##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2005
 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: 0-24312
 VIRBAC CORPORATION
  DELAWARE
(State or other jurisdiction of
incorporation or organization)
    
    43-1648680
(I.R.S. Employer
Identification No.)3200 MEACHAM BOULEVARD
FORT WORTH, TEXAS
(Address of principal executive offices)
    
    76137
(Zip Code)
 (817) 831-5030
 
  Title of each Class:
    
    Name of each exchange on which registered:COMMON STOCK, PAR VALUE $0.01
PER SHARE
    
    NONE
 
 o þ
 o þ
 þ o
 o
  o o þ
 o þ




---



##### Table of Contents



Table of Contents
 Form 10-KItem Number
    
    
    
    PagePart 11.
    
    Business
    
    
    11A.
    
    Risk Factors
    
    
    101B.
    
    Unresolved Staff Comments
    
    
    162.
    
    Properties
    
    
    163.
    
    Legal Proceedings
    
    
    174.
    
    Submission of Matters to a Vote of Security Holders
    
    
    19Part II5.
    
    Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases ofEquity Securities
    
    
    216.
    
    Selected Financial Data
    
    
    237.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    247A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    408.
    
    Financial Statements and Supplementary Data
    
    
    419.
    
    Changes in and Disagreements with Accountants on Accounting and  Financial Disclosure
    
    
    419A.
    
    Controls and Procedures
    
    
    419B.
    
    Other Information
    
    
    43Part III10.
    
    Directors and Executive Officers of the Registrant
    
    
    4411.
    
    Executive Compensation
    
    
    4412.
    
    Security Ownership of Certain Beneficial Owners and Management  and  Related Shareholder Matters
    
    
    4413.
    
    Certain Relationships and Related Transactions
    
    
    4414.
    
    Principal Accounting Fees and Services
    
    
    44Part IV15.
    
    Exhibits and Financial Statement Schedules
    
    
    45Signatures
    
    
    52Ninth Amendment to Credit AgreementThird Amendment to Secured Subordinated Promissory Note dated April 9, 2004Third Amendment to Secured Subordinated Promissory Note dated April 29, 2004Consent of PricewaterhouseCoopers LLPCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification Pursuant to Section 906
 i




---



##### Table of Contents



FORWARD LOOKING INFORMATION
  
 PART I
 
 ITEM 1. BUSINESS.
 Background
    1




---



##### Table of Contents



Business Overview
   Products
  
    
    Dermatological products for dogs and cats, including anti-itch, anti-microbial, and
anti-inflammatory lotions and shampoos;
    
    Oral hygiene products for dogs and cats, including toothpaste and toothbrushes,
sprays, oral rinses, enzymatic rawhide chews and chlorhexidine rawhide chews;
    
    Flea and tick products, including collars, shampoos and dip concentrates;
    
    Canine heartworm preventives;
    
    Ear cleaners;
 2




---



##### Table of Contents




    
    Endocrinology treatments, including canine thyroid replacements;
    
    Humane euthanasia drugs, for veterinary purposes only;
    
    Aquarium water conditioners, medications and test strips;
    
    Pest control products, including rodenticides;
    
    Nutritional supplements to promote healthy coat and skin;
    
    Gastrointestinal products for dogs and cats, including hairball remedies;
    
    Specialty chemicals; and
    
    Equine anti-parasitics.
 Sales and Marketing Strategy
  Veterinary Segment
 IVERHART
  Consumer Brand Segment
 â
  3




---



##### Table of Contents



Distribution
 Contract Manufacturing Segment
   Distribution
   Research and Development
  4




---



##### Table of Contents



Registrations, Trademarks and Patents
   IVERHART
 5




---



##### Table of Contents



Procurement of Raw Materials and Finished Goods
  Competition
      Regulatory and Environmental Matters
  6




---



##### Table of Contents



Product Regulation
      Environmental Matters
  7




---



##### Table of Contents



Employees
  Restatement of Financial Statements and Other Developments
 Restatement of Financial Statements
  8




---



##### Table of Contents



Other Developments
    Available Information
 www.virbaccorp.com www.sec.gov
 9




---



##### Table of Contents



ITEM 1A. RISK FACTORS.
 Risks Relating to the Restatement and Other Matters
 Virbac may be materially adversely affected by the result of ongoing litigation.
   Virbac is subject to an ongoing SEC investigation.
 SEC Investigation.
 Virbac may be materially adversely affected if it does not complete the implementation of its
plan to improve the Companys internal controls.
  10




---



##### Table of Contents



Risks Related to Virbacs Business
 Factors beyond the Companys control may cause its revenue to fluctuate, and since many of
Virbacs expenses are fixed in the short term, this fluctuation could cause greater than expected
losses, cash flow and liquidity shortfalls and the Companys stock price to decline.
  
    
    supply of products from third party suppliers or termination of such relationships;
    
    the introduction of new products by the Companys competitors or by the Company;
    
    competition and pricing pressures from competitive products;
    
    Virbacs distribution strategy and its ability to maintain relationships with distributors;
    
    large customers failing to purchase products at historical levels;
    
    fundamental shifts in market demand;
    
    economic uncertainties;
    
    significant increases in interest rates;
    
    manufacturing delays;
    
    shipment problems;
    
    regulatory and other delays in product development;
    
    product recalls;
    
    changes in Virbacs reputation and/or market acceptance of its current or new products;
    
    changes in the mix of products sold;
    
    the results of certain strategic initiatives, including acquisitions, divestitures,
and restructurings; and
    
    significant costs related to the compliance with newly issued SEC rules and
corporate governance initiatives.
  Virbac may be materially adversely affected by its dependency on third-party suppliers.
   The Companys future revenues depend on the research, development, commercialization and
market acceptance of new products, any of which can be slower than expected.
  11




---



##### Table of Contents



Virbac may not be able to successfully compete or be profitable in the business in which it
operates.
  Virbac may be materially adversely affected by costly intellectual property disputes.
   12




---



##### Table of Contents



Virbac may be materially adversely affected by the cost of obtaining and maintaining costly
regulatory approvals that are required to market its products.
    The Company may be materially adversely affected if the FDA and the EPA decide to require FDA
or EPA registered products to be produced in plants that produce only FDA or EPA registered
products.
  Virbac may be materially adversely affected by product returns and product liability.
  13




---



##### Table of Contents



Virbac may incur significant costs relating to the removal of hazardous materials and waste
associated with its products and development programs.
  Virbac may be materially adversely affected by changes in veterinary medical practices.
  Virbac may be materially adversely affected by an economic downturn or economic uncertainty.
  Risks Related to Virbacs Relationship with VBSA
 Virbac may be materially adversely affected by a decrease in financial support that it
receives from VBSA.
  14




---



##### Table of Contents



Risks Related to the Ownership of Common Stock and the Securities Markets
 VBSA controls any vote of shareholders of the Company.
   VBSA Tender Offer Proposal
     15




---



##### Table of Contents



Virbac may continue to be materially adversely affected by the lack of a public trading market
for its Common Stock.
   The public float of Virbacs Common Stock is limited since over 60% of the Common Stock
outstanding is held by VBSA.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS.
  
 ITEM 2. PROPERTIES.
   16




---



##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS.
  Securities Class Action Litigation Settlement
 Williams v. Virbac et al.
   Shareholder Derivative Lawsuit
  17




---



##### Table of Contents



18




---



##### Table of Contents



SEC Investigation
   
    
    without admitting or denying the SECs allegations, the Company would agree to a
stipulated judgment enjoining the Company from future violations of various provisions of
the federal securities laws;
    
    the Company would agree to undertakings requiring the Company to implement annual
training programs and internal certifications for certain personnel concerning accounting,
compliance and regulatory matters; and
    
    the Company would not be required to pay a civil money penalty or disgorgement.
  Lawsuit Against Tender Offer Proposal
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  1.
    
    The election of two Class 2 directors to serve on the Companys Board of
Directors for the remainder of the three-year term that expires in 2007;2.
    
    The election of two Class 3 directors to serve on the Companys Board of
Directors for a three-year term that expires in 2008; and3.
    
    A proposal to ratify and approve the selection of PricewaterhouseCoopers
LLP as the Companys independent registered public accountants for 2005.
 19




---



##### Table of Contents



Nominee
    
    Votes For
    
    Votes WithheldEric Marée
    
    
    21,654,310
    
    
    
    157,210Michel Garaudet
    
    
    21,654,141
    
    
    
    157,379
  Nominee
    
    Votes For
    
    Votes WithheldAlec L. Poitevint, II
    
    
    21,484,671
    
    
    
    326,849Jean Noël Willk
    
    
    21,588,123
    
    
    
    223,397
   
    
    21,544,493 Votes for approval
    
    250,864 Votes against
    
    16,163 Abstentions
 20




---



##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
    High
    
    
    LowYear ended December 31, 2003
(NASDAQ National Market)First Quarter
    
    $
    5.90
    
    
    $
    5.20Second Quarter
    
    
    6.17
    
    
    
    5.01Third Quarter
    
    
    8.22
    
    
    
    5.56Fourth Quarter (1)
    
    
    8.53
    
    
    
    6.50Year ended December 31, 2004
(Pink Sheets)First Quarter
    
    $
    6.50
    
    
    $
    2.26Second Quarter
    
    
    3.15
    
    
    
    2.50Third Quarter
    
    
    3.14
    
    
    
    2.45Fourth Quarter
    
    
    3.95
    
    
    
    2.70Year ended December 31, 2005
(Pink Sheets)First Quarter
    
    $
    3.90
    
    
    $
    3.32Second Quarter
    
    
    3.65
    
    
    
    2.17Third Quarter
    
    
    4.01
    
    
    
    2.52Fourth Quarter
    
    
    5.00
    
    
    
    3.35
 
 (1)
    
    The NASDAQ National Market halted trading in the Companys securities
effective November 13, 2003.  21




---



##### Table of Contents



Securities Authorized for Issuance under Equity Compensation Plans
   Number of SecuritiesRemaining Available forWeighted Average
    
    Future Issuance UnderNumber of Securities to
    
    Exercise Price of
    
    Virbac Incentive Planbe Issued Upon Exercise
    
    Outstanding
    
    (Excluding Securitiesof Outstanding Options,
    
    Options, Warrants
    
    Reflected in the FirstPlan Category
    
    Warrants and Rights
    
    and Rights
    
    Column)Virbac Incentive Plan
    
    
    496,431
    
    
    $
    4.02
    
    
    
    N/A
 Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
  22




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA.
  For the Years Ended December 31,(In thousands, except per share data)
    
    2005
    
    
    2004 (1)
    
    
    2003 (2)
    
    
    2002
    
    
    2001 (1)STATEMENTS OF OPERATIONS DATARevenues
    
    $
    80,778
    
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    60,923
    
    
    $
    56,944Income (loss) from operations
    
    
    7,371
    
    
    
    3,559
    
    
    
    (4,288
    )
    
    
    1,712
    
    
    
    (231
    )Provision for income taxes
    
    
    (2,038
    )
    
    
    (570
    )
    
    
    (84
    )
    
    
    (361
    )
    
    
    (16
    )Income (loss) before cumulative effect of
change in accounting principle
    
    
    3,873
    
    
    
    1,471
    
    
    
    (5,004
    )
    
    
    985
    
    
    
    (897
    )Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,308
    )
    
    
    Net income (loss)
    
    
    3,873
    
    
    
    1,471
    
    
    
    (5,004
    )
    
    
    (1,323
    )
    
    
    (897
    )Basic income (loss) per share
    
    $
    0.17
    
    
    $
    0.07
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )
    
    $
    (0.04
    )Basic weighted average number of
shares outstanding
    
    
    22,347
    
    
    
    22,291
    
    
    
    22,234
    
    
    
    22,115
    
    
    
    22,038Diluted income (loss) per share
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )
    
