##### 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, 2009
 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.)
 th
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   þ
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ




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##### 



PART I FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    2Condensed Consolidated Balance Sheets as of January 31, 2009 (unaudited)
and July 31, 2008
    
    
    2Condensed Consolidated Statements of Income (Loss) and Comprehensive
Income (Loss) for the three and six month periods ended January 31, 2009
and 2008 (unaudited)
    
    
    3Condensed Consolidated Statements of Stockholders Equity for
the six month periods ended January 31, 2009 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for
the six month periods ended January 31, 2009 and 2008 (unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    6ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    14ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    27ITEM 4: CONTROLS AND PROCEDURES
    
    
    29PART II OTHER INFORMATION
    
    
    29ITEM 1: LEGAL PROCEEDINGS
    
    
    29ITEM 1A: RISK FACTORS
    
    
    30ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    30ITEM 3: DEFAULTS UPON SENIOR SECURITIES
    
    
    31ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    31ITEM 5: OTHER INFORMATION
    
    
    31ITEM 6: EXHIBITS
    
    
    32SIGNATURES
    
    
    33EX-10.2EX-10.3EX-10.4EX-31.1(A)EX-31.1(B)EX-32
  1




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##### Table of Contents



ITEM 1: FINANCIAL STATEMENTS
 PROFESSIONAL VETERINARY PRODUCTS, LTD.
 
    January 31,
    
    
    July 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash
    
    $
    3,331
    
    
    $
    1,985Accounts Receivable, less allowance for doubtful
accounts $641 and $501, respectively
    
    
    28,405
    
    
    
    27,782Accounts receivable, related parties
    
    
    1,108
    
    
    
    663Inventory, less allowance for obsolete inventory $135 and
$182, respectively
    
    
    39,433
    
    
    
    35,906Deferred tax asset
    
    
    552
    
    
    
    599Other current assets
    
    
    1,980
    
    
    
    1,271Total current assets
    
    
    74,809
    
    
    
    68,206NET PROPERTY AND EQUIPMENT
    
    
    9,400
    
    
    
    10,200OTHER ASSETSIntangible assets, less accumulated
amortization, $8 and $7 respectively
    
    
    32
    
    
    
    33Investment in unconsolidated affiliates
    
    
    144
    
    
    
    144Cash value of life insurance
    
    
    2,601
    
    
    
    2,351Deferred tax asset
    
    
    443
    
    
    
    257Other assets
    
    
    1
    
    
    
    3Total other assets
    
    
    3,221
    
    
    
    2,788TOTAL ASSETS
    
    $
    87,430
    
    
    $
    81,194LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESNote payable, bank
    
    $
    27,171
    
    
    $
    12,860Current portion of long-term debt and capital lease obligation
    
    
    384
    
    
    
    371Current portion of accrued retirement benefits
    
    
    115
    
    
    
    115Accounts payable
    
    
    26,673
    
    
    
    32,801Accounts payable, related parties
    
    
    1,224
    
    
    
    738Interest rate swap
    
    
    211
    
    
    
    Other current liabilities
    
    
    3,542
    
    
    
    4,093Total current liabilities
    
    
    59,320
    
    
    
    50,978LONG-TERM LIABILITIESLong-term debt and capital lease obligation,
less current portion
    
    
    3,574
    
    
    
    3,767Accrued retirement benefits
    
    
    2,994
    
    
    
    2,853Total long-term liabilities
    
    
    6,568
    
    
    
    6,620TOTAL LIABILITIES
    
    
    65,888
    
    
    
    57,598COMMITMENTS AND CONTINGENT LIABILITIES  SEE NOTE 11STOCKHOLDERS EQUITYCommon stock, $1 par value; authorized 30,000 shares; issued
and outstanding, 1,988 shares and 2,037, respectively
    
    
    2
    
    
    
    2Paid-in capital
    
    
    5,897
    
    
    
    6,044Retained earnings
    
    
    16,142
    
    
    
    17,935Accumulated other comprehensive loss
    
    
    (499
    )
    
    
    (385
    )Total stockholders equity
    
    
    21,542
    
    
    
    23,596TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    87,430
    
    
    $
    81,194
  2




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 
     Three Months Ended
    
    
    Six Months EndedJanuary 31,
    
    
    January 31,
    
    
    January 31,
    
    
    January 31,2009
    
    
    2008
    
    
    2009
    
    
    2008NET SALES AND OTHER REVENUE
    
    $
    64,727
    
    
    $
    91,016
    
    
    $
    150,522
    
    
    $
    180,617COST OF SALES
    
    
    54,790
    
    
    
