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Large, Growing Market.    According to the 2001-2002 American Pet Products Manufacturers Association Pet Owners Survey, the ownership of pets is widespread, with over 62% of U.S. households owning at least one pet, including companion and other animals. The U.S. population of companion animals is approximately 188 million, including about 141 million dogs and cats. According to the U.S. Pet Ownership & Demographics Sourcebook published by the American Veterinary Medical Association, over $11 billion was spent on companion animal health care services in 1996, with an annual growth rate of over 9.5% from 1991 through 1996 for spending on dogs and cats. We believe this growth is primarily driven by an increased emphasis on pet health and wellness, continued technological developments driving new and previously unconsidered diagnostic tests, procedures and treatments, and favorable demographic trends supporting a growing pet population.

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Rapidly Growing Veterinary Diagnostic Testing Services.    We believe that outsourced diagnostic testing is among the fastest growing segments of the animal health care services industry. Reflecting this trend, our laboratory internal revenue growth has averaged 11.4% over the last three fiscal years. The growth in outsourced diagnostic testing resulted from an overall increase in the number of tests requisitioned by veterinarians and from veterinarians’ increased reliance on outsourced diagnostic testing rather than in-house testing. The overall increase in the number of tests performed is primarily due to the growing focus by veterinarians on wellness and monitoring programs, the emphasis in veterinary education on utilizing diagnostic tests for more accurate diagnoses and continued technological developments in veterinary medicine leading to new and improved tests. The increased utilization of outsourced testing is primarily due to the relative low cost and high accuracy rates provided by outside laboratories and the diagnostic consulting provided by experts employed by the leading outside laboratories.

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Attractive Client Payment Dynamics.    The animal health care services industry does not experience the problems of extended payment collection cycles or pricing pressures from third-party payors faced by human health care providers. Outsourced laboratory testing is a wholesale business that collects payments directly from animal hospitals, generally on terms requiring payment within 30 days of the date the charge is invoiced. Fees for animal hospital services are due and typically paid for at the time of the service. For example, over 95% of our animal hospital services are paid for in cash or by credit card at the time of the service. In addition, over the past three fiscal years, our bad debt expense has averaged only 1% of total revenue.

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Market Leader.    We are a market leader in each of the business segments in which we operate. We maintain the only veterinary diagnostic laboratory network serving all 50 states, which is supported by the largest group of consulting veterinary specialists in the industry. Our network of animal hospitals and veterinarians is the largest in the United States. We believe that it would be difficult, time consuming and expensive for new entrants or existing competitors to assemble a comparable nationwide laboratory or animal hospital network.

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Compelling Business Model.    The fixed cost nature of our business allows us to generate strong margins, particularly on incremental revenues. In each quarter since 1999, we have generated positive laboratory internal revenue growth. The growth in our laboratory revenue, combined with greater utilization of our infrastructure, has enabled us to improve our laboratory operating margin from 27.1% in 1999 to 33.8% for the twelve months ended September 30, 2002, and our laboratory adjusted EBITDA margin from 31.2% to 36.1% over the same period. In each quarter since 1999, we have generated positive animal hospital same-facility revenue growth. Due to the operating leverage associated with our animal hospital business, the increase in animal hospital revenue has enabled us to improve our animal hospital operating margin from 12.3% in 1999 to 17.3% for the twelve months ended September 30, 2002, and our animal hospital adjusted EBITDA margin from 17.1% to 20.7% over the same period. These high margins, combined with our modest working capital needs and low maintenance capital expenditures, provide cash that we can use for acquisitions or to reduce indebtedness.

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Leading Team of Specialists.    We believe our laboratories are a valuable diagnostic resource for veterinarians. Due to the trend towards offering specialized services in veterinary medicine, our network of 83 specialists, which includes veterinarians, chemists and other scientists with expertise in fields such as pathology, internal medicine, oncology, cardiology, dermatology, neurology and endocrinology, provides us with a significant competitive advantage. These specialists are available to consult with our laboratory clients, providing a compelling reason for them to use our laboratories rather than those of our competitors, most of whom offer no comparable service. Our team of specialists represents the largest interactive source for readily available diagnostic advice in the veterinary industry and interact with animal health care professionals over 90,000 times a year.

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High Quality Service Provider.    We believe that we have built a reputation as a trusted animal health brand among veterinarians and pet owners alike. In our laboratories, we maintain rigorous quality assurance programs to ensure the accuracy of reported results. We calibrate our laboratory equipment several times daily with test specimens of known concentration or reactivity to assure accuracy and use only qualified personnel to perform testing. Further, our specialists review all test results outside of the range of established norms. As a result of these measures, we believe our diagnostic accuracy rate is over 99%. In our animal hospitals, we provide continuing education programs, promote the sharing of professional knowledge and expertise and have developed and implemented a program of best practices to promote quality medical care.

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Shared Expertise Among Veterinarians.    We believe our group of animal hospitals and veterinarians provide us with a competitive advantage through our collective expertise and experience. Our veterinarians consult with other veterinarians in our network to share information regarding the practice of veterinary medicine, which continues to expand our collective knowledge. We maintain an internal continuing education program for our veterinarians and have an established infrastructure for the dissemination of information on new developments in diagnostic testing, procedures and treatment programs.

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Capitalizing on Our Leading Market Position to Generate Revenue Growth.    Our leading market position in each of our business segments positions us to take advantage of favorable growth trends in the animal health care services industry. In our laboratories, we seek to generate revenue growth by capitalizing on the growing number of outsourced diagnostic tests and by increasing our market share. In our animal hospitals, we seek to generate revenue growth by capitalizing on the growing emphasis on pet health and wellness and favorable demographic trends supporting a growing pet population.

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Leveraging Established Infrastructure to Improve Margins.    Due to our established networks and the fixed cost nature of our business model, we are able to realize high margins on incremental revenues from both laboratory and animal hospital clients. For example, given that our nationwide transportation network servicing our laboratory clients is a relatively fixed cost, we are able to achieve significantly higher margins on most incremental tests ordered by the same client when picked up by our couriers at the same time. We estimate that in most cases, we realize an operating and EBITDA margin between 60% and 75% on these incremental tests.