    $
    (0.04
    )Diluted weighted average number of
shares outstanding
    
    
    22,661
    
    
    
    22,763
    
    
    
    22,234
    
    
    
    22,774
    
    
    
    22,038BALANCE SHEET DATACash
    
    $
    951
    
    
    $
    2,314
    
    
    $
    4
    
    
    $
    865
    
    
    $
    477Working capital
    
    
    1,269
    
    
    
    (2,687
    )
    
    
    (13,851
    )
    
    
    6,195
    
    
    
    6,844Goodwill, net
    
    
    4,006
    
    
    
    5,006
    
    
    
    5,571
    
    
    
    4,826
    
    
    
    7,445Intangibles and other assets
    
    
    18,490
    
    
    
    20,472
    
    
    
    21,243
    
    
    
    2,917
    
    
    
    316Total assets
    
    
    55,718
    
    
    
    59,653
    
    
    
    65,145
    
    
    
    45,245
    
    
    
    47,791VBSA notes payable, less current maturities
    
    
    7,000
    
    
    
    9,000
    
    
    
    
    
    
    
    
    
    
    
    Notes payable, less current maturities
    
    
    40
    
    
    
    3
    
    
    
    7
    
    
    
    10
    
    
    
    Shareholders equity
    
    
    22,220
    
    
    
    17,693
    
    
    
    16,145
    
    
    
    21,033
    
    
    
    22,104
  23




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 References to Notes to Consolidated Financial Statements within this Item 7. refer to the Notes
to the Companys Consolidated Financial Statements in Item 15.
 Overview
      â
 24




---



##### Table of Contents



Critical Accounting Policies and Estimates
    25




---



##### Table of Contents



Revenue Recognition
     Sales Related and Product Replacement Reserves
    26




---



##### Table of Contents



Inventories and Inventories on Consignment
  Valuation of Other Intangible Assets and Goodwill
    
    
    significant underperformance relative to expected historical or projected future
operating results;
    
    significant changes in the manner or extent of the Companys use of the acquired
assets or the strategy for the Companys overall business;
    
    significant negative industry or economic trends; and
    
    significant decline in the market value of the intangible asset for a sustained
period of time.
   27




---



##### Table of Contents



Unearned Product License Fees
  Assessment of Loss Contingencies
  Income Taxes
   Business Combinations
  28




---



##### Table of Contents



Results of Operations
  29




---



##### Table of Contents



For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of goods sold
    
    
    52
    
    
    
    56
    
    
    
    62Gross profit
    
    
    48
    
    
    
    44
    
    
    
    38Operating expenses:Sales and marketing
    
    
    19
    
    
    
    17
    
    
    
    22Impairment of intangible assets
    
    
    1
    
    
    
    
    
    
    
    General and administrative
    
    
    12
    
    
    
    15
    
    
    
    12Research and development
    
    
    4
    
    
    
    4
    
    
    
    7Warehouse and distribution
    
    
    3
    
    
    
    3
    
    
    
    3Total operating expenses
    
    
    39
    
    
    
    39
    
    
    
    44Income (loss) from operations
    
    
    9
    
    
    
    5
    
    
    
    (6
    )Interest expense and other income
    
    
    (2
    )
    
    
    (2
    )
    
    
    (1
    )Income (loss) before income taxes
    
    
    7
    
    
    
    3
    
    
    
    (7
    )Provision for income taxes
    
    
    (2
    )
    
    
    (1
    )
    
    
    Net income (loss)
    
    
    5
    %
    
    
    2
    %
    
    
    (7
    )%
 Comparison of the Years Ended December 31, 2005, 2004 and 2003
 Revenues
  For the years ended
    
    
    Change(In thousands, except
    
    December 31,
    
    
    2005 vs 2004
    
    
    2004 vs 2003percentages)
    
    2005
    
    
    2004
    
    
    2003
    
    
    Dollars
    
    
    %
    
    
    Dollars
    
    
    %Veterinary
    
    $
    46,057
    
    
    $
    39,341
    
    
    $
    29,831
    
    
    $
    6,716
    
    

    17%
    
    
    $
    9,510
    
    

    32%Consumer Brand
    
    
    21,577
    
    
    
    21,244
    
    
    
    22,850
    
    
    
    333
    
    

    2%
    
    
    
    (1,606
    )
    

    (7%)Contract Manufacturing
    
    
    13,144
    
    
    
    16,530
    
    
    
    14,396
    
    
    
    (3,386
    )
    

    (20%)
    
    
    
    2,134
    
    

    15%Totals
    
    $
    80,778
    
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    3,663
    
    

    5%
    
    
    $
    10,038
    
    

    15%
 
    
    Veterinary revenues increased in 2005, as compared to 2004 due primarily to significant
increases in heartworm preventative, dental and endocrinology product category revenues,
each reporting year over year increases of $2.8 million, $1.9 million and $1.5 million, respectively. The
Companys heartworm preventative product category revenues increased 39% in 2005, as
compared to 2004, principally as a result of the full year effect of the discontinuation of
a major competitive heartworm preventative product in September 2004, due to a voluntary
recall. Dental product category revenues increased 22% in 2005, as compared to 2004, due
principally to increased sales of a significant dental chew product that was introduced in
the first quarter of
 30




---



##### Table of Contents



2004 and continues to gain wide market acceptance. This product has a
patented additive that is well recognized in the market to aid in dental health.
Endocrinology product category revenues increased 32% in 2005, as compared to 2004,
principally as a result of the increased sales of SOLOXINE®, a leader in canine thyroid
hormone replacement, which was part of the King product portfolio acquisition that occurred
in late 2003.Revenues in 2004 were negatively affected by significant backorders related to
production delays which were corrected in 2005. Thus, 2005 revenues represent a higher level
of annual SOLOXINE®  revenues than the Company would generally expect on a recurring basis.Veterinary revenues increased in 2004, as compared to 2003, principally as a result of a
full year of revenues from the King and Delmarva product acquisitions, which occurred in
late 2003. In addition to SOLOXINE®, the King product portfolio includes Pancrezyme®,
Tumil-K®, Uroeze®  and Ammonil®, which are pancreatic and nutritional supplements. The
Delmarva product portfolio includes Euthasol®  and Pentasol®, both of which are humane
euthanasia products, in addition to antibiotics ClintabsÒ and ClinsolÒ.
Incremental 2004 revenues related to these acquisitions were approximately $6.1 million.
Other product categories which reported an increase in revenues in 2004, as compared to
2003, included heartworm preventative, dermatology and dental products with year over year
increases of approximately 42%, 12% and 19%, respectively. Heartworm preventative product
revenues were positively impacted when a major competitive heartworm preventative, which had
significant market share, was removed from the market in September 2004. The removal could
be temporary, and its return would likely negatively impact Virbacs market share.
Dermatalogy revenues increased year over year due to the launch in late 2003 of two new
products. As previously mentioned, the dental product category reported increased revenues
in 2004, as compared to 2003, due to the launch of a significant dental chew product in the
first quarter of 2004. These increases were offset by a year over year decrease in
pesticide product category revenues as a result of a Company initiated recall in the first
quarter of 2004 of its flea and tick collar due to product efficacy issues. Virbac
purchased this product from VBSA and has been reimbursed in full for the costs of all unused
product and other costs associated with the recall.
    
    Consumer Brand revenues increased in 2005, as compared to 2004, by $0.3 million or 2%,
primarily as a result of increases in the dental and nutraceutical product category
revenues, offset by decreased private-label product category revenues. Dental product
category revenues increased $0.9 million year over year due to increased revenues in all
dental product categories as a result of the Company placing additional products with pet
supply retailers and the continued growth in revenues from these same retailers.
Nutraceutical product category revenues increased $0.2 million as a result of promotional
programs launched in 2005 for a significant vitamin supplement product offset by decreased
revenues resulting from the rationalization and resultant elimination of several
nutraceutical products. These increases were partially offset by a decrease of $0.8
million in private-label product category revenues as a result of the discontinuance of
unprofitable business with a customer.Consumer Brand revenues decreased in 2004, as compared to 2003, by $1.6 million due
principally to lower export revenues and decreased revenues in the dental and nutraceutical
product categories. The dental product category was negatively affected by the
discontinuation of a number of products. The nutraceutical product category was negatively
affected by pricing pressure and the loss of a key customer in July 2004, which launched its
own nutraceutical brand product.
    
    The Contract Manufacturing segment includes revenues from the Companys contract
manufacturing operations and equine products that are sold exclusively to Pfizer, and in
2004 and prior, livestock de-wormer product revenues.
 31




---



##### Table of Contents



Contract Manufacturing segment revenues decreased $3.4 million in 2005, as compared to 2004,
due principally to a $5.0 million year over year decrease in livestock de-wormer product
revenues offset by a $2.0 million year over year increase in contract manufacturing
operation revenues. The Company has eliminated the livestock de-wormer product from its
product portfolio during 2004 due to extreme competitive pricing and the resultant lack of
product profitability. The $2.0 million increase in contract manufacturing operation
revenues is primarily due to revenue from a new contract with a major pharmaceutical company
for the manufacture of livestock insecticide ear tags. Revenue of $1.4 million under this
contract was first recorded in the fourth quarter of 2005. The contract expires at the end
of 2007 and includes a minimum purchase obligation over the term of the agreement.Typically, contract manufacturing operation contracts carry lower margins, thus the
Companys strategy has been to offset lower margin contract manufacturing operations at its
St. Louis facility with the production of higher margin veterinary products as its portfolio
expands. The Company does have available capacity at its St. Louis facility and the Company
will utilize its existing capacity as appropriate contract manufacturing operation
opportunities become available.Contract Manufacturing segment revenues increased approximately 15% in 2004, as compared to
2003, principally due to increased revenues from its contract manufacturing operations as a
result of increased demand from existing customers. This increase was offset by decreased
livestock de-wormer product revenues in 2004 as compared to 2003 as a result of the
Companys decision to eliminate this product from its portfolio due to lack of
profitability. Contributing to the increased Contract Manufacturing revenues were equine
product revenues which increased approximately 23% in 2004, as compared to 2003, due to the
products strong market acceptance and a full year of revenues in 2004 for one of its equine
products.
  Gross Profit
  ChangeFor the years ended December 31,
    
    
    2005 vs. 2004
    
    
    2004 vs. 2003Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossProfit
    
    
    
    
    
    
    Profit
    
    
    
    
    
    
    Profit(In thousands, except percentages)
    
    2005
    
    
    %
    
    
    2004
    
    
    %
    
    
    2003
    
    
    %
    
    
    $
    
    
    %
    
    
    $
    
    
    %Veterinary
    
    $
    28,658
    
    

    62%
    
    
    $
    25,122
    
    

    64%
    
    
    $
    16,337
    
    

    55%
    
    
    $
    3,536
    
    

    14%
    
    
    $
    8,785
    
    

    54%Consumer Brand
    
    
    7,189
    
    

    33%
    
    
    
    7,056
    
    

    33%
    
    
    
    6,274
    
    

    27%
    
    
    
    133
    
    

    2%
    
    
    
    782
    
    

    12%Contract Manufacturing
    
    
    2,624
    
    

    20%
    
    
    
    1,686
    
    

    10%
    
    
    
    3,042
    
    

    21%
    
    
    
    938
    
    

    56%
    
    
    
    (1,356
    )
    

    (45%)Totals
    
    $
    38,471
    
    

    48%
    
    
    $
    33,864
    
    

    44%
    
    
    $
    25,653
    
    

    38%
    
    
    $
    4,607
    
    

    14%
    
    
    $
    8,211
    
    

    32%
 
    
    Veterinary segment gross profit dollars increased $3.5 million in 2005, as compared to
2004, due to increased revenues. Veterinary segment gross profit margins decreased to 62%
in 2005 from 64% in 2004. The Veterinary segments gross profit margins were positively
impacted in 2004 by a significant decline in sales return provisions, especially for the
heartworm preventative product category. This decline was the result of improved management
of inventory in the distribution channel resulting in improved sell-through of product.
This sharp decline in return rates has tapered off in 2005, such that return rate
provisions have been recorded at a more consistent level of revenues during 2005.
Additional reasons for the decline in gross margins are
 32




---



##### Table of Contents



due to an increase in several
marketing promotional programs by the Company in order to expand its market share and
respond to increased competitive pricing. Gross profit margins have also been negatively
affected by reduced margins on the Companys antibiotic product category sales. This
antibiotic product category was acquired from Delmarva in late 2003. The Companys sales
of this product category have been negatively affected by a change in market conditions as
a result of a significant competitors promotion of a broader spectrum product. The
Company has reduced its pricing in response to the changing market conditions.Veterinary segment gross profit increased significantly in 2004, as compared to 2003, due to
several factors. Revenues in 2004 included a full year of product revenues from the King and
Delmarva product acquisitions, which occurred in late 2003. The King and Delmarva product
categories have strong gross profit levels thus elevating this segments overall margins.
Additionally, 2004 gross profits were positively impacted by IVERHART®  PLUS margins as a
result of lower return rates in 2004, as compared to 2003.
    
