Edgar Filing: VCA ANTECH INC

As filed with the Securities and Exchange Commission on November 16, 2001

Registration No. 333-67128
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Amendment No. 4 to

FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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VCA ANTECH, INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 0742 95-4097995
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification No.)
Incorporation or Classification Code
Organization) Number)

12401 West Olympic Boulevard
Los Angeles, California 90064-1022
(310) 571-6500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)

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Robert L. Antin
Chief Executive Officer and President
12401 West Olympic Boulevard
Los Angeles, California 90064-1022
(310) 571-6500
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)

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Copies to:

C.N. Franklin Reddick III, Esq. Gregg A. Noel, Esq.
Julie M. Kaufer, Esq. Skadden, Arps, Slate, Meagher & Flom LLP
James Tsai, Esq. 300 South Grand Avenue
Akin, Gump, Strauss, Hauer & Feld, LLP Los Angeles, California 90071
2029 Century Park East (213) 687-5000
Los Angeles, California 90067
(310) 229-1000

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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered in this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]

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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 16, 2001

14,000,000 Shares
[LOGO] VCA ANTECH

Common Stock

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Prior to this offering, there has been no public market for our common
stock. The initial public offering price of the common stock is expected to be
between $12.00 and $14.00 per share. We have applied to have our common stock
approved for quotation on The Nasdaq Stock Market's National Market under the
symbol "WOOF."

The underwriters have an option to purchase a maximum of 2,100,000
additional shares to cover over-allotments of shares.

Investing in our common stock involves risks. See "Risk Factors" on page 9.

Underwriting Proceeds to
Price to Discounts and VCA Antech,
Public Commissions Inc.
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Per Share $ $ $
Total.... $ $ $

Delivery of the shares of common stock will be made on or about , 2001.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

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Credit Suisse First Boston Goldman, Sachs & Co.

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Banc of America Securities LLC

Jefferies & Company, Inc.

Wells Fargo Van Kasper, LLC

The date of this prospectus is , 2001.

TABLE OF CONTENTS

Page
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PROSPECTUS SUMMARY..................... 1
RISK FACTORS........................... 9
CAUTIONARY NOTE REGARDING FORWARD-
LOOKING STATEMENTS................... 16
USE OF PROCEEDS........................ 17
DIVIDEND POLICY........................ 17
DILUTION............................... 18
CAPITALIZATION......................... 19
SELECTED HISTORICAL CONSOLIDATED
FINANCIAL DATA....................... 20
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................... 23
BUSINESS............................... 48

Page
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MANAGEMENT......................... 59
PRINCIPAL STOCKHOLDERS............. 68
RELATED PARTY TRANSACTIONS......... 70
DESCRIPTION OF CAPITAL STOCK....... 73
SHARES ELIGIBLE FOR FUTURE SALE.... 76
UNDERWRITING....................... 78
NOTICE TO CANADIAN RESIDENTS....... 82
U.S. TAX CONSEQUENCES TO NON-U.S.
HOLDERS.......................... 83
LEGAL MATTERS...................... 85
EXPERTS............................ 85
WHERE YOU CAN FIND MORE INFORMATION 85
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS....................... F-1

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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.

We use market data and industry forecasts and projections throughout this
prospectus, which we have obtained from market research, publicly available
information and industry publications. These sources generally state that the
information they provide has been obtained from sources believed to be
reliable, but that the accuracy and completeness of such information are not
guaranteed. The forecasts and projections are based on industry surveys and the
preparers' experience in the industry and there is no assurance that any of the
projected amounts will be achieved. Similarly, we believe that the surveys and
market research others have performed are reliable, but we have not
independently verified this information.

Dealer Prospectus Delivery Obligation

Until , 2001 (25 days after commencement of this offering), all dealers
that effect transactions in these securities, whether or not participating in
this offering, may be required to deliver a prospectus. This is in addition to
the dealer's obligation to deliver a prospectus when acting as an underwriter
and with respect to unsold allotments or subscriptions.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed
information regarding our company and the common stock sold in this offering
and our consolidated financial statements and notes to those statements
appearing elsewhere in this prospectus. We urge you to read this entire
prospectus carefully, including the "Risk Factors" section.

VCA Antech, Inc.

Our Business

Diagnostic Laboratories

We operate the only full-service, veterinary diagnostic laboratory network
serving all 50 states and have a client base over two times that of our largest
competitor. Our 15 state-of-the-art, automated diagnostic laboratories service
a diverse customer base of over 13,000 animal hospitals, and non-affiliated
animal hospitals generated approximately 95% of our laboratory revenue in 2000.
We support our laboratories with what we believe is the industry's largest
transportation network, which picks up an average of 20,000 to 25,000 samples
daily. In the nine months ended September 30, 2001, we derived approximately
69.4% of our laboratory revenue from our customers in major metropolitan areas,
where we offer twice-a-day pick-up service and same-day results. Outside of
these areas, we typically provide test results to veterinarians before 8:00
a.m. the following day.

Our diagnostic spectrum includes over 300 different tests in the areas of
chemistry, pathology, serology, endocrinology, hematology and microbiology, as
well as tests specific to particular diseases. In 2000, we handled
approximately 6.4 million requisitions and performed approximately 19.8 million
tests. Although modified to address the particular requirements of the species
tested, the tests performed in our veterinary laboratories are similar to those
performed in human clinical laboratories and utilize similar laboratory
equipment and technologies.