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Utilizing Enterprise-Wide Systems to Improve Operating Efficiencies.    In 2001, we completed the migration of our animal hospital operations to an enterprise-wide management information system. This common system has enabled us to effectively manage the key operating metrics that drive our business. We use this system to help standardize our pricing, implement and monitor the effectiveness of targeted marketing programs, expand the services provided by our veterinarians and capture unbilled services.

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Pursuing Selected Acquisitions.    Although we have substantially completed our laboratory infrastructure, we may make selective, strategic laboratory acquisitions, with any new operations likely to be merged into existing facilities. Additionally, the fragmentation of the animal hospital industry provides us with significant expansion opportunities in our animal hospital segment. Depending on the attractiveness of the candidates and the strategic fit with our existing operations, we intend to acquire approximately 15 to 25 animal hospitals per year primarily utilizing internally generated cash.

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Continued Growth.    Our success depends, in part, on our ability to build on our position as a leading animal health care services company through a balanced program of internal growth initiatives and selective acquisitions of established animal hospitals and laboratories. We may be unable to successfully execute our growth strategy and, as a result, our business may be harmed.

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Management of Growth.    Our business and results of operations may be adversely affected if we are unable to manage our growth effectively, which may increase our costs of operations and hinder our ability to execute our business strategy.

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Substantial Debt.    Our substantial amount of debt, including senior and secured debt, as well as the guarantees of our subsidiaries and the security interests in our assets, could impair our ability to operate our business effectively and may limit our ability to take advantage of business opportunities.

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Concentration of Ownership.    Concentration of ownership among our existing executive officers, directors and principal stockholders may inhibit new investors from influencing significant corporate decisions. These stockholders will be able to significantly affect our management, our policies and all matters requiring stockholder approval.

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Fixed Costs.    A significant percentage of our expenses, particularly rent and personnel costs, are fixed costs and are based in part on expectations of revenue. We may be unable to reduce spending in a timely manner to compensate for any significant fluctuations in our revenues.

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excludes 1,955,901 shares of common stock issuable upon exercise of outstanding options under our stock incentive plans, at a weighted average exercise price of $9.95 per share;

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excludes 650,000 shares available for future issuance under our stock incentive plans; and

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assumes no exercise of the underwriters’ over-allotment option.

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(1)

Includes other revenue of $1.5 million for each of the nine months ended September 30, 2002 and 2001, and $2.0 million, $925,000 and $5.1 million for the years ended December 31, 2001, 2000 and 1999. Total revenue is net of intercompany eliminations of $6.9 million and $5.7 million for the nine months ended September 30, 2002 and 2001, and $7.5 million, $6.2 million and $5.8 million for the years ended December 31, 2001, 2000 and 1999.

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(2)

The pro forma statement of operations data for the nine months ended September 30, 2002 and the year ended December 31, 2001 are presented as if this offering, our initial public offering, concurrent note offering by one of our wholly owned subsidiaries and the application of the net proceeds therefrom, and our use of $12.3 million of cash on hand, which occurred in November 2001, occurred on January 1, 2001.

(3)

EBITDA is operating income before depreciation and amortization. Adjusted EBITDA for the 2001 and 2000 periods represents EBITDA adjusted to exclude non-cash compensation and management fees paid pursuant to our management services agreement with Leonard Green & Partners, which was terminated in November 2001. Adjusted EBITDA for the 2001 periods also excludes agreement termination costs and write-down of assets. Adjusted EBITDA for the 2000 period also excludes recapitalization costs. Adjusted EBITDA for the 1999 period represents EBITDA adjusted to exclude Year 2000 remediation expense and other non-cash operating items. No adjustments were made to the EBITDA calculations for 2002.

EBITDA and adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, or GAAP. EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity. We believe EBITDA is a useful measure of our operating performance as it reflects earnings before the impact of items that may change from period to period for reasons not directly related to our operations, such as the depreciation and amortization, interest and taxes and other non-operating or non-recurring items. EBITDA also is an important component of the financial ratios included in our debt covenants and provides us with a measure of our ability to service our debt and meet capital expenditure requirements from our operating results. Our calculation of EBITDA may not be comparable to similarly titled measures reported by other companies.

(a)

Management fees were paid pursuant to our management services agreement and are included in selling, general and administrative expense in our statements of operations. Effective November 27, 2001, the parties terminated the management services agreement.

(b)

Other non-cash operating items include a write-down of assets of $8.6 million and non-cash compensation of $1.4 million included in direct costs and $6.2 million included in selling, general and administrative expense for the nine months ended September 30, 2001; a write-down of assets of $9.2 million and non-cash compensation of $1.4 million included in direct costs and $6.2 million included in selling, general and administrative expense for the year ended December 31, 2001; non-cash compensation of $103,000 included in direct costs and $452,000 included in selling, general and administrative expense for the year ended December 31, 2000 and reversal of restructuring charges of $1.9 million for the year ended December 31, 1999.

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(4)	Adjusted EBITDA is the sum of adjusted laboratory EBITDA, adjusted animal hospital EBITDA and other revenue, less corporate selling, general and administrative expense, excluding non-cash compensation and management fees and including the effect of gain (loss) on sale of assets.

(a)

Corporate selling, general and administrative expense excludes non-cash compensation of $771,000 and management fees of $1.9 million for the nine months ended September 30, 2001, non-cash compensation of $771,000 and management fees of $2.3 million for the year ended December 31, 2001; and non-cash compensation of $56,000 and management fees of $620,000 for the year ended December 31, 2000. Management fees were paid pursuant to our management services agreement. Effective November 27, 2001, the parties terminated the management services agreement.

(5)	Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by total revenue.

(6)

Adjusted laboratory EBITDA excludes non-cash compensation of $4.3 million for the nine months ended September 30, 2001, and non-cash compensation of $4.3 million and $311,000 for the years ended December 31, 2001 and 2000. Adjusted laboratory EBITDA margin is calculated by dividing adjusted laboratory EBITDA by laboratory revenue.

(7)

Adjusted animal hospital EBITDA excludes non-cash compensation of $2.6 million for the nine months ended September 30, 2001, and non-cash compensation of $2.6 million and $188,000 for the years ended December 31, 2001 and 2000. Adjusted animal hospital EBITDA margin is calculated by dividing adjusted animal hospital EBITDA by animal hospital revenue.

