed from the additional senior term notes were used to repay in full, amounts borrowed in connection with the acquisition of Vetstreet on August 9, 2011. The terms of the amended and restated senior credit facility are discussed below in this footnote. In connection with the amendment we incurred $2.9 million in financing costs, of which approximately $865,000 were recognized as part of income from continuing operations and approximately $2.0 million were capitalized as deferred financing costs. In addition, we expensed $1.1 million of previously deferred financing costs associated with lenders who exited the syndicate on the amendment date.

The following table summarizes our long-term obligations at September 30, 2011 and December 31, 2010 (in thousands):

	September 30, 2011			December 31, 2010
Revolver	$	-		$	-
Senior term notes at LIBOR + 1.75% (1.99% at September 30, 2011)		581,250			-
Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010)		-			493,750
Other debt and capital lease obligations		46,148			33,286
Total debt obligations		627,398			527,036
Less - current portion		(28,480	)		(28,101	)
	$	598,918		$	498,935

Interest Rate. In general, borrowings under the senior term notes and the revolving credit facility bear interest, at our option, on either:

• the base rate (as defined below) plus the applicable margin. The applicable margin for a base rate loan is an amount equal to the applicable margin for Eurodollar rate (as defined below) minus 1.00%; or

• the adjusted Eurodollar rate (as defined below) plus a margin of 1.75% (Level II, see table below) per annum until the date of delivery of the compliance certificate and the financial statements for the period ending September 30, 2011, at which time the applicable margin will be determined by reference to the leverage ratio in effect from time to time as set forth in the following table:

Level	Leverage Ratio	Applicable Margin for Eurodollar Rate Loans	Applicable Revolving Commitment Fee %
I	> 2.50:1.00	2.25%	0.50%
II	< 2.50:1.00 and > 1.75:1.00	1.75%	0.375%
III	< 1.75:1.00 and > 1.00:1.00	1.50%	0.25%
IV	< 1.00:1.00	1.25%	0.20%

The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo’s prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%. The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities.”

Maturity and Principal Payments. The amended and restated senior term notes mature on August 19, 2016. Principal payments on the senior term notes are paid quarterly in the amount of $7.3 million for the first two years beginning on December 31, 2011, quarterly payments of $10.9 million for the two years following, and quarterly payments of $14.5 million for the three quarters prior to maturity at which time the remaining balance is due. The following table sets forth the remaining scheduled principal payments for our senior term notes (in thousands):

2011 (1)	$	7,266
2012		29,063
2013		32,695
2014		43,594
2015		47,227
Thereafter		421,405
Total	$	581,250

⁽¹⁾  Relates to the period from October 1, 2011 through December 31, 2011.

The revolving credit facility matures on August 19, 2016. Principal payments on the revolving credit facility are made at our discretion with the entire unpaid amount due at maturity.

Guarantees and Security. We and each of our wholly-owned subsidiaries guarantee the outstanding debt under the senior credit facility. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of our consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar equity interests, of our wholly-owned subsidiaries.

Debt Covenants. The senior credit facility contains certain financial covenants pertaining to fixed charge coverage and leverage ratios. In addition, the senior credit facility has restrictions pertaining to capital expenditures, acquisitions and the payment of cash dividends on all classes of stock. We believe the most restrictive covenant is the fixed charge coverage ratio. At September 30, 2011 we had a fixed charge coverage ratio of 1.75 to 1.00, which was in compliance with the required ratio of no less than 1.20 to 1.00.

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Commitments and Contingencies (Details) (USD $) In Millions	Sep. 30, 2011
Commitments and Contingencies (Textuals) [Abstract]
Additional payment for specified financial criteria	$ 1.3

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Condensed, Consolidated Statements of Equity (Unaudited) (Parenthetical) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Redeemable noncontrolling interests	$ 1,207	$ 582
Mandatorily redeemable noncontrolling interests	326	333
Retained Earnings
Redeemable noncontrolling interests	1,207	582
Mandatorily redeemable noncontrolling interests	326	333
Noncontrolling Interests
Redeemable noncontrolling interests	1,207	582
Mandatorily redeemable noncontrolling interests	$ 326	$ 333

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Basis of Presentation

9 Months Ended

Sep. 30, 2011

Nature of Operations and Basis of Presentation [Abstract]

Basis of Presentation

2. Basis of Presentation

Our accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements as permitted under applicable rules and regulations. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. The results of operations for the three and nine months ended September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011. For further information, refer to our consolidated financial statements and notes thereto included in our 2010 Annual Report on Form 10-K.

Certain reclassifications have been made herein to 2010 amounts to conform to the current year presentation. In our condensed, consolidated balance sheet as of December 31, 2010, we corrected certain errors in presentation by reclassifying $5.8 million to temporary equity (mezzanine) from noncontrolling interests included in permanent equity related to partnership agreements that contain certain terms which may require us to purchase the partners’ equity based upon certain contingencies. As these agreements do not contain a mandatory redemption clause, the balances are now correctly classified in temporary equity (mezzanine). Additionally, we reclassified $506,000 from noncontrolling interests in permanent equity to other liabilities related to our mandatorily redeemable partnership interests. The change in classification of our redeemable noncontrolling interests also impacts our condensed, consolidated statement of equity for the nine months ended September 30, 2010, accordingly, certain amounts related to redeemable noncontrolling interests were reclassified from the noncontrolling interests column in the statement, see Note 13, Noncontrolling Interests, which presents a summary of the amounts reclassified.

During the quarter ended March 31, 2011, we corrected an error related to our deferred revenue and related deferred cost for certain equipment sales governed by recently revised accounting guidance related to multiple element arrangements. The correction resulted in the recognition of $4.0 million of previously deferred revenue and $3.8 million of previously deferred costs.

The preparation of our condensed, consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed, consolidated financial statements and notes thereto. Actual results could differ from those estimates.

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Other Accrued Liabilities (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Other accrued liabilities
Deferred revenue	$ 6,533	$ 8,617
Accrued health insurance	5,594	4,970
Deferred rent	3,918	3,456
Accrued consulting fees	2,760	2,760
Holdbacks and earnouts	2,536	2,447
Customer deposits	2,517	2,966
Accrued lab service rebates	212	2,535
Other	21,109	18,018
Other accrued liabilities	$ 45,179	$ 45,769

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Lines of Business (Tables)

9 Months Ended

Sep. 30, 2011

Lines of Business [Abstract]

Lines of Business

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344	$	-		$	-		$	385,135
Intercompany revenue		-			11,397		4,538		-			(15,935	)		-
Total revenue		303,203			78,985		18,882		-			(15,935	)		385,135
Direct costs		251,613			43,657		14,149		-			(14,421	)		294,998
Gross profit		51,590			35,328		4,733		-			(1,514	)		90,137
Selling, general and administrative expense		6,126			7,088		4,669		14,605			-			32,488
Net (gain) loss on sale and disposal of assets		(213	)		1		20		-			-			(192	)
Operating income (loss)	$	45,677		$	28,239	$	44	$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606	$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986	$	1,338		$	(629	)	$	14,841
Three Months Ended September 30, 2010
External revenue	$	276,739		$	67,872	$	14,092	$	-		$	-		$	358,703
Intercompany revenue		-			9,420		3,314		-			(12,734	)		-
Total revenue		276,739			77,292		17,406		-			(12,734	)		358,703
Direct costs		230,113			42,579		12,152		-			(11,440	)		273,404
Gross profit		46,626			34,713		5,254		-			(1,294	)		85,299
Selling, general and administrative expense		5,599			6,804		3,731		10,971			-			27,105
Net loss on sale and disposal of assets		114			20		17		1			-			152
Operating income (loss)	$	40,913		$	27,889	$	1,506	$	(10,972	)	$	(1,294	)	$	58,042
Depreciation and amortization	$	8,258		$	2,464	$	606	$	616		$	(263	)	$	11,681
Property and equipment additions	$	16,969		$	1,599	$	428	$	1,394		$	(640	)	$	19,750