From 1998 through the twelve months ended September 30, 2001, our laboratory
revenue, laboratory operating income before depreciation and amortization, and
laboratory operating income increased at compounded annual growth rates of
14.5%, 23.8% and 27.2%, respectively. We will refer to operating income before
depreciation and amortization as "EBITDA." In the twelve months ended September
30, 2001, our laboratory EBITDA was $43.6 million, or 33.5% of our laboratory
revenue, and our laboratory operating income was $39.0 million, or 29.9% of our
laboratory revenue.

Animal Hospitals

At September 30, 2001, we operated 214 animal hospitals in 33 states that
were supported by over 750 veterinarians. In addition to general medical and
surgical services, we offer specialized treatments for companion animals,
including advanced diagnostic services, internal medicine, oncology,
ophthalmology, dermatology and cardiology. We also provide pharmaceutical
products for use in the delivery of treatments by our veterinarians and pet
owners. Our facilities typically are located in high-traffic, densely populated
areas and have an established reputation in the community with a stable
customer base. Since 2000, our animal hospitals have been connected to an
enterprise-wide management information system. This system provides us
opportunities to manage our animal hospitals more effectively and to implement
throughout our animal hospital network

veterinarian practices and procedures which we have identified, tested and
believe to provide a high level of customer care.

From 1998 through the twelve months ended September 30, 2001, our animal
hospital revenue, animal hospital EBITDA and our animal hospital operating
income increased at compounded annual growth rates of 12.5%, 19.2% and 19.2%,
respectively. In the twelve months ended September 30, 2001, our animal
hospital EBITDA was $51.9 million, or 19.5% of our animal hospital revenue, and
our animal hospital operating income was $38.0 million, or 14.3% of our animal
hospital revenue.

Our Opportunity

We intend to continue to grow by capitalizing on the following market
opportunities:

. 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 has continued, 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.

. 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 11.3% 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.

. Attractive Customer 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.

Competitive Strengths

We believe we are well positioned for profitable growth due to the following
competitive strengths:

. Market Leader. We are a market leader in each of the business segments
in which we operate. 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.
It would be particularly difficult to replicate our team of specialists,
transportation network, management and systems infrastructure, the size
of our veterinarian group and our customer relationships.

. Compelling Business Model. Our business is characterized by a stable,
recurring and diversified revenue base, high operating margins and
strong cash flow. The growth in our laboratory revenue, combined with
greater utilization of our infrastructure, enabled us to improve our
laboratory EBITDA margin from 26.9% in 1998 to 33.5% for the twelve
months ended September 30, 2001, and our laboratory operating margin
from 22.4% to 29.9% over the same period. Our animal hospitals have
generated six consecutive years of positive annual same-facility revenue
growth. Due to the operating leverage in our animal hospitals, the
increase in animal hospital revenue enabled us to improve our animal
hospital EBITDA margin from 16.7% in 1998 to 19.5% for the twelve months
ended September 30, 2001, and our animal hospital operating margin from
12.2% to 14.3% 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.

. Leading Team of Specialists. Our network of 85 veterinary medicine
experts, which we refer to as specialists, provides us with a
significant competitive advantage. Our specialists include
veterinarians, chemists and other scientists with expertise in
pathology, internal medicine, oncology, cardiology, dermatology,
neurology and endocrinology. These specialists are available to consult
with our laboratory customers, 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 interacts with animal health care
professionals over 90,000 times a year.

. High Quality Service Provider. We believe we have built a reputation as
a valuable diagnostic resource for veterinarians and a trusted animal
health brand among pet owners. In our laboratories, we maintain rigorous
quality assurance programs to ensure the accuracy of the reported
results. We calibrate our laboratory equipment several times daily, use
only qualified personnel to perform testing and our specialists review
all test results outside the range of established norms. As a result, 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.

. Shared Expertise Among Veterinarians. We believe the continued
accumulation of veterinary medical knowledge and experience among our
veterinarian group enables us to offer new services more rapidly than
our competitors, offer higher quality services and remain the leading
source of veterinary information for interested companies such as
pharmaceutical and pet food companies.

Business Strategy

Our business strategy is to continue to expand our market leadership in
animal health care services through our diagnostic laboratories and animal
hospitals. Key elements of our strategy include:

. 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. For example, in 2000 we implemented a senior pet
wellness program. The program seeks to promote recurring visits and to
increase the average amount spent per visit by bundling laboratory tests
and animal hospital services.

. 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 higher margins on incremental revenue from both
laboratory and animal hospital customers. For example, given that our
nationwide transportation network servicing our laboratory customers is
a relatively fixed cost, we are able to achieve significantly higher
margins on most incremental tests ordered by the same customer 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.

. Utilizing Enterprise-Wide System to Improve Operating Efficiencies. We
recently completed the migration of all animal hospital operations to an
enterprise-wide management information system. We believe that this
common system will enable us to more effectively manage the key
operating metrics that drive our business. With the aid of this system,
we seek to standardize pricing, expand the services our veterinarians
provide, capture unbilled services, increase volume and implement
targeted marketing programs.

