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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2004
 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
 o þ
 o þ




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Table of Contents
 Item
    
    PagePart I1. Business
    
    
    12. Properties
    
    
    103. Legal Proceedings
    
    
    114. Submission of Matters to a Vote of Security Holders
    
    
    13Part II5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    146. Selected Financial Data
    
    
    157. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    177A. 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
    
    
    45Part III10. Directors and Executive Officers of the Registrant
    
    
    4611. Executive Compensation
    
    
    4912. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    5613. Certain Relationships and Related Transactions
    
    
    5714. Principal Accountant Fees and Services
    
    
    59Part IV15. Exhibits and Financial Statement Schedules
    
    
    61Signatures
    
    
    688th Amendment to Credit AgreementEmployment Agreement - Jean M. NelsonEmployment Agreement - Erik R. Martinez2nd Agreement to Secured Subordinated Promissory Note2nd Amendment to Secured Subordinated Promissory Note2nd Amendment to Secured Subordinated Promissory NoteAmendment to Subordination AgreementCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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Part I
 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
  
 ITEM 1. BUSINESS.
 Background
   1




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Business Overview
   2




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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;
    
    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;
    
    Anthelmintics, or de-wormers, to treat gastrointestinal worms in livestock;
    
    Gastrointestinal products for dogs and cats, including hairball remedies;
    
    Specialty chemicals; and
    
    Equine anti-parasitics.
 Sales and Marketing Strategy
  Veterinary Segment
 IVERHART
  3




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Consumer Brand Segment
 â
  Contract Manufacturing Segment
   Distribution
   4




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Research and Development
      Registrations, Trademarks and Patents
  5




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IVERHART
 Procurement of Raw Materials and Finished Goods
  Competition
     6




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Regulatory and Environmental Matters
  Product Regulation
    7




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Environmental Matters
     8




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Employees
  Restatement of Financial Statements and Other Developments
 Restatement of Financial Statements
     9




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NASDAQ Delisting
   Putative Securities Class Action and Shareholder Derivative Lawsuits and SEC Investigation
  Management Changes
  Available Information
 www.virbaccorp.com www.sec.gov
 
 ITEM 2. PROPERTIES.
  10




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ITEM 3. LEGAL PROCEEDINGS.
  Putative Securities Class Action Litigation
 Williams v. Virbac et al.
   11




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Shareholder Derivative Lawsuit
     12




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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; and
    
    the Company would pay a total of $500,001, consisting of $1 in disgorgement and $500,000
in a civil money penalty.
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
  13




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Part II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER 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 ending December 31, 2005 (Pink Sheets)First Quarter
    
    
    3.90
    
    
    
    3.32Second Quarter
    
    
    3.65
    
    
    
    2.17
 
 (1)
    
    The NASDAQ National Market halted trading in the Companys securities effective
November 13, 2003.  14




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Securities Authorized for Issuance under Equity Compensation Plans
   Number of
    
    
    
    
    
    Number of SecuritiesSecurities to be
    
    
    
    
    
    Remaining Available forIssued Upon
    
    
    
    
    
    Future Issuance UnderExercise of
    
    Weighted Average
    
    Equity Compensation PlansOutstanding
    
    Exercise Price of
    
    (Excluding SecuritiesOptions, Warrants
    
    Outstanding Options,
    
    Reflected in the FirstPlan Category
    
    and Rights
    
    Warrants and Rights
    
    Column)Equity Compensation Plans
    
    
    704,014
    
    
    $
    3.64
    
    
    
    373,020
 Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
  
 ITEM 6. SELECTED FINANCIAL DATA.
  15




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##### Table of Contents



For the Years Ended December 31,(In
thousands, except per share data)
    
    2004 (1)
    
    2003 (2)
    
    2002
    
    2001 (1)
    
    2000 (1)STATEMENTS OF OPERATIONS DATARevenues
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    60,923
    
    
    $
    56,944
    
    
    $
    51,486Income (loss) from operations
    
    
    3,559
    
    
    
    (4,288
    )
    
    
    1,712
    
    
    
    (231
    )
    
    
    (135
    )Income taxes
    
    
    (570
    )
    
    
    (84
    )
    
    
    (361
    )
    
    
    (16
    )
    
    
    Income (loss) before cumulative effect of
change in accounting principle
    
    
    1,471
    
    
    
    (5,004
    )
    
    
    985
    
    
    
    (897
    )
    
    
    (575
    )Cumulative effect of change in accounting
principle
    
    
    
    
    
    
    
    
    
    
    (2,308
    )
    
    
    
    
    
    
    (469
    )Net income (loss)
    
    
    1,471
    
    
    
    (5,004
    )
    
    
    (1,323
    )
    
    
    (897
    )
    
    
    (1,044
    )Basic income (loss) per share
    
    $
    0.07
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )
    
    $
    (0.04
    )
    
    $
    (0.05
    )Basic weighted average number of
shares outstanding
    
    
    22,291
    
    
    
    22,234
    
    
    
    22,115
    
    
    
    22,038
    
    
    
    21,376Diluted income (loss) per share
    
    $
    0.06
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )
    
    $
    (0.04
    )
    
    $
    (0.05
    )Diluted weighted average number of
shares outstanding
    
    
    22,763
    
    
    
    22,234
    
    
    
    22,774
    
    
    
    22,038
    
    
    
    21,376BALANCE SHEET DATACash
    
    $
    3,717
    
    
    $
    4
    
    
    $
    865
    
    
    $
    477
    
    
    $
    272Working capital
    
    
    (2,687
    )
    
    
    (13,851
    )
    
    
    6,195
    
    
    
    6,844
    
    
    
    7,348Goodwill, net
    
    
    5,006
    
    
    
    5,571
    
    
    
    4,826
    
    
    
    7,445
    
    
    
    7,962Intangibles and other assets
    
    
    20,472
    
    
    
    21,243
    
    
    
    2,917
    
    
    
    316
    
    
    
    537Total assets
    
    
    61,056
    
    
    
    65,145
    
    
    
    45,245
    
    
    
    47,791
    
    
    
    44,983VBSA notes payable
    
    
    9,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes payable, less current maturities
    
    
    3
    
    
    
    7
    
    
    
    10
    
    
    
    
    
    
    
    Shareholders equity
    
    
    17,693
    
    
    
    16,145
    
    
    
    21,033
    
    
    
    22,104
    
    
    
    22,909
 
 (1)
    
    Effective October 1, 2000, the Company adopted the provisions of Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101). Prior to the
implementation of SAB 101, the Company recognized revenues when product was shipped from
the Companys distribution facility, due to the transfer of the risk of loss to common
carriers. Upon implementation of SAB 101, the Company recognized revenue upon receipt by
customers. The net effect in 2000 of this change was to reduce revenues by $0.8 million
and increase the diluted loss per share by
$.02. During 2001, the Company changed its shipping terms with its customers so that
ownership transferred to the customer at the time of shipment and continued this
policy through the first quarter of 2004. During this period, certain customer
contract terms were changed such that the risk of loss transferred to the customer on
delivery and revenue was recorded based upon the expected date of receipt. In the
second quarter of 2004, for customer service and policy consistency reasons, the
Company elected to change its stated shipping policy with its Veterinary and Consumer
Brand customers to FOB-destination. Accordingly, the Company now recognizes revenue
upon delivery to these customers. The net effect of this change was to reduce 2004
revenues by approximately $1.0 million and to reduce diluted income per share by
$.02.(2)
    
    The balance sheet data at December 31, 2003, and statement of operations data for the
year ended December 31, 2003, include the results of operations of Delmarva Laboratories,
Inc. (Delmarva) for the period from August 15, 2003 to December 31, 2003, and the
results of operations of the animal healthcare division of King Pharmaceuticals, Inc.
(King), for the period from September 8, 2003 to December 31, 2003. 16




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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.
 Restatement of Financial Statements
  Overview
      17




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Critical Accounting Policies and Estimates
   18




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Revenue Recognition
     Sales Related and Product Replacement Reserves
    19




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Inventories and Inventories on Consignment
  Valuation of Long-Lived and Intangible Assets and Goodwill
     20




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Unearned Product License Fees
  Assessment of Loss Contingencies
  Income Taxes
   Business Combinations
  21




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Results of Operations
  For the Years Ended December 31,2004
    
    2003
    
    2002Revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of goods sold
    
    
    56
    
    
    
    62
    
    
    
    61Gross profit
    
    
    44
    
    
    
    38
    
    
    
    39Operating expenses:Sales and marketing
    
    
    17
    
    
    
    22
    
    
    
    18General and administrative
    
    
    15
    
    
    
    12
    
    
    
    9Research and development
    
    
    4
    
    
    
    7
    
    
    
    5Warehouse and distribution
    
    
    3
    
    
    
    3
    
    
    
    4Total operating expenses
    
    
    39
    
    
    
    44
    
    
    
    36Income (loss) from operations
    
    
    5
    
    
    
    (6
    )
    
    
    3Interest expense and other income
    
    
    (2
    )
    
    
    (1
    )
    
    
    (1
    )Income (loss) before income taxes
    
    
    3
    
    
    
    (7
    )
    
    
    2Provision for income taxes
    
    
    (1
    )
    
    
    
    
    
    
    Income (loss) before cumulative effect of
change in accounting principle
    
    
    2
    
    
    
    (7
    )
    
