##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended January 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to .
 Commission file number: 000-26326
 PROFESSIONAL VETERINARY PRODUCTS, LTD.
  Nebraska
    
    37-1119387(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCondensed Consolidated Balance Sheets as of January 31, 2010 (unaudited) and July 31, 2009
    
    
    2Condensed Consolidated Statements of Loss and Comprehensive Loss for the three
and six month periods ended January 31, 2010 and 2009 (unaudited)
    
    
    3Condensed Consolidated Statements of Stockholders Equity for the six month period ended
January 31, 2010 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the six month periods ended January 31,
2010 and 2009 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    15ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    24ITEM 4T: CONTROLS AND PROCEDURES
    
    
    25PART II OTHER INFORMATION
    
    
    26ITEM 1: LEGAL PROCEEDINGS
    
    
    26ITEM 1A: RISK FACTORS
    
    
    26ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    26ITEM 3: DEFAULTS UPON SENIOR SECURITIES
    
    
    27ITEM 4: [REMOVED AND RESERVED]ITEM 5: OTHER INFORMATION
    
    
    27ITEM 6: EXHIBITS
    
    
    27SIGNATURES
    
    
    29EX-10.1EX-10.2EX-31.1.AEX-31.1.BEX-32
  1




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##### Table of Contents



ITEM 1:
    
    FINANCIAL STATEMENTS
 PROFESSIONAL VETERINARY PRODUCTS, LTD.
 January 31,
    
    
    July 31,2010
    
    
    2009ASSETSCURRENT ASSETSCash
    
    $
    7,476
    
    
    $
    1,408Accounts receivable, net of allowance: $469 and $305, respectively
    
    
    28,081
    
    
    
    24,227Accounts receivable, related parties
    
    
    596
    
    
    
    348Inventory, net of allowance: $189 and $127, respectively
    
    
    38,581
    
    
    
    37,107Deferred tax asset
    
    
    487
    
    
    
    952Other current assets
    
    
    766
    
    
    
    3,518Total current assets
    
    
    75,987
    
    
    
    67,560NET PROPERTY AND EQUIPMENT
    
    
    8,325
    
    
    
    8,718OTHER ASSETSIntangible assets, less accumulated amortization, $1 and $10, respectively
    
    
    204
    
    
    
    30Investment in unconsolidated affiliates
    
    
    144
    
    
    
    144Cash value of life insurance
    
    
    2,922
    
    
    
    2,826Deferred tax asset
    
    
    1,997
    
    
    
    446Other assets
    
    
    19
    
    
    
    9Total other assets
    
    
    5,286
    
    
    
    3,455TOTAL ASSETS
    
    $
    89,598
    
    
    $
    79,733LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNote payable, bank
    
    $
    33,077
    
    
    $
    20,287Current portion of long-term debt and capital lease obligation
    
    
    0
    
    
    
    400Current portion of accrued retirement benefits
    
    
    243
    
    
    
    243Accounts payable
    
    
    34,144
    
    
    
    29,043Accounts payable, related parties
    
    
    689
    
    
    
    845Interest rate swap
    
    
    0
    
    
    
    111Other current liabilities
    
    
    3,405
    
    
    
    3,656Total current liabilities
    
    
    71,558
    
    
    
    54,585LONG-TERM LIABILITIESLong-term debt
    
    
    0
    
    
    
    3,370Accrued retirement benefits
    
    
    2,787
    
    
    
    2,811Total long-term liabilities
    
    
    2,787
    
    
    
    6,181TOTAL LIABILITIES
    
    
    74,345
    
    
    
    60,766COMMITMENTS AND CONTINGENT LIABILITIES  SEE NOTE 11
STOCKHOLDERS EQUITYCommon stock, $1 par value; authorized 30,000 shares; issued and
outstanding, 1,916 and 1,948, respectively shares
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    5,685
    
    
    
    5,779Retained earnings
    
    
    9,865
    
    
    
    13,562Accumulated other comprehensive loss
    
    
    (299
    )
    
    
    (376
    )Total stockholders equity
    
    
    15,253
    
    
    
    18,967TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    89,598
    
    
    $
    79,733
  2




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##### Table of Contents



PROFESSIONAL
VETERINARY PRODUCTS, LTD.
 