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

Business Risks

Some of the key risks associated with our business strategy include:

. 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.

. 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.

. Substantial Debt. Our substantial amount of debt could impair our
ability to operate our business effectively and may limit our ability to
take advantage of business opportunities.

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

. Fixed Costs. A significant percentage of our expense, 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.

Our principal offices are located at 12401 West Olympic Boulevard, Los
Angeles, California 90064. Our telephone number is (310) 571-6500. We recently
changed our name from Veterinary Centers of America, Inc.

The Offering

Common stock offered............... 14,000,000 shares
Common stock to be outstanding
after this offering.............. 32,216,212 shares
Use of proceeds.................... We intend to use the net proceeds from this offering
and our concurrent note offering described below
to redeem our outstanding shares of preferred
stock and to repay indebtedness.
Proposed Nasdaq Stock Market Symbol WOOF

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Unless otherwise indicated, all share information in this prospectus is
based on the number of shares outstanding as of September 30, 2001 and:

. excludes 631,800 shares of common stock issuable upon exercise of
outstanding options under our stock incentive plans, at an exercise
price of $1.00 per share;

. excludes 1,149,990 shares of common stock issuable upon exercise of
outstanding warrants, at an exercise price of $0.0007 per share, which,
if not exercised, terminate upon the closing of this offering;

. excludes 2,000,000 shares available for future issuance under our stock
incentive plans; and

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

The Concurrent Note Offering

Concurrently, we are separately offering $150,000,000 principal amount of
senior subordinated notes due 2009. The closing of the concurrent note offering
will occur simultaneously with the closing of this offering. The concurrent
note offering is not being registered under the Securities Act, and the notes
offered thereby may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.

Summary Consolidated Financial and Other Data

The summary financial data for the years in the period ended December 31,
2000, 1999 and 1998 have been derived from our audited financial statements.
The summary financial data for the nine months ended September 30, 2001 and
2000 and as of September 30, 2001 have been derived from our unaudited interim
financial statements and include, in the opinion of management, all adjustments
necessary for a fair presentation of our financial position and operating
results for these periods and as of such date. Our results for interim periods
are not necessarily indicative of our results for a full year's operations. The
pro forma data adjusts the financial data to give effect to this offering, the
concurrent note offering and the application of the net proceeds therefrom, the
use of $12.0 million of cash on hand and the transactions associated with our
September 20, 2000 recapitalization, as more fully described in note (2) below.
You should read the following information together with "Selected Historical
Consolidated Financial Data," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our consolidated financial
statements and related notes included elsewhere in this prospectus.

Nine Months Ended
September 30, Year Ended December 31,
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2001 2000 2000 1999 1998
-------- -------- -------- -------- --------
(in thousands, except per share amounts)

Statements of Operations Data:
Laboratory revenue..................................... $101,855 $ 90,831 $119,300 $103,282 $ 89,896
Animal hospital revenue................................ 207,665 182,716 240,624 217,988 191,888
Total revenue (1)...................................... 305,365 269,281 354,687 320,560 281,039
Operating income....................................... 33,680 9,524 19,205 47,016 38,834
Net income (loss) available to common stockholders..... (22,368) (2,424) (13,802) $ 22,357 $ 16,268
Pro forma net loss available to common stockholders (2) (5,376) (20,686)
Pro forma diluted net loss per share (2)............... $ (0.17) $ (0.66)
Shares used for computing pro forma
diluted net loss per share (2)........................ 31,643 31,524

Other Financial Data:
Adjusted EBITDA (3)(4)................................. $ 71,017 $ 57,547 $ 73,526 $ 64,445 $ 51,966
Adjusted EBITDA margin (5)............................. 23.3% 21.4% 20.7% 20.1% 18.5%
Laboratory EBITDA...................................... $ 35,264 $ 30,495 $ 38,827 $ 32,273 $ 24,215
Laboratory EBITDA margin (5)........................... 34.6% 33.6% 32.5% 31.2% 26.9%
Animal hospital EBITDA................................. $ 43,159 $ 34,287 $ 42,985 $ 37,237 $ 31,975
Animal hospital EBITDA margin (5)...................... 20.8% 18.8% 17.9% 17.1% 16.7%
Net cash provided by operating activities.............. $ 49,316 $ 46,975 $ 60,054 $ 38,467 $ 27,123
Capital expenditures................................... 10,604 13,686 22,555 21,803 11,678
Operating Data:
Laboratory internal revenue growth (6)................. 11.5% 12.9% 12.6% 9.1% 12.2%
Animal hospital same-facility revenue
growth (7)............................................ 4.4% 7.7% 7.0% 2.6% 5.8%

As of September 30, 2001
------------------------
Pro Forma
Actual As Adjusted(2)
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Balance Sheet Data:
Cash and cash equivalents..................... $ 23,631 $ 11,631
Total assets.................................. 501,227 487,448
Total debt.................................... 371,365 373,763
Total redeemable preferred stock.............. 170,205 --
Total stockholders' equity (deficit).......... (97,946) 61,671

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(1) Includes other revenue of $1.5 million and $425,000 for the nine months
ended September 30, 2001 and 2000, and of $925,000, $5.1 million and $5.1
million for the years ended December 31, 2000, 1999 and 1998. Total revenue
is net of intercompany eliminations of $5.7 million and $4.7 million for
the nine months ended September 30, 2001 and 2000, and of $6.2 million,
$5.8 million and $5.8 million for the years ended December 31, 2000, 1999
and 1998.