    
    2Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    (4
    )Net income (loss)
    
    
    2
    %
    
    
    (7
    )%
    
    
    (2
    )%
 22




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Comparison of the Years Ended December 31, 2004, 2003 and 2002
 Revenues
  For the years ended
    
    
    ChangeDecember 31,
    
    
    2004 vs 2003
    
    
    2003 vs 20022004
    
    
    2003
    
    
    2002
    
    
    Dollars
    
    
    %
    
    
    Dollars
    
    
    %Veterinary
    
    $
    39,341
    
    
    $
    29,831
    
    
    $
    28,726
    
    
    $
    9,510
    
    
    
    32
    %
    
    $
    1,105
    
    
    
    4
    %Consumer Brand
    
    
    21,244
    
    
    
    22,850
    
    
    
    22,794
    
    
    
    (1,606
    )
    
    
    (7
    %)
    
    
    56
    
    
    
    0
    %Contract Manufacturing
    
    
    16,530
    
    
    
    14,396
    
    
    
    9,403
    
    
    
    2,134
    
    
    
    15
    %
    
    
    4,993
    
    
    
    53
    %Totals
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    60,923
    
    
    $
    10,038
    
    
    
    15
    %
    
    $
    6,154
    
    
    
    10
    %
 
    
    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. The King product portfolio includes SOLOXINE®, a leader in canine thyroid
hormone replacement, and 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, and
ClintabsTM
and ClinsolTM.
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 by the FDA recall in September 2004 of a competitive
heartworm preventative, which had significant market share. Dermatalogy revenues increased
year over year due to the launch in late 2003 of two new products. 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 its 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.
   23




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
    
    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 as a
result of the discontinuation of a number of products. The neutraceutical product category
was negatively affected by pricing pressure and the loss of a key customer in July 2004,
who launched their own neutraceutical brand product. Consumer Brand revenues were
essentially flat in 2003, as compared to 2002, as sales in 2003 were negatively affected
by an increase in sales related discounts and return reserve requirements.
    
    The Contract Manufacturing segment includes revenues from the Companys contract
manufacturing operations, livestock de-wormer product sales and equine products that are
sold exclusively to Pfizer.
    IVERHART
 Gross Profit
  24




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ChangeFor the year ended December 31,
    
    
    2004 vs. 2003
    
    
    2003 vs. 2002Gross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    Gross(In thousands)
    
    2004
    
    
    Profit %
    
    
    2003
    
    
    Profit %
    
    
    2002
    
    
    Profit %
    
    
    $
    
    
    %
    
    
    $
    
    
    %Veterinary
    
    $
    25,122
    
    
    
    64
    %
    
    $
    16,337
    
    
    
    55
    %
    
    $
    15,318
    
    
    
    53
    %
    
    $
    8,785
    
    
    
    53
    %
    
    $
    1,019
    
    
    
    7
    %Consumer Brand
    
    
    7,056
    
    
    
    33
    %
    
    
    6,274
    
    
    
    27
    %
    
    
    7,175
    
    
    
    31
    %
    
    
    782
    
    
    
    12
    %
    
    
    (901
    )
    
    
    (13
    )%Contract Manufacturing
    
    
    1,686
    
    
    
    10
    %
    
    
    3,042
    
    
    
    21
    %
    
    
    1,327
    
    
    
    14
    %
    
    
    (1,356
    )
    
    
    (45
    )%
    
    
    1,715
    
    
    
    129
    %Totals
    
    $
    33,864
    
    
    
    44
    %
    
    $
    25,653
    
    
    
    38
    %
    
    $
    23,820
    
    
    
    39
    %
    
    $
    8,211
    
    
    
    32
    %
    
    $
    1,833
    
    
    
    8
    %
 
    
    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 have been positively impacted by IVERHART® PLUS margins as
a result of lower return rates in 2004, as compared to 2003. On increased revenues,
Veterinary segment gross profit in 2003 was only slightly higher, as compared to 2002, due
principally to increased inventory obsolescence and product replacement reserves. Inventory
reserve requirements increased in 2003, as compared to 2002, as dated product expired due
to excess inventory on hand. Product replacement reserve requirements increased in 2003, as
compared to 2002, as product in the sales channel expired due to lack of sell-through.
    
    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 which resulted in lower inventory obsolescence reserve requirements in 2004, as
compared to 2003.
Consumer Brand segment gross profit decreased in 2003, as compared to 2002, due principally
to increased, inventory obsolescence reserves in 2003.
    
    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. Manufacturing operation gross profit remained
nearly flat year over year. Contract Manufacturing segment gross profit increased in 2003,
as compared to 2002, due principally to margins realized on the sale of the Companys
livestock de-wormer product.
This product was launched in the third quarter of 2001; however, the Company recognized the
sales and related cost of sales of this product at the time of cash collection due to the
uncertainty of collection at the time of shipment. Additionally, 2003 gross profit was
positively affected by increased equine product sales as the second significant product was
launched in July 2003.
  Operating Expenses
  25




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IVERHART
    Interest Expense and Other Income
  26




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Taxes
  Goodwill Impairment
  Liquidity and Capital Resources
    27




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1 2
   29




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Contractual Obligations and Commitments
  (In thousands)
    
    
    
    
    
    Payments Due by PeriodMore than 5Total
    
    
    Less than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    YearsCredit Agreement
    
    $
    13,000
    
    
    $
    13,000
    
    
    $
    
    
    
    $
    
    
    
    $
    VBSA Notes
    
    
    9,000
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    Installment loan
    
    
    7
    
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    Delmarva contingent payments
    
    
    2,500
    
    
    
    500
    
    
    
    1,000
    
    
    
    500
    
    
    
    500Operating lease obligations
    
    
    236
    
    
    
    118
    
    
    
    97
    
    
    
    21
    
    
    
    Purchase commitment obligations
    
    
    525
    
    
    
    525
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    25,268
    
    
    $
    14,147
    
    
    $
    10,100
    
    
    $
    521
    
    
    $
    500
   Quarterly Effects and Seasonality
  Recent Accounting Standards
  30




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Risks Relating to the Restatement of Financial Statements and Related Matters
 The Restatement and related events have had, and may continue to have, a material adverse
effect on the Company.
     31




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
    
    The Company has not completed the implementation of its plan to
improve internal controls and remediate the material weaknesses as
described in Item 9A. Controls and Procedures of this Annual Report
on Form 10-K. If these material weaknesses are not remediated or
otherwise mitigated, they could result in material misstatement of
Virbacs financial statements in the future, which would result in
additional restatements or impact the Companys ability to timely file
financial statements in the future.
    
    Virbac is subject to an ongoing SEC investigation in the United States.
    
    Virbac is subject to significant pending civil litigation.
    
    Material adverse legal judgments, fines, penalties or settlements
could have a material adverse effect on Virbacs business, results of
operations, financial condition and liquidity, which could be very
significant.
    
    Virbac and its registered public accounting firm have identified a
number of material weaknesses related to its internal control over
financial reporting, which unless corrected, could continue to impact
its ability to report its results of operations and financial
condition accurately and in a timely manner.
    
    The delay in filing certain of Virbacs reports under the federal
securities laws caused the NASDAQ National Market to suspend and
delist the Common Stock.
 Virbac is subject to an ongoing 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; and
    
    the Company would pay a total of $500,001, consisting of $1 in disgorgement and $500,000
in a civil money penalty.
  32




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Virbac is subject to significant pending civil litigation.
  Putative Securities Class Action Litigation
 Williams v. Virbac et al.
   Shareholder Derivative Lawsuit
  33




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##### Table of Contents



Material adverse legal judgments, fines, penalties or settlements could have a material
adverse effect on Virbacs financial condition and liquidity.
  34




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##### Table of Contents




    
    requiring Virbac to dedicate a substantial portion of its cash and/or cash flow from
operations to payments of such judgments, fines, penalties or settlements, thereby
reducing the availability of its cash and/or cash flow to fund working capital, capital
expenditures, R&D efforts and other general corporate purposes, including debt
reduction;
    
    making it more difficult for Virbac to satisfy its payment obligations with respect
to its outstanding indebtedness;
    
    increasing the difficulty and/or cost to Virbac of refinancing its indebtedness,
including the Credit Agreement and VBSA Notes;
    
    increasing Virbacs vulnerability to general adverse economic and industry
conditions;
    
    limiting Virbacs flexibility in planning for, or reacting to, changes in its
business and the industries in which it operates;
    
    making it more difficult for Virbac to make acquisitions and investments;
    
    limiting Virbacs ability to obtain, and/or increase the cost of obtaining,
directors and officers liability insurance and/or other types of insurance; and
    
    restricting Virbacs ability to introduce new technologies and products and/or
exploit business opportunities.
 Virbac and its independent registered public accounting firm have identified a number of
material weaknesses related to its internal control over financial reporting, which could continue
to impact the Companys ability to report its results of operations and financial condition
accurately and in a timely manner.
  The Common Stock has been delisted from the NASDAQ National Market, which has had a material
adverse impact on its stock price.
   35




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##### Table of Contents



Virbac has a limited trading market, which could affect investors ability to sell shares of
Common Stock and the price investors, may receive for Common Stock.
   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 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;
 36




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##### Table of Contents




    
    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.
  The Company relies substantially on third-party suppliers. The loss of products or delays in
product availability from one or more third-party suppliers could substantially harm the Companys
business.
   Virbac receives significant support from its indirect majority stockholder, VBSA.
  The Company is controlled by a principal stockholder.
    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.
  