(8)

Laboratory internal revenue growth is calculated using laboratory revenue as reported, adjusted to exclude, for those laboratories that we did not own for the entire period presented, an estimate of revenue generated by these newly acquired laboratories subsequent to the date of our purchase. We calculate this estimate of revenue for each newly acquired laboratory using an historical twelve-month revenue figure (in some cases on an annualized basis) provided to us by the seller of the acquired laboratory, which amount is increased by our laboratory revenue growth rate for the prior year. In calculating the laboratory revenue growth rate for the year in which the acquisition occurred, we exclude from our reported laboratory revenue the estimated annual revenue attributable to newly acquired laboratories multiplied by a fraction representing the portion of the year that we owned the related facility. In calculating the laboratory revenue growth rate for the year following the acquisition, we exclude from our reported laboratory revenue the estimated annual revenue attributable to newly acquired laboratories multiplied by a fraction representing the portion of the year that we did not own the facility. To determine laboratory internal revenue growth rate for the applicable period, we compare laboratory revenue net of estimated laboratory revenue of acquired laboratories to laboratory revenue as reported for the prior comparable period. We believe this fairly presents laboratory internal revenue growth for the periods presented, although our calculation may not be comparable to similarly titled measures reported by other companies.

(9)	Animal hospital same-facility revenue growth is calculated using the combined revenue of the animal hospitals owned and managed for the entire periods presented.

(10)

The as adjusted balance sheet data are presented as if (a) the issuance of $25.0 million in additional senior term C notes under our senior credit facility; (b) the redemption of the entire principal amount of our 13.5% senior subordinated notes; and (c) the redemption of $30.0 million principal amount of our 15.5% senior notes, each of which occurred in October 2002, had occurred at September 30, 2002.

(11)

The pro forma as adjusted balance sheet data are presented as if (a) this offering and the application of the net proceeds therefrom; (b) the issuance of $25.0 million in additional senior term C notes under our senior credit facility; (c) the redemption of the entire principal amount of our 13.5% senior subordinated notes; and (d) the redemption of $30.0 million principal amount of our 15.5% senior notes, each of which occurred in October 2002, had occurred at September 30, 2002.

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negative effects on our operating results;

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impairment of goodwill and other intangible assets;

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dependence on retention, hiring and training of key personnel, including specialists; and

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contingent and latent risks associated with the past operations of, and other unanticipated problems arising in, an acquired business.

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(1)

We intend to use the proceeds from this offering to repay the entire outstanding principal amount of our 15.5% senior notes. If we repay the entire outstanding principal amount of these notes, our future cash obligations as set forth in the table above will be reduced by $23.0 million in 2005 and $5.3 million in 2006.

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limit our funds available to repay the 15.5% senior notes and 9.875% senior subordinated notes;

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limit our ability to borrow additional funds or to obtain other financing in the future for working capital, capital expenditures, acquisitions, investments and general corporate purposes;

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limit our ability to dispose of our assets, create liens on our assets or to extend credit;

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make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business and economic conditions;

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limit our flexibility in planning for, or reacting to, changes in our business or industry;

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place us at a competitive disadvantage to our competitors with less debt; and

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restrict our ability to pay dividends, repurchase or redeem our capital stock or debt, or merge or consolidate with another entity.

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demand for our tests;

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changes in our pricing policies or those of our competitors;

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the hiring and retention of key personnel;

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wage and cost pressures;

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changes in fuel prices or electrical rates;

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costs related to acquisitions of technologies or businesses; and

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seasonal and general economic factors.

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a classified board of directors;

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a prohibition on stockholder action through written consents;

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a requirement that special meetings of stockholders be called only by our board of directors, the Chairman of our board of directors, our President or our Chief Executive Officer;

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advance notice requirements for stockholder proposals and nominations; and

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availability of “blank check” preferred stock.

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to repay the entire outstanding principal amount, or approximately $36.7 million, of our 15.5% senior notes due 2010 at a redemption price of 110% of the principal amount, for an aggregate of $40.4 million, plus accrued and unpaid interest; and

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for general corporate purposes.

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on an actual basis;

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on an as adjusted basis to reflect transactions that occurred in October 2002; and

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on a pro forma as adjusted basis to reflect transactions that occurred in October 2002 and this offering at a public offering price of $15.25 per share and the intended application of the net proceeds therefrom.

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(1)

The as adjusted data are presented as if (a) the issuance of $25.0 million in additional senior term C notes under our senior credit facility; (b) the repayment of the entire outstanding principal amount of our 13.5% senior subordinated notes; and (c) the repayment of $30.0 million in principal of our 15.5% senior notes, each of which occurred in October 2002, had occurred at September 30, 2002.

(2)

The pro forma as adjusted data are presented as if (a) this offering and the application of the net proceeds therefrom; (b) the issuance of $25.0 million in additional senior term C notes under our senior credit facility; (c) the repayment of the entire outstanding principal amount of our 13.5% senior subordinated notes; and (d) the repayment of $30.0 million in principal of our 15.5% senior notes, each of which occurred in October 2002, had occurred at September 30, 2002.

(3)	The revolving credit facility provides for borrowings of up to $50.0 million, $7.5 million of which was drawn in December 2002 and is outstanding.

(4)

On August 29, 2002, we repaid our senior term A and senior term B notes with the proceeds acquired from the issuance of senior term C notes, which bear a lower interest rate than the weighted average interest rate for the senior term A and senior term B notes. See “Description of Certain Indebtedness” for additional information.

(5)	Share information is based on the number of shares outstanding as of September 30, 2002, and:

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excludes 1,955,901 shares of common stock issuable upon exercise of outstanding options under our stock incentive plans, at a weighted average exercise price of $9.95 per share;

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excludes 650,000 shares available for future issuance under our stock incentive plans; and

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assumes no exercise of the underwriters’ over-allotment option.

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(1)

Other revenue includes consulting fees of $1.5 million for each of the nine months ended September 30, 2002 and 2001, and consulting fees of $2.0 million, $925,000, $5.1 million, $5.1 million and $4.7 million for the years ended December 31, 2001, 2000, 1999, 1998 and 1997. For the year ended December 31, 1997, other revenue also includes revenue from our pet product joint venture; we transferred the control of the joint venture to our joint venture partner in February 1997.