 
   Three Months Ended
    
    
    Six Months EndedJanuary 31,
    
    
    January 31,
    
    
    January 31,
    
    
    January 31,2010
    
    
    2009
    
    
    2010
    
    
    2009NET SALES AND OTHER REVENUE
    
    $
    78,074
    
    
    $
    64,727
    
    
    $
    157,097
    
    
    $
    150,522COST OF SALES
    
    
    70,354
    
    
    
    54,790
    
    
    
    141,807
    
    
    
    132,398Gross profit
    
    
    7,720
    
    
    
    9,937
    
    
    
    15,290
    
    
    
    18,124OPERATING GENERAL AND ADMINISTRATIVE EXPENSES
    
    
    10,374
    
    
    
    9,925
    
    
    
    19,510
    
    
    
    20,318Operating income (loss)
    
    
    (2,654
    )
    
    
    12
    
    
    
    (4,220
    )
    
    
    (2,194
    )OTHER INCOME (EXPENSE)Interest income
    
    
    63
    
    
    
    123
    
    
    
    117
    
    
    
    194Interest expense
    
    
    (512
    )
    
    
    (304
    )
    
    
    (731
    )
    
    
    (604
    )Loss on sale of equipment
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    (29
    )Other expense  net
    
    
    (449
    )
    
    
    (210
    )
    
    
    (614
    )
    
    
    (439
    )Loss before income taxes
    
    
    (3,103
    )
    
    
    (198
    )
    
    
    (4,834
    )
    
    
    (2,633
    )Income tax benefit
    
    
    (650
    )
    
    
    (165
    )
    
    
    (1,137
    )
    
    
    (840
    )NET LOSS
    
    $
    (2,453
    )
    
    $
    (33
    )
    
    $
    (3,697
    )
    
    $
    (1,793
    )LOSS PER COMMON SHARE
    
    $
    (1,276.27
    )
    
    $
    (16.54
    )
    
    $
    (1,916.54
    )
    
    $
    (891.85
    )Weighted average common shares outstanding
    
    
    1,922
    
    
    
    1,995
    
    
    
    1,929
    
    
    
    2,011COMPREHENSIVE LOSSNet loss
    
    $
    (2,453
    )
    
    $
    (33
    )
    
    $
    (3,697
    )
    
    $
    (1,793
    )Other comprehensive income (loss):Adjustment for net periodic pension benefit
cost, net of tax
    
    
    5
    
    
    
    6
    
    
    
    10
    
    
    
    12Adjustment for mark-to-market value of swap,
net of tax
    
    
    29
    
    
    
    (77
    )
    
    
    67
    
    
    
    (126
    )Total comprehensive loss
    
    $
    (2,419
    )
    
    $
    (104
    )
    
    $
    (3,620
    )
    
    $
    (1,907
    )SUPPLEMENTAL INFORMATIONNet sales and other revenue  related parties
    
    $
    1,014
    
    
    $
    1,498
    
    
    $
    2,029
    
    
    $
    2,850Purchases  related parties
    
    $
    1,496
    
    
    $
    2,481
    
    
    $
    3,646
    
    
    $
    6,555
  3




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##### Table of Contents



PROFESSIONAL VETERINARY PRODUCTS, LTD.
   AccumulatedCommon
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    OtherShares
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveIssued
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    TotalBALANCE AT
AUGUST 1, 2009
    
    
    1,948
    
    
    $
    2
    
    
    $
    5,779
    
    
    $
    13,562
    
    
    $
    (376
    )
    
    $
    18,967Redemption of stock
    
    
    (32
    )
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    (94
    )Change in
unrecognized
pension cost, net
of tax of $7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10Change in
mark-to-market
interest rate swap,
net of tax of $44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    67Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,697
    )
    
