##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 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 March 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number: 001-16783
 
 VCA Antech, Inc.
  Delaware
    
    95-4097995(State or other jurisdiction of
    
    (I.R.S. Employerincorporation 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)
  þ o
  o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



VCA Antech, Inc.
Form 10-Q
March 31, 2010
 Table of Contents
 PageNumberPart I. Financial InformationItem 1. Financial Statements (Unaudited)Condensed, Consolidated Balance Sheets as of March 31, 2010 and
December 31, 2009
    
    
    1Condensed, Consolidated Income Statements for the Three Months
Ended March 31, 2010 and 2009
    
    
    2Condensed, Consolidated Statements of Equity for the Three Months
Ended March 31, 2010 and 2009
    
    
    3Condensed, Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2010 and 2009
    
    
    4Notes to Condensed, Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31Part II. Other InformationItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    31Item 3. Defaults Upon Senior Securities
    
    
    31Item 5. Other Information
    
    
    31Item 6. Exhibits
    
    
    32Signature
    
    
    33Exhibit Index
    
    
    34EX-31.1EX-31.2EX-32.1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 VCA Antech, Inc. and Subsidiaries


Condensed, Consolidated Balance Sheets
(Unaudited)
 (In thousands, except par value)
 March 31,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    178,197
    
    
    $
    145,181Trade accounts receivable, less allowance for uncollectible accounts of $13,036
and $13,015 at March 31, 2010 and December 31, 2009, respectively
    
    
    54,276
    
    
    
    49,186Inventory
    
    
    32,489
    
    
    
    32,031Prepaid expenses and other
    
    
    24,516
    
    
    
    27,242Deferred income taxes
    
    
    18,797
    
    
    
    18,318Prepaid income taxes
    
    
    
    
    
    
    6,252Total current assets
    
    
    308,275
    
    
    
    278,210Property and equipment, less accumulated depreciation and amortization of $175,768
and $167,506 at March 31, 2010 and December 31, 2009, respectively
    
    
    298,840
    
    
    
    289,415Goodwill
    
    
    995,123
    
    
    
    985,674Other intangible assets, net
    
    
    43,345
    
    
    
    44,280Notes receivable, net
    
    
    5,662
    
    
    
    5,153Deferred financing costs, net
    
    
    449
    
    
    
    581Other
    
    
    25,991
    
    
    
    24,091Total assets
    
    $
    1,677,685
    
    
    $
    1,627,404Liabilities and EquityCurrent liabilities:Current portion of long-term debt
    
    $
    8,721
    
    
    $
    17,195Accounts payable
    
    
    30,333
    
    
    
    28,326Accrued payroll and related liabilities
    
    
    43,493
    
    
    
    33,539Income taxes payable
    
    
    6,514
    
    
    
    Other accrued liabilities
    
    
    40,541
    
    
    
    43,298Total current liabilities
    
    
    129,602
    
    
    
    122,358Long-term debt, less current portion
    
    
    525,558
    
    
    
    527,860Deferred income taxes
    
    
    85,640
    
    
    
    75,197Other liabilities
    
    
    10,422
    
    
    
    10,651Total liabilities
    
    
    751,222
    
    
    
    736,066Commitments and contingenciesPreferred 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, 85,918 and 85,584
shares outstanding as of March 31, 2010 and December 31, 2009, respectively
    
    
    86
    
    
    
    86Additional paid-in capital
    
    
    337,569
    
    
    
    335,114Accumulated earnings
    
    
    571,945
    
    
    
    540,010Accumulated other comprehensive income (loss)
    
    
    347
    
    
    
    (163
    )Total VCA Antech, Inc. stockholders equity
    
    
    909,947
    
    
    
    875,047Noncontrolling interest
    
    
    16,516
    
    
    
    16,291Total equity
    
    
    926,463
    
    
    
    891,338Total liabilities and equity
    
    $
    1,677,685
    
    
    $
    1,627,404
  1




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Income Statements
(Unaudited)
 (In thousands, except per share amounts)
 Three Months EndedMarch 31,2010
    
    
    2009Revenue
    
    $
    330,734
    
    
    $
    315,850Direct costs
    
    
    247,939
    
    
    
    233,681Gross profit
    
    
    82,795
    
    
    
    82,169Selling, general and administrative expense
    
    
    26,140
    
    
    
    22,917Loss (gain) on sale and disposal of assets
    
    
    25
    
    
    
    (248
    )Operating income
    
    
    56,630
    
    
    
    59,500Interest expense, net
    
    
    3,167
    
    
    
    6,118Other expense (income)
    
    
    25
    
    
    
    (110
    )Income before provision for income taxes
    
    
    53,438
    
    
    
    53,492Provision for income taxes
    
    
    20,506
    
    
    
    20,611Net income
    
    
    32,932
    
    
    
    32,881Net income attributable to noncontrolling interests
    
    
    997
    
    
    
    911Net income attributable to VCA Antech, Inc.
    