(2)

EBITDA is operating income before depreciation and amortization. Adjusted EBITDA for the 2001 and 2000 periods represents EBITDA adjusted to exclude non-cash compensation and management fees paid pursuant to our management services agreement with Leonard Green & Partners, which was terminated in November 2001. Adjusted EBITDA for the 2001 periods also excludes agreement termination costs and write-down of assets. Adjusted EBITDA for the 2000 period also excludes recapitalization costs. Adjusted EBITDA for the 1999 period represents EBITDA adjusted to exclude Year 2000 remediation expense and other non-cash operating items. No adjustments were made to the EBITDA calculations for 2002.

(a)

Management fees were paid pursuant to our management services agreement and are included in selling, general and administrative expense in our statements of operations. Effective November 27, 2001, the parties terminated the management services agreement.

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(b)

Other non-cash operating items include a write-down of assets of $8.6 million and non-cash compensation of $1.4 million included in direct costs and $6.2 million included in selling general and administrative expense for the nine months ended September 30, 2001; a write-down of assets of $9.2 million and non-cash compensation of $1.4 million included in direct costs and $6.2 million included in selling, general and administrative expense for the year ended December 31, 2001; non-cash compensation of $103,000 included in direct costs and $452,000 included in selling, general and administrative expense for the year ended December 31, 2000; reversal of restructuring charges of $1.9 million for the year ended December 31, 1999.

(3)

Adjusted EBITDA is the sum of adjusted laboratory EBITDA, adjusted animal hospital EBITDA and other revenue, less corporate selling, general and administrative expense, excluding non-cash compensation and management fees and including the effect of gain (loss) on sale of assets. For the year ended December 31, 1997, adjusted EBITDA also includes EBITDA of our pet products joint venture of $168,000.

(a)

Corporate selling, general and administrative expense excludes non-cash compensation of $771,000 and management fees of $1.9 million for the nine months ended September 30, 2001, non-cash compensation of $771,000 and management fees of $2.3 million for the year ended December 31, 2001; and non-cash compensation of $56,000 and management fees of $620,000 for the year ended December 31, 2000. Management fees were paid pursuant to our management services agreement. Effective November 27, 2001, the parties terminated the management services agreement.

(4)	Adjusted EBITDA margin is calculated by dividing adjusted EBITDA by total revenue.

(5)

Adjusted laboratory EBITDA excludes non-cash compensation of $4.3 million for the nine months ended September 30, 2001, and non-cash compensation of $4.3 million and $311,000 for the years ended December 31, 2001 and 2000. Adjusted laboratory EBITDA margin is calculated by dividing adjusted laboratory EBITDA by laboratory revenue.

(6)

Adjusted animal hospital EBITDA excludes non-cash compensation of $2.6 million for the nine months ended September 30, 2001, and non-cash compensation of $2.6 million and $188,000 for the years ended December 31, 2001 and 2000. Adjusted animal hospital EBITDA margin is calculated by dividing adjusted animal hospital EBITDA by animal hospital revenue.

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the contribution of $155.0 million by a group of investors led by Leonard Green & Partners;

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borrowings of $250.0 million under a $300.0 million senior credit facility;

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the issuance of an aggregate of $100.0 million of 15.5% senior notes; and

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the issuance of an aggregate of $20.0 million of 13.5% senior subordinated notes.

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redeemed all of our outstanding series A and series B redeemable preferred stock for $173.8 million;

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repaid $100.0 million of our senior term A and B notes;

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repaid $59.1 million in principal of our 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

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repaid $5.0 million in principal of our 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

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repaid our senior term A and senior term B notes with the proceeds acquired from the issuance of senior term C notes, which bear a lower interest rate than the weighted average interest rate for the senior term A and senior term B notes;

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repaid $15.0 million, the entire outstanding principal amount, of our 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

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repaid $30.0 million in principal amount of our 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

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there exists adequate evidence of the transaction;

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delivery of goods has occurred or services have been rendered; and

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the price is not contingent on future activity and collectibility is reasonably assured.

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(1)	For the nine months ended September 30, 2001, laboratory EBITDA was adjusted to exclude non-cash compensation of $4.3 million. No adjustments were made in 2002.

(2)	For the nine months ended September 30, 2001, animal hospital EBITDA was adjusted to exclude non-cash compensation of $2.6 million. No adjustments were made in 2002.

(3)	For the nine months ended September 30, 2001, corporate selling, general and administrative expense was adjusted to exclude non-cash compensation of $771,000 and management fees of $1.9 million. No adjustments were made in 2002.

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(1)	Laboratory EBITDA was adjusted to exclude non-cash compensation of $4.3 million and $311,000 for the years ended December 31, 2001 and 2000, respectively.

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(2)	Animal hospital EBITDA was adjusted to exclude non-cash compensation of $2.6 million and $188,000 for the years ended December 31, 2001 and 2000, respectively.

(3)	Corporate selling, general and administrative expense was adjusted to exclude non-cash compensation of $771,000 and management fees of $2.3 million for the year ended December 31, 2001, and non-cash compensation of $56,000 and management fees of $620,000 for the year ended December 31, 2000.

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redeemed all of our outstanding series A and series B redeemable preferred stock for $173.8 million;

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repaid $100.0 million of our senior term A and B notes;

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repaid $59.1 million in principal of our 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest;

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repaid $5.0 million in principal of our wholly owned subsidiary’s 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

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made deferred financing payments in the amount of approximately $4.4 million.

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repaid long-term obligations in the amount of $172.9 million;

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repurchased common stock in the amount of $314.5 million;

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made deferred financing and recapitalization payments in the amount of approximately $44.1 million; and

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made non-competition payments in the aggregate amount of $15.6 million to four of our executive officers including: Robert L. Antin, our Chief Executive Officer, President and founder; Arthur J. Antin, our Chief Operating Officer, Senior Vice President and founder; Neil Tauber, our Senior Vice President of Development and founder; and Tomas W. Fuller, our Chief Financial Officer. These payments are included in investing activities.