    
    
    
    
    
    (3,697
    )BALANCE AT JANUARY
31, 2010
    
    
    1,916
    
    
    $
    2
    
    
    $
    5,685
    
    
    $
    9,865
    
    
    $
    (299
    )
    
    $
    15,253
  4




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##### Table of Contents



PROFESSIONAL VETERINARY PRODUCTS, LTD.
   January 31,
    
    
    January 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (3,697
    )
    
    $
    (1,793
    )Adjustments to reconcile net loss to net cash from
operating activities:Depreciation and amortization
    
    
    782
    
    
    
    916Loss on sale of assets
    
    
    
    
    
    
    29Retirement benefits
    
    
    (7
    )
    
    
    141Deferred income tax
    
    
    (1,137
    )
    
    
    (42
    )Cash value of life insuranceAllowance for doubtful accounts
    
    
    164
    
    
    
    140Allowance for obsolete inventory
    
    
    62
    
    
    
    (47
    )(Increase) decrease in:Receivables
    
    
    (4,266
    )
    
    
    (1,208
    )Inventory
    
    
    (1,536
    )
    
    
    (3,480
    )Other current assets
    
    
    2,752
    
    
    
    (709
    )Other assets
    
    
    (10
    )
    
    
    2Increase (decrease) in:Accounts payable
    
    
    4,945
    
    
    
    (5,642
    )Other current liabilities
    
    
    (251
    )
    
    
    (551
    )Total adjustments
    
    
    1,498
    
    
    
    (10,451
    )Net cash consumed by operating activities
    
    
    (2,199
    )
    
    
    (12,244
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (363
    )
    
    
    (144
    )Cash value of life insurance
    
    
    (96
    )
    
    
    (250
    )Intangible assets
    
    
    (200
    )
    
    
    Net cash consumed by investing activities
    
    
    (659
    )
    
    
    (394
    )CASH FLOWS FROM FINANCING ACTIVITIESNet short-term borrowings
    
    
    12,790
    
    
    
    14,311Payments of long-term debt and capital lease obligation
    
    
    (3,770
    )
    
    
    (180
    )Payments from redemption of common stock
    
    
    (94
    )
    
    
    (147
    )Net cash provided by financing activities
    
    
    8,926
    
    
    
    13,984Net increase in cash
    
    
    6,068
    
    
    
    1,346Cash at beginning of year
    
    
    1,408
    
    
    
    1,985Cash at end of period
    
    $
    7,476
    
    
    $
    3,331Supplemental disclosure of cash flow information:Interest paid
    
    $
    771
    
    
    $
    612Income taxes refunded
    
    $
    (2,504
    )
    
    $
    (203
    )Non-cash periodic pension cost
    
    $
    17
    
    
    $
    12Non-cash unrealized (loss) gain on interest rate swap
    
    $
    111
    
    
    $
    (126
    )
  5




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##### Table of Contents



PROFESSIONAL VETERINARY PRODUCTS, LTD.
  NOTE 1  BASIS OF PRESENTATION:
      NOTE 2  RECENT ACCOUNTING PRONOUNCEMENTS:
 The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles FASB Accounting Standards Codification
 6




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  NOTE 3  PROPERTY AND EQUIPMENT:
  January 31,
    
    
    July 31,2010
    
    
    2009Land
    
    $
    1,762
    
    
    $
    1,762Buildings
    
    
    5,217
    
    
    
    5,217Leasehold improvements
    
    
    606
    
    
    
    606Equipment
    
    
    11,505
    
    
    
    11,14019,090
    
    
    
    18,725Less  Accumulated depreciation
    
    
    10,952
    
    
    
    10,1968,138
    
    
    
    8,529Construction in progress
    
    
    187
    
    
    