    78,121
    
    
    
    132,398
    
    
    
    158,158Gross profit
    
    
    9,937
    
    
    
    12,895
    
    
    
    18,124
    
    
    
    22,459OPERATING GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    9,925
    
    
    
    10,191
    
    
    
    20,318
    
    
    
    19,521Operating income (loss)
    
    
    12
    
    
    
    2,704
    
    
    
    (2,194
    )
    
    
    2,938OTHER INCOME (EXPENSE)Interest income
    
    
    123
    
    
    
    92
    
    
    
    194
    
    
    
    161Interest expense
    
    
    (304
    )
    
    
    (379
    )
    
    
    (604
    )
    
    
    (774
    )Loss on sale of equipment
    
    
    (29
    )
    
    
    
    
    
    
    (29
    )
    
    
    Equity in earnings of unconsolidated affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36
    )Other expense  net
    
    
    (210
    )
    
    
    (287
    )
    
    
    (439
    )
    
    
    (649
    )Income (loss) before taxes
    
    
    (198
    )
    
    
    2,417
    
    
    
    (2,633
    )
    
    
    2,289Income tax expense (benefit)
    
    
    (165
    )
    
    
    906
    
    
    
    (840
    )
    
    
    812NET INCOME (LOSS)
    
    $
    (33
    )
    
    $
    1,511
    
    
    $
    (1,793
    )
    
    $
    1,477EARNINGS (LOSS) PER COMMON SHARE
    
    $
    (16.54
    )
    
    $
    737.29
    
    
    $
    (891.85
    )
    
    $
    719.29Weighted average common shares
outstanding
    
    
    1,995
    
    
    
    2,049
    
    
    
    2,011
    
    
    
    2,053COMPREHENSIVE INCOMENet income (loss)
    
    $
    (33
    )
    
    $
    1,511
    
    
    $
    (1,793
    )
    
    $
    1,477Other comprehensive income:Adjustment for net periodic pension
benefit cost, net of tax
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Adjustment for mark-to-market
value of swap, net of tax
    
    
    (77
    )
    
    
    
    
    
    
    (126
    )
    
    
    Total comprehensive income (loss)
    
    $
    (104
    )
    
    $
    1,517
    
    
    $
    (1,907
    )
    
    $
    1,489SUPPLEMENTAL INFORMATIONNet sales and other revenue  related parties
    
    $
    1,498
    
    
    $
    9,222
    
    
    $
    2,850
    
    
    $
    19,512Purchases  related parties
    
    $
    2,481
    
    
    $
    4,132
    
    
    $
    6,555
    
    
    $
    7,782
  3




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 
     AccumulatedCommon
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    OtherShares
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    ComprehensiveIssued
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income(Loss)
    
    
    TotalBALANCE AT JULY 31, 2008
    
    
    2,037
    
    
    $
    2
    
    
    $
    6,044
    
    
    $
    17,935
    
    
    $
    (385
    )
    
    $
    23,596Redemption of stock
    
    
    (49
    )
    
    
    
    
    
    
    (147
    )
    
    
    
    
    
    
    
    
    
    
    (147
    )Change in unrecognized pension cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    12Change in mark-to-market interest
rate swap
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (126
    )
    
    
    (126
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,793
    )
    
    
    
    
    
    
    (1,793
    )BALANCE AT JANUARY 31, 2009
    
    
    1,988
    
    
    $
    2
    
    
    $
    5,897
    
    
    $
    16,142
    
    
    $
    (499
    )
    
    $
    21,542
  4




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 
     January 31,
    
    
    January 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIESNet Income (loss)
    
    $
    (1,793
    )
    
    $
    1,477Adjustments to reconcile net income (loss) to net cash
from operating activities:Depreciation and amortization
    
    
    916
    
    
    
    814Loss on sale of assets
    
    
    29
    
    
    
    Retirement benefits
    
    
    141
    
    
    
    164Deferred income tax
    
    
    (42
    )
    
    
    (162
    )Allowance for doubtful accounts
    
    
    140
    
    
    
    47Allowance for obsolete inventory
    
    
    (47
    )
    
    
    33Loss from affiliates
    
    
    
    
    
    
    36Changes in:Receivables
    
    
    (1,208
    )
    