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639	$	42,248	$	-		$	-		$	1,116,363
Intercompany revenue		-			33,280		11,939		-			(45,219	)		-
Total revenue		864,476			242,919		54,187		-			(45,219	)		1,116,363
Direct costs		720,393			130,192		40,206		-			(41,175	)		849,616
Gross profit		144,083			112,727		13,981		-			(4,044	)		266,747
Selling, general and administrative expense		18,253			20,577		11,809		34,695			-			85,334
Net (gain) loss on sale and disposal of assets		(84	)		19		22		-			-			(43	)
Operating income (loss)	$	125,914		$	92,131	$	2,150	$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542	$	2,931	$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049	$	3,003	$	3,923		$	(1,532	)	$	43,275
Nine Months Ended September 30, 2010
External revenue	$	791,002		$	210,531	$	41,823	$	-		$	-		$	1,043,356
Intercompany revenue		-			27,913		5,982		-			(33,895	)		-
Total revenue		791,002			238,444		47,805		-			(33,895	)		1,043,356
Direct costs		653,671			126,647		33,373		-			(31,913	)		781,778
Gross profit		137,331			111,797		14,432		-			(1,982	)		261,578
Selling, general and administrative expense		16,859			19,485		10,650		47,296			-			94,290
Net loss on sale and disposal of assets		63			21		71		8			-			163
Operating income (loss)	$	120,409		$	92,291	$	3,711	$	(47,304	)	$	(1,982	)	$	167,125
Depreciation and amortization	$	23,240		$	7,273	$	1,812	$	1,815		$	(753	)	$	33,387
Property and equipment additions	$	39,946		$	3,937	$	634	$	4,579		$	(1,421	)	$	47,675
At September 30, 2011
Total assets	$	1,417,062		$	229,252	$	220,964	$	149,801		$	(20,265	)	$	1,996,814
At December 31, 2010
Total assets	$	1,320,619		$	215,483	$	69,082	$	175,297		$	(14,059	)	$	1,766,422

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Lines of Business (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Lines of Business
External revenue	$ 385,135	$ 358,703	$ 1,116,363	$ 1,043,356
Total revenue	385,135	358,703	1,116,363	1,043,356
Direct costs	294,998	273,404	849,616	781,778
Gross profit	90,137	85,299	266,747	261,578
Selling, general and administrative expense	32,488	27,105	85,334	94,290
Net (gain) loss on sale of assets	(192)	152	(43)	163
Operating income (loss)	57,841	58,042	181,456	167,125
Depreciation and amortization	14,930	11,681	41,386	33,387
Property and equipment additions	14,841	19,750	43,275	47,675
Total assets	1,996,814		1,996,814		1,766,422
Animal Hospital [Member]
Lines of Business
External revenue	303,203	276,739	864,476	791,002
Total revenue	303,203	276,739	864,476	791,002
Direct costs	251,613	230,113	720,393	653,671
Gross profit	51,590	46,626	144,083	137,331
Selling, general and administrative expense	6,126	5,599	18,253	16,859
Net (gain) loss on sale of assets	(213)	114	(84)	63
Operating income (loss)	45,677	40,913	125,914	120,409
Depreciation and amortization	10,393	8,258	29,799	23,240
Property and equipment additions	11,061	16,969	33,832	39,946
Total assets	1,417,062		1,417,062		1,320,619
Laboratory [Member]
Lines of Business
External revenue	67,588	67,872	209,639	210,531
Intercompany revenue	11,397	9,420	33,280	27,913
Total revenue	78,985	77,292	242,919	238,444
Direct costs	43,657	42,579	130,192	126,647
Gross profit	35,328	34,713	112,727	111,797
Selling, general and administrative expense	7,088	6,804	20,577	19,485
Net (gain) loss on sale of assets	1	20	19	21
Operating income (loss)	28,239	27,889	92,131	92,291
Depreciation and amortization	2,563	2,464	7,542	7,273
Property and equipment additions	1,085	1,599	4,049	3,937
Total assets	229,252		229,252		215,483
All Other [Member]
Lines of Business
External revenue	14,344	14,092	42,248	41,823
Intercompany revenue	4,538	3,314	11,939	5,982
Total revenue	18,882	17,406	54,187	47,805
Direct costs	14,149	12,152	40,206	33,373
Gross profit	4,733	5,254	13,981	14,432
Selling, general and administrative expense	4,669	3,731	11,809	10,650
Net (gain) loss on sale of assets	20	17	22	71
Operating income (loss)	44	1,506	2,150	3,711
Depreciation and amortization	1,606	606	2,931	1,812
Property and equipment additions	1,986	428	3,003	634
Total assets	220,964		220,964		69,082
Corporate [Member]
Lines of Business
Selling, general and administrative expense	14,605	10,971	34,695	47,296
Net (gain) loss on sale of assets		1		8
Operating income (loss)	(14,605)	(10,972)	(34,695)	(47,304)
Depreciation and amortization	702	616	2,067	1,815
Property and equipment additions	1,338	1,394	3,923	4,579
Total assets	149,801		149,801		175,297
Intercompany Eliminations [Member]
Lines of Business
Intercompany revenue	(15,935)	(12,734)	(45,219)	(33,895)
Total revenue	(15,935)	(12,734)	(45,219)	(33,895)
Direct costs	(14,421)	(11,440)	(41,175)	(31,913)
Gross profit	(1,514)	(1,294)	(4,044)	(1,982)
Operating income (loss)	(1,514)	(1,294)	(4,044)	(1,982)
Depreciation and amortization	(334)	(263)	(953)	(753)
Property and equipment additions	(629)	(640)	(1,532)	(1,421)
Total assets	$ (20,265)		$ (20,265)		$ (14,059)

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Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2011

Goodwill and Other Intangible Assets [Abstract]

Goodwill and Other Intangible Assets

3. Goodwill and Other Intangible Assets

Goodwill

The following table presents the changes in the carrying amount of our goodwill for the nine months ended September 30, 2011 (in thousands):

	Animal Hospital			Laboratory			All Other			Total
Balance as of December 31, 2010	$	965,999		$	96,818		$	29,663		$	1,092,480
Goodwill acquired		64,459			6			99,087			163,552
Other (1)		(1,807	)		(30	)		(134	)		(1,971	)
Balance as of September 30, 2011	$	1,028,651		$	96,794		$	128,616		$	1,254,061

⁽¹⁾  Other includes acquisition-price adjustments which consist primarily of an adjustment related to deferred taxes, buy- outs and foreign currency translation adjustments.

We had no accumulated impairment losses as of September 30, 2011.