    $
    31,935
    
    
    $
    31,970Basic earnings per share
    
    $
    0.37
    
    
    $
    0.38Diluted earnings per share
    
    $
    0.37
    
    
    $
    0.37Weighted-average shares outstanding
for basic earnings per share
    
    
    85,824
    
    
    
    84,680Weighted-average shares outstanding
for diluted earnings per share
    
    
    86,870
    
    
    
    85,386
  2




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Equity
(Unaudited)
 (In thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    NoncontrollingShares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    (Loss) Income
    
    
    Interests
    
    
    TotalBalances, December 31, 2008
    
    
    84,633
    
    
    $
    85
    
    
    $
    308,674
    
    
    $
    408,582
    
    
    $
    (6,352
    )
    
    $
    12,846
    
    
    $
    723,835Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,970
    
    
    
    
    
    
    
    911
    
    
    
    32,881Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (178
    )
    
    
    
    
    
    
    (178
    )Unrealized loss on foreign currency,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )Unrealized loss on hedging
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (374
    )
    
    
    
    
    
    
    (374
    )Losses on hedging instruments
reclassified to income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,976
    
    
    
    
    
    
    
    1,976Formation of noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,440
    
    
    
    3,440Distribution to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (888
    )
    
    
    (888
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    1,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,976Issuance of common stock under
stock option plans
    
    
    71
    
    
    
    
    
    
    
    557
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    557Stock repurchases
    
    
    
    
    
    
    
    
    
    
    (180
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (180
    )Tax shortfall from stock options and awards
    
    
    
    
    
    
    
    
    
    
    (245
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (245
    )Balances, March 31, 2009
    
    
    84,704
    
    
    
    85
    
    
    
    310,782
    
    
    
    440,552
    
    
    
    (4,986
    )
    
    
    16,309
    
    
    
    762,742Balances, December 31, 2009
    
    
    85,584
    
    
    $
    86
    
    
    $
    335,114
    
    
    $
    540,010
    
    
    $
    (163
    )
    
    $
    16,291
    
    
    $
    891,338Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,935
    
    
    
    
    
    
    
    997
    
    
    
    32,932Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    167Unrealized gain on foreign currency,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    111
    
    
    
    
    
    
    
    111Unrealized loss on hedging
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Losses on hedging instruments
reclassified to income, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233
    
    
    
    
    
    
    
    233Formation of noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450
    
    
    
    450Distribution to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (989
    )
    
    
    (989
    )Purchase of noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233
    )
    
    
    (233
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    2,088
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,088Issuance of common stock under
stock option plans
    
    
    334
    
    
    
    
    
    
    
    2,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,858Stock repurchases
    
    
    
    
    
    
    
    
    
    
    (2,253
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,253
    )Tax shortfall from stock options and awards
    
    
    
    
    
    
    
    
    
    
    (238
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (238
    )Balances, March 31, 2010
    
    
    85,918
    
    
    $
    86
    
    
    $
    337,569
    
    
    $
    571,945
    
    
    $
    347
    
    
    $
    16,516
    
    
    $
    926,463
  3




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VCA Antech, Inc. and Subsidiaries

Condensed, Consolidated Statements of Cash Flows
(Unaudited)
 (In thousands)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    32,932
    
    
    $
    32,881Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    10,707
    
    
    
    9,152Amortization of debt issue costs
    
    
    132
    
    
    
    120Provision for uncollectible accounts
    
    
    1,492
    
    
    
    1,559Loss (gain) on sale and disposal of assets
    
    
    25
    
    
    
    (248
    )Share-based compensation
    
    
    2,088
    
    
    
    1,976Deferred income taxes
    
    
    7,232
    
    
    
    5,304Excess tax benefit from exercise of stock options
    
    
    (264
    )
    
    
    Other
    
    
    (114
    )
    
    
    (148
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (6,511
    )
    
    
    (5,455
    )Inventory, prepaid expenses and other assets
    
    
    644
    
    
    
    (2,790
    )Accounts payable and other accrued liabilities
    
    
    (288
    )
    
    
    (2,362
    )Accrued payroll and related liabilities
    
    
    9,954
    
    
    
    (3,204
    )Income taxes
    
    
    12,527
    
    
    
    14,413Net cash provided by operating activities
    
    
    70,556
    
    
    
    51,198Cash flows from investing activities:Business acquisitions, net of cash acquired
    
    
    (9,247
    )
    
    
    (14,467
    )Real estate acquired in connection with business acquisitions
    
    
    (1,300
    )
    
    
    (963
    )Property and equipment additions
    
    
    (16,049
    )
    
    
    (12,886
    )Proceeds from sale of assets
    
    
    6
    
    
    
    74Other
    
    
    (61
    )
    
    
    (373
    )Net cash used in investing activities
    
    
    (26,651
    )
    
    
    (28,615
    )Cash flows from financing activities:Repayment of debt
    
    
    (10,822
    )
    
    
    (1,946
    )Distributions to noncontrolling interest partners
    
    
    (989
    )
    
    
    (888
    )Proceeds from issuance of common stock under stock option plans
    
    
    2,858
    
    
    
    557Excess tax benefit from exercise of stock options
    
    
    264
    
    
    
    Stock repurchases
    
    
    (2,253
    )
    
    
    (180
    )Net cash used in financing activities
    
    
    (10,942
    )
    