    
    (6,056
    )Inventory
    
    
    (3,480
    )
    
    
    (4,746
    )Other current assets
    
    
    (709
    )
    
    
    (586
    )Other assets
    
    
    2
    
    
    
    Accounts payable
    
    
    (5,642
    )
    
    
    11,394Other current liabilities
    
    
    (551
    )
    
    
    73Total adjustments
    
    
    (10,451
    )
    
    
    1,011Net cash provided by (consumed by) operating activities
    
    
    (12,244
    )
    
    
    2,488CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (144
    )
    
    
    (963
    )Purchase of investments
    
    
    
    
    
    
    (9
    )Sale of investments
    
    
    
    
    
    
    40Cash value of life insurance
    
    
    (250
    )
    
    
    (458
    )Net cash consumed by investing activities
    
    
    (394
    )
    
    
    (1,390
    )CASH FLOWS FROM FINANCING ACTIVITIESNet short-term borrowings
    
    
    14,311
    
    
    
    726Payments of long-term debt and capital lease obligation
    
    
    (180
    )
    
    
    (203
    )Net payments from issuance of common stock
    
    
    (147
    )
    
    
    (44
    )Net cash provided by financing activities
    
    
    13,984
    
    
    
    479Net increase in cash
    
    
    1,346
    
    
    
    1,577Cash at beginning of year
    
    
    1,985
    
    
    
    1,111Cash at end of period
    
    $
    3,331
    
    
    $
    2,688Supplemental disclosure of cash flow information:Interest paid
    
    $
    612
    
    
    $
    823Income taxes paid (refunded)
    
    $
    (203
    )
    
    $
    896Non-cash periodic pension cost
    
    $
    12
    
    
    $
    13Non-cash unrealized loss on interest rate swap
    
    $
    (126
    )
    
    $
    
  5




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 
    NOTE 1  BASIS OF PRESENTATION:
      NOTE 2  RECENT ACCOUNTING PRONOUNCEMENTS:
 Fair Value
Measurements
 6




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 3  PROPERTY AND EQUIPMENT:
  January 31,
    
    
    July 31,2009
    
    
    2008Land
    
    $
    1,762
    
    
    $
    1,762Buildings
    
    
    5,217
    
    
    
    5,217Leasehold improvements
    
    
    606
    
    
    
    636Equipment
    
    
    11,155
    
    
    
    10,98218,740
    
    
    
    18,597Less  Accumulated depreciation
    
    
    9,491
    
    
    
    8,6989,249
    
    
    
    9,899Construction in progress
    
    
    151
    
    
    
    301Net property, plant, and equipment
    
    $
    9,400
    
    
    $
    10,200
 NOTE 4  LINE OF CREDIT:
   NOTE 5  EARNINGS PER SHARE:
 Earnings per Share
 7




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 6  COMMON STOCK:
  NOTE 7  INCOME TAXES:
 Accounting for Uncertainty in Income Taxes, Accounting for Income Taxes
   NOTE 8  POST RETIREMENT BENEFITS:
   Three Months Ended
    
    
    Six Months EndedJanuary 31,
    
    
    January 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    24
    
    
    $
    35
    
    
    $
    49
    
    
    $
    69Interest cost
    
    
    46
    
    
    
    41
    
    
    
    93
    
    
    
    82Amortization of prior losses
    
    
    2
    
    
    
    1
    
    
    
    3
    
    
    
    3Amortization of unrecognized prior service cost
    
    
    9
    
    
    
    9
    
    
    
    17
    
    
    
    18Net periodic benefit cost
    
    $
    81
    
    
    $
    86
    
    
    $
    162
    
    
    $
    172
 8




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 9  DERIVATIVE FINANCIAL INSTRUMENTS:
  Accounting for Derivative Instruments and Hedging
Activities
 NOTE 10  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS:
   Level 1
    
    Quoted prices in active markets for identical assets or liabilities.Level 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
  9




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 10  DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (continued):
 Interest Rate Swap Agreement
   Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsFair Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Interest rate swap agreement
    
    $
    (211
    )
    
    $
    
    
    
    $
    (211
    )
    
    $
    
 NOTE 11  COMMITMENTS AND CONTINGENT LIABILITIES:
 Stock Redemption 
 Major Customers, Major Suppliers and Credit Concentrations 
 Other 
 Agreements 
 10