Other Intangible Assets

Our amortizable intangible assets at September 30, 2011 and December 31, 2010 are as follows (in thousands):

	As of September 30, 2011							As of December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Noncontractual customer relationships	$	80,613	$	(18,297	)	$	62,316	$	48,686	$	(14,188	)	$	34,498
Covenants not-to-compete		12,990		(8,030	)		4,960		14,459		(8,311	)		6,148
Favorable lease asset		5,571		(3,076	)		2,495		5,486		(2,672	)		2,814
Trademarks		7,545		(1,463	)		6,082		3,749		(986	)		2,763
Contracts		3,500		(74	)		3,426		-		-			-
Technology		16,589		(1,852	)		14,737		2,189		(1,447	)		742
Client lists		84		(28	)		56		35		(14	)		21
Total	$	126,892	$	(32,820	)	$	94,072	$	74,604	$	(27,618	)	$	46,986

The following table summarizes our aggregate amortization expense related to other intangible assets (in thousands):

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Aggregate amortization expense	$	3,833	$	2,484	$	9,092	$	6,825

The estimated amortization expense related to intangible assets for the remainder of 2011 and each of the succeeding years thereafter as of September 30, 2011 is as follows (in thousands):

Remainder of 2011	$	4,403
2012		16,952
2013		14,680
2014		12,348
2015		10,492
Thereafter		35,197
Total	$	94,072

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Long-Term Obligations (Details 1)	9 Months Ended
	Sep. 30, 2011
Level One [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	Greater than or equal to 2.50:1.00
Applicable Margin for Eurodollar Rate Loans	2.25%
Applicable Revolving Commitment Fee %	0.50%
Level Two [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	Less than 2.50:1.00 and Greater than or equal to 1.75:1.00
Applicable Margin for Eurodollar Rate Loans	1.75%
Applicable Revolving Commitment Fee %	0.375%
Level Three [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	Less than 1.75:1.00 and greater than or equal to 1.00:1.00
Applicable Margin for Eurodollar Rate Loans	1.50%
Applicable Revolving Commitment Fee %	0.25%
Level Four [Member]
Summary of Leverage ratios in effect from time to time
Leverage Ratio	Less than 1.00:1.00
Applicable Margin for Eurodollar Rate Loans	1.25%
Applicable Revolving Commitment Fee %	0.20%

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Summary of stock option activity

	Stock      Options			Weighted- Average Exercise Price
Outstanding at December 31, 2010		3,323		$	16.45
Granted		894		$	15.98
Exercised		(262	)	$	9.90
Canceled		(3	)	$	17.04
Outstanding at September 30, 2011		3,952		$	16.78
Exercisable at September 30, 2011		2,719		$	17.00
Vested and expected to vest at September 30, 2011		3,896		$	16.78

Assumptions used to determine fair value of options granted

Expected volatility (1)	41.6%
Weighted-average volatility (1)	42.0%
Expected dividends	0.0%
Expected term	4.85 years
Risk-free rate (2)	0.94%

⁽¹⁾  We estimated the volatility of our common stock on the date of grant based on using both historical and implied volatilities.

⁽²⁾  The risk-free interest rate is based on the implied yield in effect at the time of option grant on U.S. Treasury zero-coupon issues with equivalent remaining terms.

Summary of nonvested stock activity

	Shares			Grant Date Weighted- Average Fair Value Per Share
Outstanding at December 31, 2010		686,511		$	26.16
Granted		1,225,046		$	20.00
Vested		(334,370	)	$	28.84
Forfeited/Canceled		(2,275	)	$	30.35
Outstanding at September 30, 2011		1,574,912		$	20.80

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Nature of Operations (Details)	Sep. 30, 2011 State Laboratory Hospital
Nature of Operations (Textuals) [Abstract]
Number of hospitals operated	540
Number of states in which hospitals are operated	41
Number of states in which the company operate a full-service veterinary diagnostic laboratory network	50
Number of laboratories operated	52

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Long-Term Obligations (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Summary of long-term obligations
Revolver	$ 0	$ 0
Senior term notes	581,250	493,750
Other debt and capital lease obligations	46,148	33,286
Total debt obligations	627,398	527,036
Less - current portion	(28,480)	(28,101)
Long-term debt and capital lease obligations	598,918	498,935
Senior term notes at LIBOR + 1.75% (1.99% at September 30, 2011) [Member]
Summary of long-term obligations
Senior term notes	581,250	0
Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010) [Member]
Summary of long-term obligations
Senior term notes	$ 0	$ 493,750

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Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2011

Comprehensive Income [Abstract]

Summary of comprehensive income

	Three Months  Ended September 30,						Nine Months  Ended September 30,
	2011			2010			2011			2010
Net income (1)	$	31,359		$	28,587		$	101,920		$	92,036
Other comprehensive income:
Foreign currency translation adjustments		(669	)		172			(373	)		103
Unrealized (loss) gain on foreign currency		(608	)		364			(371	)		287
Tax benefit (expense)		237			(142	)		145			(112	)
Unrealized loss on hedging instruments		-			-			-			(2	)
Tax benefit		-			-			-			1
Losses on hedging instruments reclassified to income		-			-			-			382
Tax benefit		-			-			-			(149	)
Other comprehensive (loss) income		(1,040	)		394			(599	)		510
Total comprehensive income		30,319			28,981			101,321			92,546
Comprehensive income attributable to noncontrolling interests (1)		1,190			1,156			3,300			3,266
Comprehensive income attributable to VCA Antech, Inc	$	29,129		$	27,825		$	98,021		$	89,280

⁽¹⁾ Includes $1.5 million and $915,000 for the nine months ended September 30, 2011 and September 30, 2010, respectively, related to redeemable and mandatorily redeemable noncontrolling interests.

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Lines of Business

9 Months Ended

Sep. 30, 2011

Lines of Business [Abstract]

Lines of Business

11. Lines of Business

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments included in “All Other” in the following tables are our Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet business, which provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a selection of products, information and services to the pet-owning community. These operating segments do not meet the quantitative or qualitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our other segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2010 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

The following is a summary of certain financial data for each of our segments (in thousands):

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Three Months Ended September 30, 2011
External revenue	$	303,203		$	67,588	$	14,344	$	-		$	-		$	385,135
Intercompany revenue		-			11,397		4,538		-			(15,935	)		-
Total revenue		303,203			78,985		18,882		-			(15,935	)		385,135
Direct costs		251,613			43,657		14,149		-			(14,421	)		294,998
Gross profit		51,590			35,328		4,733		-			(1,514	)		90,137
Selling, general and administrative expense		6,126			7,088		4,669		14,605			-			32,488
Net (gain) loss on sale and disposal of assets		(213	)		1		20		-			-			(192	)
Operating income (loss)	$	45,677		$	28,239	$	44	$	(14,605	)	$	(1,514	)	$	57,841
Depreciation and amortization	$	10,393		$	2,563	$	1,606	$	702		$	(334	)	$	14,930
Property and equipment additions	$	11,061		$	1,085	$	1,986	$	1,338		$	(629	)	$	14,841
Three Months Ended September 30, 2010
External revenue	$	276,739		$	67,872	$	14,092	$	-		$	-		$	358,703
Intercompany revenue		-			9,420		3,314		-			(12,734	)		-
Total revenue		276,739			77,292		17,406		-			(12,734	)		358,703
Direct costs		230,113			42,579		12,152		-			(11,440	)		273,404
Gross profit		46,626			34,713		5,254		-			(1,294	)		85,299
Selling, general and administrative expense		5,599			6,804		3,731		10,971			-			27,105
Net loss on sale and disposal of assets		114			20		17		1			-			152
Operating income (loss)	$	40,913		$	27,889	$	1,506	$	(10,972	)	$	(1,294	)	$	58,042
Depreciation and amortization	$	8,258		$	2,464	$	606	$	616		$	(263	)	$	11,681
Property and equipment additions	$	16,969		$	1,599	$	428	$	1,394		$	(640	)	$	19,750