    Consumer Brand segment gross profit dollars increased $0.1 million or 2% in 2005, as
compared to 2004. Gross profit margins were flat year over year. Certain product
categories reported higher gross margins, namely dermatology and dental, while other
products categories reported lower gross margins, namely pesticides. The year over year
variances are a result of market pricing pressure and various marketing and promotional
campaigns launched by the Company.Consumer Brand segment gross profit increased in 2004, as compared to 2003, reflecting the
net impact of product mix, product rationalization and improved inventory management that
resulted in lower inventory obsolescence reserve requirements in 2004, as compared to 2003.
    
    Contract Manufacturing segment gross profit increased $0.9 million or 56% in 2005, as
compared to 2004, due principally to the elimination of livestock de-wormer product sales
that carried low profit margins. In addition, 2004 gross profit margins were negatively
affected by inventory reserve provisions.Contract Manufacturing segment gross profit decreased in 2004, as compared to 2003, due
principally to lower livestock de-wormer product revenues and reduced overall gross profit
on this product category. Livestock de-wormer gross profit was negatively affected by
extreme competitive pricing pressures. Contract manufacturing operation gross profit
remained nearly flat year over year.
  Operating Expenses
   33




---



##### Table of Contents



34




---



##### Table of Contents



Interest Expense and Other Income
   Taxes
   35




---



##### Table of Contents



Liquidity and Capital Resources
      .
  36




---



##### Table of Contents



1 2
 37




---



##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by PeriodMore than 5(In thousands)
    
    Total
    
    
    Less than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsCredit Agreement
    
    $
    6,000
    
    
    $
    6,000
    
    
    $
    
    
    
    $
    
    
    
    $
    VBSA Notes
    
    
    9,000
    
    
    
    2,000
    
    
    
    7,000
    
    
    
    
    
    
    
    Installment loan
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    Capital lease
    
    
    51
    
    
    
    11
    
    
    
    25
    
    
    
    10
    
    
    
    5Delmarva contingent payments
    
    
    2,000
    
    
    
    500
    
    
    
    500
    
    
    
    1,000
    
    
    
    Operating lease obligations
    
    
    270
    
    
    
    84
    
    
    
    95
    
    
    
    66
    
    
    
    25Purchase commitment obligations
    
    
    325
    
    
    
    325
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    17,649
    
    
    $
    8,923
    
    
    $
    7,620
    
    
    $
    1,076
    
    
    $
    30
 1 2
  38




---



##### Table of Contents



Quarterly Effects and Seasonality
  Recently Issued Accounting Pronouncements
  (r) Employee stock-based compensation
 39




---



##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 1 2
    40




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 Form 10-K.
 
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 (a) Evaluation of the Companys Disclosure Controls and Procedures
   Identification of Material Weaknesses in Internal Control over Financial Reporting
  
    
    Deficiencies related to the internal control environment.The Company has not
developed an effective control environment which would address the experience and
depth of certain sales, operating, accounting and financial management personnel,
and the Company continues to lack a robust governance function and adequate
financial oversight.
    
    Deficiencies related to the design, documentation and execution of accounting
policies and procedures. Controls are ineffective or not effectively executed or
monitored, including the non-documentation of business process policies and
procedures, adequate segregation of responsibilities and the establishment of
effective management review controls.
 41




---



##### Table of Contents




    
    Deficiencies related to policies and procedures with respect to revenue
recognition. In addition to the deficiencies in the internal control environment
noted above, current management has also concluded that policies and procedures
with respect to revenue recognition in accordance with GAAP may be either
misapplied or ignored in a manner that permits the Company to recognize revenue
prematurely.
  
    
    the Restatement;
    
    the findings of the Audit Committees internal investigation;
    
    the resignations of the Companys former President and Chief Executive Officer,
former Chief Financial Officer and other employees resulting from the findings of
the internal investigation;
    
    the material weaknesses in the Companys internal control over financial
reporting that were identified by Virbac and the Companys independent registered
public accounting firm;
    
    the remedial measures that the Company has identified, developed and begun to
implement beginning in November 2003, to remedy those material weaknesses (as more
fully described below); and
    
    the Companys inability to file timely its 2004 and 2003 Quarterly Reports on
Form 10-Q and Annual Reports on Form 10-K and its 2005 Quarterly Reports on Form
10-Q for the quarters ended March 31, 2005 and June 30, 2005.
 (b) Changes in Internal Control over Financial Reporting
  
    
    Virbac has appointed a new member to its Board who qualifies as a financial
expert in accordance with Section 407 of SOX. This Board member has also been
appointed chairman of the Audit Committee.
    
    The Audit Committee has exercised increased oversight over managements
assessment of internal control over financial reporting and response to control
deficiencies identified in these assessments.
    
    Virbac has established a Disclosure Review Committee, consisting of senior
executives from the Companys sales, research, operating and finance organizations.
The Disclosure Review Committee was established to assist in the administration of
disclosure controls and procedures with respect to the Companys public
disclosures, including SEC filings.
    
    Virbac has sought to thoroughly understand the nature of the issues identified
in the Audit Committee-sponsored internal investigation through discussions with
its independent registered public accounting firm and the independent counsel and
forensic accountants engaged by the Audit Committee.
 42




---



##### Table of Contents




    
    Virbac has recruited and continues to recruit new personnel to the accounting
and financial reporting organization who have expertise in financial controls,
financial reporting and cost accounting to improve the quality and level of
experience of the Companys finance organization.
    
    Virbac has adopted and is implementing formal standard financial policies and
procedures, education and training of employees on policies and procedures in an
effort to constantly improve internal controls and the control environment.
GAAP-compliant revenue recognition policies have been communicated to sales,
operations and financial personnel throughout the Company. The Company has also
implemented new inventory obsolescence review and cycle-count policies.
    
    Virbac implemented a standardized account reconciliation policy, which requires
the monthly reconciliation of all balance sheet accounts and the use of standard
methodology and templates for account reconciliations.
    
    The Company continues to work to improve its internal control over financial
reporting and has recently implemented a fully integrated management information
system in its Fort Worth facility, which provides enhanced internal control
features. The Company expects to implement the same system in its St. Louis
facility in May 2006.
    
    Virbac continues to review and improve its significant accounting practices,
improve accounting accuracy and identify process and internal control improvements.
The Company has made significant investments in improving its internal control
environment as it begins its readiness to implement the provisions of Section 404
of SOX.
   
 ITEM 9B. OTHER INFORMATION.
  43




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 Section 16(a) Beneficial Ownership Reporting Compliance Audit Committee Code of Business Conduct and Ethics
 
 ITEM 11. EXECUTIVE COMPENSATION.
 Summary Compensation Table, Option Exercises and Holdings and
Employment Agreements
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDERS
MATTERS.
 Security Ownership of Certain Beneficial Owners and Management
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 Certain Relationships and Related Transactions
 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
 Independent Registered Public Accountants Audit Committee Administration of the Engagement  Procedures for
Pre-Approval of Audit and Permissible Non-Audit Services of the Companys Independent Registered
Public Accountants
 44




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
             IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)2.4
    
    Warehousing and Distribution Agreement between Purina
Mills, Inc. and PM Resources, Inc. dated September 9,
1993.
    
    (1); Ex. 2.42.5
    
    Indemnity Agreement between Purina Mills, Inc. and PM
Resources, Inc. dated September 9, 1993.
    
    (1); Ex. 2.52.11
    
    Agreement and Plan of Merger, dated October 16, 1998, by
and among Agri-Nutrition Group Limited, Virbac S.A., and
Virbac, Inc.
    
    (7); Ex. 2.12.12
    
    Stock Purchase Agreement by and between Virbac Corporation
and Delmarva Laboratories, Inc. dated as of August 15,
2003.
    
    (14); Ex. 2.22.13
    
    Asset Purchase Agreement by and among Virbac Corporation,
Jones Pharma Incorporated and JMI- Daniels
Pharmaceuticals, Inc. dated as of September 5, 2003.
    
    (13); Ex. 2.1
 45




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    

(if applicable)3.1
    
    Restated Certificate of Incorporation.
    
    (2); Ex. 3.13.3
    
    Amended and Restated By-Laws, dated as of January 27, 2004.
    
    (14); Ex. 3. 24
    
    Specimen Stock Certificate.
    
    (1); Ex. 410.11
    
    Form of Indemnification Agreement.
    
    (1); Ex. 10.1010.12
    
    Reload Option and Exchange Exercise Plan.
    
    (3); Ex. 4.210.13
    
    1996 Incentive Stock Plan, as amended.
    
    (4); Ex. 10.1510.14
    
    Credit Agreement by and among Agri-Nutrition Group
Limited, PM Resources, Inc., St. JON Laboratories, Inc.,
and First Bank, dated May 14, 1998.
    
    (5); Ex. 10.2410.15
    
    Amended Credit Agreement by and among Agri-Nutrition Group
Limited, PM Resources, Inc., St. JON Laboratories, Inc.,
and First Bank, dated August 6, 1998.
    
    (6); Ex. 10.2510.16
    
    Second Amendment to Credit Agreement by and among
Agri-Nutrition Group Limited, PM Resources, Inc., St. JON
Laboratories, Inc., and First Bank, dated October 2, 1998.
    
    (8); Ex. 10.2610.17
    
    Credit Agreement by and among Virbac Corporation, PM
Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated
September 7, 1999.
    
    (12); Ex. 10.2710.18
    
    First Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc., and
First Bank, dated December 30, 1999.
    
    (15); Ex. 10.2110.19
    
    Second Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc., and
First Bank, dated May 1, 2000.
    
    (9); Ex. 10.2710.20
    
    Third Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc., and
First Bank, dated April 4, 2001.
    
    (10); Ex. 99.110.21
    
    Fourth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc., and
First Bank, dated August 7, 2002.
    
    (11); Ex. 10.29
 46




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.22
    
    Fifth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc., and
First Bank, dated August 11, 2003.
    
    (14); Ex. 10.1010.23
    
    Sixth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and First Bank, dated
September 3, 2003.
    
    (13); Ex. 10.110.24
    
    Waiver of September 30, 2003 10-Q Reporting Period from
First Bank, dated November 12, 2003.
    
    (14); Ex. 10.1210.25
    
    Seventh Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and First Bank, dated March
1, 2004.
    
    (14); Ex. 10.1310.26
    
    Eighth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and First Bank, dated August
22, 2005.
    
    (17); Ex. 10.2610.27
    
    Ninth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and First Bank, dated March
24, 2006.
    
    +10.28
    
    Agreement for Temporary Management Services between Virbac
Corporation and Executive Interim Management dated
December 16, 2003.
    