    
    improve market acceptance of current products;
    
    complete development of new and innovative products; and
    
    successfully introduce and commercialize such products.
  37




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Virbac operates in a highly competitive industry, which could render its products obsolete or
substantially limit the volume of products that it sells. This could limit Virbacs ability to
compete and achieve profitability.
  Virbac may face costly intellectual property disputes or, its technology or that of its
collaborators may become the subject of legal action.
   Virbac must obtain and maintain costly regulatory approvals in order to market its products.
  38




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Virbacs Bridgeton, Missouri facility is one of the only manufacturing facilities that
produces both FDA and EPA registered products.
  Virbac may face product returns and product liability litigation and the extent of its
insurance coverage is limited. If Virbac becomes subject to product liability claims resulting from
defects in its products, Virbac may fail to achieve market acceptance of its products and its sales
could decline.
  39




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Virbac may be held liable for the release of hazardous materials, which could result in
extensive clean up costs or otherwise harm its business.
  Changes in veterinary medical practices could negatively affect operating results.
  Virbac may be adversely affected by an economic downturn or economic uncertainty.
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  1 2
  40




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of the Companys Disclosure Controls and Procedures
  41




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Identification of Material Weaknesses in Internal Control over Financial Reporting
  
    
    Deficiencies related to the internal control environment.The prior Chief
Executive Officer and Chief Financial Officer (i) did not promote an environment
that emphasized the establishment and/or adherence to appropriate internal control
and (ii) took actions or directed subordinates to take actions that circumvented or
otherwise over-rode the existing controls. Management concluded that, among other
things, the Company did not have adequate integrity, experience or depth of certain
sales, operating, accounting and financial management personnel, and the Company
lacked a robust governance function and adequate financial oversight.
    
    Deficiencies related to the design, documentation and execution of accounting
policies and procedures. Current management has identified areas where controls
were ineffective or not effectively executed or monitored, including failures in
documenting business process policies and procedures, adequately segregating
responsibilities and establishing effective management review controls. Accounting
entries were processed without appropriate supporting documentation or documented
approvals and certain intangible assets were recorded without appropriate
supporting documentation. The review and analysis of the historical books and
records identified various transactions in which former officers and employees
misapplied or ignored generally accepted accounting principles in a manner that
permitted the Company to defer certain expenses improperly.
    
    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 also concluded that policies and procedures with
respect to revenue recognition in accordance with generally accepted accounting
principles were either misapplied or ignored in a manner that permitted the Company
to recognize revenue prematurely. Additionally, the Company failed to properly
maintain credits and return goods authorizations issued to customers, and,
therefore, did not adequately provide for these sales-related and
product-replacement reserves in the proper accounting periods.
    
    Deficiencies related to policies and procedures with respect to inventory
valuation.Current management also concluded that policies and procedures for the
review and evaluation of slow moving inventory were inadequate or ineffective
resulting in inadequate inventory obsolescence reserves.
   42




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
    
    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 Virbac and the Companys independent registered public accounting
firm identified;
    
    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.
  Changes in Internal Control over Financial Reporting
  
    
    Virbac appointed a new CEO during the first quarter of 2004 and a new CFO during
the first half of 2004.
    
    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.
    
    Virbac has adopted a new charter for the Audit Committee, which meets the
requirements of the SEC and the NASDAQ National Market listing standards.
    
    Virbac has implemented the Virbac Corporation Code of Business Conduct & Ethics
(the Code of Ethics), which is applicable to all Virbac directors, officers and
employees, including the Companys Chief Executive Officer, Chief Financial
Officer, Corporate Controller and other financial personnel performing similar
functions. The Code of Ethics
 43




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satisfies, and in many respects exceeds, all of the requirements of SOX and the
rules and regulations promulgated by the SEC pursuant to SOX. The Code of Ethics
also satisfies, and in many respects exceeds, the listing standards established by
the NASDAQ National Market, where the Companys stock was previously quoted. The
Code of Ethics has been disseminated to all Company employees and employees are
required to certify their agreement to abide by the Code of Ethics. The Company has
posted the Code of Ethics on its website at www.virbaccorp.com.
    
    Virbac has adopted a whistleblower policy and has established a reporting
process for employees by telephone hotline, e-mail, facsimile or physical address.
The whistleblower policy provides employees direct anonymous access to the Audit
Committee chairman or to the corporate governance 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 auditors and the independent counsel and forensic accountants engaged by the
Audit Committee.
    
    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 made changes to the Companys organizational structure to provide a
clearer segregation of responsibilities in connection with order entry, customer
account management and inventory accounting.
    
    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.
Generally Accepted Accounting Principles (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 implemented new or revised accounting policies and procedures
designed to comply with GAAP, which include the accounting for sales related and
product replacement reserves, inventory obsolescence reserves and intangible
assets.
 44




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
    
    The Company continues to work to improve its internal control over financial
reporting. In this regard, Virbac has interviewed certain outside firms to assist
the Company in further development of its disclosure controls and procedures and
the evaluation of its internal control over financial reporting as required under
Section 404 of SOX. Additionally, the Company has purchased and commenced the
implementation of a fully integrated management information system, which will
provide enhanced internal control features.
    
 ITEM 9B. OTHER INFORMATION.
  45




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Part III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 Officers and Directors
  Name
    
    Age
    
    PositionPascal Boissy (1)
    
    61
    
    Chairman of the Board of DirectorsExecutive Vice President of IndustrialLaurent Cesar
    
    51
    
    OperationsEric Marée
    
    53
    
    DirectorErik R. Martinez, D.V.M
    
    48
    
    President and Chief Executive OfficerExecutive Vice President and ChiefJean M. Nelson
    
    45
    
    Financial OfficerExecutive Vice President of BusinessMichael S. OBryan
    
    54
    
    OperationsPierre A. Pagès, D.V.M. (2)
    
    54
    
    DirectorRichard W. Pickert (1)
    
    63
    
    DirectorAlec L. Poitevint, II (1) (2)
    
    57
    
    DirectorJean N. Willk (1)
    
    47
    
    Director
 
 (1)
    
    Member of the Audit Committee(2)
    
    Member of the Compensation Committee Pascal Boissy
 Laurent Cesar
 Eric Marée
 46




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##### Table of Contents



Erik R. Martinez, D.V.M.
 Jean M. Nelson
 Michael S. OBryan
 Pierre Pa s, D.V.M. .
 Richard W. Pickert
 Alec L. Poitevint, II
 47




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Jean N. Willk
  Audit Committee
 www.virbaccorp.com.
 Section 16(a) Beneficial Ownership Reporting Compliance
  48




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Code of Ethics
 http://www.virbaccorp.com.
 http://www.virbaccorp.com.
 
 ITEM 11. EXECUTIVE COMPENSATION.
    49




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SUMMARY COMPENSATION TABLE
 Annual Compensation
    
    
    Long Term CompensationAwards
    
    
    PayoutsSecuritiesRestricted
    
    
    Underlying
    
    
    
    
    
    
    All OtherSalary
    
    
    Bonus
    
    
    Other Annual
    
    
    Stock
    
    
    Options/
    
    
    LTIP
    
    
    CompensationName and Principal Position(1)
    
    Year
    
    
    $
    
    
    $
    
    
    Compensation
    
    
    Awards
    
    
    SARS (2)
    
    
    Payouts
    
    

$
(3)Erik R. Martinez (4)
    
    
    2004
    
    
    $
    120,167
    
    
    $
    20,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33,780President and Chief
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Executive Officer
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jean M. Nelson (5)
    
    
    2004
    
    
    $
    131,846
    
    
    $
    248,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    307Executive Vice President and
    
    
    2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chief Financial Officer
    
    
    2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael S. OBryan
    
    
    2004
    
    
    $
    151,470
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    489Executive Vice-President of
    
    
    2003
    
    
    $
    148,500
    
    
    $
    18,066
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    $
    489Business Operations
    
    
    2002
    
    
    $
    144,475
    
    
    $
    7,070
    
    
    
    
    
    
    
    
    
    
    
    3,150
    
    
    
    
    
    
    $
    540Thomas L. Bell (6)(8)
    
    
    2004
    
    
    $
    21,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    101,040Former President and
    
    
    2003
    
    
    $
    240,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,000
    
    
    
    
    
    
    $
    12,535Chief Executive Officer
    
    
    2002
    
    
    $
    218,000
    
    
    $
    70,850
    
    
    
    
    
    
    
    
    
    
    
    18,000
    
    
    
    
    
    
    $
    12,000Joesph A. Rougraff (7)(8)
    
    
    2004
    
    
    $
    28,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    44,834Former Vice President,
    
    
    2003
    
    
    $
    143,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,000
    
    
    
    
    
    
    $
    486Chief
Financial Officer and Secretary
    
    
    2002
    
    
    $
    139,165
    
    
    $
    34,791
    
    
    
    
    
    
    
    
    
    
    
    4,200
    
    
    
    
    
    
    
    
 
 (1)
    
    Mr. OBryan became Executive Vice-President of Business Operations on February 8, 2005
and Mr. Cesar joined the Company as Executive Vice-President of Industrial Operations on
April 1, 2005.(2)
    