(2) The pro forma statement of operations data for the nine months ended
September 30, 2001 and the pro forma as adjusted balance sheet data are
presented as if this offering, the concurrent note offering and the
application of the net proceeds therefrom and the use of $12.0 million of
cash on hand occurred on January 1, 2001 for such pro forma statement of
operations data and at September 30, 2001 for the pro forma as adjusted
balance sheet data. We calculated the shares used for computing pro forma
diluted net loss per share for the nine months ended September 30, 2001 by
using shares used for computing diluted earnings per share for the nine
months ended September 30, 2001 and adding an assumed 14,000,000 shares to
be issued in this offering. The pro forma statement of operations data for
the year ended December 31, 2000 are presented as if (a) this offering, the
concurrent note offering and the application of the net proceeds therefrom
and the use of $12.0 million of our cash on hand and (b) the transactions
associated with our September 20, 2000 recapitalization (as described in
the notes to our consolidated financial statements) occurred on January 1,
2000. We calculated the shares used for computing pro forma diluted net
loss per share for the year ended December 31, 2000 by using shares
outstanding as of December 31, 2000, which represents the pro forma
weighted average shares outstanding for the year ended December 31, 2000
had the transactions associated with our September 20, 2000
recapitalization occurred on January 1, 2000, and adding an assumed
14,000,000 shares to be issued in this offering.

(3) EBITDA is operating income (loss) before depreciation and amortization.
Adjusted EBITDA is EBITDA adjusted to exclude management fees,
recapitalization costs, Year 2000 remediation expense and other non-cash
operating items. EBITDA and Adjusted EBITDA are not measures of financial
performance under generally accepted accounting principles, or GAAP.
Although EBITDA and Adjusted 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 understand that EBITDA
and Adjusted EBITDA are widely used by financial analysts as a measure of
financial performance. Our calculation of EBITDA and Adjusted EBITDA may
not be comparable to similarly titled measures reported by other companies.

The calculation of EBITDA and Adjusted EBITDA are shown below (dollars in
thousands):

Nine Months
Ended
September 30, Year Ended December 31,
--------------- ------------------------
2001 2000 2000 1999 1998
------- ------- ------- ------- -------

Operating income..................... $33,680 $ 9,524 $19,205 $47,016 $38,834
Depreciation and amortization........ 19,121 13,200 18,878 16,463 13,132
------- ------- ------- ------- -------
EBITDA............................ 52,801 22,724 38,083 63,479 51,966
Management fees (a).................. 1,860 -- 620 -- --
Recapitalization costs............... -- 34,268 34,268 -- --
Year 2000 remediation expense........ -- -- -- 2,839 --
Other non-cash operating items (b)... 16,356 555 555 (1,873) --
------- ------- ------- ------- -------
Adjusted EBITDA (c)............... $71,017 $57,547 $73,526 $64,445 $51,966
======= ======= ======= ======= =======

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(a) Management fees are paid pursuant to our management services agreement
and are included in selling, general and administrative expense in our
statements of operations. Upon the closing of this offering, the parties
have agreed to terminate the management services agreement.

(c)Numbers may not add due to rounding.

(4)Adjusted EBITDA is the sum of laboratory EBITDA, animal hospital EBITDA and
other revenue, less corporate selling, general and administrative expense,
excluding management fees, as shown below (dollars in thousands):

Nine Months
Ended
September 30, Year Ended December 31,
----------------- --------------------------
2001 2000 2000 1999 1998
-------- ------- ------- -------- -------

Laboratory EBITDA............. $ 35,264 $30,495 $38,827 $ 32,273 $24,215
Animal hospital EBITDA........ 43,159 34,287 42,985 37,237 31,975
Other revenue................. 1,500 425 925 5,100 5,100
Corporate selling, general and
administrative............... (10,766) (7,660) (9,831) (10,165) (9,324)
Management fees (a)........... 1,860 -- 620 -- --
-------- ------- ------- -------- -------
Adjusted EBITDA............ $ 71,017 $57,547 $73,526 $ 64,445 $51,966
======== ======= ======= ======== =======

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(a)Management fees are paid pursuant to our management services agreement
and are included in selling, general and administrative expense in our
statements of operations. Upon the closing of this offering, the parties
have agreed to terminate the management services agreement.

(5)Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total
revenue. Laboratory EBITDA margin is calculated by dividing laboratory
EBITDA by laboratory revenue. Animal hospital EBITDA margin is calculated by
dividing animal hospital EBITDA by animal hospital revenue.

(6)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 our laboratory internal
revenue growth rate for the applicable period, we compare our laboratory
revenue, net of estimated laboratory revenue of newly acquired laboratories,
to our laboratory revenue as reported for the prior comparable period. We
believe this fairly presents our laboratory internal revenue growth for the
periods presented, although our calculation may not be comparable to
similarly titled measures reported by other companies.