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 12  SEGMENT INFORMATION:
   Disclosures About Segments of an Enterprise and Related
Information.
 11




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 12  SEGMENT INFORMATION (continued):
  Direct
    
    
    
    
    
    CondensedWholesale
    
    Logistics
    
    Customer
    
    
    
    
    
    ConsolidatedDistribution
    
    Services
    
    Services
    
    Eliminations
    
    TotalThree 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
    
    
    45
    
    
    
    10
    
    
    
    54
    
    
    
    (97
    )
    
    
    12Income (loss) before taxes
    
    $
    (198
    )
    
    $
    10
    
    
    $
    87
    
    
    $
    (97
    )
    
    $
    (198
    )Three months ended January 31, 2008Net sales and other revenue
    
    $
    90,981
    
    
    $
    878
    
    
    $
    19,915
    
    
    $
    (20,758
    )
    
    $
    91,016Cost of sales
    
    
    80,008
    
    
    
    937
    
    
    
    17,232
    
    
    
    (20,056
    )
    
    
    78,121Operating, general and
administrative expenses
    
    
    8,265
    
    
    
    
    
    
    
    1,926
    
    
    
    
    
    
    
    10,191Operating income (loss)
    
    
    2,710
    
    
    
    (59
    )
    
    
    756
    
    
    
    (703
    )
    
    
    2,704Income (loss) before taxes
    
    $
    2,417
    
    
    $
    (59
    )
    
    $
    762
    
    
    $
    (703
    )
    
    $
    2,417Six 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
    )
    
    $
    87,430Six months ended January 31, 2008Net sales and other revenue
    
    $
    180,957
    
    
    $
    1,264
    
    
    $
    36,732
    
    
    $
    (38,336
    )
    
    $
    180,617Cost of sales
    
    
    162,257
    
    
    
    1,338
    
    
    
    31,964
    
    
    
    (37,401
    )
    
    
    158,158Operating, general and
administrative expenses
    
    
    15,766
    
    
    
    
    
    
    
    3,755
    
    
    
    
    
    
    
    19,521Operating income (loss)
    
    
    2,935
    
    
    
    (74
    )
    
    
    1,012
    
    
    
    (935
    )
    
    
    2,938Income (loss) before taxes
    
    $
    2,289
    
    
    $
    (74
    )
    
    $
    1,009
    
    
    $
    (935
    )
    
    $
    2,289Business segment assets
    
    $
    100,863
    
    
    $
    320
    
    
    $
    14,550
    
    
    $
    (13,902
    )
    
    $
    101,831
 12




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PROFESSIONAL VETERINARY PRODUCTS, LTD.
 NOTE 13  SIGNIFICANT ESTIMATES AND CONCENTRATIONS
 Current Economic Conditions
   
 13




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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 it serves;
    
    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
   14




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Current Assets
  Current Liabilities
  15




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##### Table of Contents



Results of Operations
  Summary Condensed Consolidated Results of Operations Table For Three Months Ended January 31, 2009
 Three Months EndedJanuary 31,(in thousands)2009
    
    
    2008Net sales and other revenue
    
    $
    64,727
    
    
    $
    91,016Cost of sales
    
    
    54,790
    
    
    
    78,121Gross profit
    
    
    9,937
    
    
    
    12,895Operating, general and administrative
expenses
    
    
    9,925
    
    
    
    10,191Operating income
    
    
    12
    
    
    
    2,704Interest expense, net
    
    
    (181
    )
    
    
    (287
    )Other expense
    
    
    (29
    )
    
    
    Income (loss) before taxes
    
    
    (198
    )
    
    
    2,417Income tax expense (benefit)
    
    
    (165
    )
    
    
    906Net income (loss)
    
    $
    (33
    )
    
    $
    1,511
 Three months ended January 31, 2009 as compared to three months ended January 31, 2008
     16




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Operating Segments  three months ended January 31, 2009 as compared to three months ended January
31, 2008
   17




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Wholesale Distribution
      Logistics Services
    18




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##### Table of Contents



Direct Customer Services
      19




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##### Table of Contents



Summary Consolidated Results of Operations Table for six months ended January 31, 2009
 Six Months EndedJanuary 31,(in thousands)2009
    
    
    2008Net sales and other revenue
    
    $
    150,522
    
    
    $
    180,617Cost of sales
    
    
    132,398
    
    
    
    158,158Gross profit
    
    
    18,124
    
    
    