    189Net property, plant, and equipment
    
    $
    8,325
    
    
    $
    8,718
 NOTE 4  LINE OF CREDIT:
   7




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NOTE 5  EARNINGS PER SHARE:
 Earnings per Share
 NOTE 6  COMMON STOCK:
  NOTE 7  INCOME TAXES:
 Income Taxes
     8




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  NOTE 8  POST RETIREMENT BENEFITS:
   Three Months Ended
    
    
    Six Months EndedJanuary 31,
    
    
    January 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Service Cost
    
    $
    8
    
    
    $
    24
    
    
    $
    16
    
    
    $
    49Interest Cost
    
    
    41
    
    
    
    46
    
    
    
    81
    
    
    
    93Amortization of prior losses
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    3Amortization of unrecognized prior service costs
    
    
    8
    
    
    
    9
    
    
    
    17
    
    
    
    17Net periodic benefit cost
    
    $
    57
    
    
    $
    81
    
    
    $
    114
    
    
    $
    162
 NOTE 9  DERIVATIVE FINANCIAL INSTRUMENTS:
   9




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  NOTE 9  DERIVATIVE FINANCIAL INSTRUMENTS (continued):
 Derivative
Instruments and Hedging Activities
 January 31, 2010
    
    July 31, 2009Fair Value of interest rate swap agreement
    
    
    N/A
    
    
    $
    (111
    )Balance sheet location of fair value amount
    
    
    N/A
    
    
    Current LiabilitiesGain (loss) recognized in other comprehensive
income (effective portion-net of tax)
    
    $
    67
    
    
    $
    (67
    )Loss reclassified from accumulated other
comprehensive income into income (effective
portion)
    
    $
    (96
    )
    
    $
    (162
    )Location of loss reclassified from accumulated
other comprehensive income into income
    
    Interest Expense
    
    Interest ExpenseGain or loss recognized in income
(ineffective portion and amount excluded from
effectiveness testing)
    
    $
    
    
    
    $
    Location of gain (loss) recognized in income
(ineffective portion and amount excluded from
effectiveness testing)
    
    
    
    
    
    
    
 NOTE 10  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
 Fair Value Measurements and Disclosures
  Level 1
    
    Quoted prices in active markets for identical assets or liabilitiesLevel 2
    
    Observable inputs other than Level 1 prices, such as quoted prices for
similar assets or liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilitiesLevel 3
    
    Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities
  10




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  Interest Rate Swap Agreement
   Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableProducts
    
    Inputs
    
    InputsFair Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Interest rate swap agreement
    
    $
    (111
    )
    
    
    
    
    
    $
    (111
    )
    
    
    
 NOTE 11  COMMITMENTS AND CONTINGENT LIABILITIES:
 Stock Redemption 
 Major Customers, Major Suppliers and Credit Concentrations 
 Other 
  11




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  NOTE 12  SEGMENT INFORMATION:
   Segment Reporting.
 12




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
  Direct
    
    
    
    
    
    CondensedWholesale
    
    Logistics
    
    Customer
    
    
    
    
    
    ConsolidatedDistribution
    
    Services
    
    Services
    
    Eliminations
    
    TotalThree months ended January 31, 2010Net sales and other revenue
    
    $
    77,299
    
    
    $
    69
    
    
    $
    27,340
    
    
    $
    (26,634
    )
    
    $
    78,074Cost of sales
    
    
    72,340
    
    
    
    60
    
    
    
    25,266
    
    
    
    (27,313
    )
    
    
    70,353Operating, general and administrative expenses
    
    
    7,613
    
    
    
    
    
    
    
    2,761
    
    
    
    
    
    
    
    10,374Operating income (loss)
    
    
    (2,654
    )
    
    
    9
    
    
    
    (687
    )
    
    
    679
    
    
    
    (2,653
    )Income (loss) before taxes
    
    $
    (3,103
    )
    
    $
    9
    
    
    $
    (687
    )
    