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

RISK FACTORS

The value of an investment in VCA will be subject to significant risks
inherent in our business. You should carefully consider the risks and
uncertainties described below and other information included in this prospectus
before purchasing our common stock. If any of the events described below occur,
our business and financial results could be adversely affected in a material
way. This could cause the trading price of our common stock to decline, perhaps
significantly.

Risks Related to Our Business

We may be unable to successfully execute our growth strategy and, as a result,
our business may be harmed.

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. If we cannot implement or are not successful in
executing these initiatives, our results of operations will be adversely
affected. Our internal growth rate may decline and could become negative. Our
laboratory internal revenue growth has fluctuated between 9.1% and 12.6% for
each fiscal year since 1998. Similarly, our animal hospital same-facility
revenue growth has fluctuated between 2.6% and 7.0% over the same periods. Even
if we are successful implementing our growth strategy, we may not achieve the
economies of scale that we have experienced in the past or that we anticipate.
Our internal growth may continue to fluctuate and may be below our historical
rates. Any reductions in the rate of our internal growth may cause our revenue
and margins to decrease. Our internal growth calculations involve a number of
assumptions, and our internal growth may not be calculated in the same manner
as that of comparable companies. Our historical growth rates and margins are
not necessarily indicative of future results.

Our business and results of operations may be adversely affected if we are
unable to manage our growth effectively.

Since January 1, 1996, we have experienced rapid growth and expansion. Our
failure to manage our growth effectively may increase our costs of operations
and hinder our ability to execute our business strategy. Our rapid growth has
placed, and will continue to place, a significant strain on our management and
operational systems and resources. If our business grows, we will need to
improve and enhance our overall financial and managerial controls, reporting
systems and procedures, and expand, train and manage our workforce. We will
also need to increase the capacity of our current systems to meet additional
demands.

Difficulties with the integration of new acquisitions may impose substantial
costs and delays and cause other problems for us.

Acquisitions involve a number of risks relating to our ability to integrate
an acquired business into our existing operations. The process of integrating
the operations of an acquired business, including its personnel, could cause
interruptions to our business. Some of the risks we face include:

. negative effects on our operating results;

. impairments of goodwill and other intangible assets;

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

. amortization of intangible assets; and

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

The process of integration may require a disproportionate amount of the time
and attention of our management, which may distract management's attention from
its day-to-day responsibilities. In addition, any interruption or deterioration
in service resulting from an acquisition may result in a customer's decision to
stop using us. For these reasons, we may not realize the anticipated benefits
of an acquisition, either at all or in a timely manner. If that happens and we
incur significant costs, it could have a material adverse impact on our
business.

A prolonged economic downturn could materially adversely affect our business.

Our business may be materially adversely affected by prolonged, negative
trends in the general economy that reduce consumer spending. Our business
depends on the ability and willingness of animal owners to pay for our
services. This dependence could make us more vulnerable to any reduction in
consumer confidence or disposable income than companies in other industries
that are less reliant on consumer spending, such as the human health care
industry, in which a large portion of payments are made by insurance programs.

Our substantial amount of debt could adversely affect our ability to run our
business.

We have, and will continue to have, a substantial amount of debt. At
September 30, 2001, our debt, excluding unamortized discount, consisted
primarily of:

. $246.5 million of outstanding borrowings under our credit facility;

. $136.6 million of outstanding senior notes and senior subordinated
notes; and

. $1.5 million of other 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. For example, our
indentures and credit facility:

. 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;

. require us to dedicate a substantial portion of our cash flow from
operations to pay down our indebtedness, thereby reducing the funds
available to use for working capital, capital expenditures, acquisitions
and general corporate purposes;

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

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

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

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

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

The terms of our indentures and credit facility allow us, under specified
conditions, to incur further indebtedness, which would heighten the foregoing
risks. If compliance with our debt obligations materially hinders our ability
to operate our business and adapt to changing industry conditions, we may lose
market share, our revenue may decline and our operating results may suffer.

We require a significant amount of cash to service our debt and expand our
business as planned.

Our ability to make payments on our debt, and to fund acquisitions, will
depend on our ability to generate cash in the future. Insufficient cash flow
could place us at risk of default under our debt agreements or could prevent us
from expanding our business as planned. Our ability to generate cash is subject
to general economic, financial, competitive, legislative, regulatory and other
factors that are beyond our control. Our business may not generate sufficient
cash flow from operations, our strategy to increase operating efficiencies may
not be realized and future borrowings may not be available to us under our
credit facility in an amount sufficient to enable us to service our debt or to
fund our other liquidity needs. In order to meet our debt obligations, we may
need to refinance all or a portion of our debt. We may not be able to refinance
any of our debt, on commercially reasonable terms or at all.

Our failure to satisfy covenants in our debt instruments will cause a default
under those instruments.

In addition to imposing restrictions on our business and operations, our
debt instruments include a number of covenants relating to financial ratios and
tests. Our ability to comply with these covenants may be affected by events
beyond our control, including prevailing economic, financial and industry
conditions. The breach of any of these covenants would result in a default
under these instruments. An event of default would permit our lenders to
declare all amounts borrowed from them to be due and payable, together with
accrued and unpaid interest. Moreover, these lenders would have the option to
terminate any obligation to make further extensions of credit under these
instruments. If we are unable to repay debt to our senior lenders, these
lenders could proceed against our assets.