    
    (2,457
    )Effect of currency exchange rate changes on cash and cash equivalents
    
    
    53
    
    
    
    (1
    )Increase in cash and cash equivalents
    
    
    33,016
    
    
    
    20,125Cash and cash equivalents at beginning of period
    
    
    145,181
    
    
    
    88,959Cash and cash equivalents at end of period
    
    $
    178,197
    
    
    $
    109,084Supplemental disclosures of cash flow information:Interest paid
    
    $
    3,196
    
    
    $
    6,430Income taxes paid
    
    $
    747
    
    
    $
    894Supplemental schedule of noncash investing and financing activities:Detail of acquisitions:Fair value of assets acquired
    
    $
    8,868
    
    
    $
    23,333Cash paid for acquisitions
    
    
    (8,528
    )
    
    
    (13,095
    )Noncash note conversion to equity interest in subsidiary
    
    
    
    
    
    
    (5,700
    )Contingent consideration
    
    
    (7
    )
    
    
    Liabilities assumed
    
    $
    333
    
    
    $
    4,538
  4




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VCA Antech, Inc. and Subsidiaries
 
 Notes to Condensed, Consolidated Financial Statements  March 31, 2010
 (Unaudited)
 1. Nature of Operations
     2. Basis of Presentation
    3. Multiple-Deliverable Revenue Arrangements
  5




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VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 3. Multiple-Deliverable Revenue Arrangements, continued
         6




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VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 4. Goodwill and Other Intangible Assets
 Goodwill
  Animal
    
    
    
    
    
    
    MedicalHospital
    
    
    Laboratory
    
    
    Technology
    
    
    TotalBalance as of December 31, 2009
    
    $
    861,868
    
    
    $
    96,285
    
    
    $
    27,521
    
    
    $
    985,674Goodwill acquired
    
    
    7,069
    
    
    
    7
    
    
    
    
    
    
    
    7,076Other(1)
    
    
    (157
    )
    
    
    388
    
    
    
    2,142
    
    
    
    2,373Balance as of March 31, 2010
    
    $
    868,780
    
    
    $
    96,680
    
    
    $
    29,663
    
    
    $
    995,123
 
 (1)
    
    Other includes purchase-price adjustments which consist primarily of an adjustment
to the valuation of deferred tax assets, buy-outs, earn-out payments and foreign currency
translation adjustments. Other Intangible Assets
  As of March 31, 2010
    
    
    As of December 31, 2009Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountNoncontractual customer
relationships
    
    $
    39,483
    
    
    $
    (9,425
    )
    
    $
    30,058
    
    
    $
    38,359
    
    
    $
    (8,077
    )
    
    $
    30,282Covenants not-to-compete
    
    
    14,163
    
    
    
    (7,659
    )
    
    
    6,504
    
    
    
    14,748
    
    
    
    (7,785
    )
    
    
    6,963Favorable lease asset
    
    
    5,406
    
    
    
    (2,277
    )
    
    
    3,129
    
    
    
    5,406
    
    
    
    (2,150
    )
    
    
    3,256Trademarks
    
    
    3,379
    
    
    
    (598
    )
    
    
    2,781
    
    
    
    3,362
    
    
    
    (494
    )
    
    
    2,868Technology
    
    
    2,209
    
    
    
    (1,366
    )
    
    
    843
    
    
    
    2,209
    
    
    
    (1,332
    )
    
    
    877Client lists
    
    
    48
    
    
    
    (18
    )
    
    
    30
    
    
    
    60
    
    
    
    (26
    )
    
    
    34Total
    
    $
    64,688
    
    
    $
    (21,343
    )
    
    $
    43,345
    
    
    $
    64,144
    
    
    $
    (19,864
    )
    
    $
    44,280
  Three Months EndedMarch 31,2010
    
    
    2009Aggregate amortization expense
    
    $
    2,154
    
    
    $
    1,807
 7




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VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 4. Goodwill and Other Intangible Assets, continued
  Remainder of 2010
    
    $
    6,7352011
    
    
    8,1992012
    
    
    7,2042013
    
    
    5,0842014
    
    
    2,841Thereafter
    
    
    13,282Total
    
    $
    43,345
 5. Other Accrued Liabilities
  March 31,
    
    
    December 31,2010
    
    
    2009Deferred revenue
    
    $
    11,321
    
    
    $
    12,497Accrued health insurance
    
    
    4,745
    
    
    
    4,484Deferred rent
    
    
    3,022
    
    
    
    2,989Accrued workers compensation insurance
    
    
    2,385
    
    
    
    2,217Customer deposits
    
    
    2,157
    
    
    
    3,783Other
    
    
    16,911
    
    
    
    17,328$
    40,541
    
    
    $
    43,298
 6. Interest Rate Swap Agreements
 ,
    8




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 6. Interest Rate Swap Agreements, continued
    Three Months EndedMarch 31,2010
    
    
    2009Cash paid (1)
    
    $
    382
    
    
    $
    3,245Recognized gain from ineffectiveness(2)
    
    $
    
    
    
    $
    (49
    )
 
 (1)
    