    (15); Ex. 10.2610.29
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Joseph Rougraff
dated March 24, 2004.
    
    (15); Ex. 10.2710.30
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Thomas Bell dated
April 15, 2004.
    
    (15); Ex. 10.2810.31
    
    Employment and Consulting Agreement by and between Virbac
Corporation and David Eller, dated as of June 18, 2004.
    
    (15); Ex. 10.2910.32
    
    Employment Agreement by and between Virbac Corporation and
Jean M. Nelson, dated as of May 20, 2004.
    
    (17); Ex.10.3110.33
    
    Employment Agreement by and between Virbac Corporation and
Erik R. Martinez, dated as of October 1, 2004.
    
    (17); Ex. 10.32
 47




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.34
    
    Secured Subordinated Promissory Note for $3,000,000 by and
among Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated April 9, 2004.
    
    (14); Ex. 10.1410.35
    
    Secured Subordinated Promissory Note for $4,000,000 by and
among Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated April 29, 2004.
    
    (14); Ex. 10.1510.36
    
    Secured Subordinated Promissory Note for $2,000,000 by and
among Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated June 3, 2004.
    
    (14); Ex. 10.1910.37
    
    First Amendment to Secured Subordinated Promissory Note
Dated as of April 9, 2004 by and among Virbac Corporation,
PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and Virbac, S.A., dated March 24,
2005.
    
    (14); Ex. 10.2310.38
    
    First Amendment to Secured Subordinated Promissory Note
Dated as of April 29, 2004 by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and Virbac, S.A., dated March
24, 2005.
    
    (14); Ex. 10.2410.39
    
    First Amendment to Secured Subordinated Promissory Note
Dated as of June 3, 2004 by and among Virbac Corporation,
PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and Virbac, S.A., dated March 24,
2005.
    
    (14); Ex. 10.2510.40
    
    Acknowledgment of Extended Maturity Date by Virbac S.A.,
dated June 3, 2004.
    
    (14); Ex. 10.1810.41
    
    Acknowledgment of 2005 Extended Maturity Date by Virbac
S.A., dated February 8, 2005.
    
    (14); Ex. 10.2210.42
    
    Second Amendment to Secured Subordinated Promissory Note
Dated as of April 9, 2004 by and among Virbac Corporation,
PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and Virbac, S.A., dated August 2,
2005.
    
    (17); Ex. 10.41
 48




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.43
    
    Second Amendment to Secured Subordinated Promissory Note
Dated as of April 29, 2004 by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and Virbac, S.A., dated
August 2, 2005.
    
    (17); Ex 10.4210.44
    
    Second Amendment to Secured Subordinated Promissory Note
Dated as of June 3, 2004 by and among Virbac Corporation,
PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and Virbac, S.A., dated August 2,
2005.
    
    (17); Ex 10.4310.45
    
    Third Amendment to Secured Subordinated Promissory Note
Dated as of April 9, 2004 by and among Virbac Corporation,
PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and Virbac, S.A., dated March 7, 2006.
    
    +10.46
    
    Third Amendment to Secured Subordinated Promissory Note
Dated as of April 29, 2004 by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and Virbac, S.A., dated March
7, 2006.
    
    +10.47
    
    Amendment to Subordination Agreement as of April 9, 2004,
by and between VIRBAC, S.A., a business organized under
the laws of the Republic of France and First Bank, dated
August 22, 2005.
    
    (17); Ex 10.4410.48
    
    Forbearance Agreement by and among Virbac Corporation, PM
Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva
Laboratories, Inc., and First Bank, dated April 9, 2004.
    
    (14); Ex. 10.1610.49
    
    Amendment to Forbearance Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories,
Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and First Bank, dated May 10,
2004.
    
    (14); Ex. 10.1710.50
    
    Second Amendment to Forbearance Agreement by and among
Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and First Bank,
dated August 9, 2004.
    
    (14); Ex. 10.2010.51
    
    Third Amendment to Forbearance Agreement by and among
Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and First Bank,
dated February 7, 2005.
    
    (14); Ex. 10.21
 49




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.52
    
    Amendment to Forbearance Agreement Dated as of April 9,
2004 to Amend Delivery of Audited Financial Statements by
and among Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated April 1, 2005.
    
    (14); Ex. 10.2610.53
    
    Waiver of 2001 and 2002 Financial Covenant Defaults and
Amendment to Forbearance Agreement Dated as of April 9,
2004 to Amend Delivery of Audited Financial Statements by
and among Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated April 15, 2005.
    
    (14); Ex. 10.2710.54
    
    Fifth Amendment to Forbearance Agreement by and among
Virbac Corporation, PM Resources, Inc., St. JON
Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and First Bank,
dated May 6, 2005.
    
    (16); Ex. 10.114.1
    
    Virbac Corporation Code of Business Conduct and Ethics.
    
    (15); Ex. 14.121.1
    
    Subsidiaries of Virbac Corporation.
    
    (15); Ex. 21.123.1
    
    Consent of PricewaterhouseCoopers LLP.
    
    +31.1
    
    Certification of the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
    
    +31.2
    
    Certification of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
    
    +32.1
    
    Certification pursuant to 18. U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
    
    +99.1
    
    Virbac Corporation Charter of the Audit Committee of the
Board of Directors.
    
    (15); Ex. 99.199.2
    
    Supplement A to the Virbac Corporation Charter of the
Audit Committee of the Board of Directors.
    
    (15); Ex. 99.299.3
    
    Independent Auditors Report and Statements of Net Assets
Sold and Statements of Revenues and Direct Expenses of the
Animal Health Product Lines of King Pharmaceuticals, Inc.
    
    (15); Ex. 99.399.4
    
    Unaudited Pro Forma Condensed Combined Financial
Statements of Virbac Corporation.
    
    (15); Ex. 99.4
 
 +
    
    Filed herewith. 50




---



##### Table of Contents



(1)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-1 filed
on May 5, 1994. (File No. 33-78646)(2)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended January 31, 1996. (File No. 000-24312)(3)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-8 filed
November 29, 1994 (S-8) (File No. 33-86892)(4)
    
    Incorporated herein by reference to the Companys Registration Statement on Form S-8 filed
April 3, 1996 (S-8) (File No. 33-3192)(5)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended April 30, 1998. (File No. 000-24312)(6)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q/A for the
quarterly period ended July 31, 1998. (File No. 000-24312)(7)
    
    Incorporated herein by reference to the Companys Current Report on Form 8-K, dated
October 16, 1998, filed November 17, 1998. (File No. 000-24312)(8)
    
    Incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended October 31, 1998. (File No. 000-24312)(9)
    
    Incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended December 31, 1999. (File No. 000-24312)(10)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2001. (File No. 000-24312)(11)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2002. (File No. 000-24312)(12)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1999. (File No. 000-24312)(13)
    
    Incorporated herein by reference to the Companys Current Report on Form 8-K, dated as of
September 8, 2003, filed September 18, 2003. (File No. 000-24312)(14)
    
    Incorporated herein by reference to the Companys Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003. (File No. 000-24312)(15)
    
    Incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended December 31, 2003. (File No. 000-24312)(16)
    
    Incorporated herein by reference to the Companys Current Report on Form 8-K, dated as of May 6, 2005, filed May 12, 2005. (File No. 000-24312)(17)
    
    Incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended December 31, 2004. (File No. 000-24312) 51




---



##### Table of Contents



SIGNATURES
  VIRBAC CORPORATIONBy:
    /s/ Erik R. MartinezErik R. MartinezPresident and Chief Executive Officer Date: March 31, 2006  Signature
    
    Title
    
    Date/s/ Erik R. Martinez

Erik R. Martinez
    
    President and Chief Executive
Officer 
(Principal
Executive Officer)
    
    March 31, 2006/s/ Jean M. Nelson
    
    Executive Vice President and
    
    March 31, 2006Jean M. Nelson
    
    Chief Financial Officer(Principal Financial and Accounting Officer)/s/ Eric Marée

Eric Marée
    
    Chairman of the Board
    
    March 31, 2006/s/ Michel Garaudet

Michel Garaudet
    
    Director
    
    March 31, 2006/s/ Pierre A. Pagès

Pierre A. Pagès
    
    Director
    
    March 31, 2006/s/ Richard W. Pickert

Richard W. Pickert
    
    Director
    
    March 31, 2006/s/ Alec L. Poitevint, II

Alec L. Poitevint, II
    
    Director
    
    March 31, 2006/s/ Jean Noël Willk

Jean Noël Willk
    
    Director
    
    March 31, 2006
 52




---



##### Table of Contents



VIRBAC CORPORATION
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    F-3Consolidated Statements of Operations for each of the three years
in the period ended December 31, 2005
    
    F-4Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2005
    
    F-5Consolidated Statements of Shareholders Equity for each of the three years
in the period ended December 31, 2005
    
    F-7Notes to Consolidated Financial Statements
    
    F-8
 F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
  
 F-2




---



##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    951
    
    
    $
    2,314Accounts receivable  trade (net of reserves of $35 and $35, respectively)
    
    
    5,561
    
    
    
    6,268Accounts receivable  Virbac S.A. and subsidiaries
    
    
    361
    
    
    
    419Inventories (net of reserves of $2,579 and $3,479, respectively)
    
    
    11,862
    
    
    
    10,942Prepaid expenses
    
    
    1,274
    
    
    
    1,375Other current assets
    
    
    419
    
    
    
    480Total current assets
    
    
    20,428
    
    
    
    21,798Property, plant and equipment, net
    
    
    12,794
    
    
    
    12,377Goodwill, net
    
    
    4,006
    
    
    
    5,006Intangibles and other assets, net
    
    
    18,490
    
    
    
    20,472Total assets
    
    $
    55,718
    
    
    $
    59,653Liabilities and Shareholders EquityCurrent liabilities:Borrowings under revolving line of credit and notes payable
    
    $
    6,015
    
    
    $
    13,004Note payable  Virbac S. A.
    
    
    2,000
    
    
    
    Accounts payable  trade
    
    
    2,421
    
    
    
    2,845Accounts payable  Virbac S.A. and subsidiaries
    
    
    552
    
    
    
    537Sales related reserves
    
    
    2,209
    
    
    
    2,236Accrued expenses
    
    
    5,962
    
    
    
    5,863Total current liabilities
    
    
    19,159
    
    
    
    24,485Notes payable
    
    
    40
    
    
    
    3Notes payable  Virbac S. A.
    