    Amounts reflected in this column are for grants of stock options for the Common Stock
of Virbac. Virbac has issued no SARs.(3)
    
    Includes a $4,083 car allowance for Mr. Martinez for 2004, includes a $1,000 car
allowance in 2004 and a $12,000 per year car allowance in 2003 and 2002 for Mr. Bell.
Amounts toward long-term disability plans include $295, $307 and $489 for Mr. Martinez, Ms.
Nelson and Mr. OBryan, respectively, for 2004, $40 each for Mr. Bell and Mr. Rougraff in
2004, $489, $535 and $486 for Mr. OBryan, Mr. Bell and Mr. Rougraff, respectively, for
2003 and $540 for Mr. OBryan for 2002. Amounts reflected also include a $19,720
relocation payment, $2,950 personal travel payment and a $6,732 allowance for a
contribution toward the Mexican Social Security Institute Program for Mr. Martinez for
2004. Severance payments of $100,000 and $44,794 for Mr. Bell and Mr. Rougraff,
respectively, are also included in the amounts for 2004.(4)
    
    Dr. Erik R. Martinez joined the Company on July 15, 2004, and became President and
Chief Executive Officer effective October 1, 2004.(5)
    
    Ms. Jean M. Nelson joined the Company as Executive Vice-President and Chief Financial
Officer on June 14, 2004.(6)
    
    Thomas L. Bell took a leave of absence from the Company beginning on December 18, 2003,
and resigned his positions of President, Chief Executive Officer and Director of the
Company on January 27, 2004. Salary amounts include Mr. Bells compensation through
January 27, 2004, and accrued vacation paid upon his termination. 50




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(7)
    
    Joseph A. Rougraff resigned his positions of Vice President, Chief Financial Officer
and Secretary on January 27, 2004. Salary amounts include Mr. Rougraffs compensation
through January 27, 2004, and accrued vacation paid upon his termination.(8)
    
    All stock options granted to Mr. Bell and Mr. Rougraff expired in accordance with the
terms of their stock option grants upon their resignations. 2004 OPTION/STOCK APPRECIATION RIGHTS GRANTS
  AGGREGATED OPTION/STOCK APPRECIATION RIGHT EXERCISES IN 2004 AND
YEAR-END OPTION/STOCK APPRECIATION RIGHT VALUES
 Number of Securities Underlying
    
    
    Value of Unexercised In-the-Unexercised Options/SARS at Year-
    
    
    Money Options/SARS atEnd (#) (1)
    
    
    Year-End ($) (1)Shares Acquired
    
    
    ValueName
    
    on Exercise (#)
    
    
    Realized ($)
    
    
    Exercisable
    
    
    Unexcercisable
    
    
    Exercisable
    
    
    UnexcercisableErik R. Martinez
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Jean M. Nelson
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Michael OBryan
    
    
    
    
    
    $
    
    
    
    
    103,267
    
    
    
    6,383
    
    
    $
    167,055
    
    
    $
    Thomas L. Bell
    
    
    50,000
    
    
    $
    62,500
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Joseph A. Rougraff
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    All information provided is with respect to stock options. Virbac has issued no stock
appreciation rights. Calculated by multiplying the number of shares
underlying options by the difference between the closing price of the
Common Stock on the Pink Sheets on December 31, 2004 and the exercise
price of the options. Compensation of Directors
   Employment Agreements
  51




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Temporary Management Services Contract and Employment and Consulting Agreement
  Employment Termination, Release and Cooperation Agreements
   52




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Compensation Committee Interlocks and Insider Participation
  Report of the Virbac Compensation Committee
 To:
    
    The Board of Directors and Shareholders of Virbac Corporation:
  Compensation Philosophy
  
    
    Base salary; and
    
    Annual incentive compensation consisting of bonuses based upon achievement of
performance objectives.
 53




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##### Table of Contents



Base Salary
  Annual Bonus Compensation
  Long-term Incentives
  Compensation of the Chief Executive Officer
  
 54




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Performance Graph
   
 55




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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS
MATTERS.
  
    
    each person known by Virbac to own beneficially more than 5% of the outstanding shares
of the Common Stock;
    
    each director of Virbac;
    
    each named executive officer or person serving in that capacity during 2004 of Virbac; and
    
    all directors and executive officers of Virbac as a group.
  Shares Beneficially OwnedAmount andNature ofBeneficialName of Beneficial Owner
    
    Ownership
    
    
    Percent of ClassInterlab (1) (3)
    
    
    13,435,474
    
    
    
    60.18
    %Pascal Boissy
    
    
    31,045
    
    
    
    *Laurent Cesar
    
    
    
    
    
    
    *Erik R. Martinez, D.V.M.
    
    
    
    
    
    
    *Jean M. Nelson
    
    
    
    
    
    
    *Eric Maree
    
    
    4,518
    
    
    
    *Michael S. OBryan
    
    
    173,863
    
    
    
    *Pierre A. Pages, D.V.M.
    
    
    18,955
    
    
    
    *Richard W. Pickert
    
    
    
    
    
    
    *Alec L. Poitevint, II (2)
    
    
    391,040
    
    
    
    1.75
    %Jean N. Willk
    
    
    11,360
    
    
    
    *All directors and executive officers as a
group (10 persons)
    
    
    630,781
    
    
    
    2.83
    %
 
 *
    
    The percentage of shares beneficially owned does not exceed 1% of the Common Stock
outstanding.(1)
    
    Interlab is a wholly-owned subsidiary of VBSA and the beneficial owner of 13,435,474
shares of Virbac Common Stock.(2)
    
    Included are 20,000 shares held by Mr. Poitevints adult children, over which Mr.
Poitevint has power of attorney. Mr. Poitevints beneficial ownership also includes 147,252
shares held by Marshall Minerals, Inc. and 162,339 shares held by Mineral Associates, Inc.
Mr. Poitevint is the President and Chairman of both Marshall Minerals, Inc. and Mineral
Associates, Inc., but is not a controlling stockholder of either corporation. Mr.
Poitevint disclaims beneficial ownership of the 56




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shares owned by Marshall Minerals, Inc.,
Mineral Associates, Inc. and the shares held by Mr. Poitevints adult children.(3)
    
    The business address for Interlab is: Interlab, BP 27, 06511 Carros, France. Securities Authorized for Issuance under Equity Compensation Plans
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 Agreements with VBSA
  Loan Agreements
  Directors and Officers Insurance Procurement Agreement
  Employment Agreement
  57




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Consulting Agreement
  Trademark Agreement
  Supply Agreement
  Development and License Agreement
  License Agreement  Pyriproxyfen
  58




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Distribution Agreement
  Sub License Agreement
  Secrecy Agreements
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
  (In thousands)
    
    2004
    
    
    2003Audit fees
    
    $
    1,656
    
    
    $
    280Tax fees
    
    
    65
    
    
    
    102All other fees
    
    
    2
    
    
    
    49Total
    
    $
    1,723
    
    
    $
    431
 59




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##### Table of Contents



Audit Fees
 Tax Fees
 All Other Fees
 Audit Committee Administration of the Engagement  Procedures for Pre-Approval of Audit and
Permissible Non-Audit Services of the Companys Independent Auditors
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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. 2.2
 61




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)2.13
    
    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. 99.110.21
    
    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. 10.2910.22
    
    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. 10.10
 62




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.23
    
    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.
    
    +10.27
    
    Agreement for Temporary Management Services between Virbac
Corporation and Executive Interim Management dated
December 16, 2003.
    
    (15); Ex. 10.2610.28
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Joseph Rougraff
dated March 24, 2004.
    
    (15); Ex. 10.2710.29
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Thomas Bell dated
April 15, 2004.
    
    (15); Ex. 10.2810.30
    
    Employment and Consulting Agreement by and between Virbac
Corporation and David Eller, dated as of June 18, 2004.
    
    (15); Ex. 10.2910.31
    
    Employment Agreement by and between Virbac Corporation and
Jean M. Nelson, dated as of May 20, 2004.
    
    +10.32
    
    Employment Agreement by and between Virbac Corporation and
Erik R. Martinez, dated as of October 1, 2004.
    
    +10.33
    
    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. 10.1410.34
    
    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. 10.1510.35
    
    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. 10.19
 63




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.36
    
    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. 10.2310.37
    
    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. 10.2410.38
    
    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. 10.2510.39
    
    Acknowledgment of Extended Maturity Date by Virbac S.A.,
dated June 3, 2004.
    
    (14); Ex. 10.1810.40
    
    Acknowledgment of 2005 Extended Maturity Date by Virbac
S.A., dated February 8, 2005.
    
    (14); Ex. 10.2210.41
    
    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.
    
    +10.42
    
    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.
    
    +10.43
    
    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.
    
    +10.44
    
    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.
    
    +10.45
    
    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. 10.1610.46
    
    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. 10.17
 64




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.47
    
    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. 10.2010.48
    
    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. 10.2110.49
    
    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. 10.2610.50
    
    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. 10.2710.51
    
    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. 21.131.1
    
    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 of the Chief Executive Officer pursuant to
18. U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
    
    +32.2
    
    Certification of the Chief Financial Officer 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. 99.3
 65




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)99.4
    
    Unaudited Pro Forma Condensed Combined Financial
Statements of Virbac Corporation.
    