	Animal Hospital			Laboratory		All Other		Corporate			Intercompany Eliminations			Total
Nine Months Ended September 30, 2011
External revenue	$	864,476		$	209,639	$	42,248	$	-		$	-		$	1,116,363
Intercompany revenue		-			33,280		11,939		-			(45,219	)		-
Total revenue		864,476			242,919		54,187		-			(45,219	)		1,116,363
Direct costs		720,393			130,192		40,206		-			(41,175	)		849,616
Gross profit		144,083			112,727		13,981		-			(4,044	)		266,747
Selling, general and administrative expense		18,253			20,577		11,809		34,695			-			85,334
Net (gain) loss on sale and disposal of assets		(84	)		19		22		-			-			(43	)
Operating income (loss)	$	125,914		$	92,131	$	2,150	$	(34,695	)	$	(4,044	)	$	181,456
Depreciation and amortization	$	29,799		$	7,542	$	2,931	$	2,067		$	(953	)	$	41,386
Property and equipment additions	$	33,832		$	4,049	$	3,003	$	3,923		$	(1,532	)	$	43,275
Nine Months Ended September 30, 2010
External revenue	$	791,002		$	210,531	$	41,823	$	-		$	-		$	1,043,356
Intercompany revenue		-			27,913		5,982		-			(33,895	)		-
Total revenue		791,002			238,444		47,805		-			(33,895	)		1,043,356
Direct costs		653,671			126,647		33,373		-			(31,913	)		781,778
Gross profit		137,331			111,797		14,432		-			(1,982	)		261,578
Selling, general and administrative expense		16,859			19,485		10,650		47,296			-			94,290
Net loss on sale and disposal of assets		63			21		71		8			-			163
Operating income (loss)	$	120,409		$	92,291	$	3,711	$	(47,304	)	$	(1,982	)	$	167,125
Depreciation and amortization	$	23,240		$	7,273	$	1,812	$	1,815		$	(753	)	$	33,387
Property and equipment additions	$	39,946		$	3,937	$	634	$	4,579		$	(1,421	)	$	47,675
At September 30, 2011
Total assets	$	1,417,062		$	229,252	$	220,964	$	149,801		$	(20,265	)	$	1,996,814
At December 31, 2010
Total assets	$	1,320,619		$	215,483	$	69,082	$	175,297		$	(14,059	)	$	1,766,422

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Acquisitions

9 Months Ended

Sep. 30, 2011

Acquisitions [Abstract]

Acquisitions

4. Acquisitions

The table below reflects the activity related to the acquisitions and dispositions of our animal hospitals and laboratories during the nine months ended September 30, 2011:

Animal Hospitals:
Animal Hospital acquisitions, excluding BrightHeart	10
Acquisitions, merged	(1	)
BrightHeart (1)	9
Sold, closed or merged	(6	)
Total	12
Laboratories:
Acquisitions	1
Created	1
Total	2

⁽¹⁾  BrightHeart Veterinary Centers (“BrightHeart) was acquired on July 11, 2011.

Animal Hospital and Laboratory Acquisitions, excluding BrightHeart

The following table summarizes the aggregate consideration, including acquisition costs, paid by us for our acquired animal hospitals and laboratories, excluding BrightHeart and the final allocation of the purchase price (in thousands):

Consideration:
Cash	$	19,499
Holdback		800
Fair value of total consideration transferred	$	20,299
Allocation of the Purchase Price:
Tangible assets	$	446
Identifiable intangible assets		3,620
Goodwill (1)		16,233
Total	$	20,299

⁽¹⁾  We expect that $16.2 million, of the goodwill recorded for these acquisitions as of September 30, 2011 will be fully deductible for income tax purposes.

In addition to the purchase price listed above are cash payments made for real estate acquired in connection with our purchase of animal hospitals totaling $1.9 million for the nine months ended September 30, 2011.

BrightHeart Acquisition

On July 11, 2011, we acquired 100% of the membership interests of BrightHeart for approximately $50 million in cash. BrightHeart operates nine animal hospitals, eight of which focus on the delivery of specialty and emergency medicine. The acquisition will increase our level of market recognition in areas where we have an existing market presence. Our consolidated financial statements reflect the operating results of BrightHeart since July 11, 2011.

The following table summarizes the preliminary purchase price and the preliminary allocation of the purchase price (in thousands):

Consideration:
Cash	$	23,490
Cash paid to holders of debt		26,048
Contingent consideration		481
Fair value of total consideration transferred	$	50,019
Allocation of the Purchase Price:
Tangible assets	$	15,985
Identifiable intangible assets (1)		7,335
Goodwill (2)		47,431
Other liabilities assumed		(20,732	)
Total	$	50,019

⁽¹⁾  Identifiable intangible assets primarily include customer relationships. The weighted average amortization period for both the total identifiable intangible assets and the customer-related intangible assets is approximately five years.

⁽²⁾  We expect that all of the goodwill related to the BrightHeart acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2011, were approximately $851,000 and $1.1 million, respectively.

The preliminary purchase price is pending the finalization of the working capital calculation.

The preliminary purchase price allocation listed above is primarily pending the finalization of values related to deferred income taxes, capital leases and assumed liabilities. Our internal management review with respect to these items has not yet been completed. The final purchase price and the valuation of net assets acquired are expected to be completed as soon as practicable, but no later than one year from the date of acquisition. We believe that any adjustments would not be material to the consolidated financial statements and we expect this review to be completed by the end of the third quarter of 2012.

Other Acquisitions

MediMedia Animal Health, LLC (“Vetstreet”)

On August 9, 2011, we acquired 100% of the securities interests of Vetstreet, the nation’s largest provider of online communications, professional education and marketing solutions to the veterinary community. The acquisition of Vetstreet expands the breadth of our product offerings to the veterinary community and is expected to provide long-term synergies to our existing businesses. We acquired Vetstreet for a preliminary purchase price of $146.4 million, net of cash acquired. The following table summarizes the preliminary purchase price and allocation of the preliminary purchase price (in thousands):

Consideration:
Cash	$	146,420
Allocation of the Purchase Price:
Tangible assets	$	5,952
Identifiable intangible assets (1)		45,810
Goodwill (2)		99,087
Other liabilities assumed		(4,429	)
Total	$	146,420

⁽¹⁾  Identifiable intangible assets include customer relationships, technology, trademarks, non-compete agreements and contracts. The weighted average amortization period for the total identifiable intangible assets is approximately nine years, for the customer-related intangible assets approximately ten years, for the technology and trademarks approximately seven years, for the non-compete agreements approximately two years and for the contracts approximately eight years.

⁽²⁾  We expect that all of the goodwill related to the Vetstreet acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Acquisition-related costs, included in corporate selling, general and administrative expense in our income statement, for the three and nine months ended September 30, 2011 were approximately $657,000 and $911,000, respectively.

The preliminary purchase price is pending the finalization of the working capital calculation, which at this time is under seller review.

The final purchase price allocation is pending the completion of the internal review of the final valuation. The provisional items pending finalization include, but are not limited to, accounts receivable, prepaid expenses, deferred income taxes, computer equipment, accounts payable and other accrued liabilities. The final purchase price and the valuation of the net assets acquired are expected to be completed as soon as practicable, but no later than one year from the date of acquisition. We believe that any adjustments would not be material to the consolidated financial statements and we expect this review to be completed by the end of the third quarter of 2012.