    Our interest rate swap agreements effectively converted a certain amount of our
variable-rate debt under our senior credit facility to fixed-rate for purposes of hedging
against the risk of increasing interests rates. The above table depicts cash payments to
the counterparties on our swap agreements. These payments and receipts are
offset by a corresponding decrease or increase in interest paid on our variable-rate debt
under our senior credit facility. These amounts are included in interest expense, net in our
condensed, consolidated income statements.(2)
    
    The recognized gain is included in other income in our condensed, consolidated
income statements. 7. Fair Value Measurements
  
    
    Level 1.Observable inputs such as quoted prices in active markets;
    
    Level 2.Inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and
    
    Level 3.Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 9




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 7. Fair Value Measurements, continued
 Fair Value of Financial Instruments
  Cash and Cash Equivalents.
 Receivables, Less Allowance for Doubtful Accounts, Accounts Payable and Certain Other Accrued
Liabilities.
 Long-Term Debt.
  As of March 31, 2010
    
    
    As of December 31, 2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairValue
    
    
    Value
    
    
    Value
    
    
    ValueVariable-rate long-term debt
    
    $
    506,773
    
    
    $
    504,919
    
    
    $
    516,889
    
    
    $
    513,053
 Interest Rate Swap Agreements
  Basis of Fair Value MeasurementQuoted Prices
    
    
    Significant Other
    
    
    SignificantIn Active Markets
    
    
    Observable
    
    
    Unobservablefor Identical Items
    
    
    Inputs
    
    
    InputsBalance
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)At December 31, 2009Other accrued liabilities
    
    $
    380
    
    
    $
    
    
    
    $
    380
    
    
    $
    
  10




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 8. Share-Based Compensation
 Stock Option Activity
  Weighted-AverageStock
    
    
    ExerciseOptions
    
    
    PriceOutstanding at January 1, 2010
    
    
    4,300
    
    
    $
    16.72Exercised
    
    
    (173
    )
    
    
    16.47Outstanding at March 31, 2010
    
    
    4,127
    
    
    $
    16.73Exercisable at March 31, 2010
    
    
    3,377
    
    
    $
    16.66Expected to vest at March 31, 2010
    
    
    716
    
    
    $
    17.04
    Nonvested Stock Activity
    Weighted-Average FairValueShares
    
    
    Per ShareOutstanding at December 31, 2009
    
    
    691,764
    
    
    $
    30.54Granted
    
    
    
    
    
    
    Vested
    
    
    (250,154
    )
    
    $
    31.71Forfeited/Canceled
    
    
    (8,630
    )
    
    $
    30.35Outstanding at March 31, 2010
    
    
    432,980
    
    
    $
    29.87
 11




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 9. Calculation of Earnings per Share
  Three Months EndedMarch 31,2010
    
    
    2009Net income attributable to VCA Antech, Inc.
    
    $
    31,935
    
    
    $
    31,970Weighted-average common shares outstanding:Basic
    
    
    85,824
    
    
    
    84,680Effect of dilutive potential common shares:Stock options
    
    
    870
    
    
    
    568Nonvested shares
    
    
    176
    
    
    
    138Diluted
    
    
    86,870
    
    
    
    85,386Basic earnings per share
    
    $
    0.37
    
    
    $
    0.38Diluted earnings per share
    
    $
    0.37
    
    
    $
    0.37
  10. Comprehensive Income
  Three Months EndedMarch 31,2010
    
    
    2009Net income
    
    $
    32,932
    
    
    $
    32,881Other comprehensive income:Foreign currency translation adjustments
    
    
    167
    
    
    
    (178
    )Unrealized gain (loss) on foreign currency
    
    
    182
    
    
    
    (95
    )Tax (expense) benefit
    
    
    (71
    )
    
    
    37Unrealized loss on hedging instruments
    
    
    (2
    )
    
    
    (614
    )Tax benefit
    
    
    1
    
    
    
    240Losses on hedging instruments reclassified to income
    
    
    382
    
    
    
    3,245Tax benefit
    
    
    (149
    )
    
    
    (1,269
    )Other comprehensive income
    
    
    510
    
    
    
    1,366Total comprehensive income
    
    
    33,442
    
    
    
    34,247Comprehensive income attributable to noncontrolling interests
    
    
    (997
    )
    
    
    (911
    )Comprehensive income attributable to VCA Antech, Inc.
    
    $
    32,445
    
    
    $
    33,336
 12




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 11. Lines of Business
  Multiple-Deliverable Revenue Arrangements
 13




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 11. Lines of Business, continued
  Animal
    
    
    
    
    
    
    Medical
    
    
    
    
    
    
    IntercompanyHospital
    
    
    Laboratory(1)
    
    
    Technology(1)
    
    
    Corporate
    
    
    Eliminations
    
    
    Total(1)Three Months Ended March 31, 2010External revenue
    
    $
    246,668
    
    
    $
    69,400
    
    
    $
    14,666
    
    
    $
    
    
    
    $
    
    
    
    $
    330,734Intercompany revenue
    
    
    
    
    
    
    8,780
    
    
    
    1,131
    
    
    
    
    
    
    
    (9,911
    )
    
    
    Total revenue
    
    
    246,668
    
    
    