    (15); Ex. 99.4
 
 +
    
    Filed herewith.(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. (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) 66




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##### Table of Contents



(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) 67




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##### Table of Contents



SIGNATURES
  VIRBAC CORPORATIONBy:
    
    /s/ Erik R. MartinezErik R. MartinezPresident and Chief Executive OfficerDate:
    
    August 30, 2005
  Signature
    
    Title
    
    Date/s/ Erik R. Martinez
    
    President and Chief Executive Officer
    
    August 30, 2005Erik R. Martinez
    
    (Principal Executive Officer)/s/ Jean M. Nelson
    
    Executive Vice President and
    
    August 30, 2005Jean M. Nelson
    
    Chief Financial Officer(Principal Financial and Accounting Officer)/s/ Pascal Boissy
    
    Chairman of the Board
    
    August 30, 2005Pascal Boissy/s/ Eric Marée
    
    Director
    
    August 30, 2005Eric Marée/s/ Pierre A. Pagès
    
    Director
    
    August 30, 2005Pierre A. Pagès/s/ Richard W. Pickert
    
    Director
    
    August 30, 2005Richard W. Pickert/s/ Alec L. Poitevint, II
    
    Director
    
    August 30, 2005Alec L. Poitevint, II/s/ Jean Noël Willk
    
    Director
    
    August 30, 2005Jean Noël Willk
 68




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##### Table of Contents



VIRBAC CORPORATION
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of December 31, 2004 and 2003
    
    
    F-3Consolidated Statements of Operations for the Three Years Ended
December 31, 2004, 2003 and 2002
    
    
    F-4Consolidated Statements of Cash Flows for the Three Years Ended
December 31, 2004, 2003 and 2002
    
    
    F-5Consolidated Statements of Shareholders Equity for the Three
Years Ended December 31, 2004, 2003 and 2002
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 F-2




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##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  December 31,2004
    
    
    2003AssetsCurrent assets:Cash and cash equivalents
    
    $
    3,717
    
    
    $
    4Accounts
receivable  trade (net of reserves of $35 and $129, respectively)
    
    
    6,268
    
    
    
    7,105Accounts receivable  Virbac S.A. and subsidiaries
    
    
    419
    
    
    
    314Inventories (net of reserves of $3,479 and $3,894, respectively)
    
    
    10,942
    
    
    
    13,178Inventories on consignment
    
    
    
    
    
    
    2,173Prepaid expenses
    
    
    1,375
    
    
    
    2,109Other current assets
    
    
    480
    
    
    
    950Total current assets
    
    
    23,201
    
    
    
    25,833Property, plant and equipment, net
    
    
    12,377
    
    
    
    12,498Goodwill, net
    
    
    5,006
    
    
    
    5,571Intangibles and other assets, net
    
    
    20,472
    
    
    
    21,243Total assets
    
    $
    61,056
    
    
    $
    65,145Liabilities and Shareholders EquityCurrent liabilities:Borrowings under revolving line of credit and note payable
    
    $
    13,004
    
    
    $
    25,357Checks outstanding
    
    
    1,403
    
    
    
    2,107Accounts payable  trade
    
    
    2,845
    
    
    
    3,697Accounts payable  Virbac S.A. and subsidiaries
    
    
    537
    
    
    
    446Sales related and product replacement reserves
    
    
    2,236
    
    
    
    2,602Accrued expenses
    
    
    5,863
    
    
    
    5,475Total current liabilities
    
    
    25,888
    
    
    
    39,684Note payable
    
    
    3
    
    
    
    7Notes payable  Virbac S. A.
    
    
    9,000
    
    
    
    Unearned product license fees
    
    
    6,299
    
    
    
    7,136Liability related to contingent consideration
    
    
    2,173
    
    
    
    2,173Total liabilities
    
    
    43,363
    
    
    
    49,000Commitments 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; 22,312,906 and 22,256,906 issued
and outstanding in 2004 and 2003, respectively)
    
    
    223
    
    
    
    223Additional paid-in capital
    
    
    35,003
    
    
    
    34,926Accumulated deficit
    
    
    (17,533
    )
    
    
    (19,004
    )Total shareholders equity
    
    
    17,693
    
    
    
    16,145Total liabilities and shareholders equity
    
    $
    61,056
    
    
    $
    65,145
  F-3




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##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Year Ended December 31,2004
    
    
    2003
    
    
    2002Revenues
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    60,923Cost of goods sold
    
    
    43,251
    
    
    
    41,424
    
    
    
    37,103Gross profit
    
    
    33,864
    
    
    
    25,653
    
    
    
    23,820Operating expenses:Sales and marketing
    
    
    13,456
    
    
    
    14,459
    
    
    
    11,062General and administrative
    
    
    11,248
    
    
    
    8,285
    
    
    
    5,675Research and development
    
    
    3,275
    
    
    
    4,947
    
    
    
    3,057Warehouse and distribution
    
    
    2,326
    
    
    
    2,250
    
    
    
    2,314Total operating expenses
    
    
    30,305
    
    
    
    29,941
    
    
    
    22,108Income (loss) from operations
    
    
    3,559
    
    
    
    (4,288
    )
    
    
    1,712Interest expense
    
    
    (1,550
    )
    
    
    (637
    )
    
    
    (366
    )Other income
    
    
    32
    
    
    
    5
    
    
    
    Income (loss) before income taxes
    
    
    2,041
    
    
    
    (4,920
    )
    
    
    1,346Provision for income taxes
    
    
    (570
    )
    
    
    (84
    )
    
    
    (361
    )Income (loss) before cumulative effect of
change in accounting principle
    
    
    1,471
    
    
    
    (5,004
    )
    
    
    985Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (2,308
    )Net income (loss)
    
    $
    1,471
    
    
    $
    (5,004
    )
    
    $
    (1,323
    )Basic income (loss) per share before cumulative effect of
change in accounting principle
    
    $
    0.07
    
    
    $
    (0.23
    )
    
    $
    0.04Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.10
    )Basic income (loss) per share
    
    $
    0.07
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )Basic shares outstanding
    
    
    22,291
    
    
    
    22,234
    
    
    
    22,115Diluted income (loss) per share before cumulative effect of
change in accounting principle
    
    $
    0.06
    
    
    $
    (0.23
    )
    
    $
    0.04Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.10
    )Diluted income (loss) per share
    
    $
    0.06
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )Diluted shares outstanding
    
    
    22,763
    
    
    
    22,234
    
    
    
    22,774
  F-4




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##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Year Ended December 31,2004
    
    
    2003
    
    
    2002Cash flows from operating activitiesNet income (loss)
    
    $
    1,471
    
    
    $
    (5,004
    )
    
    $
    (1,323
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Cumulative
effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    2,308Provision for excess and obsolete inventories
    
    
    911
    
    
    
    2,353
    
    
    
    1,004Depreciation and amortization
    
    
    2,732
    
    
    
    2,009
    
    
    
    1,385Provision for doubtful accounts
    
    
    (92
    )
    
    
    80
    
    
    
    145Recognition of unearned product license fees
    
    
    (787
    )
    
    
    (434
    )
    
    
    (129
    )Provision for sales related reserves
    
    
    (154
    )
    
    
    536
    
    
    
    1,319Deferred income taxes
    
    
    565
    
    
    
    
    
    
    
    311Impairment of long-lived assets
    
    
    80
    
    
    
    234
    
    
    
    Issuance of stock to directors as compensation
    
    
    
    
    
    
    52
    
    
    
    63Loss on disposal of assets
    
    
    67
    
    
    
    401
    
    
    
    26Changes in operating assets and liabilities,
net of acquisitions:Decrease in accounts receivable
    
    
    824
    
    
    
    1,463
    
    
    
    864Decrease (increase) in inventories
    
    
    1,325
    
    
    
    (4,451
    )
    
    
    1,301Decrease
(increase) in consigned inventories
    
    
    2,173
    
    
    
    (109
    )
    
    
    374Decrease
(increase) in prepaid expenses and other assets
    
    
    774
    
    
    
    (459
    )
    
    
    (596
    )(Decrease) increase in accounts payable
    
    
    (761
    )
    
    
    391
    
    
    
    (1,445
    )Decrease in sales related reserves
    
    
    (123
    )
    
    
    (662
    )
    
    
    (129
    )Increase in accrued expenses
    
    
    249
    
    
    
    1,293
    
    
    
    1,684Increase in product license fees
    
    
    
    
    
    
    1,654
    
    
    
    650Net cash provided by (used in) operating activities
    
    
    9,254
    
    
    
    (653
    )
    
    
    7,812Cash flows from investing activitiesPurchase of property, plant and equipment
    
    
    (1,323
    )
    
    
    (1,323
    )
    
    
    (1,504
    )Proceeds from sale of property, plant and equipment
    
    
    
    
    
    
    64
    
    
    
    Acquisition of businesses
    
    
    
    
    
    
    (17,806
    )
    
    
    Acquisition
of product license rights and other intangible assets
    
    
    (234
    )
    
    
    (657
    )
    
    
    (2,683
    )Net cash used in investing activities
    
    
    (1,557
    )
    
    
    (19,722
    )
    
    
    (4,187
    )Cash flows from financing activitiesNet
(repayments) borrowings under revolving line of credit
    
    
    (12,353
    )
    
    
    18,503
    
    
    
    (3,446
    )Proceeds from Virbac S. A. notes payable
    
    
    9,000
    
    
    
    
    
    
    