    
    7,000
    
    
    
    9,000Unearned product license fees
    
    
    5,561
    
    
    
    6,299Liability related to contingent consideration
    
    
    1,738
    
    
    
    2,173Total liabilities
    
    
    33,498
    
    
    
    41,960Commitments and contingencies (Note 3)Shareholders equity:Preferred Stock - 2,000,000 shares authorized;
none issued or outstanding
    
    
    
    
    
    
    Common stock ($.01 par value; 38,000,000 shares
authorized; 22,459,240 and 22,312,906 issued
and outstanding in 2005 and 2004, respectively)
    
    
    225
    
    
    
    223Additional paid-in capital
    
    
    35,655
    
    
    
    35,003Accumulated deficit
    
    
    (13,660
    )
    
    
    (17,533
    )Total shareholders equity
    
    
    22,220
    
    
    
    17,693Total liabilities and shareholders equity
    
    $
    55,718
    
    
    $
    59,653
  F-3




---



##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Revenues
    
    $
    80,778
    
    
    $
    77,115
    
    
    $
    67,077Cost of goods sold
    
    
    42,307
    
    
    
    43,251
    
    
    
    41,424Gross profit
    
    
    38,471
    
    
    
    33,864
    
    
    
    25,653Operating expenses:Sales and marketing
    
    
    15,121
    
    
    
    13,376
    
    
    
    14,414Impairment of intangible assets
    
    
    810
    
    
    
    80
    
    
    
    45General and administrative
    
    
    9,543
    
    
    
    11,248
    
    
    
    8,285Research and development
    
    
    3,271
    
    
    
    3,275
    
    
    
    4,947Warehouse and distribution
    
    
    2,355
    
    
    
    2,326
    
    
    
    2,250Total operating expenses
    
    
    31,100
    
    
    
    30,305
    
    
    
    29,941Income (loss) from operations
    
    
    7,371
    
    
    
    3,559
    
    
    
    (4,288
    )Interest expense
    
    
    (1,474
    )
    
    
    (1,550
    )
    
    
    (637
    )Other income
    
    
    14
    
    
    
    32
    
    
    
    5Income (loss) before income taxes
    
    
    5,911
    
    
    
    2,041
    
    
    
    (4,920
    )Provision for income taxes
    
    
    (2,038
    )
    
    
    (570
    )
    
    
    (84
    )Net income (loss)
    
    $
    3,873
    
    
    $
    1,471
    
    
    $
    (5,004
    )Basic income (loss) per share
    
    $
    0.17
    
    
    $
    0.07
    
    
    $
    (0.23
    )Diluted income (loss) per share
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    (0.23
    )Basic shares outstanding
    
    
    22,347
    
    
    
    22,291
    
    
    
    22,234Diluted shares outstanding
    
    
    22,661
    
    
    
    22,763
    
    
    
    22,234
  F-4




---



##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activitiesNet income (loss)
    
    $
    3,873
    
    
    $
    1,471
    
    
    $
    (5,004
    )Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:Provision for excess and obsolete inventories
    
    
    3
    
    
    
    911
    
    
    
    2,353Depreciation and amortization
    
    
    2,365
    
    
    
    2,732
    
    
    
    2,009Provision for doubtful accounts
    
    
    20
    
    
    
    (92
    )
    
    
    80Recognition of unearned product license fees
    
    
    (738
    )
    
    
    (787
    )
    
    
    (434
    )Deferred income taxes and other items
    
    
    1,494
    
    
    
    565
    
    
    
    Impairment of intangible assets
    
    
    810
    
    
    
    80
    
    
    
    234Issuance of stock to directors as compensation
    
    
    
    
    
    
    
    
    
    
    52Loss on disposal of assets
    
    
    38
    
    
    
    67
    
    
    
    401Changes in operating assets and liabilities, net of acquisitions:Decrease in accounts receivable
    
    
    745
    
    
    
    824
    
    
    
    1,463(Increase) decrease in inventories
    
    
    (923
    )
    
    
    1,325
    
    
    
    (4,451
    )Decrease (increase) in consigned inventories
    
    
    
    
    
    
    2,173
    
    
    
    (109
    )Increase in income taxes receivable
    
    
    (8
    )
    
    
    
    
    
    
    Decrease (increase) in prepaid expenses and other assets
    
    
    161
    
    
    
    774
    
    
    
    (459
    )(Decrease) increase in accounts payable
    
    
    (409
    )
    
    
    (761
    )
    
    
    391Decrease in sales related reserves, net
    
    
    (27
    )
    
    
    (277
    )
    
    
    (126
    )Increase in accrued expenses
    
    
    99
    
    
    
    249
    
    
    
    1,293Increase in product license fees
    
    
    
    
    
    
    
    
    
    
    1,654Net cash provided by (used in) operating activities
    
    
    7,503
    
    
    
    9,254
    
    
    
    (653
    )Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    (1,766
    )
    
    
    (1,323
    )
    
    
    (1,323
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    64Acquisition of businesses
    
    
    
    
    
    
    
    
    
    
    (17,806
    )Payment of contingent consideration
    
    
    (250
    )
    
    
    
    
    
    
    Acquisition of product license rights and other intangible assets
    
    
    
    
    
    
    (234
    )
    
    
    (657
    )Net cash used in investing activities
    
    
    (2,016
    )
    
    
    (1,557
    )
    
    
    (19,722
    )Cash flows from financing activitiesNet (repayments) borrowings under revolving line of credit
    
    
    (7,000
    )
    
    
    (12,353
    )
    
    
    18,503Proceeds from Virbac S. A. notes payable
    
    
    
    
    
    
    9,000
    
    
    
    Repayment of long-term debt and notes payable
    
    
    (10
    )
    
    
    (4
    )
    
    
    (3
    )Change in outstanding checks
    
    
    
    
    
    
    (2,107
    )
    
    
    950Issuance of common stock
    
    
    160
    
    
    
    77
    
    
    
    64Net cash (used in) provided by financing activities
    
    
    (6,850
    )
    
    
    (5,387
    )
    
    
    19,514(Decrease) increase in cash and cash equivalents
    
    
    (1,363
    )
    
    
    2,310
    
    
    
    (861
    )Cash and cash equivalents, beginning of period
    
    
    2,314
    
    
    
    4
    
    
    
    865Cash and cash equivalents, end of period
    
    $
    951
    
    
    $
    2,314
    
    
    $
    4Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    1,417
    
    
    $
    1,540
    
    
    $
    580Cash paid for income taxes
    
    $
    611
    
    
    $
    64
    
    
    $
    69
  F-5




---



##### Table of Contents



For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Delmarva acquisitionProduct rights
    
    $
    
    
    
    $
    
    
    
    $
    4,760Working capital
    
    
    
    
    
    
    
    
    
    
    (5
    )Estimated fair value of acquired net assets
    
    
    
    
    
    
    
    
    
    
    4,755Liability related to contingent consideration
    
    
    
    
    
    
    
    
    
    
    2,173Cash consideration
    
    $
    
    
    
    $
    
    
    
    $
    2,582King acquisitionFair value of assets acquired
    
    $
    
    
    
    $
    
    
    
    $
    14,479Goodwill
    
    
    
    
    
    
    
    
    
    
    745Cash consideration
    
    $
    
    
    
    $
    
    
    
    $
    15,224Property and
equipment acquired through assumption of capital lease
    
    $
    58
    
    
    $
    
    
    
     $
    
    F-6




---



##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
  Common Stock
    
    
    Additional
    
    
    
    
    
    
    Treasury StockNumber
    
    
    Par
    
    
    Paid In
    
    
    Accumulated
    
    
    Numberof Shares
    
    
    Value
    
    
    Capital
    
    
    Deficit
    
    
    of Shares
    
    
    Amount
    
    
    TotalBalance at December
31, 2002
    
    
    22,213
    
    
    $
    222
    
    
    $
    34,891
    
    
    $
    (14,000
    )
    
    
    16
    
    
    $
    (80
    )
    
    $
    21,033Shares issued to
directors
    
    
    9
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52Issuance for stock
compensation plans
    
    
    35
    
    
    
    1
    
    
    
    (17
    )
    
    
    
    
    
    
    (16
    )
    
    
    80
    
    
    
    64Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,004
    )
    
    
    
    
    
    
    
    
    
    
    (5,004
    )Balance at December
31, 2003
    
    
    22,257
    
    
    
    223
    
    
    
    34,926
    
    
    
    (19,004
    )
    
    
    
    
    
    
    
    
    
    
    16,145Issuance for stock
compensation plans
    
    
    56
    
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,471
    
    
    
    
    
    
    
    
    
    
    
    1,471Balance at December
31, 2004
    
    
    22,313
    
    
    
    223
    
    
    
    35,003
    
    
    
    (17,533
    )
    
    
    
    
    
    
    
    
    
    
    17,693Issuance for stock
compensation plans
    
    
    146
    
    
    
    2
    
    
    
    158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    160Stock option income
tax benefits
    
    
    
    
    
    
    
    
    
    
    494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    494Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,873
    
    
    
    
    
    
    
    
    
    
    
    3,873Balance at December
31, 2005
    
    
    22,459
    
    
    $
    225
    
    
    $
    35,655
    
    
    $
    (13,660
    )
    
    
    
    
    
    $
    
    
    
    $
    22,220
  F-7




---



##### Table of Contents



Note 1. Description of Business
   Note 2. Summary of Significant Accounting Policies
 (a) Principles of consolidation
  (b) Estimates
  (c) Revenue recognition and accounts receivable
  F-8




---



##### Table of Contents



F-9




---



##### Table of Contents



(d) Sales related and product replacement reserves
     (e) Cash and cash equivalents
  (f) Concentration of credit risk
  (g) Fair value of financial instruments
  F-10




---



##### Table of Contents



(h) Inventories and inventories on consignment
  (i) Valuation of intangible assets and goodwill
   
    
    significant underperformance of the asset relative to expected
historical or projected future operating results;
    
    significant changes in the manner or extent of the Companys use of the
acquired asset or the strategy for the Companys overall business;
    
    significant negative industry or economic trends; and
    
    significant decline in the market value of the intangible asset for a
sustained period of time.
   F-11




---



##### Table of Contents



(j) Property, plant and equipment
    EstimatedUseful LifeBuilding and leasehold improvements
    
    5-20 yearsProduction equipment
    
    5-7 yearsFurniture, computer equipment and software, and fixtures
    
    2-7 yearsVehicles
    
    3-4 years
 (k) Advertising costs
  (l) Freight to customers
  (m) Research and development expenses
  F-12




---



##### Table of Contents



(n) Income taxes
   (o) Business combinations
    (p) Earnings per share
  F-13




---



##### Table of Contents



For the Years Ended December 31,2005
    
    
    2004
    
    
    2003Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share
    
    
    Income
    
    
    Shares
    
    
    Per Share(In thousands, except per share amounts)
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amount
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    AmountNet income (loss)
    
    $
    3,873
    
    
    
    
    
    
    
    
    
    
    $
    1,471
    
    
    
    
    
    
    
    
    
    
    $
    (5,004
    )Basic EPSNet income (loss)
    
    
    3,873
    
    
    
    22,347
    
    
    $
    0.17
    
    
    
    1,471
    
    
    
    22,291
    
    
    $
    0.07
    
    
    
    (5,004
    )
    
    
    22,234
    
    
    $
    (0.23
    )Effect of dilutive
securities:Stock options
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    Antidilution
provisions of
merger agreement:Shares currently
owed to VBSA
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    Shares owed to VBSA
upon exercise
of pre-merger
options
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    Diluted EPSNet income (loss)
plus
assumed conversions
    
    $
    3,873
    
    
    
    22,661
    
    
    $
    0.17
    
    
    $
    1,471
    
    
    
    22,763
    
    
    $
    0.06
    
    
    $
    (5,004
    )
    
    
    22,234
    
    
    $
    (0.23
    )
  (q) Environmental liabilities and expenditures
  (r) Employee stock-based compensation
  F-14




---



##### Table of Contents



Years ended December 31,(In thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2003Net income (loss), as reported
    
    $
    3,873
    
    
    $
    1,471
    
    
    $
    (5,004
    )Less: Compensation expense for equity awards determined
by the fair value based method, net of related tax effects
    
    
    (295
    )
    
    
    (383
    )
    
    
    (394
    )Pro forma income (loss)
    
    $
    3,578
    
    
    $
    1,088
    
    
    $
    (5,398
    )Basic income (loss) per share, as reported
    
    $
    0.17
    
    
    $
    0.07
    
    
    $
    (0.23
    )Diluted income (loss) per share, as reported
    
    $
    0.17
    
    
    $
    0.06
    
    
    $
    (0.23
    )Pro forma basic income (loss) per share
    
    $
    0.16
    
    
    $
    0.05
    
    
    $
    (0.24
    )Pro forma diluted income (loss) per share
    
    $
    0.16
    
    
    $
    0.05
    
    
    $
    (0.24
    )
  2003Expected dividend yield
    
    
    0
    %Expected volatility
    
    
    88.4
    %Risk-free interest rate
    
    
    4.3
    %Expected life (in years)
    
    
    6.9Weighted average fair value of options granted
measured at the original date of grant
    