    78,180
    
    
    
    15,797
    
    
    
    
    
    
    
    (9,911
    )
    
    
    330,734Direct costs
    
    
    204,991
    
    
    
    41,652
    
    
    
    10,966
    
    
    
    
    
    
    
    (9,670
    )
    
    
    247,939Gross profit
    
    
    41,677
    
    
    
    36,528
    
    
    
    4,831
    
    
    
    
    
    
    
    (241
    )
    
    
    82,795Selling, general and administrative expense
    
    
    5,587
    
    
    
    6,154
    
    
    
    3,515
    
    
    
    10,884
    
    
    
    
    
    
    
    26,140Net (gain) loss on sale and disposal of assets
    
    
    (16
    )
    
    
    1
    
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    25Operating income (loss)
    
    $
    36,106
    
    
    $
    30,373
    
    
    $
    1,276
    
    
    $
    (10,884
    )
    
    $
    (241
    )
    
    $
    56,630Depreciation and amortization
    
    $
    7,352
    
    
    $
    2,413
    
    
    $
    601
    
    
    $
    581
    
    
    $
    (240
    )
    
    $
    10,707Capital expenditures
    
    $
    13,128
    
    
    $
    832
    
    
    $
    82
    
    
    $
    2,327
    
    
    $
    (320
    )
    
    $
    16,049Three Months Ended March 31, 2009External revenue
    
    $
    238,358
    
    
    $
    69,713
    
    
    $
    7,779
    
    
    $
    
    
    
    $
    
    
    
    $
    315,850Intercompany revenue
    
    
    
    
    
    
    8,149
    
    
    
    1,006
    
    
    
    
    
    
    
    (9,155
    )
    
    
    Total revenue
    
    
    238,358
    
    
    
    77,862
    
    
    
    8,785
    
    
    
    
    
    
    
    (9,155
    )
    
    
    315,850Direct costs
    
    
    195,194
    
    
    
    41,831
    
    
    
    5,557
    
    
    
    
    
    
    
    (8,901
    )
    
    
    233,681Gross profit
    
    
    43,164
    
    
    
    36,031
    
    
    
    3,228
    
    
    
    
    
    
    
    (254
    )
    
    
    82,169Selling, general and administrative expense
    
    
    5,384
    
    
    
    5,567
    
    
    
    2,812
    
    
    
    9,154
    
    
    
    
    
    
    
    22,917Net (gain) loss on sale and disposal of assets
    
    
    (259
    )
    
    
    2
    
    
    
    1
    
    
    
    8
    
    
    
    
    
    
    
    (248
    )Operating income (loss)
    
    $
    38,039
    
    
    $
    30,462
    
    
    $
    415
    
    
    $
    (9,162
    )
    
    $
    (254
    )
    
    $
    59,500Depreciation and amortization
    
    $
    6,299
    
    
    $
    2,195
    
    
    $
    357
    
    
    $
    488
    
    
    $
    (187
    )
    
    $
    9,152Capital expenditures
    
    $
    9,123
    
    
    $
    2,129
    
    
    $
    1,121
    
    
    $
    885
    
    
    $
    (372
    )
    
    $
    12,886At March 31, 2010Total assets
    
    $
    1,173,654
    
    
    $
    210,394
    
    
    $
    71,238
    
    
    $
    233,855
    
    
    $
    (11,456
    )
    
    $
    1,677,685At December 31, 2009Total assets
    
    $
    1,158,891
    
    
    $
    207,043
    
    
    $
    71,019
    
    
    $
    201,024
    
    
    $
    (10,573
    )
    
    $
    1,627,404
 
 (1)
    
    Certain prior year amounts have been reclassified to reflect the transfer of certain
business operations to the Laboratory segment from the Medical Technology segment. The
reclassifications did not have a material impact on either of our segments. 14




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##### Table of Contents



VCA Antech, Inc. and Subsidiaries
Notes to Condensed, Consolidated Financial Statements (Continued)
 12. Commitments and Contingencies
  a. Earn-Out Payments
  b. Other Contingencies
   13. Subsequent Events
  15




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 PageIntroduction
    
    
    17Executive Overview
    
    
    18Critical Accounting Policies
    
    
    19Consolidated Results of Operations
    
    
    21Segment Results
    
    
    22Liquidity and Capital Resources
    
    
    27
 16




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##### Table of Contents



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 May
7, 2010, and we undertake no duty to update this information. Shareholders and prospective
investors can find information filed with the SEC after May 7, 2010 at our website at http://investor.vcaantech.com or at the SECs website at www.sec.gov
  
    
    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 March 31, 2010, our animal hospital network consisted of 492 animal
hospitals in 40 states.
 
    
    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 March 31,
2010, our Laboratory network consisted of 47 laboratories serving all 50 states and certain
areas in Canada.
 