    10Repayment of note payable
    
    
    (4
    )
    
    
    (3
    )
    
    
    Change in outstanding checks
    
    
    (704
    )
    
    
    950
    
    
    
    10Issuance of common stock
    
    
    77
    
    
    
    64
    
    
    
    189Net cash (used in) provided by financing activities
    
    
    (3,984
    )
    
    
    19,514
    
    
    
    (3,237
    )Increase (decrease) in cash and cash equivalents
    
    
    3,713
    
    
    
    (861
    )
    
    
    388Cash and cash equivalents, beginning of period
    
    
    4
    
    
    
    865
    
    
    
    477Cash and cash equivalents, end of period
    
    $
    3,717
    
    
    $
    4
    
    
    $
    865Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    1,540
    
    
    $
    580
    
    
    $
    347Cash paid for income taxes
    
    $
    64
    
    
    $
    69
    
    
    $
    126
  F-5




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##### Table of Contents



For the Year Ended December 31,2004
    
    
    2003
    
    
    2002DelmarvaFair value of acquired net assets
    
    $
    
    
    
    $
    4,755
    
    
    $
    Less: Liability related to contingent
consideration
    
    
    
    
    
    
    (2,173
    )
    
    
    Net cash consideration
    
    $
    
    
    
    $
    2,582
    
    
    $
    KingFair value of assets acquired
    
    $
    
    
    
    $
    14,479
    
    
    $
    Goodwill
    
    
    
    
    
    
    745
    
    
    
    Net cash consideration
    
    $
    
    
    
    $
    15,224
    
    
    $
    
    F-6




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##### Table of Contents



VIRBAC CORPORATION
 
 CONSOLIDATED STATEM ENTS OF SHAREHOLDERS EQUITY
  Common Stock
    
    
    Additional
    
    
    
    
    
    
    Treasury StockNumber
    
    
    Par
    
    
    Paid In
    
    
    Accumulated
    
    
    Numberof Shares
    
    
    Value
    
    
    Capital
    
    
    Deficit
    
    
    of Shares
    
    
    Amount
    
    
    TotalBalance at December 31, 2001
    
    
    22,055
    
    
    $
    221
    
    
    $
    34,665
    
    
    $
    (12,677
    )
    
    
    28
    
    
    $
    (105
    )
    
    $
    22,104Shares issued to directors
    
    
    6
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    (5
    )
    
    
    20
    
    
    
    64Issuance for stock compensation
plans
    
    
    100
    
    
    
    1
    
    
    
    182
    
    
    
    
    
    
    
    (23
    )
    
    
    85
    
    
    
    268Purchase of treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    (80
    )
    
    
    (80
    )Shares issued to Interlab under
anti-
dilution provisions of merger
agreement
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,323
    )
    
    
    
    
    
    
    
    
    
    
    (1,323
    )Balance 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
    )
    
    
    
    
    
    $
    
    
    
    $
    17,693
  F-7




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##### Table of Contents



VIRBAC
CORPORATION
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 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



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      (d) Sales related and product replacement reserves
  F-9




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     (e) Cash and cash equivalents
  (f) Concentration of credit risk
  (g) Fair value of financial instruments
  (h) Inventories and inventories on consignment
  (i) Valuation of long-lived and intangible assets and goodwill
  F-10




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     
    
    Significant under-performance compared to historical or projected future
operating results,
    
    Failure to obtain regulatory approval of certain products,
    
    Significant changes in the manner of use of the acquired assets or the strategy
for the overall business,
    
    Significant increase in the discount rate assumed to calculate the present value
of future cash flows,
    
    Significant negative industry or economic trends, and
    
    Significant advancements or changes in technology.
  (j) Property, plant and equipment
  F-11




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   EstimatedUseful LifeBuilding and leasehold improvements
    
    5-39 yearsProduction equipment
    
    5-7 yearsFurniture, computer equipment and software, and fixtures
    
    3-7 yearsVehicles
    
    4 years
 (k) Advertising costs
  (l) Freight to customers
  (m) Research and development expenses
  (n) Income taxes
   F-12




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (o) Business Combinations
    (p) Earnings per share
   Year Ended December 31,2004
    
    
    2003
    
    
    2002Income
    
    
    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)
    
    $
    1,471
    
    
    
    
    
    
    
    
    
    
    $
    (5,004
    )
    
    
    
    
    
    
    
    
    
    $
    (1,323
    )Basic EPSNet income (loss)
available to common
stockholders
    
    
    1,471
    
    
    
    22,291
    
    
    $
    0.07
    
    
    
    (5,004
    )
    
    
    22,234
    
    
    $
    (0.23
    )
    
    
    (1,323
    )
    
    
    22,115
    
    
    $
    (0.06
    )Effect of dilutive
securities:Stock options
    
    
    
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    390
    
    
    
    
    
    
    
    
    
    
    
    351Shares owed to VBSA
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    VBSA under
antidilution
provisions of
merger
agreement
    
    
    
    
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    308Diluted EPSNet income
(loss) available to common
stockholders
plus assumed
conversions
    
    $
    1,471
    
    
    
    22,763
    
    
    $
    0.06
    
    
    $
    (5,004
    )
    
    
    22,956
    
    
    $
    (0.23
    )
    
    $
    (1,323
    )
    
    
    22,774
    
    
    $
    (0.06
    )
 F-13




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (q) Environmental liabilities and expenditures
  (r) Employee stock-based compensation
  Year ended December 31,(In thousands, except per share data)
    
    2004
    
    
    2003
    
    
    2002Net income (loss) as reported
    
    $
    1,471
    
    
    $
    (5,004
    )
    
    $
    (1,323
    )Less: Compensation expense for equity awards determined
by the fair value based method, net of related tax effects
    
    
    (579
    )
    
    
    (761
    )
    
    
    (453
    )Pro forma net income (loss)
    
    $
    892
    
    
    $
    (5,765
    )
    
    $
    (1,776
    )Basic income (loss) per share as reported
    
    $
    0.07
    
    
    $
    (0.23
    )
    
    $
    (0.06
    )Diluted income (loss) per share as reported
    
    
    0.06
    
    
    
    (0.23
    )
    
    
    (0.06
    )Pro forma basic income (loss) per share
    
    
    0.04
    
    
    
    (0.26
    )
    
    
    (0.08
    )Pro forma diluted income (loss) per share
    
    
    0.04
    
    
    
    (0.26
    )
    
    
    (0.08
    )
  2003
    
    
    2002Expected dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    88.4
    %
    
    
    91.5
    %Risk-free interest rate
    
    
    4.3
    %
    
    
    3.9
    %Expected life (in years)
    
    
    6.9
    
    
    
    6.4Weighted average fair value of options granted
measured at the original date of grant
    
    $
    5.84
    
    
    $
    3.91
 F-14




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (s) Comprehensive income
  (t) Recent accounting pronouncements
     F-15




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3. Commitments and Contingencies
 Legal Proceedings
  Putative Securities Class Action Litigation
 Williams v. Virbac et al.
   Shareholder Derivative Lawsuit
  F-16




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
     SEC Investigation
  F-17




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
    
    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; and
    
    the Company would pay a total of $500,001, consisting of $1 in disgorgement and $500,000
in a civil money penalty.
  Operating Leases
  (In thousands)
 2005
    
    $
    1182006
    
    
    642007
    
    
    342008
    
    
    20Total minimum lease payments
    
    $
    236
  Acquisition of Licensing Rights
  F-18




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Pfizer Agreement
  Environmental Liability
  Adjustment of the Merger Shares
  F-19




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Delmarva Acquisition
   Note 4. Acquisitions
  Delmarva Acquisition
    F-20




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   (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)
 Inventory
    
    $
    133Unfilled customer orders
    
    
    520Product rights
    
    
    13,630Property, plant and equipment
    
    
    196Goodwill
    
    
    745Net cash consideration
    
    $
    15,224
  Pro Forma Information
  F-21




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Year ended December 31,2003
    
    
    2002Revenue
    
    $
    69,827
    
    
    $
    66,566Cost of goods sold
    
    
    42,704
    
    
    
    38,855Gross profit
    
    
    27,123
    
    
    
    27,711Operating expenses
    
    
    31,002
    
    
    
    24,153(Loss) income from operations
    
    
    (3,879
    )
    
    
    3,558Interest and other expense
    
    
    (1,351
    )
    
    
    (1,085
    )Income tax expense
    
    
    (84
    )
    
    
    (361
    )Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    (2,308
    )Net loss
    
    $
    (5,313
    )
    
    $
    (196
    )Loss per share:Basic loss per share
    
    $
    (0.24
    )
    
    $
    (0.01
    )Diluted loss per share
    
    $
    (0.24
    )
    
    $
    (0.01
    )Basic shares outstanding
    
    
    22,234
    
    
    
    22,115Diluted shares outstanding
    
    
    22,234
    
    
    
    22,774
 Note 5. 2003 Facility Closure
  Note 6. Inventories
  December 31,(In thousands)
    
    2004
    
    
    2003Raw materials
    
    $
    6,337
    
    
    $
    7,544Finished goods
    
    
    8,084
    
    
    
    9,52814,421
    
    
    
    17,072Less  reserve for excess and obsolete inventories
    
    
    (3,479
    )
    
    
    (3,894
    )$
    10,942
    
    
    $
    13,178
 Note 7. Property, Plant and Equipment, net
  F-22




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31,(In thousands)
    