Vetstreet is reported within our “All Other” category in our segment disclosures combined with our Medical Technology operating segment.

Pro Forma Information (unaudited)

The following unaudited pro forma financial information for the three and nine months ended September 30, 2011 and 2010 presents, (i) the actual results of operations of our 2011 acquisitions and (ii) the combined results of operations for our company and our 2011 acquisitions as if those acquisitions had been completed on January 1, 2010, the first day of the earliest period presented. The pro forma financial information considers principally (i) our company’s unaudited financial results, (ii) the unaudited historical financial results of our acquisitions, and (iii) select pro forma adjustments to the historical financial results of our acquisitions. Such pro forma adjustments represent principally estimates of (i) the impact of the hypothetical amortization of acquired intangible assets, (ii) the recognition of fair value adjustments relating to tangible assets, (iii) adjustments reflecting the new capital structure, including additional financing or repayments of debt as part of the acquisitions and (iv) the tax effects of the acquisitions and related adjustments as if those acquisitions had been completed on January 1, 2010. The unaudited pro forma financial information is not necessarily indicative of what our consolidated results of operations would have been had we completed the acquisition at the beginning of each year presented. In addition, the unaudited pro forma financial information does not attempt to project the future results of operations of our company:

	Revenue		Net Income
(In thousands):	(Unaudited)
Actual from July 1, 2011 to September 30, 2011	$	19,318	$	1,108
2011 supplemental pro forma from July 1, 2011 to September 30, 2011 (1)	$	389,648	$	30,624
2010 supplemental pro forma from July 1, 2010 to September 30, 2010	$	383,333	$	27,639
Actual from January 1, 2011 to September 30, 2011	$	23,341	$	1,616
2011 supplemental pro forma from January 1, 2011 to September 30, 2011 (1)	$	1,173,830	$	99,611
2010 supplemental pro forma from January 1, 2010 to September 30, 2010 (1)	$	1,117,245	$	87,375

⁽¹⁾  The July 1, 2011 to September 30, 2011 and January 1, 2011 to September 30, 2011 supplemental pro forma net income was adjusted to exclude $1.5 million and $2.0 million, respectively of acquisition-related costs incurred in 2011. The January 1, 2010 to September 30, 2010 supplemental pro forma net income was adjusted to include the $2.0 million of year-to-date acquisition-related costs.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2011

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

14. Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (FASB) amended the accounting guidance for Fair Value Measurement to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS (International Financial Reporting Standards). The amendments explain how to measure fair value, however they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption of this new guidance is not expected to have a significant impact on our consolidated financial statements.

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder’s equity and requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The statement of other comprehensive income should immediately follow the statement of net income. Regardless of which option is chosen it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects; and does not affect how earnings per share is calculated or presented.

The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted. The adoption of the new disclosure requirements will have no effect on our consolidated financial statements other than the changes to presentation outlined.

In September 2011, the FASB amended the accounting guidance on Intangibles—Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit’s fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The adoption of the amended goodwill impairment testing procedures will not significantly impact our consolidated financial statements.

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Acquisitions (Details Textuals) (USD $)	3 Months Ended	9 Months Ended			3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Animal Hospitals and Laboratory Acquisitions [Member]	Sep. 30, 2011 Bright Heart [Member]	Sep. 30, 2011 Bright Heart [Member] Year Hospital	Jul. 11, 2011 Bright Heart [Member]	Sep. 30, 2011 Vetstreet [Member]	Sep. 30, 2011 Vetstreet [Member] Year	Aug. 09, 2011 Vetstreet [Member]	Sep. 30, 2011 Vetstreet [Member] Customer Relationships [Member] Year	Sep. 30, 2011 Vetstreet [Member] Technology and Trademarks [Member] Year	Sep. 30, 2011 Vetstreet [Member] Non-compete Agreements [Member] Year	Sep. 30, 2011 Vetstreet [Member] Contracts [Member] Year
Acquisitions (Textuals) [Abstract]
Acquisition-related costs (included in corporate selling, general and administrative expense in our income statement for the three and nine months ended September 30, 2011	$ 1,500,000	$ 2,000,000	$ 2,000,000		$ 851,000	$ 1,100,000		$ 657,000	$ 911,000
Amount of goodwill deducted for income tax purpose				16,200,000	47,431,000	47,431,000		99,087,000	99,087,000
Cash payments made for real estate acquired through acquisition		1,900,000	5,834,000	1,900,000
Business Acquisition Cost of Acquired Entity Cash Paid	189,255,000	189,255,000	42,827,000	19,499,000	23,490,000	23,490,000	50,000,000	146,420,000	146,420,000
Business acquisition percentage of voting interests acquired					100.00%	100.00%		100.00%	100.00%
Weighted average amortization period						5			9		10	7	2	8
Preliminary purchase price										$ 146,400,000

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Calculation of Earnings per Share (Tables)

9 Months Ended

Sep. 30, 2011

Calculation of Earnings per Share [Abstract]

Calculation of Basic and Diluted Earnings per Share

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Net income attributable to VCA Antech, Inc	$	30,169	$	27,431	$	98,620	$	88,770
Weighted-average common shares outstanding:
Basic		86,697		86,086		86,531		85,985
Effect of dilutive potential common shares:
Stock options		445		632		593		812
Nonvested shares		111		246		169		201
Diluted		87,253		86,964		87,293		86,998
Basic earnings per share	$	0.35	$	0.32	$	1.14	$	1.03
Diluted earnings per share	$	0.35	$	0.32	$	1.13	$	1.02

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Condensed, Consolidated Statements of Equity (Unaudited) (USD $) In Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Noncontrolling Interests
Beginning Balances at Dec. 31, 2009	$ 886,476	$ 86	$ 335,114	$ 540,010	$ (163)	$ 11,429
Beginning Balances, shares at Dec. 31, 2009		85,584
Net income (excludes $582 and $333 in September 2010 and $1,207 and $326 in September 2011 related to redeemable and mandatorily redeemable noncontrolling interests, respectively)	91,121			88,770		2,351
Foreign currency translation adjustment	103				103
Unrealized gain (loss) on foreign currency, net of tax	175				175
Unrealized loss on hedging instruments, net of tax	(1)				(1)
Losses on hedging instruments reclassified to income, net of tax	233				233
Formation of noncontrolling interests	3,169					3,169
Distribution to noncontrolling interests	(2,479)					(2,479)
Purchase of noncontrolling interests	(484)					(484)
Share-based compensation	7,490		7,490
Issuance of common stock under stock incentive plans	4,781		4,781
Issuance of common stock under stock incentive plans, shares		503
Stock repurchases	(2,292)		(2,292)
Excess tax benefit from stock options	370		370
Tax shortfall and other from stock options and awards	(568)		(568)
Ending Balances at Sep. 30, 2010	988,094	86	344,895	628,780	347	13,986
Ending Balances, shares at Sep. 30, 2010		86,087
Beginning Balances at Dec. 31, 2010	1,009,485	86	347,848	650,253	737	10,561
Beginning Balances, shares at Dec. 31, 2010		86,179
Net income (excludes $582 and $333 in September 2010 and $1,207 and $326 in September 2011 related to redeemable and mandatorily redeemable noncontrolling interests, respectively)	100,387			98,620		1,767
Foreign currency translation adjustment	(373)				(373)
Unrealized gain (loss) on foreign currency, net of tax	(226)				(226)
Distribution to noncontrolling interests	(1,046)					(1,046)
Purchase of noncontrolling interests	(612)		263			(875)
Share-based compensation	6,610		6,610
Issuance of common stock under stock incentive plans	2,596	1	2,595
Issuance of common stock under stock incentive plans, shares		483
Stock repurchases	(2,663)		(2,663)
Excess tax benefit from stock options	963		963
Tax shortfall and other from stock options and awards	(539)		(539)
Ending Balances at Sep. 30, 2011	$ 1,114,582	$ 87	$ 355,077	$ 748,873	$ 138	$ 10,407
Ending Balances, shares at Sep. 30, 2011		86,662