    
    Our Medical Technology segment sells digital radiography and ultrasound imaging
equipment, related computer hardware, software and ancillary services.
   17




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##### Table of Contents



Executive Overview
  Acquisitions and Facilities
  Animal Hospitals:Beginning of period
    
    
    489Acquisitions
    
    
    4Sold, closed or merged
    
    
    (1
    )End of period
    
    
    492Laboratories:Beginning of period
    
    
    47Acquisitions
    
    
    Acquisitions relocated into our existing laboratories
    
    
    (1
    )Created
    
    
    1End of period
    
    
    47
  Consideration:Cash (1)
    
    $
    8,528Contingent consideration
    
    
    7Fair value of total consideration transferred
    
    $
    8,535Allocation of the Purchase Price:Tangible assets
    
    $
    584Identifiable intangible assets
    
    
    1,208Goodwill (2)
    
    
    7,076Other liabilities assumed
    
    
    (333
    )Total
    
    $
    8,535
 
 (1)
    
    See the Cash Flows from Investing Activitiessection in the Liquidity and Capital
Resources discussion for reconciliation of cash paid for acquisitions per this schedule to the
condensed, consolidated statement of cash flows.(2)
    
    We expect that $7.1 million of the goodwill recorded for these acquisitions as of
March 31, 2010 will be fully deductible for income tax purposes. 18




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##### Table of Contents



Acquisition of Eklin Medical Systems, Inc.
  Consideration:Cash
    
    $
    12,504Fair value of total consideration transferred
    
    $
    12,504Allocation of the Purchase Price:Tangible assets
    
    $
    6,830Identifiable intangible assets
    
    
    7,351Goodwill
(1)
    
    
    10,875Other liabilities assumed
    
    
    (12,552
    )Total
    
    $
    12,504
 
 (1)
    
    We expect that $3.4 million of the goodwill recorded for this acquisition as of
March 31, 2010 will be fully deductible for income tax purposes.   
 Critical Accounting Policies
  19




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##### Table of Contents



Medical Technology Revenue
   Multiple-Deliverable Revenue Arrangements
  20




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##### Table of Contents



Consolidated Results of Operations
  Three Months EndedMarch 31,2010
    
    
    2009Revenue:Animal Hospital
    
    
    74.6
    %
    
    
    75.5
    %Laboratory
    
    
    23.6
    
    
    
    24.6Medical Technology
    
    
    4.8
    
    
    
    2.8Intercompany
    
    
    (3.0
    )
    
    
    (2.9
    )Total revenue
    
    
    100.0
    
    
    
    100.0Direct costs
    
    
    75.0
    
    
    
    74.0Gross profit
    
    
    25.0
    
    
    
    26.0Selling, general and administrative expense
    
    
    7.9
    
    
    
    7.2Operating income
    
    
    17.1
    
    
    
    18.8Interest expense, net
    
    
    0.9
    
    
    
    1.9Income before provision for income taxes
    
    
    16.2
    
    
    
    16.9Provision for income taxes
    
    
    6.2
    
    
    
    6.5Net income
    
    
    10.0
    
    
    
    10.4Net income attributable to noncontrolling interests
    
    
    0.3
    
    
    
    0.3Net income attributable to VCA Antech, Inc.
    
    
    9.7
    %
    
    
    10.1
    %
 Revenue
  Three Months Ended March 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    %$
    
    
    Total
    
    
    $
    
    
    Total
    
    
    ChangeAnimal Hospital
    
    $
    246,668
    
    
    
    74.6
    %
    
    $
    238,358
    
    
    
    75.5
    %
    
    
    3.5
    %Laboratory (1)
    
    
    78,180
    
    
    
    23.6
    %
    
    
    77,862
    
    
    
    24.6
    %
    
    
    0.4
    %Medical Technology(1)
    
    
    15,797
    
    
    
    4.8
    %
    
    
    8,785
    
    
    
    2.8
    %
    
    
    79.8
    %Intercompany
    
    
    (9,911
    )
    
    
    (3.0
    )%
    
    
    (9,155
    )
    
    
    (2.9
    )%
    
    
    8.3
    %Total revenue
    
    $
    330,734
    
    
    
    100.0
    %
    
    $
    315,850
    
    
    
    100.0
    %
    
    
    4.7
    %
 
 (1)
    
    Prior year amounts have been adjusted to reflect the reclassification of certain
business operations from our Medical Technology segment to our Laboratory segment, (see Note
11, Lines of Business). The reclassification did not have a material impact on either
segment.  21




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##### Table of Contents



Gross Profit
  Three Months Ended March 31,2010
    
    
    2009Gross
    
    
    
    
    
    
    Gross
    
    
    %$
    
    
    Margin
    
    
    $
    
    
    Margin
    
    
    ChangeAnimal Hospital
    
    $
    41,677
    
    
    
    16.9
    %
    
    $
    43,164
    
    
    
    18.1
    %
    
    
    (3.4
    )%Laboratory
    
    
    36,528
    
    
    
    46.7
    %
    
    
    36,031
    
    
    
    46.3
    %
    
    
    1.4
    %Medical Technology
    
    
    4,831
    
    
    
    30.6
    %
    
    
    3,228
    
    
    
    36.7
    %
    
    
    49.7
    %Intercompany
    
    
    (241
    )
    
    
    
    
    
    
    (254
    )Total gross profit
    
    $
    82,795
    
    
    
    25.0
    %
    
    $
    82,169
    
    
    