    2004
    
    
    2003Land
    
    $
    3,330
    
    
    $
    3,330Building and leasehold improvements
    
    
    7,500
    
    
    
    7,333Production equipment
    
    
    7,675
    
    
    
    7,213Vehicles
    
    
    15
    
    
    
    15Furniture and fixtures
    
    
    959
    
    
    
    898Computer equipment and software
    
    
    1,456
    
    
    
    1,17920,935
    
    
    
    19,968Less  accumulated depreciation
    
    
    (8,558
    )
    
    
    (7,470
    )$
    12,377
    
    
    $
    12,498
  Note 8. Goodwill and Other Intangible Assets
     F-23




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Veterinary(In thousands)
    
    SegmentDecember 31, 2003
    
    $
    5,571Recognition of Agri-Nutrition deferred tax assets
    
    
    (565
    )December 31, 2004
    
    $
    5,006
   December 31,2004
    
    
    2003Gross carrying
    
    
    Accumulated
    
    
    Gross carrying
    
    
    Accumulated(In thousands)
    
    amount
    
    
    amortization
    
    
    amount
    
    
    amortizationIntangible assets subject to amortization:Patents
    
    $
    86
    
    
    $
    (38
    )
    
    $
    92
    
    
    $
    (36
    )Product rights
    
    
    21,187
    
    
    
    (1,638
    )
    
    
    21,069
    
    
    
    (596
    )Intangible assets not subject to
amortization:Product rights and trademarks
    
    
    774
    
    
    
    (115
    )
    
    
    692
    
    
    
    (132
    )Total intangible assets
    
    $
    22,047
    
    
    $
    (1,791
    )
    
    $
    21,853
    
    
    $
    (764
    )
     F-24




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 2005
    
    $
    9982006
    
    
    9542007
    
    
    9312008
    
    
    9272009
    
    
    920Total amortization
    
    $
    4,730
 Note 9. Borrowings Under Revolving Line of Credit and Notes Payable
 December 31,(In thousands)
    
    2004
    
    
    2003Credit Agreement
    
    $
    13,000
    
    
    $
    25,354VBSA Notes
    
    
    9,000
    
    
    
    Installment credit loan
    
    
    7
    
    
    
    10Total borrowings
    
    
    22,007
    
    
    
    25,364Less current portion
    
    
    (13,004
    )
    
    
    (25,357
    )VBSA Notes and installment credit loan
    
    $
    9,003
    
    
    $
    7Weighted average interest rate
    
    
    6.43
    %
    
    
    4.16
    %
     F-25




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   1 2
   Note 10. Common Stock Transactions and Preferred Stock
  F-26




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Note 11. Stock Options
    WeightedAverageOptions
    
    
    Exercise PriceBalance, December 31, 2001
    
    
    748,599
    
    
    $
    2.25Granted
    
    
    112,841
    
    
    
    5.02Exercised
    
    
    (121,475
    )
    
    
    2.25Forfeited and canceled
    
    
    (38,219
    )
    
    
    3.61Balance, 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
    
    
    
    3.64
 F-27




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Options Outstanding
    
    
    Options ExercisableWeighted
    
    Weighted
    
    
    
    
    
    
    WeightedRange of Exercise
    
    Number
    
    
    
    Average
    
    Average
    
    
    Number
    
    
    AveragePrice
    
    Outstanding
    
    
    
    Remaining Life
    
    Exercise Price
    
    
    Outstanding
    
    
    Exercise Price$1.01 -$2.00
    
    
    244,500
    
    
    
    2.3
    years
    
    $
    1.50
    
    
    
    244,500
    
    
    $
    1.50$2.01 -$3.00
    
    
    55,500
    
    
    
    4.7
    
    
    
    2.73
    
    
    
    55,500
    
    
    
    2.73$3.01 -$4.00
    
    
    99,166
    
    
    
    6.0
    
    
    
    3.39
    
    
    
    99,166
    
    
    
    3.39$4.01 -$5.00
    
    
    76,823
    
    
    
    7.1
    
    
    
    4.97
    
    
    
    58,289
    
    
    
    4.97$5.01 -$6.00
    
    
    227,275
    
    
    
    8.2
    
    
    
    5.83
    
    
    
    79,380
    
    
    
    5.82$6.01 -$7.00
    
    
    750
    
    
    
    8.7
    
    
    
    6.50
    
    
    
    250
    
    
    
    6.50704,014
    
    
    
    5.4
    
    
    
    3.64
    
    
    
    537,085
    
    
    
    2.99
 Note 12. Income Taxes
  December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Current:Federal
    
    $
    
    
    
    $
    50
    
    
    $
    State
    
    
    5
    
    
    
    34
    
    
    
    505
    
    
    
    84
    
    
    
    50Deferred:Federal
    
    
    517
    
    
    
    
    
    
    
    283State
    
    
    48
    
    
    
    
    
    
    
    28565
    
    
    
    
    
    
    
    311Provision for income taxes
    
    $
    570
    
    
    $
    84
    
    
    $
    361
  Year ended December 31,(In thousands)
    
    2004
    
    
    2003
    
    
    2002Provision
(benefit) for income taxes at federal statutory rate
    
    $
    694
    
    
    $
    (1,673
    )
    
    $
    458Adjustments due to:Non-deductible
intangible amortization
    
    
    51
    
    
    
    21
    
    
    
    State income taxes, net of federal benefit
    
    
    63
    
    
    
    (153
    )
    
    
    50Valuation allowance
    
    
    (293
    )
    
    
    1,651
    
    
    
    (175
    )Fines and penalties
    
    
    8
    
    
    
    192
    
    
    
    Meals and
entertainment
    
    
    43
    
    
    
    42
    
    
    
    51Other
    
    
    4
    
    
    
    4
    
    
    
    (23
    )Provision
for income taxes
    
    $
    570
    
    
    $
    84
    
    
    $
    361
 F-28




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   December 31,(In thousands)
    
    2004
    
    
    2003Deferred tax assets:Goodwill
    
    $
    2,362
    
    
    $
    2,663Net operating loss carryforwards
    
    
    1,064
    
    
    
    1,069Inventories
    
    
    1,689
    
    
    
    1,975Deferred income
    
    
    2,350
    
    
    
    2,188Other accruals and reserves
    
    
    1,188
    
    
    
    1,273Federal tax credits
    
    
    163
    
    
    
    163Total deferred tax assets
    
    
    8,816
    
    
    
    9,331Valuation allowance
    
    
    (7,974
    )
    
    
    (8,807
    )Net deferred tax assets
    
    
    842
    
    
    
    524Deferred tax liabilities:Depreciation
    
    
    386
    
    
    
    396Prepaid expenses
    
    
    456
    
    
    
    128Total deferred tax liabilities
    
    
    842
    
    
    
    524Total net deferred tax assets
    
    $
    
    
    
    $
    
   F-29




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13. Employee Savings Plan
  Note 14. Selected Quarterly Data (unaudited)
    MAR. 31,2003
    
    
    JUNE 30,2003
    
    
    SEPT. 30,2003
    
    
    DEC. 31,2003
    
    
    MAR. 31,2004
    
    
    JUNE 30,2004
    
    
    SEPT. 30,2004
    
    
    DEC. 31, 2004(In thousands, except per share amounts)Revenues
    
    $
    14,283
    
    
    $
    17,534
    
    
    $
    18,008
    
    
    $
    17,252
    
    
    $
    21,547
    
    
    $
    18,137
    
    
    $
    19,515
    
    
    $
    17,916Cost of goods sold
    
    
    8,969
    
    
    
    10,575
    
    
    
    11,475
    
    
    
    10,405
    
    
    
    12,303
    
    
    
    10,440
    
    
    
    10,700
    
    
    
    9,808Gross profit
    
    
    5,314
    
    
    
    6,959
    
    
    
    6,533
    
    
    
    6,847
    
    
    
    9,244
    
    
    
    7,697
    
    
    
    8,815
    
    
    
    8,108Operating expenses:Sales and marketing
    
    
    3,751
    
    
    
    3,493
    
    
    
    3,248
    
    
    
    3,967
    
    
    
    3,591
    
    
    
    3,337
    
    
    
    3,425
    
    
    
    3,103General and administrative
    
    
    1,776
    
    
    
    1,615
    
    
    
    1,566
    
    
    
    3,328
    
    
    
    3,806
    
    
    
    2,440
    
    
    
    2,963
    
    
    
    2,039Research and development
    
    
    1,134
    
    
    
    1,236
    
    
    
    1,015
    
    
    
    1,562
    
    
    
    937
    
    
    
    643
    
    
    
    840
    
    
    
    855Warehouse and distribution
    
    
    538
    
    
    
    717
    
    
    
    657
    
    
    
    338
    
    
    
    556
    
    
    
    613
    
    
    
    629
    
    
    
    528Total operating expenses
    
    
    7,199
    
    
    
    7,061
    
    
    
    6,486
    
    
    
    9,195
    
    
    
    8,890
    
    
    
    7,033
    
    
    
    7,857
    
    
    
    6,525(Loss) income from operations
    
    
    (1,885
    )
    
    
    (102
    )
    
    
    47
    
    
    
    (2,348
    )
    
    
    354
    
    
    
    664
    
    
    
    958
    
    
    
    1,583Interest expense
    
    
    (75
    )
    