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Lines of Business (Policies)

9 Months Ended

Sep. 30, 2011

Lines of Business [Abstract]

Segment Reporting

Our reportable segments are Animal Hospital and Laboratory. Our Animal Hospital segment provides veterinary services for companion animals and sells related retail and pharmaceutical products. Our Laboratory segment provides diagnostic laboratory testing services for veterinarians, both associated with our animal hospitals and those independent of us. Our other operating segments included in “All Other” in the following tables are our Medical Technology business, which sells digital radiography and ultrasound imaging equipment, related computer hardware, software and ancillary services to the veterinary market and our Vetstreet business, which provides online communications, professional education, marketing solutions to the veterinary community and an ecommerce platform for independent animal hospitals. In addition, Vetstreet.com provides a selection of products, information and services to the pet-owning community. These operating segments do not meet the quantitative or qualitative requirements for reportable segments. Our operating segments are strategic business units that have different services, products and/or functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, risks and rewards. We also operate a corporate office that provides general and administrative support services for our other segments.

The accounting policies of our segments are essentially the same as those described in the summary of significant accounting policies included in our 2010 Annual Report on Form 10-K. We evaluate the performance of our segments based on gross profit and operating income. For purposes of reviewing the operating performance of our segments all intercompany sales and purchases are generally accounted for as if they were transactions with independent third parties at current market prices.

Fair Value Measurement

In May 2011, the Financial Accounting Standards Board (FASB) amended the accounting guidance for Fair Value Measurement to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS (International Financial Reporting Standards). The amendments explain how to measure fair value, however they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments are to be applied prospectively and are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The adoption of this new guidance is not expected to have a significant impact on our consolidated financial statements.

Presentation of Comprehensive Income

In June 2011, the FASB finalized the accounting guidance for the Presentation of Comprehensive Income. The objective of the new guidance is to improve the comparability, consistency, and transparency of financial reporting, to increase the prominence of the items reported in other comprehensive income and to facilitate convergence of GAAP and IFRS. The guidance eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholder’s equity and requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The statement of other comprehensive income should immediately follow the statement of net income. Regardless of which option is chosen it is required that reclassification adjustments for items that are reclassified from other comprehensive income to net income be presented on the face of the financial statements.

The new guidance does not change the following: the items that must be reported in other comprehensive income; when an item of other comprehensive income must be reclassified to net income; the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects; and does not affect how earnings per share is calculated or presented.

The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. Early adoption is permitted. The adoption of the new disclosure requirements will have no effect on our consolidated financial statements other than the changes to presentation outlined.

Goodwill and Intangible Assets

In September 2011, the FASB amended the accounting guidance on Intangibles—Goodwill and Other - Testing Goodwill for Impairment. The objective of this guidance is to reduce the cost and complexity of performing the annual goodwill impairment test and to improve the previous guidance by expanding the examples of events and circumstances that an entity should consider in the qualitative evaluation about the likelihood of goodwill impairment. The amendments allow an entity the option of first assessing qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The examples of events and circumstances included in the amendment that an entity should consider in performing its qualitative assessment about whether to proceed to the first step of the goodwill impairment test supersede the examples in the existing guidance. If it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. Under the amendments, an entity has the option to bypass the qualitative assessment for any reporting unit in any period and may resume performing the qualitative assessment in any subsequent period. An entity is no longer permitted to carry forward its detailed calculation of a reporting unit’s fair value from a prior year as previously permitted under the existing guidance. The amended guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The adoption of the amended goodwill impairment testing procedures will not significantly impact our consolidated financial statements.

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Long-Term Obligations (Details Textuals) (USD $)	9 Months Ended			9 Months Ended				9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Aug. 16, 2011	Sep. 30, 2011 Line of Credit [Member]	Sep. 30, 2011 Senior term notes at LIBOR + 1.75% (1.99% at September 30, 2011) [Member]	Sep. 30, 2011 Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010) [Member]	Dec. 31, 2010 Senior term notes at LIBOR + 2.25% (2.51% at December 31, 2010) [Member]	Sep. 30, 2011 Senior Notes [Member]
Debt Instrument [Line Items]
Deferred financing costs				$ 2,000,000
Interest rate of Senior term notes					LIBOR plus 1.75%	LIBOR plus 2.25%
Debt retirement costs	2,944,000	9,112,000		2,900,000
Income from continuing operations				865,000
Deferred financing costs associated with lenders				1,100,000
Interest rate of Senior term notes				1.75%	1.75%	2.25%
Senior term notes interest rates, period end					1.99%		2.51%
Senior Term Notes description of variable interest rate basis	LIBOR			Base rate or adjusted Eurodollar rate				The base rate for the senior term notes is a rate per annum equal to the greatest of Wells Fargo's prime rate in effect on such day, the Federal funds effective rate in effect on such day plus 0.5% and the adjusted Eurodollar rate for a one-month interest period commencing on such day plus 1.0%
Senior notes Description of Euro Dollar rate basis								The adjusted Eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities."
Basis spread on federal funds effective rate								0.50%
Basis spread on adjusted eurodollar rate								1.00%
Long-Term Obligations (Textuals) [Abstract]
Senior term notes	100,000,000
Aggregate principal amount of revolving commitments			25,000,000
Long term revolving credit facility interest rate	the base rate or the adjusted Eurodollar rate plus a margin of 1.75%
Principal payment for senior term notes	7,300,000
Principal payment for senior term notes quarterly payments	10,900,000
Principal payment for senior term notes quarterly payments prior to maturity	$ 14,500,000
Fixed charge coverage ratio	175.00%
Fixed charge coverage ratio required	120.00%
Revolving credit facility maturity date	2016-08-19

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Acquisitions (Tables)

9 Months Ended

Sep. 30, 2011

Acquisitions [Abstract]

Summary of acquisitions of animal hospitals and laboratories

Animal Hospitals:
Animal Hospital acquisitions, excluding BrightHeart	10
Acquisitions, merged	(1	)
BrightHeart (1)	9
Sold, closed or merged	(6	)
Total	12
Laboratories:
Acquisitions	1
Created	1
Total	2

⁽¹⁾  BrightHeart Veterinary Centers (“BrightHeart) was acquired on July 11, 2011.

Summary of Purchase price and allocation of the purchase price

Consideration:
Cash	$	19,499
Holdback		800
Fair value of total consideration transferred	$	20,299
Allocation of the Purchase Price:
Tangible assets	$	446
Identifiable intangible assets		3,620
Goodwill (1)		16,233
Total	$	20,299

⁽¹⁾  We expect that $16.2 million, of the goodwill recorded for these acquisitions as of September 30, 2011 will be fully deductible for income tax purposes.