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(1)

We intend to use the proceeds from this offering to repay the entire outstanding principal amount of our 15.5% senior notes. If we repay the entire outstanding principal amount of these notes, our future cash obligations will be reduced by $23.0 million in 2005, $5.3 million in 2006 and $55.9 million thereafter, for an aggregate reduction of $84.2 million.

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if the benchmark rate is below 5.9% and a change in the rate does not cause the benchmark to exceed 5.9%, every one-half percent increase in the benchmark rate will cause interest expense to increase by $445,000, while a one-half percent decrease will cause interest expense to decrease by $445,000;

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if the benchmark rate is equal to or between 5.9% and 7.5% and a change in the rate does not cause the benchmark to exceed 7.5% or drop below 5.9%, every one-half percent increase in the benchmark rate will cause interest expense to increase by $718,000, while a one-half percent decrease will cause interest expense to decrease by $718,000; and

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if the benchmark rate is above 7.5% and a change in the rate does not cause the benchmark to drop below 7.5%, every one-half percent increase in the benchmark rate would cause interest expense to increase by $445,000, while a one-half percent decrease would cause interest expense to decrease by $445,000.

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the increased focus on wellness and monitoring programs in veterinary medicine, which is increasing the overall number of tests being performed;

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the emphasis in veterinary education on diagnostic tests and the trend toward specialization in veterinary medicine, which are causing veterinarians to increasingly rely on tests for more accurate diagnoses;

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the continued technological developments in veterinary medicine, which are increasing the breadth of tests offered; and

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the trend toward outsourcing tests because of the relative low cost, the high accuracy rates and the diagnostic support provided by specialists employed by the laboratory.

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the purchasing, marketing and administrative cost advantages that can be realized by a large, multiple location, multi-practitioner veterinary provider;

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the cost of financing equipment purchases and upgrading technology necessary for a successful practice;

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the desire of veterinarians to focus on practicing veterinary medicine, rather than spending large portions of their time at work performing the administrative tasks necessary to operate an animal hospital;

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the choice of some owners of animal hospitals to diversify their investment portfolio by selling all or a portion of their investment in the animal hospital; and

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the appeal to many veterinarians of the benefits and work scheduling flexibility that are not typically available to a sole practitioner or single site-provider.

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Market Leader.    We are a market leader in each of the business segments in which we operate. We maintain the only veterinary diagnostic laboratory network serving all 50 states, which is supported by the largest group of consulting veterinary specialists in the industry. Our network of animal hospitals and veterinarians is the largest in the United States. We believe that it would be difficult, time consuming and expensive for new entrants or existing competitors to assemble a comparable nationwide laboratory or animal hospital network.

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Compelling Business Model.    We believe our business model enables us to generate consistent growth and increasing cash flows. The fixed cost nature of our business allows us to generate strong margins, particularly on incremental revenues. In each quarter since 1999, we have generated positive laboratory internal revenue growth. The growth in our laboratory revenue, combined with greater utilization of our infrastructure, has enabled us to improve our laboratory operating margin from 27.1% in 1999 to 33.8% for the twelve months ended September 30, 2002, and our laboratory adjusted EBITDA margin from 31.2% to 36.1% over the same period. In each quarter since 1999, we have generated positive animal hospital same-facility revenue growth. Due to the operating leverage associated with our animal hospital business, the increase in animal hospital revenue has enabled us to improve our animal hospital operating margin from 12.3% in 1999 to 17.3% for the twelve months ended September 30, 2002, and our animal hospital adjusted EBITDA margin from 17.1% to 20.7% over the same period. These high margins, combined with our modest working capital needs and low maintenance capital expenditures, provide cash that we can use for acquisitions or to reduce indebtedness.

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Leading Team of Specialists.    We believe our laboratories are a valuable diagnostic resource for veterinarians. Due to the trend towards offering specialized services in veterinary medicine, our network of 83 specialists, which includes veterinarians, chemists and other scientists with expertise in fields such as pathology, internal medicine, oncology, cardiology,

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dermatology, neurology and endocrinology, provides us with a significant competitive advantage. These specialists are available to consult with our laboratory clients, providing a compelling reason for them to use our laboratories rather than those of our competitors, most of whom offer no comparable service. Our team of specialists represents the largest interactive source for readily available diagnostic advice in the veterinary industry and interact with animal health care professionals over 90,000 times a year.

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High Quality Service Provider.    We believe that we have built a reputation as a trusted animal health brand among veterinarians and pet owners alike. In our laboratories, we maintain rigorous quality assurance programs to ensure the accuracy of reported results. We calibrate our laboratory equipment several times daily with test specimens of known concentration or reactivity to assure accuracy and use only qualified personnel to perform testing. Further, our specialists review all test results outside of the range of established norms. As a result of these measures, we believe our diagnostic accuracy rate is over 99%. In our animal hospitals, we provide continuing education programs, promote the sharing of professional knowledge and expertise and have developed and implemented a program of best practices to promote quality medical care.

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Shared Expertise Among Veterinarians.    We believe our group of animal hospitals and veterinarians provide us with a competitive advantage through our collective expertise and experience. Our veterinarians consult with other veterinarians in our network to share information regarding the practice of veterinary medicine, which continues to expand our collective knowledge. We maintain an internal continuing education program for our veterinarians and have an established infrastructure for the dissemination of information on new developments in diagnostic testing, procedures and treatment programs.

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Capitalizing on our Leading Market Position to Generate Revenue Growth.    Our leading market position in each of our business segments positions us to capitalize on favorable growth trends in the animal health care services industry. In our laboratories, we seek to generate revenue growth by taking advantage of the growing number of outsourced diagnostic tests and by increasing our market share. We continually educate veterinarians on new and existing technologies and test offerings available to diagnose medical conditions. Further, we leverage the knowledge of our specialists by providing veterinarians with extensive client support in promoting and understanding these diagnostic tests. In our animal hospitals, we seek to generate revenue growth by capitalizing on the growing emphasis on pet health and wellness.

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Leveraging Established Infrastructure to Improve Margins.    We intend to leverage our established laboratory and animal hospital infrastructure to continue to increase our operating margins. Due to our established networks and the fixed cost nature of our business model, we are able to realize high margins on incremental revenues from both laboratory and animal hospital clients. For example, given that our nationwide transportation network servicing our laboratory clients is a relatively fixed cost, we are able to achieve significantly higher margins on most incremental tests ordered by the same client when picked up by our couriers at the same time. We estimate that in most cases, we realize an operating and EBITDA margin between 60% and 75% on these incremental tests.