    
    (99
    )
    
    
    (155
    )
    
    
    (308
    )
    
    
    (384
    )
    
    
    (404
    )
    
    
    (361
    )
    
    
    (401
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    19
    
    
    
    13
    
    
    
    
    
    
    
    (Loss) income before income taxes
    
    
    (1,960
    )
    
    
    (201
    )
    
    
    (108
    )
    
    
    (2,651
    )
    
    
    (11
    )
    
    
    273
    
    
    
    597
    
    
    
    1,182Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (12
    )
    
    
    (83
    )
    
    
    (165
    )
    
    
    (310
    )Net (loss) income
    
    $
    (1,960
    )
    
    $
    (201
    )
    
    $
    (108
    )
    
    $
    (2,735
    )
    
    $
    (23
    )
    
    $
    190
    
    
    $
    432
    
    
    $
    872(Loss) income per share:Basic (loss) income per share
    
    $
    (0.09
    )
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.12
    )
    
    $
    
    
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.04Diluted (loss) income per share
    
    $
    (0.09
    )
    
    $
    (0.01
    )
    
    $
    
    
    
    $
    (0.12
    )
    
    $
    
    
    
    $
    0.01
    
    
    $
    0.02
    
    
    $
    0.04Basic shares outstanding
    
    
    22,216
    
    
    
    22,228
    
    
    
    22,244
    
    
    
    22,249
    
    
    
    22,257
    
    
    
    22,289
    
    
    
    22,307
    
    
    
    22,310Diluted shares outstanding
    
    
    22,216
    
    
    
    22,228
    
    
    
    22,244
    
    
    
    22,249
    
    
    
    22,794
    
    
    
    22,741
    
    
    
    22,745
    
    
    
    22,773
 F-30




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 15. Restatement of Financial Statements
     Note 16. Related Party Transactions
 Transactions with VBSA
  Loan Agreements
  F-31




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Directors and Officers Insurance Procurement Agreement
  Trademark Agreement
  Supply Agreement
  F-32




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Development and License Agreement
  License Agreement  Pyriproxyfen
  Distribution Agreement
  F-33




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Sub License Agreement
  Secrecy Agreements
  Note 17. Segment and Related Information
     F-34




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Consumer
    
    
    Contract(In thousands)
    
    Veterinary
    
    
    Brand
    
    
    Manufacturing
    
    
    Unallocated
    
    
    ConsolidatedAs of and for the year ended
December 31, 2004Revenues from external customers
    
    $
    39,341
    
    
    $
    21,244
    
    
    $
    16,530
    
    
    $
    
    
    
    $
    77,115Depreciation and amortization
    
    
    1,387
    
    
    
    62
    
    
    
    599
    
    
    
    684
    
    
    
    2,732Income (loss) from operations
    
    
    14,088
    
    
    
    2,463
    
    
    
    1,600
    
    
    
    (14,592
    )
    
    
    3,559Interest expense and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,518
    )
    
    
    (1,518
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (570
    )
    
    
    (570
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,471Total assets
    
    
    4,360
    
    
    
    1,532
    
    
    
    18,132
    
    
    
    37,032
    
    
    
    61,056Capital expenditures
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    955
    
    
    
    1,323As of and for the year ended
December 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
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (84
    )
    
    
    (84
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,004
    )Total assets
    
    
    3,870
    
    
    
    2,240
    
    
    
    13,906
    
    
    
    45,129
    
    
    
    65,145Capital expenditures
    
    
    
    
    
    
    
    
    
    
    725
    
    
    
    598
    
    
    
    1,323As of and for the year ended
December 31, 2002Revenues from external customers
    
    $
    28,726
    
    
    $
    22,794
    
    
    $
    9,403
    
    
    $
    
    
    
    $
    60,923Depreciation and amortization
    
    
    56
    
    
    
    59
    
    
    
    898
    
    
    
    372
    
    
    
    1,385Income (loss) from operations
    
    
    6,342
    
    
    
    206
    
    
    
    1,043
    
    
    
    (5,879
    )
    
    
    1,712Interest expense and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (366
    )
    
    
    (366
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (361
    )
    
    
    (361
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,323
    )Total assets
    
    
    12,620
    
    
    
    1,973
    
    
    
    15,752
    
    
    
    14,900
    
    
    
    45,245Capital expenditures
    
    
    
    
    
    
    
    
    
    
    830
    
    
    
    674
    
    
    
    1,504
   (In thousands)
    
    2004
    
    
    2003
    
    
    2002United States
    
    $
    74,228
    
    
    $
    63,747
    
    
    $
    57,026Canada
    
    
    1,164
    
    
    
    1,118
    
    
    
    1,892Export
    
    
    1,723
    
    
    
    2,212
    
    
    
    2,005Total revenue
    
    $
    77,115
    
    
    $
    67,077
    
    
    $
    60,923
 F-35




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##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 18. Subsequent Events
     F-36




---



##### Table of Contents



VIRBAC
CORPORATION
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 VIRBAC CORPORATION
SCHEDULE II  RULE 12-09
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
DECEMBER 31, 2002, 2003 and 2004
 VIRBAC CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 (In thousands)Column A
    
    Column B
    
    
    Column C
    
    
    Column D
    
    
    Column EAdditionsBalance at
    
    
    Charged to
    
    
    Charged to
    
    
    
    
    
    
    Balance atBeginning of
    
    
    Costs and
    
    
    other
    
    
    
    
    
    
    End ofDescription
    
    Year
    
    
    Expenses
    
    
    accounts
    
    
    Deductions
    
    
    YearYear ended December 31, 2002Inventory reserve
    
    $
    1,502
    
    
    $
    1,004
    
    
    $
    
    
    
    $
    708
    (1)
    
    $
    1,798Allowance for doubtful accounts
    
    
    122
    
    
    
    145
    
    
    
    
    
    
    
    132
    (2)
    
    
    135Billing and sales return reserves
    
    
    1,481
    
    
    
    877
    
    
    
    
    
    
    
    
    
    
    
    2,358Product replacement reserves
    
    
    57
    
    
    
    442
    
    
    
    
    
    
    
    129
    (4)
    
    
    370Deferred tax valuation reserve
    
    
    7,536
    
    
    
    
    
    
    
    
    
    
    
    380
    (5)
    
    
    7,156Year 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
    
    
    
    127
    
    
    
    
    
    
    
    117
    (3)
    
    
    2,368Product replacement reserves
    
    
    370
    
    
    
    409
    
    
    
    
    
    
    
    545
    (4)
    
    
    234Deferred tax valuation reserve
    
    
    7,156
    
    
    
    
    
    
    
    1,651
    (5)
    
    
    
    
    
    
    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
    
    
    
    (42
    )
    
    
    (90
    )
    
    
    
    
    
    
    2,236Product replacement reserves
    
    
    234
    
    
    
    (112
    )
    
    
    
    
    
    
    122
    (4)
    
    
    Deferred tax valuation reserve
    
    
    8,807
    
    
    
    
    
    
    
    
    
    
    
    833
    (5)
    
    
    7,974
 
 (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)
    
    Rebates, discounts or refunds for customer returns were allowed against customer receivable
amounts.(4)
    
    Customer product replaced upon expiration.(5)
    
    Change in the deferred tax asset valuation. F-37




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##### 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.
    
    +10.27
    
    Agreement for Temporary Management Services between Virbac
Corporation and Executive Interim Management dated
December 16, 2003.
    
    (15); Ex. 10.2610.28
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Joseph Rougraff
dated March 24, 2004.
    
    (15); Ex. 10.2710.29
    
    Employment Termination, Release and Cooperation Agreement
by and between Virbac Corporation and Thomas Bell dated
April 15, 2004.
    
    (15); Ex. 10.2810.30
    
    Employment and Consulting Agreement by and between Virbac
Corporation and David Eller, dated as of June 18, 2004.
    
    (15); Ex. 10.2910.31
    
    Employment Agreement by and between Virbac Corporation and
Jean M. Nelson, dated as of May 20, 2004.
    
    +10.32
    
    Employment Agreement by and between Virbac Corporation and
Erik R. Martinez, dated as of October 1, 2004.
    
    +10.33
    
    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. 10.1410.34
    
    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. 10.15




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.35
    
    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. 10.1910.36
    
    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. 10.2310.37
    
    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. 10.2410.38
    
    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. 10.2510.39
    
    Acknowledgment of Extended Maturity Date by Virbac S.A.,
dated June 3, 2004.
    
    (14); Ex. 10.1810.40
    
    Acknowledgment of 2005 Extended Maturity Date by Virbac
S.A., dated February 8, 2005.
    
    (14); Ex. 10.2210.41
    
    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.
    
    +10.42
    
    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.
    
    +10.43
    
    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.
    
    +10.44
    
    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.
    
    +10.45
    
    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. 10.1610.46
    
    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. 10.17




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##### Table of Contents



IncorporationExhibit
    
    
    
    by ReferenceNumber
    
    Description of Document
    
    (if applicable)10.47
    
    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. 10.2010.48
    
    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. 10.2110.49
    
    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. 10.2610.50
    
    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. 10.2710.51
    
    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. 21.131.1
    
    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 of the Chief Executive Officer pursuant to
18. U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
    
    +32.2
    
    Certification of the Chief Financial Officer 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




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##### Table of Contents



+
    
    Filed herewith.(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. (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)