Consideration:
Cash	$	23,490
Cash paid to holders of debt		26,048
Contingent consideration		481
Fair value of total consideration transferred	$	50,019
Allocation of the Purchase Price:
Tangible assets	$	15,985
Identifiable intangible assets (1)		7,335
Goodwill (2)		47,431
Other liabilities assumed		(20,732	)
Total	$	50,019

⁽¹⁾  Identifiable intangible assets primarily include customer relationships. The weighted average amortization period for both the total identifiable intangible assets and the customer-related intangible assets is approximately five years.

⁽²⁾  We expect that all of the goodwill related to the BrightHeart acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Consideration:
Cash	$	146,420
Allocation of the Purchase Price:
Tangible assets	$	5,952
Identifiable intangible assets (1)		45,810
Goodwill (2)		99,087
Other liabilities assumed		(4,429	)
Total	$	146,420

⁽¹⁾  Identifiable intangible assets include customer relationships, technology, trademarks, non-compete agreements and contracts. The weighted average amortization period for the total identifiable intangible assets is approximately nine years, for the customer-related intangible assets approximately ten years, for the technology and trademarks approximately seven years, for the non-compete agreements approximately two years and for the contracts approximately eight years.

⁽²⁾  We expect that all of the goodwill related to the Vetstreet acquisition recorded as of September 30, 2011 will be fully deductible for income tax purposes.

Business Acquisition Pro Forma Financial information

	Revenue		Net Income
(In thousands):	(Unaudited)
Actual from July 1, 2011 to September 30, 2011	$	19,318	$	1,108
2011 supplemental pro forma from July 1, 2011 to September 30, 2011 (1)	$	389,648	$	30,624
2010 supplemental pro forma from July 1, 2010 to September 30, 2010	$	383,333	$	27,639
Actual from January 1, 2011 to September 30, 2011	$	23,341	$	1,616
2011 supplemental pro forma from January 1, 2011 to September 30, 2011 (1)	$	1,173,830	$	99,611
2010 supplemental pro forma from January 1, 2010 to September 30, 2010 (1)	$	1,117,245	$	87,375

⁽¹⁾  The July 1, 2011 to September 30, 2011 and January 1, 2011 to September 30, 2011 supplemental pro forma net income was adjusted to exclude $1.5 million and $2.0 million, respectively of acquisition-related costs incurred in 2011. The January 1, 2010 to September 30, 2010 supplemental pro forma net income was adjusted to include the $2.0 million of year-to-date acquisition-related costs.

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Condensed, Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities:
Net income	$ 101,920	$ 92,036
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	41,386	33,387
Amortization of debt issue costs	1,169	461
Provision for uncollectible accounts	4,510	5,388
Debt retirement costs	2,764	2,550
Net (gain) loss on sale of assets	(43)	163
Share-based compensation	6,610	7,490
Deferred income taxes	14,649	10,992
Excess tax benefit from exercise of stock options	(963)	(370)
Other	(489)	(550)
Changes in operating assets and liabilities:
Trade accounts receivable	(7,018)	(7,533)
Inventory, prepaid expense and other assets	(9,806)	(1,754)
Accounts payable and other accrued liabilities	(8,328)	7,038
Accrued payroll and related liabilities	8,523	3,717
Income taxes	8,707	(9,545)
Net cash provided by operating activities	163,591	143,470
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(190,363)	(44,126)
Real estate acquired in connection with business acquisitions	(1,900)	(5,834)
Property and equipment additions	(43,275)	(47,675)
Proceeds from sale of assets	447	15
Other	(723)	188
Net cash used in investing activities	(235,814)	(97,432)
Cash flows from financing activities:
Repayment of debt	(90,945)	(548,560)
Proceeds from issuance of long-term debt	150,000	500,000
Proceeds from revolving credit facility	50,000
Repayment of revolving credit facility	(50,000)
Payment of financing costs	(2,944)	(9,112)
Distributions to noncontrolling interest partners	(1,959)	(3,314)
Proceeds from issuance of common stock under stock option plans	2,596	4,781
Excess tax benefit from exercise of stock options	963	370
Stock repurchases	(2,663)	(2,292)
Other	(345)	(897)
Net cash provided by (used in) financing activities	54,703	(59,024)
Effect of currency exchange rate changes on cash and cash equivalents	(363)	38
Decrease in cash and cash equivalents	(17,883)	(12,948)
Cash and cash equivalents at beginning of period	97,126	145,181
Cash and cash equivalents at end of period	79,243	132,233
Supplemental disclosures of cash flow information:
Interest paid	12,214	9,207
Income taxes paid	40,601	62,018
Detail of acquisitions:
Fair value of assets acquired	241,688	104,251
Cash paid for acquisitions	(189,255)	(42,827)
Cash paid to bondholders/debt holders	(26,048)	(29,532)
Contingent consideration	(481)	(259)
Holdbacks	(800)
Liabilities assumed	$ 25,104	$ 31,633

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Calculation of Earnings per Share

9 Months Ended

Sep. 30, 2011

Calculation of Earnings per Share [Abstract]

Calculation of Earnings per Share

9. Calculation of Earnings per Share

Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to VCA Antech, Inc. by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic and diluted earnings per share were calculated as follows (in thousands, except per share amounts):

	Three Months  Ended September 30,				Nine Months  Ended September 30,
	2011		2010		2011		2010
Net income attributable to VCA Antech, Inc	$	30,169	$	27,431	$	98,620	$	88,770
Weighted-average common shares outstanding:
Basic		86,697		86,086		86,531		85,985
Effect of dilutive potential common shares:
Stock options		445		632		593		812
Nonvested shares		111		246		169		201
Diluted		87,253		86,964		87,293		86,998
Basic earnings per share	$	0.35	$	0.32	$	1.14	$	1.03
Diluted earnings per share	$	0.35	$	0.32	$	1.13	$	1.02

For the three months ended September 30, 2011 and 2010, potential common shares of 2,104,547 and 1,162,389, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect. For the nine months ended September 30, 2011 and 2010, potential common shares of 1,139,567 and 13,919, respectively, were excluded from the computation of diluted earnings per share because their inclusion would have had an antidilutive effect.

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Basis of Presentation (Details) (USD $)	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2011	Sep. 30, 2011	Dec. 31, 2010
Basis of Presentation (Textuals) [Abstract]
Reclassification Adjustment		$ 506,000	$ 5,800,000
Recognition of deferred revenue	4,000,000
Recognition of deferred cost	$ 3,800,000

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Noncontrolling Interests

9 Months Ended

Sep. 30, 2011

Noncontrolling Interests [Abstract]

Non controlling interests

13. Noncontrolling Interests

We own some of our animal hospitals in partnerships with noncontrolling interest holders. We consolidate our partnerships in our consolidated financial statements because our ownership interest in these partnerships is equal to or greater than 50.1% and we control these entities. We record noncontrolling interest in income of subsidiaries equal to our partners’ percentage ownership of the partnerships’ income. We also record changes in the redemption value of our redeemable noncontrolling interests in net income attributable to noncontrolling interests in our condensed, consolidated income statements. We reflect our noncontrolling partners’ cumulative share in the equity of the respective partnerships as either noncontrolling interests in equity, mandatorily redeemable noncontrolling interests in other liabilities or redeemable noncontrolling interests in temporary equity (mezzanine).

a. Mandatorily Redeemable Noncontrolling Interests

The terms of some of our partnership agreements require us to purchase the partner’s equity in the partnership in the event of the partner’s death. We report these redeemable noncontrolling interests at their estimated redemption value and classify them as liabilities due to the certainty of the related event. We recognize redemption value changes in the obligation in interest expense. At September 30, 2011 and December 31, 2010, these liabilities were $3.1 million and $1.7 million, respectively, and are included in other liabilities in our consolidated balance sheets.

b. Redeemable Noncontrolling Interests

We also enter into partnership agreements whereby the minority partner is issued certain “put” rights. These rights are normally exercisable at the sole discretion of the minority partner. We report these redeemable noncontrolling interests at their estimated redemption value and classify them in temporary equity (mezzanine). We recognize changes in the obligation in net income attributable to noncontrolling interests.