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Utilizing Enterprise-Wide Systems to Improve Operating Efficiencies.    In 2001, we completed the migration of our animal hospital operations to an enterprise-wide management

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information system. This common system has enabled us to effectively manage the key operating metrics that drive our business. We use this system to help standardize our pricing, implement and monitor the effectiveness of targeted marketing programs, expand the services provided by our veterinarians and capture unbilled services.

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Pursuing Selected Acquisitions.    Although we have substantially completed our laboratory infrastructure, we may make selective, strategic laboratory acquisitions, with any new operations likely to be merged into existing facilities. Additionally, the fragmentation of the animal hospital industry provides us with significant expansion opportunities in our animal hospital segment. Depending on the attractiveness of the candidates and the strategic fit with our existing operations, we intend to acquire approximately 15 to 25 animal hospitals per year primarily using internally generated cash.

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primary hubs that are open 24 hours per day and offer a full testing menu;

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secondary laboratories that service large metropolitan areas, are open 24 hours per day and offer a wide testing menu; and

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STAT laboratories that service other locations with demand sufficient to warrant nearby laboratory facilities and are open primarily during daytime hours.

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States in which we manage animal hospitals owned by veterinary medical groups.

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is located in a 4,000 to 6,000 square foot, free-standing facility in an attractive location;

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has annual revenue between $1.0 million and $2.0 million;

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is supported by three to five veterinarians; and

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has an operating history of over ten years.

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availability of all facilities and equipment;

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day-to-day financial and administrative supervision and management;

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maintenance of patient records;

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recruitment of veterinarians and animal hospital staff;

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marketing; and

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malpractice and general insurance.

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the class I directors’ term will expire at our annual meeting of stockholders to be held in 2003;

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the class II directors’ term will expire at our annual meeting of stockholders to be held in 2004; and

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the class III directors’ term will expire at our annual meeting of stockholders to be held in 2005.

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each of our directors;

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each of our executive officers;

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all of our directors and executive officers as a group;

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all other stockholders known by us to beneficially own more than 5% of our outstanding common stock; and

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the selling stockholders.

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*	Indicates less than one percent.

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(1)	The selling stockholders have granted to the underwriters an option to purchase additional shares to cover the over-allotment of shares as follows:

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Green Equity Investors III, L.P.:    907,500

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Robert L. Antin:                             100,000

(2)	Green Equity Investors III, L.P. is managed by Leonard Green & Partners, L.P.

(3)

Includes: (a) 250,000 shares held by family trusts established for the benefit of Mr. Robert L. Antin’s family, and for which Mr. Robert L. Antin disclaims beneficial ownership; (b) 60,000 shares held by Mr. Arthur J. Antin for the benefit of Mr. Robert L. Antin’s minor children pursuant to the California Uniform Gifts to Minors Act, and for which Mr. Robert L. Antin disclaims beneficial ownership; and (c) 10,000 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(4)	Includes: (a) 250,000 shares held by Mr. Arthur J. Antin as trustee of family trusts established for the benefit of Mr. Robert L. Antin’s family, and for which Mr. Arthur J. Antin disclaims beneficial

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ownership; (b) 60,000 shares held by Mr. Arthur J. Antin as custodian for Mr. Robert L. Antin’s minor children pursuant to the California Uniform Gifts to Minors Act, and for which Mr. Arthur J. Antin disclaims beneficial ownership; and (c) 21,897 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(5)	Includes 13,333 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(6)	Includes 20,000 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(7)	Includes 5,367 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(8)

Each of John M. Baumer, John G. Danhakl and Peter J. Nolan is a partner of Leonard Green & Partners, L.P. As such, Messrs. Baumer, Danhakl and Nolan may be deemed to have shared voting and investment power with respect to all shares held by Leonard Green & Partners, L.P. These individuals disclaim beneficial ownership of the securities held by Leonard Green & Partners, L.P., except to the extent of their respective pecuniary interests therein.

(9)	Consists of 4,167 shares of common stock reserved for issuance upon exercise of stock options which are or will become exercisable on or before January 29, 2003.

(10)

Consists of 359,622 shares held by TCW/Crescent Mezzanine Partners II, L.P. and TCW/Crescent Mezzanine Trust II. The managing owner of the investment advisor to these two entities, and the general partner and managing owner of these entities, is TCW/Crescent Mezzanine, LLC. The business, property and affairs of TCW/Crescent Mezzanine, LLC are managed exclusively by its board of directors, which consists of the following individuals: Mark L. Attanasio, Robert D. Beyer, Jean-Marc Chapus, Jack D. Furst, Thomas O. Hicks, William C. Sonneborn and Mark I. Stern.

(11)

Consists of 89,913 shares held by the following entities: TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P. and TCW Leveraged Income Trust IV, L.P. The general partner of TCW Leveraged Income Trust, L.P. is TCW Advisers (Bermuda) Ltd. and the investment adviser to TCW Leveraged Income Trust, L.P. is TCW Investment Management Company. TCW Advisers (Bermuda) Ltd. is the general partner of the general partner of TCW Leveraged Income Trust II, L.P. and TCW Investment Management Company is the investment advisor to TCW Leveraged Income Trust II, L.P. TCW Asset Management Company is the managing member of the general partner of TCW Leveraged Income Trust IV, L.P. and the investment adviser to TCW Leveraged Income Trust IV, L.P. TCW Advisers (Bermuda) Ltd., TCW Investment Management Company and TCW Asset Management Company are wholly owned subsidiaries of The TCW Group, Inc. The TCW Group, Inc. together with its direct and indirect subsidiaries collectively constitute The TCW Group business unit. Société Générale Asset Management, S.A. owns a controlling interest in The TCW Group, Inc. Société Générale Asset Management, S.A., in turn, is a wholly owned subsidiary of Société Générale, S.A. a company incorporated under the Laws of France.