    $
    678
    
    
    $
    (3,103
    )Three months ended January 31, 2009Net sales and other revenue
    
    $
    62,940
    
    
    $
    61
    
    
    $
    9,255
    
    
    $
    (7,529
    )
    
    $
    64,727Cost of sales
    
    
    54,313
    
    
    
    51
    
    
    
    7,858
    
    
    
    (7,432
    )
    
    
    54,790Operating, general and administrative
expenses
    
    
    8,582
    
    
    
    
    
    
    
    1,343
    
    
    
    
    
    
    
    9,925Operating income (loss)
    
    
    45
    
    
    
    10
    
    
    
    54
    
    
    
    (97
    )
    
    
    12Income (loss) before taxes
    
    $
    (198
    )
    
    $
    10
    
    
    $
    87
    
    
    $
    (97
    )
    
    $
    (198
    )Six months ended January 31, 2010Net sales and other revenue
    
    $
    155,818
    
    
    $
    122
    
    
    $
    50,946
    
    
    $
    (49,789
    )
    
    $
    157,097Cost of sales
    
    
    145,685
    
    
    
    105
    
    
    
    47,389
    
    
    
    (51,373
    )
    
    
    141,806Operating, general and administrative expenses
    
    
    14,347
    
    
    
    
    
    
    
    5,163
    
    
    
    
    
    
    
    19,510Operating income (loss)
    
    
    (4,214
    )
    
    
    17
    
    
    
    (1,606
    )
    
    
    1,584
    
    
    
    (4,220
    )Income (loss) before taxes
    
    $
    (4,834
    )
    
    $
    17
    
    
    $
    (1,600
    )
    
    $
    1,583
    
    
    $
    (4,834
    )Business segment assets
    
    $
    88,839
    
    
    $
    412
    
    
    $
    14,923
    
    
    $
    (14,576
    )
    
    $
    89,598Six months ended January 31, 2009Net sales and other revenue
    
    $
    147,095
    
    
    $
    124
    
    
    $
    27,776
    
    
    $
    (24,473
    )
    
    $
    150,522Cost of sales
    
    
    132,316
    
    
    
    104
    
    
    
    24,906
    
    
    
    (24,928
    )
    
    
    132,398Operating, general and administrative
expenses
    
    
    16,946
    
    
    
    
    
    
    
    3,372
    
    
    
    
    
    
    
    20,318Operating income (loss)
    
    
    (2,167
    )
    
    
    20
    
    
    
    (502
    )
    
    
    455
    
    
    
    (2,194
    )Income (loss) before taxes
    
    $
    (2,633
    )
    
    $
    20
    
    
    $
    (475
    )
    
    $
    455
    
    
    $
    (2,633
    )Business segment assets
    
    $
    86,684
    
    
    $
    371
    
    
    $
    10,159
    
    
    $
    (9,784
    )
    
    $
    87,430
 13




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 14  SIGNIFICANT ESTIMATES AND CONCENTRATIONS
 Current Economic Conditions
   14




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ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-Looking Statements
 This Quarterly Report on Form 10-Q contains forward-looking statements. Forward-looking
statements are contained principally in the section entitled Managements Discussion and Analysis
of Financial Condition and Results of Operations. These statements involve known and unknown
risks, uncertainties and other factors which may cause our actual results, performance or
achievements to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements. Forward-looking statements include, but are
not limited to, statements about:
 
    
    the current economic environment affecting the Company and the markets its serves;
    
    the sources of revenues and anticipated revenues, including the contribution from the
growth of new products and markets;
    
    estimates regarding the Companys capital requirements and its need for additional
financing;
    
    the Companys ability to attract customers and the market acceptance of its products;
    