The following table provides a summary of redeemable noncontrolling interests (in thousands):

	Income Statement Impact		Redeemable Noncontrolling Interests
Balance as of December 31, 2009			$	4,369
Noncontrolling interest	$	582
Redemption value change		-		582
Formation of noncontrolling interests				1,390
Distribution to noncontrolling interests				(515	)
Balance as of September 30, 2010			$	5,826
Balance as of December 31, 2010			$	5,799
Noncontrolling interest	$	660
Redemption value change		547		1,207
Formation of noncontrolling interests				510
Distribution to noncontrolling interests				(625	)
Balance as of September 30, 2011			$	6,891

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Condensed, Consolidated Balance Sheets (Unaudited) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 79,243	$ 97,126
Trade accounts receivable, less allowance for uncollectible accounts of $14,661 and $13,801 at September 30, 2011 and December 31, 2010, respectively	53,445	49,224
Inventory	46,876	40,760
Prepaid expenses and other	23,203	21,138
Deferred income taxes	20,129	19,019
Prepaid income taxes	10,765	19,047
Total current assets	233,661	246,314
Property and equipment, net	361,451	331,687
Goodwill	1,254,061	1,092,480
Other intangible assets, net	94,072	46,986
Notes receivable, net	6,441	6,429
Deferred financing costs, net	5,711	6,700
Other	41,417	35,826
Total assets	1,996,814	1,766,422
Current liabilities:
Current portion of long-term debt	28,480	28,101
Accounts payable	34,178	31,970
Accrued payroll and related liabilities	46,594	35,754
Other accrued liabilities	45,179	45,769
Total current liabilities	154,431	141,594
Long-term debt, less current portion	598,918	498,935
Deferred income taxes	95,745	82,131
Other liabilities	26,247	28,478
Total liabilities	875,341	751,138
Commitments and contingencies
Redeemable noncontrolling interests	6,891	5,799
Preferred stock, par value $0.001, 11,000 shares authorized, none outstanding
VCA Antech, Inc. stockholders' equity:
Common stock, par value $0.001, 175,000 shares authorized, 86,662 and 86,179 shares outstanding as of September 30, 2011 and December 31, 2010, respectively	87	86
Additional paid-in capital	355,077	347,848
Retained earnings	748,873	650,253
Accumulated other comprehensive income	138	737
Total VCA Antech, Inc. stockholders' equity	1,104,175	998,924
Noncontrolling interests	10,407	10,561
Total equity	1,114,582	1,009,485
Total liabilities and equity	$ 1,996,814	$ 1,766,422

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Acquisitions (Details)	9 Months Ended
	Sep. 30, 2011 Hospital Year
Summary of acquisitions of animal hospitals and laboratories
Number of acquisitions, merged	(1)
Number of Properties Sold Closed or Merged	(6)
Animal Hospital Acquisitions [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	10
Bright Heart [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	9
Animal Hospitals Including Bright Heart [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	12
Laboratories Acquisitions [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	1
Laboratories Created [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	1
Laboratories [Member]
Summary of acquisitions of animal hospitals and laboratories
Number of Businesses Acquired	2

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Calculation of Earnings per Share (Details) (USD $) In Thousands, except Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Calculation of Basic and Diluted Earnings per Share
Net income attributable to VCA Antech, Inc.	$ 30,169	$ 27,431	$ 98,620	$ 88,770
Weighted-average common shares outstanding:
Basic	86,697,000	86,086,000	86,531,000	85,985,000
Effect of dilutive potential common shares:
Stock options	445,000	632,000	593,000	812,000
Nonvested shares	111,000	246,000	169,000	201,000
Diluted	87,253,000	86,964,000	87,293,000	86,998,000
Basic earnings per share	$ 0.35	$ 0.32	$ 1.14	$ 1.03
Diluted earnings per share	$ 0.35	$ 0.32	$ 1.13	$ 1.02
Calculation of Earnings per Share (Textuals) [Abstract]
Potential common shares excluded from the computation of diluted earnings per share	2,104,547	1,162,389	1,139,567	13,919

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Fair Value Measurements (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010
Carrying value and fair value of long-term debt
Variable-rate long-term debt, Carrying Value	$ 581,250	$ 493,750
Variable-rate long-term debt, Fair Value	$ 579,797	$ 496,219

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Share-Based Compensation (Details) (USD $)	9 Months Ended
	Sep. 30, 2011
Summary of stock option activity
Stock Options, Beginning balance	3,323,000
Stock option granted	894,000
Stock Options, Exercised	(262,000)
Stock option, Canceled	(3,000)
Stock Options, Ending balance	3,952,000
Stock Options, Exercisable	2,719,000
Stock Options, Vested and Expected to vest	3,896,000
Weighted-Average Exercise Price, Beginning balance	$ 16.45
Weighted-Average Exercise Price, Granted	$ 15.98
Weighted-Average Exercise Price, Exercised	$ 9.90
Weighted-Average Exercise Price, Canceled	$ 17.04
Weighted-Average Exercise Price, Ending balance	$ 16.78
Weighted-Average Exercise Price, Exercisable	$ 17.00
Weighted-Average Exercise Price, Vested and Expected to vest	$ 16.78
Summary of nonvested stock activity
Shares, Beginning balance	686,511
Shares, Granted	1,225,046
Shares, Vested	(334,370)
Shares, Forfeited/Canceled	(2,275)
Shares, Ending balance	1,574,912
Grant Date Weighted-Average Fair Value Per Share, Beginning balance	$ 26.16
Grant Date Weighted-Average Fair Value Per Share, Granted	$ 20.00
Grant Date Weighted-Average Fair Value Per Share, Vested	$ 28.84
Grant Date Weighted-Average Fair Value Per Share, Forfeited/Canceled	$ 30.35
Grant Date Weighted-Average Fair Value Per Share, Ending balance	$ 20.80

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Noncontrolling Interests (Details Textuals) (USD $) In Millions, unless otherwise specified	Sep. 30, 2011	Dec. 31, 2010
Noncontrolling Interests (Textuals) [Abstract]
Percentage of ownership interest in partnership	50.10%
Mandatorily Redeemable Noncontrolling Interests included in other liabilities	$ 3.1	$ 1.7

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Acquisitions (Details1) (USD $) In Thousands	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Animal Hospitals and Laboratory Acquisitions [Member]	Sep. 30, 2011 Bright Heart [Member]	Jul. 11, 2011 Bright Heart [Member]	Sep. 30, 2011 Vetstreet [Member]
Consideration
Cash paid for acquisitions	$ 189,255	$ 42,827	$ 19,499	$ 23,490	$ 50,000	$ 146,420
Holdback			800
Cash paid to holders of debt	26,048	29,532		26,048
Contingent consideration	481	259		481
Fair value of total consideration transferred			20,299	50,019
Allocation of the Purchase Price
Tangible assets			446	15,985		5,952
Identifiable intangible assets			3,620	7,335		45,810
Goodwill			16,233	47,431		99,087
Other liabilities assumed				(20,732)		(4,429)
Total			$ 20,299	$ 50,019		$ 146,420