(12)

An affiliate of The Goldman Sachs Group, Inc. (a reporting company under the Securities Exchange Act of 1934) of which Goldman, Sachs & Co. is an indirect wholly-owned subsidiary, and is either a general partner, managing general partner or investment manager of this entity. An investment committee of Goldman, Sachs & Co. (which committee is currently composed of 11 members) has voting and dispositive authority over the share held by this entity. The Goldman Sachs Group, Inc. and Goldman Sachs & Co. each disclaim beneficial ownership of the shares owned by such investment partnerships, except to the extent of their pecuniary interest in such partnerships. Goldman Sachs & Co. is an underwriter in this offering.

(13)	Includes 74,764 shares of common stock reserved for issuance upon exercise of options which are or will become exercisable on or before January 29, 2003.

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prior to the date, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

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upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock of the corporation outstanding at the time the transaction commenced, excluding those shares owned by persons who are directors and also officers, and employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

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on or subsequent to the date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

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any merger or consolidation involving the corporation and the interested stockholder;

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any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

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subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; or

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the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

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the base rate (as defined below) plus a margin ranging from 1.00% to 2.25% per annum for the revolving facility and a margin of 2.00% per annum for the senior term C notes; or

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the adjusted eurodollar rate (as defined below) plus a margin ranging from 2.00% to 3.25% per annum for the revolving facility and a margin of 3.00% per annum for the senior term C notes.

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a minimum consolidated interest expense coverage ratio;

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a minimum fixed charge coverage ratio;

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a maximum consolidated senior leverage ratio; and

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a maximum consolidated total leverage ratio.

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dispose of assets;

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incur additional debt;

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prepay other debt, subject to specified exceptions, or amend specified debt instruments;

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pay dividends;

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create liens on assets;

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make investments, loans or advances;

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make acquisitions;

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engage in mergers or consolidations;

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change the business conducted by us;

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engage in sale and leaseback transactions;

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purchase shares of the outstanding common stock of our wholly owned subsidiary;

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otherwise undertake various corporate activities.

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nonpayment of principal, interest or fees when due, subject to specified grace periods;

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cross-defaults to other debt;

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breach of specified covenants;

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material inaccuracy of representations and warranties;

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specified other defaults under other credit documents;

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events of bankruptcy and insolvency;

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material judgments;

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dissolution and liquidation;

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specified occurrences relating to subordinated debt;

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change in control; and

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invalidity of any guaranty or security interest.

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certain specified persons, including Leonard Green & Partners, its affiliated co-investors and management investors, collectively cease to own and control at least 35% on a fully diluted basis of the voting interests in our capital stock;

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any person or group has acquired ownership of a percentage greater than that owned by Leonard Green & Partners, its affiliated co-investors and management investors collectively, on a fully diluted basis of the voting interests in our capital stock;

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any person or group has obtained the power to elect a majority of the members of our board of directors;

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Leonard Green & Partners and its affiliated co-investors collectively cease to beneficially own and control on a fully diluted basis a percentage of the voting interests in our capital stock greater than any other person or group;

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we cease to beneficially own and control 100% of the capital stock of our wholly owned subsidiary;

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the majority of the seats on the board of directors of our wholly owned subsidiary cease to be occupied by persons who either were members of its board of directors on September 20, 2000, or were nominated for election by its board of directors, a majority of whom were directors on September 20, 2000, or whose election or nomination for election was previously approved by a majority of these directors; or

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any change of control has occurred under our outstanding 15.5% senior notes.

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An aggregate principal amount of at least $5 million of the 15.5% senior notes may be prepaid, at our option in whole or in part, at any time on or after September 20, 2003, initially at 107.5%

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of their principal amount at maturity and declining in annual increments to 101.55% of that principal amount on and after September 20, 2009, in each case plus accrued interest.

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The 15.5% senior notes may be prepaid, at our option, in their entirety, concurrently with the consummation of a public offering of our common stock or a change of control, on or after September 20, 2002 and prior to September 20, 2003, at a price of 110% of the principal amount plus accrued interest.

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the aggregate amount which would be includable in the holders’ gross income for federal income tax purposes with respect to the 15.5% senior notes before that interest payment date, and

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the sum of the following:

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the aggregate amount of interest paid in cash under the 15.5% senior notes before that interest payment date, and

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the product of the issue price of all of the 15.5% senior notes (as determined under United States Treasury Regulations Sections 1.1273-2(a)) multiplied by 17.25%.

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the sale, lease, transfer, conveyance or other disposition of substantially all of our assets and those of our subsidiaries to a person other than persons affiliated with Leonard Green & Partners, specified equity investors and management investors;

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the adoption of a plan relating to our liquidation or dissolution or the liquidation or dissolution of our wholly owned subsidiary;

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the consummation of any transaction as result of which,

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prior to the 15.5% senior notes being registered or exchanged for registered notes,

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persons, including Leonard Green & Partners, its affiliated co-investors and management investors, collectively own less than 35.0% of the voting interests in our capital stock; or

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Leonard Green & Partners and its affiliates own less than 20% of the voting interests in our capital stock; or

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we cease to own directly 100% of the outstanding equity of our wholly owned subsidiary; or

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any person or group, other than Leonard Green & Partners, its affiliated co-investors and management investors has acquired beneficial ownership of 35% or more on a fully diluted basis of the aggregate voting interest attributable to all of our outstanding capital stock and Leonard Green & Partners, its affiliated co-investors and management investors have less voting power than that person or group; or

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the first day on which a majority of our board of directors are not directors who were directors on September 20, 2000 or whose election or nomination was previously approved by a majority of those directors.

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incur additional debt;

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incur specified liens on our assets;

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pay dividends on stock or repurchase stock;

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make investments;

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engage in specified transactions with affiliates;

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create or permit to exist specified dividend or payment restrictions affecting subsidiaries;

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engage in specified sale/lease-back transactions;

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sell all or substantially all of their assets or merge with or into other companies; and

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engage in business activities unrelated to activities engaged in at the original date of issuance of the 15.5% senior notes.

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failure to pay interest on the 15.5% senior notes when due after a specified grace period;

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failure to pay any principal on the 15.5% senior notes when the same becomes due at maturity, upon redemption or otherwise;

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failure to observe or perform any other covenant or agreement in the indenture governing the 15.5% senior notes where that failure continues for 30 days after actual knowledge thereof by a senior officer; and

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failure to pay at final maturity or other default leading to actual acceleration with respect to other indebtedness having an aggregate principal amount of $7.5 million or more.