    our ability to establish relationships with suppliers of products; and
    
    plans for future products and services and for enhancements of existing products and
services.
 In some cases, you can identify forward-looking statements by terms such as may, intend,
might, will, should, could, would, expect, believe, estimate, predict,
potential, or the negative of these terms, and similar expressions intended to identify
forward-looking statements. These statements reflect our current views with respect to future
events and are based on assumptions and subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these statements. Also, these statements
represent our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q,
and we undertake no obligation to publicly update or revise these forward-looking statements.
 These statements are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements are based upon the current beliefs and expectations
of our management and are subject to significant risks and uncertainties. Actual results may differ
from those set forth in the forward-looking statements. The following factors, among others, could
cause actual results to differ materially from those in forward-looking statements: decreased
demand for our services or loss of one or more of our major customers; surplus inventories; loss of
one or more of our major vendors; recessionary economic cycles; strikes, work slowdowns, or work
stoppages at our vendors facilities; increases in interest rates; and increases in the prices paid
for goods. Readers should review and consider these factors along with the various disclosures we
make in public filings with the Securities and Exchange Commission.
 Overview
  15




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##### Table of Contents



Current Assets
  Current Liabilities
  Results of Operations
  Summary Condensed Consolidated Results of Operations Table For Three Months Ended January 31, 2010
 Three Months EndedJanuary 31,(in thousands)2010
    
    
    2009Net sales and other revenue
    
    $
    78,074
    
    
    $
    64,727Cost of sales
    
    
    70,354
    
    
    
    54,790Gross profit
    
    
    7,720
    
    
    
    9,937Operating, general and administrative expenses
    
    
    10,374
    
    
    
    9,925
 16




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##### Table of Contents



Three Months EndedJanuary 31,(in thousands)2010
    
    
    2009Operating income (loss)
    
    
    (2,654
    )
    
    
    12Interest expense, net
    
    
    (449
    )
    
    
    (181
    )Other expense
    
    
    
    
    
    
    (29
    )Loss before taxes
    
    
    (3,103
    )
    
    
    (198
    )Income tax benefit
    
    
    (650
    )
    
    
    (165
    )Net loss
    
    $
    (2,453
    )
    
    $
    (33
    )
 Three months ended January 31, 2010 as compared to three months ended January 31, 2009
       Operating Segments  three months ended January 31, 2010 as compared to three months ended January
31, 2009
   17




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##### Table of Contents



Wholesale Distribution
      Logistics Services
    18




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##### Table of Contents



Direct Customer Services
      Summary Consolidated Results of Operations Table for six months ended January 31, 2010
 Six Months EndedJanuary 31,(in thousands)2010
    
    
    2009Net sales and other revenue
    
    $
    157,097
    
    
    $
    150,522Cost of sales
    
    
    141,806
    
    
    
    132,398Gross profit
    
    
    15,291
    
    
    
    18,124Operating, general and administrative expenses
    
    
    19,510
    
    
    
    20,318Operating loss
    
    
    (4,219
    )
    
    
    (2,194
    )Other expense, net
    
    
    (615
    )
    
    
    (410
    )Loss on sale of equipment
    
    
    
    
    
    
    (29
    )Loss before taxes
    
    
    (4,834
    )
    
    
    (2,633
    )Income tax benefit
    
    
    (1,137
    )
    
    
    (840
    )Net loss
    
    $
    (3,697
    )
    
    $
    (1,793
    )
 Six months ended January 31, 2010 as compared to six months ended January 31, 2009
   19




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##### Table of Contents



Operating Segments Six months ended January 31, 2010 compared to six months ended January 31, 2009
 Wholesale Distribution
      20




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##### Table of Contents



Logistics Services
   Direct Customer Services
      Seasonality in Operating Results
  21




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##### Table of Contents



Liquidity and Capital Resources
   Operating Activities .
 Investing Activities.
 Financing Activities .
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
   Use of Estimates
  22




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##### Table of Contents



Revenue Recognition
  Inventories
  Major Customers, Major Suppliers and Credit Concentrations
  Income Taxes
  Other Intangible Assets
   Pension Accounting
  23




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##### Table of Contents



Recent Accounting Changes
 Generally Accepted Accounting Principles
 
 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
 ITEM 4T: CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  24