Due to the fixed cost nature of our business, fluctuations in our revenue could
adversely affect our operating income.

Approximately 56.5% of our expense, 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 revenue. Accordingly, shortfalls in revenue may adversely
affect our operating income.

The significant competition in the animal health care services industry could
cause us to reduce prices or lose market share.

The animal health care services industry is highly competitive. To compete
successfully, we may be required to reduce prices, increase our operating costs
or take other measures that could have an adverse effect on our financial
condition, results of operations, margins and cash flow. If we are unable to
compete successfully, we may lose market share.

There are many clinical laboratory companies that provide a broad range of
laboratory testing services in the same markets we service. Our largest
competitor for outsourced laboratory testing services is Idexx Laboratories,
Inc. Also, Idexx and several other national companies provide on-site
diagnostic equipment that allows veterinarians to perform their own laboratory
tests.

Our primary competitors for our animal hospitals in most markets are
individual practitioners or small, regional, multi-clinic practices. Also,
regional pet care companies and some national companies, including operators of
super-stores, are developing multi-regional networks of animal hospitals in
markets in which we operate.

We may experience difficulties hiring skilled veterinarians due to periodic
shortages which could disrupt our business.

Skilled veterinarians are in shortage from time to time in particular
regional markets in which we operate animal hospitals. During these shortages,
we may be unable to hire enough qualified veterinarians to adequately staff our
animal hospitals in these regions, in which event we may lose market share and
our revenues and profitability may decline.

If we fail to comply with governmental regulations applicable to our business,
various governmental agencies may impose fines, institute litigation or
preclude us from operating in certain states.

The laws of many states prohibit business corporations from providing, or
holding themselves out as providers of, veterinary medical care. These laws
vary from state to state and are enforced by the courts and by regulatory
authorities with broad discretion. We operate 53 animal hospitals in 11 states
with these laws, including 21 in New York. We may experience difficulty in
expanding our operations into other states with similar laws. Given varying and
uncertain interpretations of the veterinary laws of each state, we may not be
in compliance with restrictions on the corporate practice of veterinary
medicine in all states. A determination that we are in violation of applicable
restrictions on the practice of veterinary medicine in any state in which we
operate could have a material adverse effect on us, particularly if we were
unable to restructure our operations to comply with the requirements of that
state.

For example, we currently are a party to a lawsuit in the State of Ohio in
which that State has alleged that our management of a veterinary medical group
licensed to practice veterinary medicine in that state violates the Ohio
statute prohibiting business corporations from providing or holding themselves
out as providers of veterinary medical care. On March 20, 2001, the trial court
in the case entered summary judgment in favor of the State of Ohio and issued
an order enjoining us from operating in the State of Ohio in a manner that is
in violation of the state statute. In response, we have restructured our
operations in the State of Ohio in a manner that we believe conforms to the
state law and the court's order. The Attorney General of the State of Ohio has
informed us that it disagrees with our position that we are in compliance with
the court's order. We are currently in discussions with the Attorney General's
office in the State of Ohio in an attempt to resolve this matter. We may not be
able to reach a settlement, in which case we would be required to discontinue
our operations in the state. Our five animal hospitals in the State of Ohio
have a book value of $6.1 million as of September 30, 2001. If we were required
to discontinue our operations in the State of Ohio, we may not be able to
dispose of the hospital assets for their book value. The animal hospitals
located in the State of Ohio generated revenue, EBITDA and operating income of
$2.2 million, $754,000 and $513,000, respectively, in the twelve months ended
December 31, 2000 and $1.7 million, $575,000 and $376,000, respectively, in the
nine months ended September 30, 2001.

All of the states in which we operate impose various registration
requirements. To fulfill these requirements, we have registered each of our
facilities with appropriate governmental agencies and, where required, have
appointed a licensed veterinarian to act on behalf of each facility. All
veterinary doctors practicing in our clinics are required to maintain valid
state licenses to practice.

Any failure in our information technology systems could significantly increase
testing turn-around time, reduce our production capacity and otherwise disrupt
our operations.

Our laboratory operations depend, in part, on the continued and
uninterrupted performance of our information technology systems. Our growth has
necessitated continued expansion and upgrade of our information technology
infrastructure. Sustained system failures or interruption in one or more of our
laboratory operations could disrupt our ability to process laboratory
requisitions, perform testing, provide test results in a timely manner and/or
bill the appropriate party. We could lose customers and revenue as a result of
a system failure.

Our computer systems are vulnerable to damage or interruption from a variety
of sources, including telecommunications failures, electricity brownouts or
blackouts, malicious human acts and natural disasters. Moreover, despite
network security measures, some of our servers are potentially vulnerable to
physical or electronic break-ins, computer viruses and similar disruptive
problems. Despite the precautions we have taken, unanticipated problems
affecting our systems could cause interruptions in our information technology
systems. Our insurance policies may not adequately compensate us for any losses
that may occur due to any failures in our systems.

The loss of Mr. Robert L. Antin, our Chairman, President and Chief Executive
Officer, could materially and adversely affect our business.

We are dependent upon the management and leadership of our Chairman,
President and Chief Executive Officer, Robert L. Antin. We have an employment
contract with Mr. Antin which may be terminated at the option of Mr. Antin. We
do not maintain any key man life insurance coverage for Mr. Antin. The loss of
Mr. Antin could materially adversely affect our business.