    26.0
    %
    
    
    0.8
    %
  
 Segment Results
 Animal Hospital Segment
  Three Months Ended March 31,2010
    
    
    2009
    
    
    % ChangeRevenue
    
    $
    246,668
    
    
    $
    238,358
    
    
    
    3.5
    %Gross profit
    
    $
    41,677
    
    
    $
    43,164
    
    
    
    (3.4
    )%Gross margin
    
    
    16.9
    %
    
    
    18.1
    %
  Three Months Ended March 31,2010
    
    
    2009
    
    
    % ChangeSame-store facilities:Orders (1)
    
    
    1,471
    
    
    
    1,544
    
    
    
    (4.7
    )%Average revenue per order (2)
    
    $
    156.85
    
    
    $
    151.88
    
    
    
    3.3
    %Same-store revenue (1)
    
    $
    230,696
    
    
    $
    234,490
    
    
    
    (1.6
    )%Net acquired revenue (3)
    
    
    15,972
    
    
    
    3,868Total
    
    $
    246,668
    
    
    $
    238,358
    
    
    
    3.5
    %
 22




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##### Table of Contents



(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)
    
    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 January 1, 2009 for the three 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.        23




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##### Table of Contents



Laboratory Segment
  Three Months Ended March 31,2010
    
    
    2009
    
    
    %     ChangeRevenue
    
    $
    78,180
    
    
    $
    77,862
    
    
    
    0.4
    %Gross profit
    
    $
    36,528
    
    
    $
    36,031
    
    
    
    1.4
    %Gross margin
    
    
    46.7
    %
    
    
    46.3
    %
  Three Months Ended March 31,2010
    
    
    2009
    
    
    %     ChangeInternal growth:Number of requisitions (1)
    
    
    3,206
    
    
    
    3,275
    
    
    
    (2.1
    )%Average revenue per requisition (2)
    
    $
    24.33
    
    
    $
    23.77
    
    
    
    2.4
    %Total internal revenue (1)
    
    $
    77,997
    
    
    $
    77,862
    
    
    
    0.2
    %Acquired revenue (3)
    
    
    183
    
    
    
    Total
    
    $
    78,180
    
    
    $
    77,862
    
    
    
    0.4
    %
 
 (1)
    
    Internal revenue and requisitions were calculated using Laboratory operating
results, adjusted to exclude the operating results of acquired laboratories for the comparable
periods that we did not own them in the prior year and adjusted for the impact resulting from
any differences in the number of billing days in comparable periods.(2)
    
    Computed by dividing internal revenue by the number of requisitions.(3)
    
    Acquired revenue represents the revenue recognized from our acquired laboratories
for the comparable current year period that we did not own them in the prior year.     24




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##### Table of Contents



Medical Technology Segment
  Three Months Ended March 31,2010
    
    
    2009
    
    
    %     ChangeRevenue
    
    $
    15,797
    
    
    $
    8,785
    
    
    
    79.8
    %Gross profit
    
    $
    4,831
    
    
    $
    3,228
    
    
    
    49.7
    %Gross margin
    
    
    30.6
    %
    
    
    36.7
    %
 Multiple-Deliverable Revenue Arrangements
   Intercompany Revenue
  25




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##### Table of Contents



Selling, General and Administrative Expense
  Three Months Ended March 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    %$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    ChangeAnimal Hospital
    
    $
    5,587
    
    
    
    2.3
    %
    
    $
    5,384
    
    
    
    2.3
    %
    
    
    3.8
    %Laboratory
    
    
    6,154
    
    
    
    7.9
    %
    
    
    5,567
    
    
    
    7.1
    %
    
    
    10.5
    %Medical Technology
    
    
    3,515
    
    
    
    22.3
    %
    
    
    2,812
    
    
    
    32.0
    %
    
    
    25.0
    %Corporate
    
    
    10,884
    
    
    
    3.3
    %
    
    
    9,154
    
    
    
    2.9
    %
    
    
    18.9
    %Total SG&A
    
    $
    26,140
    
    
    
    7.9
    %
    
    $
    22,917
    
    
    
    7.2
    %
    
    
    14.1
    %
  Operating Income
  Three Months Ended March 31,2010
    
    
    2009% of
    
    
    
    
    
    
    % of
    
    
    %$
    
    
    Revenue
    
    
    $
    
    
    Revenue
    
    
    ChangeAnimal Hospital
    
    $
    36,106
    
    
    
    14.6
    %
    
    $
    38,039
    
    
    
    16.0
    %
    
    
    (5.1
    )%Laboratory
    
    
    30,373
    
    
    
    38.9
    %
    
    
    30,462
    
    
    
    39.1
    %
    
    
    (0.3
    )%Medical Technology
    
    
    1,276
    
    
    
    8.1
    %
    
    
    415
    
    
    
    4.7
    %
    
    
    207.5
    %Corporate
    
    
    (10,884
    )
    
    
    
    
    
    
    (9,162
    )
    
    
    
    
    
    
    18.8
    %Intercompany
    
    
    (241
    )
    
    
    
    
    
    
    (254
    )
    
    
    
    
    
    
    (5.1
    )%Total operating income
    
    $
    56,630
    
    
    