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##### Table of Contents



Changes in Internal Controls
  Limitations on the Effectiveness of Controls
  
 PART II
OTHER INFORMATION
 
 ITEM 1: LEGAL PROCEEDINGS
  
 ITEM 1A: RISK FACTORS
  
 ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  25




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##### Table of Contents



Purchases of Equity Securities by the Company and Affiliated Purchasers:
 Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May Yet BeTotal Number
    
    
    
    
    
    
    Part of Publicly
    
    
    Purchased Under theOf Shares
    
    
    Average Price
    
    
    Announced Plans or
    
    
    Plans orPeriod
    
    Purchased
    
    
    Paid Per Share
    
    
    Programs
    
    
    Programs(1)November 1  November 30, 2009
    
    
    4
    
    
    $
    2,500
    
    
    
    
    
    
    
    1,928December 1  December 31, 2009
    
    
    7
    
    
    $
    3,000
    
    
    
    
    
    
    
    1,921January 1  January 31, 2010
    
    
    5
    
    
    $
    3,000
    
    
    
    
    
    
    
    1,916Total:
    
    
    16
    
    
    $
    2,875
 
 (1)
    
    The maximum number of shares that may be purchased by the Company varies from time to
time because of the on-going redemption of shares. 
 ITEM 3: DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4: [REMOVED AND RESERVED]
 
 ITEM 5: OTHER INFORMATION
 Submission of Matters to a Vote of Security Holders.
   26




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##### Table of Contents



Shares Voted
    
    Shares VotedDirector
    
    FOR
    
    WITHHOLDEileen Sam Holly Morris, D.V.M.
    
    
    959
    
    
    
    34Thomas E. Wakefield, D.V.M.
    
    
    964
    
    
    
    29
 Entry into a Material Agreement
     
 ITEM 6: EXHIBITS
 Exhibit No.
    
    Description3.1
    
    
    Second Amended and Restated Articles of Incorporation of Professional Veterinary Products, Ltd.(1)3.2
    
    
    Second Amended and Restated Bylaws of Professional Veterinary Products, Ltd. (2)3.3
    
    
    Amendment to Second Amended and Restated Bylaws of Professional Veterinary Products, Ltd. (3)4.1
    
    
    Certificate of Professional Veterinary Products, Ltd. (4)4.2
    
    
    Second Amended and Restated Articles of Incorporation of Professional Veterinary Products, Ltd. (1)4.3
    
    
    Second Amended and Restated Bylaws of Professional Veterinary Products, Ltd. (2)4.4
    
    
    Amendment to Second Amended and Restated Bylaws of Professional Veterinary Products, Ltd. (3)10.1
    
    
    Credit and Security Agreement dated January 29, 2010, between Professional Veterinary Products,
Ltd.and Wells Fargo Bank, National Association (#) (***)10.2
    
    
    Promissory Note for the benefit of Wells Fargo Bank, National Association (#)31.1
    (A)
    
    Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 by the Companys CEO (#)31.1
    (B)
    
    Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 by the Companys CFO (#)32
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, by the Companys CEO and CFO (#)
 
 (#)
    
    Filed herewith.(***)
    
    Portions of this exhibit has been redacted pursuant to a request for confidential treatment.  (1)
    
    Form 10-Q Quarterly Report for the period ended January 31, 2005 filed March 17, 2005.(2)
    
    Form 8-K Current Report dated March 7, 2005 and filed March 11, 2005.(3)
    
    Form 8-K Current Report dated May 26, 2006 and filed June 2, 2006.(4)
    
    Form S-1 Registration Statement No. 333-86629 filed on September 7, 1999.
 27




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##### Table of Contents



SIGNATURES
  Date: March 17, 2010
    PROFESSIONAL VETERINARY PRODUCTS, LTD.By:
    /s/ Stephen J. PriceStephen J. Price, President and Chief Executive OfficerBy:
    /s/ Tara ChicatelliTara Chicatelli, Chief Financial Officer 28