Risks Associated with this Offering

Concentration of ownership among our existing executive officers, directors and
principal stockholders may prevent new investors from influencing significant
corporate decisions.

Upon completion of this offering, our executive officers, directors and
principal stockholders will beneficially own, in the aggregate, approximately
52.2% of our outstanding common stock. As a result, these stockholders will be
able to exercise control over all matters requiring stockholder approval,
including the election of directors, amendment of our certificate of
incorporation and approval of significant corporate transactions and will have
significant control over our management and policies. The directors elected by
these stockholders will be able to make decisions affecting our capital
structure, including decisions to issue additional capital stock, implement
stock repurchase programs and incur indebtedness. This control may have the
effect of deterring hostile takeovers, delaying or preventing changes in
control or changes in management, or limiting the ability of our other
stockholders to approve transactions that they may deem to be in their best
interests.

Future sales of shares of our common stock in the public market may depress our
stock price and make it difficult for you to recover the full value of your
investment in our shares.

If our existing stockholders sell substantial amounts of our common stock in
the public market following this offering or if there is a perception that
these sales may occur, the market price of our common stock could decline.
Based on shares outstanding as of September 30, 2001, upon completion of this
offering we will have outstanding approximately 32,216,212 shares of common
stock. Of these shares, only the shares of common stock sold in this offering
will be freely tradable, without restriction, in the public market. After the
lockup agreements pertaining to this offering expire 180 days from the date of
this prospectus unless waived, an additional 18,216,212 shares will be eligible
for sale in the public market at various times, subject to volume limitations
under Rule 144 of the Securities Act of 1933. See "Shares Eligible for Future
Sale" for more information regarding shares of our common stock that may be
sold by existing stockholders after the closing of this offering.

Because our common stock is not currently traded on a public market, the
initial public offering price may not be indicative of the market price of our
common stock after this offering. You may be unable to resell your shares at or
above the initial public offering price.

There is currently no public market for our common stock. An active public
market may not develop for our common stock following this offering. If a
market does develop, the market price of our common stock may be

less than the public offering price. The public offering price will be
determined by negotiations between us and the representatives of the
underwriters and will not necessarily be indicative of the market price of the
common stock after the offering. The prices at which the common stock will
trade after the offering will be determined by the marketplace and may be
influenced by many factors, including:

. the information included in this prospectus and otherwise available to
the representatives;

. the history and the prospects of the industry in which we compete;

. the ability of our management;

. our past and present operations;

. our prospects for future earnings;

. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies;

. market conditions for initial public offerings; and

. the general condition of the securities markets at the time of this
offering.

The price of our common stock may be volatile.

Following this offering, the price at which our common stock will trade may
be volatile. The stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices of
securities. These fluctuations often have been unrelated or disproportionate to
the operating performance of publicly traded companies. In the past, following
periods of volatility in the market price of a particular company's securities,
securities class-action litigation has often been brought against that company.
We may become involved in this type of litigation in the future. Litigation of
this type is often expensive to defend and may divert management's attention
and resources from the operation of our business.

Terrorism and the uncertainty of war may have a material adverse effect on our
operating results.

Terrorist attacks, such as the attacks that occurred in New York and
Washington, D.C. on September 11, 2001, the response by the United States on
October 7, 2001 and other acts of violence or war may affect the market on
which our common stock will trade, the markets in which we operate, our
operations and profitability and your investment. Further terrorist attacks
against the United States or United States businesses may occur. The potential
near-term and long-term effect these attacks may have for our customers, the
market for our common stock, the markets for our services and the U.S. economy
are uncertain. The consequences of any terrorist attacks, or any armed
conflicts which may result, are unpredictable, and we may not be able to
foresee events that could have an adverse effect on our markets, our business
or your investment.

Our stock price may be adversely affected because our results of operations may
fluctuate significantly from quarter to quarter.

Our operating results may fluctuate significantly in the future. If our
quarterly revenue and operating results fall below the expectations of
securities analysts and investors, the market price of our common stock could
fall substantially. We believe that quarter to quarter or annual comparisons of
our operating results are not a good indication of our future performance.
Historically, when you eliminate the effect of acquisitions, we have
experienced higher revenue in the second and third quarters than in the first
and fourth quarters. The demand for our veterinary services is higher during
warmer months because pets spend a greater amount of time outdoors, where they
are more likely to be injured and are more susceptible to disease and
parasites. Also, use of veterinary services may be affected by levels of
infestation of fleas, heartworms and ticks, and the number of daylight hours. A
substantial portion of our costs are fixed and do not vary with the level of
demand for our services. Therefore, net income for the second and third
quarters at individual animal hospitals and veterinary diagnostic laboratories
generally is higher than in the first and fourth quarters.

Operating results also may vary depending on a number of factors, many of
which are outside our control, including:

. demand for our tests;

. changes in our pricing policies or those of our competitors;

. the hiring and retention of key personnel;

. wage and cost pressures;

. changes in fuel prices or electrical rates;

. costs related to acquisitions of technologies or businesses; and

. seasonal and general economic factors.

You will incur immediate and substantial dilution as a result of this offering.