    $
    5.84
 (s) Comprehensive income
  (t) Change in classification
  F-15




---



##### Table of Contents



(u) Recently issued accounting pronouncements
  (r) Employee stock-based compensation
   F-16




---



##### Table of Contents



Note 3. Commitments and Contingencies
 Legal Proceedings
  Securities Class Action Litigation Settlement
 Williams v. Virbac et al.
   F-17




---



##### Table of Contents



Shareholder Derivative Lawsuit
      F-18




---



##### Table of Contents



SEC Investigation
   
    
    without admitting or denying the SECs allegations, the Company would agree to a
stipulated judgment enjoining the Company from future violations of various provisions of
the federal securities laws;
    
    the Company would agree to undertakings requiring the Company to implement annual
training programs and internal certifications for certain personnel concerning accounting,
compliance and regulatory matters; and
    
    the Company would not be required to pay a civil money penalty or disgorgement.
  Lawsuit Against Tender Offer Proposal
   Operating Leases
  F-19




---



##### Table of Contents



(In thousands)2006
    
    $
    592007
    
    
    532008
    
    
    422009
    
    
    342010
    
    
    32Thereafter
    
    
    25Total minimum lease payments
    
    $
    245
  Environmental Liability
  Adjustment of the Merger Shares
  F-20




---



##### Table of Contents



Note 4. Acquisitions
  Delmarva Acquisition
 Ò Ò
   F-21




---



##### Table of Contents



(In thousands)Product rights
    
    $
    4,760Net working capital assumed
    
    
    (5
    )Fair value of acquired net assets
    
    
    4,755Liability related to contingent consideration
    
    
    2,173Net cash consideration
    
    $
    2,582
 King Acquisition
    (In thousands)Product rights
    
    $
    13,630Unfilled customer orders
    
    
    520Property, plant and equipment
    
    
    196Inventory
    
    
    133Goodwill
    
    
    745Net cash consideration
    
    $
    15,224
  Note 5. Facility Closure
  F-22




---



##### Table of Contents



Note 6. Inventories
  As of December 31,(In thousands)
    
    2005
    
    
    2004Raw materials
    
    $
    5,400
    
    
    $
    6,337Finished goods
    
    
    9,041
    
    
    
    8,08414,441
    
    
    
    14,421Less  Reserve for excess and obsolete inventories
    
    
    (2,579
    )
    
    
    (3,479
    )$
    11,862
    
    
    $
    10,942
 Note 7. Property, Plant and Equipment, net
  December 31,(In thousands)
    
    2005
    
    
    2004Land
    
    $
    3,330
    
    
    $
    3,330Building and leasehold improvements
    
    
    7,604
    
    
    
    7,500Production equipment
    
    
    8,685
    
    
    
    7,675Vehicles
    
    
    28
    
    
    
    15Furniture and fixtures
    
    
    1,049
    
    
    
    959Computer equipment and software
    
    
    1,320
    
    
    
    1,45622,016
    
    
    
    20,935Less  accumulated depreciation
    
    
    (9,222
    )
    
    
    (8,558
    )$
    12,794
    
    
    $
    12,377
  Note 8. Goodwill and Other Intangible Assets
   F-23




---



##### Table of Contents



As of December 31,2005
    
    
    2004Gross carrying
    
    
    Accumulated
    
    
    Gross carrying
    
    
    Accumulated(In thousands)
    
    amount
    
    
    amortization
    
    
    amount
    
    
    amortizationIntangible assets subject to amortization:Patents
    
    $
    86
    
    
    $
    (44
    )
    
    $
    86
    
    
    $
    (38
    )Product rights
    
    
    20,202
    
    
    
    (2,622
    )
    
    
    21,187
    
    
    
    (1,638
    )Intangible assets not subject to amortization:Product rights and trademarks
    
    
    762
    
    
    
    (119
    )
    
    
    774
    
    
    
    (115
    )Total intangible assets
    
    $
    21,050
    
    
    $
    (2,785
    )
    
    $
    22,047
    
    
    $
    (1,791
    )
    Veterinary(In thousands)
    
    SegmentDecember 31, 2004
    
    $
    5,006Recognition of Agri-Nutrition deferred tax assets
    
    
    (1,000
    )December 31, 2005
    
    $
    4,006
    Years Ended December 31,(In thousands)
    
    2005
    
    
    2004
    
    
    2003By asset type:Finite-lived intangibles
    
    $
    800
    
    
    $
    3
    
    
    $
    9Indefinite-lived intangibles
    
    
    10
    
    
    
    77
    
    
    
    36Total impairment charges
    
    $
    810
    
    
    $
    80
    
    
    $
    45By segment:Veterinary
    
    $
    804
    
    
    $
    48
    
    
    $
    36Consumer Brand
    
    
    6
    
    
    
    31
    
    
    
    9Contact Manufacturing
    
    
    
    
    
    
    1
    
    
    
    Total impairment changes
    
    $
    810
    
    
    $
    80
    
    
    $
    45
 F-24




---



##### Table of Contents



(In thousands)2006
    
    $
    9242007
    
    
    9012008
    
    
    8972009
    
    
    8902010
    
    
    884Total amortization
    
    $
    4,496
 Note 9. Borrowings Under Revolving Line of Credit and Notes Payable
 As of December 31,(In thousands)
    
    2005
    
    
    2004Credit Agreement
    
    $
    6,000
    
    
    $
    13,000VBSA Notes
    
    
    9,000
    
    
    
    9,000Capital lease
    
    
    52
    
    
    
    Installment credit loan
    
    
    3
    
    
    
    7Total borrowings
    
    
    15,055
    
    
    
    22,007Less current portion
    
    
    (8,015
    )
    
    
    (13,004
    )VBSA Notes and installment credit loan
    
    $
    7,040
    
    
    $
    9,003Weighted average interest rate
    
    
    8.02
    %
    
    
    6.43
    %
 1 2
 F-25




---



##### Table of Contents



Note 10. Common Stock Transactions and Preferred Stock
  F-26




---



##### Table of Contents



Note 11. Stock Options
    WeightedAverageOptions
    
    
    Exercise PriceBalance, December 31, 2002
    
    
    701,746
    
    
    $
    2.63Granted
    
    
    304,858
    
    
    
    5.85Exercised
    
    
    (57,857
    )
    
    
    2.00Forfeited and canceled
    
    
    (12,500
    )
    
    
    4.89Balance, December 31, 2003
    
    
    936,247
    
    
    
    3.68Granted
    
    
    
    
    
    
    Exercised
    
    
    (56,000
    )
    
    
    1.38Forfeited and canceled
    
    
    (176,233
    )
    
    
    4.65Balance, December 31, 2004
    
    
    704,014
    
    
    
    3.64Granted
    
    
    
    
    
    
    Exercised
    
    
    (86,500
    )
    
    
    1.85Forfeited and canceled
    
    
    (121,083
    )
    
    
    3.38Balance, December 31, 2005
    
    
    496,431
    
    
    $
    4.02
 F-27




---



##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Average
    
    
    
    
    
    
    AverageRange of Exercise
    
    Number
    
    
    Remaining Life
    
    
    Exercise
    
    
    Number
    
    
    ExercisePrice
    
    Outstanding
    
    
    (in years)
    
    
    Price
    
    
    Outstanding
    
    
    Price$1.01 - $2.00
    
    
    116,000
    
    
    
    2.5
    
    
    $
    1.44
    
    
    
    116,000
    
    
    $
    1.44$2.01 - $3.00
    
    
    44,500
    
    
    
    3.7
    
    
    
    2.72
    
    
    
    44,500
    
    
    
    2.72$3.01 - $4.00
    
    
    81,166
    
    
    
    5.2
    
    
    
    3.41
    
    
    
    81,166
    
    
    
    3.41$4.01 - $5.00
    
    
    65,407
    
    
    
    6.3
    
    
    
    4.98
    
    
    
    65,407
    
    
    
    4.98$5.01 - $6.00
    
    
    188,608
    
    
    
    7.2
    
    
    
    5.83
    
    
    
    128,404
    
    
    
    5.82$6.01 - $7.00
    
    
    750
    
    
    
    7.7
    
    
    
    6.50
    
    
    
    500
    
    
    
    6.50496,431
    
    
    
    5.3
    
    
    $
    4.02
    
    
    
    435,977
    
    
    $
    3.77
 F-28




---



##### Table of Contents



Note 12. Income Taxes
  For the Years Ended December 31,(In thousands)
    
    2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    474
    
    
    $
    
    
    
    $
    50State
    
    
    129
    
    
    
    5
    
    
    
    34603
    
    
    
    5
    
    
    
    84Deferred:Federal
    
    
    1,280
    
    
    
    517
    
    
    
    State
    
    
    155
    
    
    
    48
    
    
    
    1,435
    
    
    
    565
    
    
    
    Provision for income taxes
    
    $
    2,038
    
    
    $
    570
    
    
    $
    84
  For the Years Ended December 31,(In thousands)
    
    2005
    
    
    2004
    
    
    2003Provision (benefit) for income taxes at federal
statutory rate
    
    $
    2,010
    
    
    $
    694
    
    
    $
    (1,673
    )Adjustments due to:Non-deductible intangible amortization
    
    
    50
    
    
    
    51
    
    
    
    21Intangible impairment
    
    
    272
    
    
    
    
    
    
    
    State income taxes, net of federal benefit
    
    
    237
    
    
    
    63
    
    
    
    (153
    )Valuation allowance
    
    
    (563
    )
    
    
    (293
    )
    
    
    1,651Fines and penalties
    
    
    2
    
    
    
    8
    
    
    
    192Meals and entertainment
    
    
    48
    
    
    
    43
    
    
    
    42Other, net
    
    
    (18
    )
    
    
    4
    
    
    
    4Provision for income taxes
    
    $
    2,038
    
    
    $
    570
    
    
    $
    84
   F-29




---



##### Table of Contents



As of December 31,(In thousands)
    
    2005
    
    
    2004Deferred tax assets:Intangible amortization
    
    $
    1,863
    
    
    $
    2,362Net operating loss carryforwards
    
    
    50
    
    
    
    1,064Inventories
    
    
    1,354
    
    
    
    1,689Deferred income
    
    
    2,074
    
    
    
    2,350Other accruals and reserves
    
    
    1,009
    
    
    
    1,188Federal tax credits
    
    
    321
    
    
    
    163Total deferred tax assets
    
    
    6,671
    
    
    
    8,816Valuation allowance
    
    
    (6,160
    )
    
    
    (7,974
    )Net deferred tax assets
    
    
    511
    
    
    
    842Deferred tax liabilities:Depreciation
    
    
    100
    
    
    
    386Prepaid expenses
    
    
    411
    
    
    
    456Total deferred tax liabilities
    
    
    511
    
    
    
    842Total net deferred tax assets
    
    $
    
    
    
    $
    
   F-30




---



##### Table of Contents



Note 13. Employee Savings Plans
  Note 14. Selected Quarterly Data (unaudited)
    MAR. 31,
    
    
    
    
    
    
    JUNE 30,
    
    
    
    
    
    
    SEPT. 30,
    
    
    
    
    
    
    DEC. 31,
    
    
    
    
    
    
    MAR. 31,
    
    
    
    
    
    
    JUNE 30,
    
    
    
    
    
    
    SEPT. 30,
    
    
    
    
    
    
    DEC. 31,2004
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2005(1)
    
    
    
    
    
    
    2005
    
    
    
    
    
    
    2005(In thousands, except per share amounts)Revenues
    
    $
    21,547
    
    
    
    
    
    
    $
    18,137
    
    
    
    
    
    
    $
    19,515
    
    
    
    
    
    
    $
    17,916
    
    
    
    
    
    
    $
    19,091
    
    
    
    
    
    
    $
    22,042
    
    
    
    
    
    
    $
    20,073
    
    
    
    
    
    
    $
    19,572Cost of goods sold
    
    
    12,303
    
    
    