    17.1
    %
    
    $
    59,500
    
    
    
    18.8
    %
    
    
    (4.8
    )%
  26




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##### Table of Contents



Interest Expense, Net
  Three Months EndedMarch 31,2010
    
    
    2009Interest expense (income):Senior term notes
    
    $
    2,249
    
    
    $
    2,587Interest rate hedging agreements
    
    
    382
    
    
    
    3,245Capital leases and other
    
    
    564
    
    
    
    580Amortization of debt costs
    
    
    132
    
    
    
    1203,327
    
    
    
    6,532Interest income
    
    
    (160
    )
    
    
    (414
    )Total interest expense, net of interest income
    
    $
    3,167
    
    
    $
    6,118
  
 Liquidity and Capital Resources
 Introduction
     27




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##### Table of Contents



Future Cash Flows
 Short-Term
   Long-Term
   Debt Related Covenants
    28




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##### Table of Contents



Historical Cash Flows
  Three Months EndedMarch 31,2010
    
    
    2009Cash provided by (used in):Operating activities
    
    $
    70,556
    
    
    $
    51,198Investing activities
    
    
    (26,651
    )
    
    
    (28,615
    )Financing activities
    
    
    (10,942
    )
    
    
    (2,457
    )Effect of currency exchange rate changes on cash and cash equivalents
    
    
    53
    
    
    
    (1
    )Increase in cash and cash equivalents
    
    
    33,016
    
    
    
    20,125Cash and cash equivalents at beginning of period
    
    
    145,181
    
    
    
    88,959Cash and cash equivalents at end of period
    
    $
    178,197
    
    
    $
    109,084
 Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Three Months EndedMarch 31,2010
    
    
    2009
    
    
    VarianceInvesting Cash Flows:Acquisition of independent animal
hospitals and laboratories
    
    $
    (8,528
    )
    
    $
    (13,095
    )
    
    $
    4,567
    (1)Other
    
    
    (719
    )
    
    
    (1,372
    )
    
    
    653Total cash used for acquisitions
    
    
    (9,247
    )
    
    
    (14,467
    )
    
    
    5,220Property and equipment additions
    
    
    (16,049
    )
    
    
    (12,886
    )
    
    
    (3,163
    )(2)Real estate acquired with acquisitions
    
    
    (1,300
    )
    
    
    (963
    )
    
    
    (337
    )(3)Proceeds from sale of assets
    
    
    6
    
    
    
    74
    
    
    
    (68
    )Other
    
    
    (61
    )
    
    
    (373
    )
    
    
    312Net cash used in investing activities
    
    $
    (26,651
    )
    
    $
    (28,615
    )
    
    $
    1,964
 
 (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)
    
    The increase in cash used to acquire property and equipment was related to the
maintenance and expansion of our existing animal hospitals and laboratory facilities.(3)
    
    Due to the lower return on investment realized on acquired real estate we are highly
selective in our decision to acquire real estate. The increase in cash used to acquire real
estate is due to an increase in the number of opportunities that met our selective criteria. 29




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##### Table of Contents



Cash Flows from Financing Activities
  Three Months EndedMarch 31,2010
    
    
    2009
    
    
    VarianceFinancing Cash Flows:Repayment of debt
    
    $
    (10,822
    )
    
    $
    (1,946
    )
    
    $
    (8,876
    )(1)Distributions to noncontrolling interest partners
    
    
    (989
    )
    
    
    (888
    )
    
    
    (101
    )(2)Proceeds from stock options exercises
    
    
    2,858
    
    
    
    557
    
    
    
    2,301
    (3)Excess tax benefits from stock options
    
    
    264
    
    
    
    
    
    
    
    264Stock repurchases
    
    
    (2,253
    )
    
    
    (180
    )
    
    
    (2,073
    )(4)Net cash used in financing activities
    
    $
    (10,942
    )
    
    $
    (2,457
    )
    
    $
    (8,485
    )
 
 (1)
    
    The cash used for repayment of debt increased $8.9 million due primarily to the
payment of excess cash flows. See discussion above under Future Cash Flows.(2)
    
    The distributions to noncontrolling interest partners represent cash payments to
noncontrolling interest partners for their portion of the partnerships excess cash.(3)
    
    The number of stock option exercises has increased in comparison to the prior year
related to the increase in the market price of our stock during the three months ended March
31, 2010 and the expiration of certain stock options in the near term.(4)
    
    The stock repurchases for the three months ended March 2010 and March 31, 2009
represent cash paid for income taxes on behalf of employees who elected to settle their tax
obligations on vested stocks with a portion of the stocks that vested. Off-Balance-Sheet Arrangements
  Interest Rate Swap Agreements
   Description of Indebtedness
 Senior Credit Facility
    Other Debt and Capital Lease Obligations
  30




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
    
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 5. OTHER INFORMATION
  31




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##### Table of Contents



ITEM 6. EXHIBITS
 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.
 32




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##### Table of Contents



SIGNATURE
  Date: May 7, 2010
    By:
    /s/ Tomas W. FullerTomas W. FullerChief Financial Officer 33




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description31.1
    
    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.
 34