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in whole or in part, at any time on or after December 1, 2005, initially at 104.938% of their principal amount at maturity and declining in annual increments to 100.0% of that principal amount on and after December 1, 2008, in each case plus accrued interest; or

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up to 35% of the aggregate principal amount of the 9.875% senior subordinated notes, at any time prior to November 1, 2004, from the proceeds of a public offering of our common stock and within 90 days of the closing of that public offering, at a price of 109.875% of the principal amount plus accrued interest; provided that, after giving effect to the prepayment, at least 65% of the original principal amount of the senior subordinated notes issued on November 27, 2001, remains outstanding.

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the sale, lease, transfer, conveyance or other disposition of substantially all of our assets and our subsidiaries to a person other than specified persons affiliated with Leonard Green & Partners, specified equity investors and management investors;

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the adoption of a plan relating to our liquidation or dissolution or the liquidation or dissolution of our wholly owned subsidiary;

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we cease to own directly 100% of the outstanding equity of our wholly owned subsidiary;

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any person or group, other than Leonard Green & Partners, its affiliated co-investors and management investors, has acquired beneficial ownership of 35% or more on a fully diluted basis of the aggregate voting interest attributable to all of our outstanding capital stock and Leonard Green & Partners, its affiliated co-investors and management investors have less voting power than that person or group; or

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the first day on which a majority of our board of directors are not directors who were directors on September 20, 2000, or whose election or nomination was previously approved by a majority of these directors.

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incur additional debt;

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incur specified liens on our assets;

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pay dividends on stock or repurchase stock;

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make investments;

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engage in specified transactions with affiliates;

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create or permit to exist specified dividend or payment restrictions affecting subsidiaries;

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engage in specified sale/lease-back transactions;

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sell all or substantially all of their assets or merge with or into other companies; and

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engage in business activities unrelated to activities engaged in at the original date of issuance of the 9.875% senior subordinated notes.

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failure to pay interest on the 9.875% senior subordinated notes when due (after a specified grace period);

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failure to pay any principal on the 9.875% senior subordinated notes when the same becomes due at maturity, upon redemption or otherwise;

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failure to observe or perform any other covenant or agreement in the indenture governing the 9.875% senior subordinated notes where that failure continues for 30 or 60 days after actual knowledge thereof by a senior officer, depending on the nature of the covenant; and

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failure to pay at final maturity or other default leading to actual acceleration with respect to other indebtedness having an aggregate principal amount of $10.0 million or more.

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a citizen or resident of the U.S.;

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a corporation (including any entity taxable as a corporation) or partnership created or organized in or under the laws of the U.S. or any of its political subdivisions;

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an estate the income of which is subject to U.S. federal income taxation regardless of its source;

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a trust if a U.S. court is able to exercise primary supervision over administration of the trust and one or more of the individuals or entitites described above have authority to control all substantial decisions of the trust; or

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a trust that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

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Our Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed with the SEC on March 29, 2002, as amended by our Form 10-K/A filed with the SEC on April 30, 2002;

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Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002, filed with the SEC on May 15, 2002;

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Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2002, filed with the SEC on August 14, 2002;

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Our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2002, filed with the SEC on November 14, 2002;

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Our Current Reports on Form 8-K filed with the SEC on February 22, 2002; April 26, 2002; May 14, 2002; June 13, 2002; June 19, 2002; July 26, 2002; September 3, 2002; October 25, 2002 and November 14, 2002; and

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The description of our common stock contained in our Form 8-A filed with the SEC on November 15, 2001, as amended by our Form 8-A/A filed with the SEC on November 16, 2001.

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(a)	states where the Company manages animal hospitals under long-term management agreements.

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redeemed all of the outstanding series A and series B redeemable preferred stock;

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repaid $100.0 million under the senior subordinated credit facilities;

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repaid $59.1 million in principal of the Company’s 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

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repaid $5.0 million in principal of the Company’s 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

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availability of all facilities and equipment

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day-to-day financial and administrative supervision and management

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maintenance of patient records

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recruitment of veterinary and hospital staff

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marketing

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malpractice and general insurance

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Goodwill and Other Intangible Assets

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Goodwill Impairment Test

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Asset Retirement Obligations

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Impairment of Long-Lived Assets

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Gains and Losses from Extinguishment of Debt and Capital Leases

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Costs Associated with Exit or Disposal of Activities

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the contribution of $155.0 million by a group of investors led by Leonard Green & Partners;

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the issuance of an aggregate of $20.0 million of senior subordinated notes;

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the borrowing of $250.0 million under our $300.0 million senior credit facility; and

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the issuance of an aggregate of $100.0 million of senior notes.

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Call rights expired on one-half of Robert Antin’s shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a six-month period commencing on October 1, 2001;

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Call rights expired on one-half of Arthur Antin’s, Neil Tauber’s and Tomas Fuller’s shares that initially were subject to the stockholders agreement. Of the amount remaining, call rights will expire on one-half of those shares on April 1, 2002, and on the remaining one-half on October 1, 2002; and

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Call rights expired on one-half of the other employees’ shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a 12-month period commencing May 1, 2002.

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The base rate (as defined below) plus a margin, as defined in the Credit Agreement based on the Company’s leverage ratio, ranging from 1.00% to 2.25% per annum for the Senior Term A Notes and the Revolving Credit Facility and a margin of 2.75% per annum for the Senior Term B Notes; or

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The adjusted eurodollar rate (as defined below) plus a margin, as defined in the Credit Agreement based on the Company’s leverage ratio, ranging from 2.00% to 3.25% per annum for the Senor Term A Notes and the Revolving Credit Facility and a margin of 3.75% per annum for the Senor Term B Notes.

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(1)	“Other” changes in the allowance for uncollectible accounts include allowances acquired with animal hospitals and laboratory acquisitions.

(2)	Balance includes allowance for trade accounts receivable and notes receivable.

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(1)	Does not include goodwill amortization of $6.9 million for the nine months ended September 30, 2001, respectively. There was no goodwill amortization recorded in 2002.

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