    
    
    
    
    10,440
    
    
    
    
    
    
    
    10,700
    
    
    
    
    
    
    
    9,808
    
    
    
    
    
    
    
    10,559
    
    
    
    
    
    
    
    10,790
    
    
    
    
    
    
    
    10,609
    
    
    
    
    
    
    
    10,349Gross profit
    
    
    9,244
    
    
    
    
    
    
    
    7,697
    
    
    
    
    
    
    
    8,815
    
    
    
    
    
    
    
    8,108
    
    
    
    
    
    
    
    8,532
    
    
    
    
    
    
    
    11,252
    
    
    
    
    
    
    
    9,464
    
    
    
    
    
    
    
    9,223Operating expenses:Sales and marketing
    
    
    3,581
    
    
    
    
    
    
    
    3,316
    
    
    
    
    
    
    
    3,411
    
    
    
    
    
    
    
    3,068
    
    
    
    
    
    
    
    3,533
    
    
    
    
    
    
    
    3,843
    
    
    
    
    
    
    
    3,886
    
    
    
    
    
    
    
    3,859Impairment of
intangible asset
    
    
    10
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    800
    
    
    
    
    
    
    
    8General and
administrative
    
    
    3,806
    
    
    
    
    
    
    
    2,440
    
    
    
    
    
    
    
    2,963
    
    
    
    
    
    
    
    2,039
    
    
    
    
    
    
    
    2,772
    
    
    
    
    
    
    
    2,573
    
    
    
    
    
    
    
    1,946
    
    
    
    
    
    
    
    2,252Research and development
    
    
    937
    
    
    
    
    
    
    
    643
    
    
    
    
    
    
    
    840
    
    
    
    
    
    
    
    855
    
    
    
    
    
    
    
    909
    
    
    
    
    
    
    
    776
    
    
    
    
    
    
    
    707
    
    
    
    
    
    
    
    879Warehouse and
distribution
    
    
    556
    
    
    
    
    
    
    
    613
    
    
    
    
    
    
    
    629
    
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    544
    
    
    
    
    
    
    
    602
    
    
    
    
    
    
    
    615
    
    
    
    
    
    
    
    594Total operating expenses
    
    
    8,890
    
    
    
    
    
    
    
    7,033
    
    
    
    
    
    
    
    7,857
    
    
    
    
    
    
    
    6,525
    
    
    
    
    
    
    
    7,760
    
    
    
    
    
    
    
    7,794
    
    
    
    
    
    
    
    7,954
    
    
    
    
    
    
    
    7,592Income
from operations
    
    
    354
    
    
    
    
    
    
    
    664
    
    
    
    
    
    
    
    958
    
    
    
    
    
    
    
    1,583
    
    
    
    
    
    
    
    772
    
    
    
    
    
    
    
    3,458
    
    
    
    
    
    
    
    1,510
    
    
    
    
    
    
    
    1,631Interest expense
    
    
    (384
    )
    
    
    
    
    
    
    (404
    )
    
    
    
    
    
    
    (361
    )
    
    
    
    
    
    
    (401
    )
    
    
    
    
    
    
    (402
    )
    
    
    
    
    
    
    (431
    )
    
    
    
    
    
    
    (339
    )
    
    
    
    
    
    
    (302
    )Other income
    
    
    19
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10(Loss) income before
income taxes
    
    
    (11
    )
    
    
    
    
    
    
    273
    
    
    
    
    
    
    
    597
    
    
    
    
    
    
    
    1,182
    
    
    
    
    
    
    
    373
    
    
    
    
    
    
    
    3,028
    
    
    
    
    
    
    
    1,171
    
    
    
    
    
    
    
    1,339Provision for income
taxes
    
    
    (12
    )
    
    
    
    
    
    
    (83
    )
    
    
    
    
    
    
    (165
    )
    
    
    
    
    
    
    (310
    )
    
    
    
    
    
    
    (106
    )
    
    
    
    
    
    
    (863
    )
    
    
    
    
    
    
    (559
    )
    
    
    
    
    
    
    (510
    )Net (loss) income
    
    $
    (23
    )
    
    
    
    
    
    $
    190
    
    
    
    
    
    
    $
    432
    
    
    
    
    
    
    $
    872
    
    
    
    
    
    
    $
    267
    
    
    
    
    
    
    $
    2,165
    
    
    
    
    
    
    $
    612
    
    
    
    
    
    
    $
    829Income per share:Basic income per
share
    
    $
    
    
    
    
    
    
    
    $
    0.01
    
    
    
    
    
    
    $
    0.02
    
    
    
    
    
    
    $
    0.04
    
    
    
    
    
    
    $
    0.01
    
    
    
    
    
    
    $
    0.10
    
    
    
    
    
    
    $
    0.03
    
    
    
    
    
    
    $
    0.04Diluted income
per share
    
    $
    
    
    
    
    
    
    
    $
    0.01
    
    
    
    
    
    
    $
    0.02
    
    
    
    
    
    
    $
    0.04
    
    
    
    
    
    
    $
    0.01
    
    
    
    
    
    
    $
    0.09
    
    
    
    
    
    
    $
    0.03
    
    
    
    
    
    
    $
    0.04Basic shares outstanding
    
    
    22,257
    
    
    
    
    
    
    
    22,289
    
    
    
    
    
    
    
    22,307
    
    
    
    
    
    
    
    22,310
    
    
    
    
    
    
    
    22,322
    
    
    
    
    
    
    
    22,326
    
    
    
    
    
    
    
    22,330
    
    
    
    
    
    
    
    22,412Diluted shares
outstanding
    
    
    22,257
    
    
    
    
    
    
    
    22,741
    
    
    
    
    
    
    
    22,745
    
    
    
    
    
    
    
    22,773
    
    
    
    
    
    
    
    22,803
    
    
    
    
    
    
    
    22,795
    
    
    
    
    
    
    
    22,683
    
    
    
    
    
    
    
    22,717
 F-31




---



##### Table of Contents



Note 15. Related Party Transactions
  Tender
Offer Proposal
   Loan Agreements
  Directors and Officers Insurance Procurement Agreement
  Trademark Agreement
  Supply Agreement
  F-32




---



##### Table of Contents



Development and License Agreement
   License Agreement  Pyriproxyfen
  Distribution Agreement
  F-33




---



##### Table of Contents



Sub License Agreement
  Secrecy Agreements
  Note 16. Segment and Related Information
    F-34




---



##### Table of Contents



Consumer
    
    
    Contract(In thousands)
    
    Veterinary
    
    
    Brand
    
    
    Manufacturing
    
    
    Unallocated
    
    
    ConsolidatedAs of and for the year
endedDecember 31, 2005Revenues from external
customers
    
    $
    46,057
    
    
    $
    21,577
    
    
    $
    13,144
    
    
    $
    
    
    
    $
    80,778Depreciation and
amortization
    
    
    1,058
    
    
    
    62
    
    
    
    645
    
    
    
    600
    
    
    
    2,365Income from operations
    
    
    15,233
    
    
    
    2,475
    
    
    
    2,517
    
    
    
    (12,854
    )
    
    
    7,371Interest expense and
other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,460
    )
    
    
    (1,460
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,038
    )
    
    
    (2,038
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,873Total assets
    
    
    3,423
    
    
    
    1,392
    
    
    
    19,941
    
    
    
    30,962
    
    
    
    55,718Capital expenditures
    
    
    
    
    
    
    
    
    
    
    356
    
    
    
    1,410
    
    
    
    1,766As of and for the year
endedDecember 31, 2004Revenues from external
customers
    
    $
    39,341
    
    
    $
    21,244
    
    
    $
    16,530
    
    
    $
    
    
    
    $
    77,115Depreciation and
amortization
    
    
    1,387
    
    
    
    62
    
    
    
    599
    
    
    
    684
    
    
    
    2,732Income from operations
    
    
    14,088
    
    
    
    2,463
    
    
    
    1,600
    
    
    
    (14,592
    )
    
    
    3,559Interest expense and
other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,518
    )
    
    
    (1,518
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (570
    )
    
    
    (570
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,471Total assets
    
    
    4,360
    
    
    
    1,532
    
    
    
    18,132
    
    
    
    35,629
    
    
    
    59,653Capital expenditures
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    955
    
    
    
    1,323As of and for the year
endedDecember 31, 2003Revenues from external
customers
    
    $
    29,831
    
    
    $
    22,850
    
    
    $
    14,396
    
    
    $
    
    
    
    $
    67,077Depreciation and
amortization
    
    
    613
    
    
    
    68
    
    
    
    925
    
    
    
    403
    
    
    
    2,009Income (loss) from
operations
    
    
    4,273
    
    
    
    1,080
    
    
    
    2,930
    
    
    
    (12,571
    )
    
    
    (4,288
    )Interest expense and
other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (632
    )
    
    
    (632
    )Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (84
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,004
    )Total assets
    
    
    3,870
    
    
    
    2,240
    
    
    
    13,906
    
    
    
    45,129
    
    
    
    65,145Capital expenditures
    
    
    
    
    
    
    
    
    
    
    725
    
    
    
    598
    
    
    
    1,323
   For the Years Ended December 31,(In thousands)
    
    2005
    
    
    2004
    
    
    2003United States
    
    $
    76,585
    
    
    $
    74,228
    
    
    $
    63,747Canada
    
    
    1,821
    
    
    
    1,164
    
    
    
    1,118Export
    
    
    2,372
    
    
    
    1,723
    
    
    
    2,212Total revenue
    
    $
    80,778
    
    
    $
    77,115
    
    
    $
    67,077
 F-35




---



##### Table of Contents



VIRBAC CORPORATION
SCHEDULE II  RULE 12-09
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
DECEMBER 31, 2003, 2004 and 2005
 VIRBAC CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Years Ended December 31, 2003, 2004 and 2005
 (In thousands)
 Column A
    
    Column B
    
    
    Column C
    
    
    
    Column D
    
    
    
    Column EAdditionsChargedBalance at
    
    
    to Costs
    
    
    Charged
    
    
    
    
    
    
    
    
    Balance atBeginning
    
    
    and
    
    
    to other
    
    
    
    
    
    
    
    
    End ofDescription
    
    of Year
    
    
    Expenses
    
    
    Accounts
    
    
    
    Deductions
    
    
    
    YearYear ended December 31, 2003Inventory reserve
    
    $
    1,798
    
    
    $
    2,353
    
    
    $
    
    
    
    
    $
    257
    (1
    )
    
    $
    3,894Allowance for doubtful accounts
    
    
    135
    
    
    
    80
    
    
    
    
    
    
    
    
    86
    (2
    )
    
    
    129Billing and sales return reserves
    
    
    2,358
    
    
    
    3,760
    
    
    
    
    
    
    
    
    3,750
    (3
    )
    
    
    2,368Product replacement reserves
    
    
    370
    
    
    
    409
    
    
    
    
    
    
    
    
    545
    (4
    )
    
    
    234Deferred tax valuation reserve
    
    
    7,156
    
    
    
    1,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,807Year ended December 31, 2004Inventory reserve
    
    $
    3,894
    
    
    $
    911
    
    
    $
    
    
    
    
    $
    1,326
    (1
    )
    
    $
    3,479Allowance for doubtful accounts
    
    
    129
    
    
    
    (92
    )
    
    
    
    
    
    
    
    2
    (2
    )
    
    
    35Billing and sales return reserves
    
    
    2,368
    
    
    
    2,360
    
    
    
    (89
    ) (6
    )
    
    
    2,403
    (3
    )
    
    
    2,236Product replacement reserves
    
    
    234
    
    
    
    (112
    )
    
    
    
    
    
    
    
    122
    (4
    )
    
    
    Deferred tax valuation reserve
    
    
    8,807
    
    
    
    
    
    
    
    (549
    ) (7
    )
    
    
    284
    (5
    )
    
    
    7,974Year ended December 31, 2005Inventory reserve
    
    $
    3,479
    
    
    $
    3
    
    
    $
    
    
    
    
    $
    903
    (1
    )
    
    $
    2,579Allowance for doubtful accounts
    
    
    35
    
    
    
    20
    
    
    
    
    
    
    
    
    20
    (2
    )
    
    
    35Billing and sales return reserves
    
    
    2,236
    
    
    
    1,816
    
    
    
    
    
    
    
    
    1,843
    (3
    )
    
    
    2,209Deferred tax valuation reserve
    
    
    7,974
    
    
    
    
    
    
    
    (1,495
    ) (8
    )
    
    
    319
    (5
    )
    
    
    6,160
 
 (1)
    
    During the year inventory was removed from stock and destroyed.(2)
    
    Accounts receivable were written off during the year because they were deemed to be
uncollectible.(3)
    
    Refunds for customer returns and billing adjustments were allowed against customer
receivable amounts.(4)
    
    Customer product replaced upon expiration.(5)
    
    Change in the deferred tax asset valuation.(6)
    
    Amount was reclassified to an accrued expense account.(7)
    
    Realization of deferred tax assets related to Agri-Nutrition.(8)
    
    Realization of deferred tax assets related to Agri-Nutrition and stock option
transactions.
 F-36




---



##### Table of Contents



Index to Exhibits
 IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)2.4
    
    Warehousing and Distribution Agreement between Purina Mills, Inc.
and PM Resources, Inc. dated September 9, 1993.
    