    22,459Operating, general and
administrative expenses
    
    
    20,318
    
    
    
    19,521Operating income (loss)
    
    
    (2,194
    )
    
    
    2,938Other income (expense), net
    
    
    (410
    )
    
    
    (649
    )Loss on sale of equipment
    
    
    (29
    )
    
    
    Income (loss) before taxes
    
    
    (2,633
    )
    
    
    2,289Income tax expense (benefit)
    
    
    (840
    )
    
    
    812Net income (loss)
    
    $
    (1,793
    )
    
    $
    1,477
 Six months ended January 31, 2009 as compared to six months ended January 31, 2008
     20




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Operating Segments Six months ended January 31, 2009 compared to six months ended January 31,
2008
 Wholesale Distribution
     21




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##### Table of Contents



Logistics Services
      Direct Customer Services
     22




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##### Table of Contents



Seasonality in Operating Results
   Liquidity and Capital Resources
      23




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##### Table of Contents



Operating Activities .
 Investing Activities.
 24




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##### Table of Contents



Financing Activities .
 Off-Balance Sheet Arrangements
  Critical Accounting Policies
   Use of Estimates
  Revenue Recognition
  Inventories
  25




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##### Table of Contents



Major Customers, Major Suppliers and Credit Concentrations
  Income Taxes
  Other Intangible Assets
   Pension Accounting
 Employers Accounting for Defined Benefit Pension and Other Postretirement Plans
   26




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Recent Accounting Changes
 Fair Value Measurements
 
 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
      27




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##### Table of Contents



28




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ITEM 4: CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Controls
  Limitations on the Effectiveness of Controls
  
 PART II
OTHER INFORMATION
 
 ITEM 1: LEGAL PROCEEDINGS
  29




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##### Table of Contents



ITEM 1A: RISK FACTORS
  Our business, financial condition and results of operations depend upon maintaining our
relationships with vendors and if we cannot do so, our business and results of operations may be
negatively impacted.
      
 ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   30




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##### Table of Contents



Purchases of Equity Securities by the Company and Affiliated Purchasers:
 Total Number of
    
    MaximumShares
    
    Number ofPurchased as
    
    Shares ThatPart of Publicly
    
    May Yet BeTotal Number
    
    
    
    
    
    Announced
    
    Purchasedof Shares
    
    Average Price
    
    Plans or
    
    Under the PlansPeriod
    
    Purchased
    
    Paid Per Share
    
    Programs
    
    or Programs(1)November 1  November 30, 2008
    
    
    16
    
    
    $
    3,000
    
    
    
    
    
    
    
    2,006December 1  December 31, 2008
    
    
    14
    
    
    $
    3,000
    
    
    
    
    
    
    
    1,992January 1  January 31, 2009
    
    
    4
    
    
    $
    3,000
    
    
    
    
    
    
    
    1,988Total:
    
    
    34
    
    
    $
    3,000
    
    
    
    
    
    
    
    1,988
 
 (1)
    
    The maximum number of shares that may be purchased by the Company varies from time to time due
to the addition of new shareholders and on-going redemption of shares. 
 ITEM 3: DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5: OTHER INFORMATION
  31




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##### Table of Contents



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
    
    Amendment No. 2 dated November 19, 2008 to the Loan Agreement by and among
Professional Veterinary Products, Ltd., its subsidiaries and First National
Bank of Omaha (5)10.2
    
    2009 Livestock Products Distribution Agreement effective January 1, 2009 by and
between Professional Veterinary Products, Ltd. and Pfizer Inc. (#) ***10.3
    
    Amended and Restated Supplemental Executive Retirement Plan effective January
1, 2009 (#)10.4
    
    Consulting Agreement dated January 30, 2009 between Professional Veterinary
Products, Ltd. and Reico, Inc. (#)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
    
    Certifications 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.***
    
    Material has been omitted pursuant to a request for confidential
treatment and such materials have been filed separately with the
Securities and Exchange Commission.The following footnotes indicate a document previously filed as an exhibit to and incorporated by reference from the following:(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.(5)
    
    Form 8-K Current Report dated November 19, 2008 and filed November 25, 2008. 32




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SIGNATURES
   PROFESSIONAL VETERINARY PRODUCTS, LTD.By:
    /s/ Stephen J. PriceStephen J. Price, President and CEOBy:
    /s/ Neal B. SoderquistNeal B. Soderquist, Vice President and CFO 33