    (1); Ex. 2.42.5
    
    Indemnity Agreement between Purina Mills, Inc. and PM Resources,
Inc. dated September 9, 1993.
    
    (1); Ex. 2.52.11
    
    Agreement and Plan of Merger, dated October 16, 1998, by and among
Agri -Nutrition Group Limited, Virbac S.A., and Virbac, Inc.
    
    (7); Ex. 2.12.12
    
    Stock Purchase Agreement by and between Virbac Corporation and
Delmarva Laboratories, Inc. dated as of August 15, 2003.
    
    (14); Ex. 2.22.13
    
    Asset Purchase Agreement by and among Virbac Corporation, Jones
Pharma Incorporated and JMI- Daniels Pharmaceuticals, Inc. dated as of
September 5, 2003.
    
    (13); Ex. 2.13.1
    
    Restated Certificate of Incorporation.
    
    (2); Ex. 3.13.3
    
    Amended and Restated By-Laws, dated as of January 27, 2004.
    
    (14); Ex. 3. 24
    
    Specimen Stock Certificate.
    
    (1); Ex. 410.11
    
    Form of Indemnification Agreement.
    
    (1); Ex. 10.1010.12
    
    Reload Option and Exchange Exercise Plan.
    
    (3); Ex. 4.210.13
    
    1996 Incentive Stock Plan, as amended.
    
    (4); Ex. 10.1510.14
    
    Credit Agreement by and among Agri -Nutrition Group Limited, PM
Resources, Inc., St. JON Laboratories, Inc., and First Bank, dated
May 14, 1998.
    
    (5); Ex. 10.2410.15
    
    Amended Credit Agreement by and among Agri -Nutrition Group
Limited, PM Resources, Inc., St. JON Laboratories, Inc., and First Bank,
dated August 6, 1998.
    
    (6); Ex. 10.2510.16
    
    Second Amendment to Credit Agreement by and among Agri -Nutrition
Group Limited, PM Resources, Inc., St. JON Laboratories, Inc., and
First Bank, dated October 2, 1998.
    
    (8); Ex. 10.2610.17
    
    Credit Agreement by and among Virbac Corporation, PM Resources,
Inc., St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., and First Bank, dated September 7, 1999.
    
    (12); Ex. 10.2710.18
    
    First Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated December 30,
1999.
    
    (15); Ex. 10.2110.19
    
    Second Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated May 1, 2000.
    
    (9); Ex. 10.2710.20
    
    Third Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated April 4, 2001.
    
    (10); Ex. 99.1
        .




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.21
    
    Fourth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated August 7,
2002.
    
    (11); Ex. 10.2910.22
    
    Fifth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., and First Bank, dated August 11,
2003.
    
    (14); Ex. 10.1010.23
    
    Sixth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated September 3, 2003.
    
    (13); Ex. 10.110.24
    
    Waiver of September 30, 2003 10-Q Reporting Period from First Bank,
dated November 12, 2003.
    
    (14); Ex. 10.1210.25
    
    Seventh Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated March 1, 2004.
    
    (14); Ex. 10.1310.26
    
    Eighth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated August 22, 2005.
    
    (17); Ex. 10.2610.27
    
    Ninth Amendment to Credit Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated March 24, 2006.
    
    +10.28
    
    Agreement for Temporary Management Services between Virbac
Corporation and Executive Interim Management dated December 16,
2003.
    
    (15); Ex. 10.2610.29
    
    Employment Termination, Release and Cooperation Agreement by and
between Virbac Corporation and Joseph Rougraff dated March 24, 2004.
    
    (15); Ex. 10.2710.30
    
    Employment Termination, Release and Cooperation Agreement by and
between Virbac Corporation and Thomas Bell dated April 15, 2004.
    
    (15); Ex. 10.2810.31
    
    Employment and Consulting Agreement by and between Virbac
Corporation and David Eller, dated as of June 18, 2004.
    
    (15); Ex. 10.2910.32
    
    Employment Agreement by and between Virbac Corporation and Jean
M. Nelson, dated as of May 20, 2004.
    
    (17); Ex.10.3110.33
    
    Employment Agreement by and between Virbac Corporation and Erik
R. Martinez, dated as of October 1, 2004.
    
    (17); Ex. 10.3210.34
    
    Secured Subordinated Promissory Note for $3,000,000 by and among
Virbac Corporation, PM Resources, Inc., St. JON Laboratories, Inc.,
Francodex Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories,
Inc., and Virbac, S.A., dated April 9, 2004.
    
    (14); Ex. 10.14




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.35
    
    Secured Subordinated Promissory Note for $4,000,000 by and among
Virbac Corporation, PM Resources, Inc., St. JON Laboratories, Inc.,
Francodex Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories,
Inc., and Virbac, S.A., dated April 29, 2004.
    
    (14); Ex. 10.1510.36
    
    Secured Subordinated Promissory Note for $2,000,000 by and among
Virbac Corporation, PM Resources, Inc., St. JON Laboratories, Inc.,
Francodex Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories,
Inc., and Virbac, S.A., dated June 3, 2004.
    
    (14); Ex. 10.1910.37
    
    First Amendment to Secured Subordinated Promissory Note Dated as of
April 9, 2004 by and among Virbac Corporation, PM Resources, Inc., St.
JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and Virbac, S.A., dated March 24, 2005.
    
    (14); Ex. 10.2310.38
    
    First Amendment to Secured Subordinated Promissory Note Dated as of
April 29, 2004 by and among Virbac Corporation, PM Resources, Inc.,
St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH,
Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated March 24,
2005.
    
    (14); Ex. 10.2410.39
    
    First Amendment to Secured Subordinated Promissory Note Dated as of
June 3, 2004 by and among Virbac Corporation, PM Resources, Inc., St.
JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH, Inc.,
Delmarva Laboratories, Inc., and Virbac, S.A., dated March 24, 2005.
    
    (14); Ex. 10.2510.40
    
    Acknowledgment of Extended Maturity Date by Virbac S.A., dated June
3, 2004.
    
    (14); Ex. 10.1810.41
    
    Acknowledgment of 2005 Extended Maturity Date by Virbac S.A.,
dated February 8, 2005.
    
    (14); Ex. 10.2210.42
    
    Second Amendment to Secured Subordinated Promissory Note Dated as
of April 9, 2004 by and among Virbac Corporation, PM Resources, Inc.,
St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH,
Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated August 2,
2005.
    
    (17); Ex. 10.4110.43
    
    Second Amendment to Secured Subordinated Promissory Note Dated as
of April 29, 2004 by and among Virbac Corporation, PM Resources,
Inc., St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated August 2,
2005.
    
    (17); Ex 10.4210.44
    
    Second Amendment to Secured Subordinated Promissory Note Dated as
of June 3, 2004 by and among Virbac Corporation, PM Resources, Inc.,
St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH,
Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated August 2,
2005.
    
    (17); Ex 10.4310.45
    
    Third Amendment to Secured Subordinated Promissory Note Dated as
of April 9, 2004 by and among Virbac Corporation, PM Resources, Inc.,
St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac AH,
Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated March 7,
2006.
    
    +




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.46
    
    Third Amendment to Secured Subordinated Promissory Note Dated as
of April 29, 2004 by and among Virbac Corporation, PM Resources,
Inc., St. JON Laboratories, Inc., Francodex Laboratories, Inc., Virbac
AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A., dated March 7,
2006.
    
    +10.47
    
    Amendment to Subordination Agreement as of April 9, 2004, by and
between VIRBAC, S.A., a business organized under the laws of the
Republic of France and First Bank, dated August 22, 2005.
    
    (17); Ex 10.4410.48
    
    Forbearance Agreement by and among Virbac Corporation, PM
Resources, Inc., St. JON Laboratories, Inc., Francodex Laboratories,
Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and First Bank,
dated April 9, 2004.
    
    (14); Ex. 10.1610.49
    
    Amendment to Forbearance Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated May 10, 2004.
    
    (14); Ex. 10.1710.50
    
    Second Amendment to Forbearance Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated August 9, 2004.
    
    (14); Ex. 10.2010.51
    
    Third Amendment to Forbearance Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated February 7, 2005.
    
    (14); Ex. 10.2110.52
    
    Amendment to Forbearance Agreement Dated as of April 9, 2004 to
Amend Delivery of Audited Financial Statements by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
Virbac, S.A., dated April 1, 2005.
    
    (14); Ex. 10.2610.53
    
    Waiver of 2001 and 2002 Financial Covenant Defaults and Amendment
to Forbearance Agreement Dated as of April 9, 2004 to Amend Delivery
of Audited Financial Statements by and among Virbac Corporation, PM
Resources, Inc., St. JON Laboratories, Inc., Francodex Laboratories,
Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and Virbac, S.A.,
dated April 15, 2005.
    
    (14); Ex. 10.2710.54
    
    Fifth Amendment to Forbearance Agreement by and among Virbac
Corporation, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Virbac AH, Inc., Delmarva Laboratories, Inc., and
First Bank, dated May 6, 2005.
    
    (16); Ex. 10.114.1
    
    Virbac Corporation Code of Business Conduct and Ethics.
    
    (15); Ex. 14.121.1
    
    Subsidiaries of Virbac Corporation.
    
    (15); Ex. 21.123.1
    
    Consent of PricewaterhouseCoopers LLP.
    
    +31.1
    
    Certification of the Chief Executive Officer pursuant to Section 302 of
the Sarbanes -Oxley Act of 2002.
    
    +




---



##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)31.2
    
    Certification of the Chief Financial Officer pursuant to Section 302 of
the Sarbanes -Oxley Act of 2002.
    
    +32.1
    
    Certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes -Oxley Act of 2002.
    
    +99.1
    
    Virbac Corporation Charter of the Audit Committee of the Board of
Directors.
    
    (15); Ex. 99.199.2
    
    Supplement A to the Virbac Corporation Charter of the Audit
Committee of the Board of Directors.
    
    (15); Ex. 99.299.3
    
    Independent Auditors Report and Statements of Net Assets Sold and
Statements of Revenues and Direct Expenses of the Animal Health
Product Lines of King Pharmaceuticals, Inc.
    
    (15); Ex. 99.399.4
    
    Unaudited Pro Forma Condensed Combined Financial Statements of
Virbac Corporation.
    
    (15); Ex. 99.4




---



##### Table of Contents