The initial public offering price is substantially higher than the book
value per share of the common stock. As a result, purchasers in this offering
will experience immediate and substantial dilution of $21.87 per share in the
tangible book value of the common stock from the initial public offering price.

Takeover defense provisions may adversely affect the market price of our common
stock.

Various provisions of Delaware corporation law and of our corporate
governance documents may inhibit changes in control not approved by our board
of directors and may have the effect of depriving you of an opportunity to
receive a premium over the prevailing market price of our common stock in the
event of an attempted hostile takeover. In addition, the existence of these
provisions may adversely affect the market price of our common stock. These
provisions include:

. a classified board of directors;

. a prohibition on stockholder action through written consents;

. a requirement that special meetings of stockholders be called only by
our the board of directors;

. advance notice requirements for stockholder proposals and nominations;
and

. availability of "blank check" preferred stock.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business," and elsewhere in this prospectus are forward-looking
statements. We generally identify forward-looking statements in this prospectus
using words like "believe," "intend," "expect," "estimate," "may," "should,"
"plan," "project," "contemplate," "anticipate," "predict," or similar
expressions. These statements involve known and unknown risks, uncertainties,
and other factors, including those described in this "Risk Factors" section,
that may cause our or our industry's actual results, levels of activity,
performance, or achievements to be materially different from any future
results, levels of activity, performance, or achievements expressed or implied
by these forward-looking statements. Except as required by applicable law,
including the securities laws of the United States, and the rules and
regulations of the SEC, we do not plan to publicly update or revise any
forward-looking statements after we distribute this prospectus, whether as a
result of any new information, future events or otherwise.

USE OF PROCEEDS

We expect to receive $182.0 million in gross proceeds from the sale of
shares of our common stock in this offering based on the sale of 14,000,000
shares at an assumed initial public offering price of $13.00 per share, the
midpoint of the offering range set forth on the cover page of this prospectus.
We expect our net proceeds from this offering and the concurrent note offering
to be approximately $315.0 million and $340.4 million if the underwriters
exercise their over-allotment option in full.

We intend to use the net proceeds from these offerings and our cash on hand
to:

. repay approximately $104.2 million of our credit facility;

. repay approximately $47.8 million of the outstanding principal amount of
our 15.5% senior notes due 2010 at a redemption price of 110% of the
principal amount, for an aggregate of $52.6 million, plus accrued and
unpaid interest;

. redeem in full, all outstanding shares of our 14% series A redeemable
preferred stock and our 12% series B redeemable preferred stock having
an aggregate liquidation preference of $86.3 million and $83.9 million,
respectively, plus accrued and unpaid dividends.

If the underwriters exercise their over-allotment option, we will receive
additional net proceeds of $25.4 million which we intend to use to reduce
indebtedness. The closing of the concurrent note offering will occur
simultaneously with the closing of this offering.

Pending application of the net proceeds as described above, we intend to
invest the net proceeds in short-term investment grade securities.

DIVIDEND POLICY

We have not paid cash dividends on our common stock, and we do not
anticipate paying cash dividends in the foreseeable future. In addition, our
credit facility and the indentures governing our outstanding senior and senior
subordinated notes place limitations on our ability to pay dividends or make
other distributions in respect of our common stock. Any future determination as
to the payment of dividends on our common stock will be restricted by these
limitations, will be at the discretion of our board of directors and will
depend on our results of operations, financial condition, capital requirements
and other factors deemed relevant by the board of directors, including the
General Corporation Law of the State of Delaware, which provides that dividends
are only payable out of surplus or current net profits.

The terms of our series A and series B redeemable preferred stock require us
to pay dividends whether or not declared by our board of directors, out of
funds legally available. Dividends on the series A and series B redeemable
preferred stock accrue at the rates of 14% and 12% per annum of the liquidation
preference. Dividends are payable in cash on a quarterly basis. If dividends
are not paid when due, the amount payable is added to the liquidation
preference. At September 30, 2001, dividends earned but not paid were $11.4
million and $9.6 million for the series A and series B redeemable preferred
stock, respectively.

DILUTION

At September 30, 2001, we had net tangible book value of $(441.6) million,
or $(24.24) per share. Net tangible book value per share is equal to our total
tangible assets less our total liabilities, divided by the total number of
shares of our common stock outstanding. After giving effect to this offering at
an assumed initial public offering price of $13.00 per share, the mid-point of
the offering range set forth on the cover of this prospectus, the concurrent
note offering and the application of the net proceeds therefrom and the use of
$12.0 million of cash on hand, our as adjusted pro forma net tangible book
value at September 30, 2001 would have been $(285.8) million or $(8.87) per
share. This represents an immediate increase in net tangible book value of
$15.37 per share to existing stockholders and an immediate dilution of $21.87
per share to new investors purchasing shares of our common stock in this
offering. The following table illustrates the per share dilution to the new
investors.

Assumed initial public offering price................................................. $13.00
Net tangible book value per share at September 30, 2001............................ $(24.24)
Increase per share attributable to this offering, the concurrent note offering and
the use of $12.0 million of cash on hand......................................... 15.37
-------
As adjusted pro forma net tangible book value per share after this offering, the
concurrent note offering and the use of $12.0 million of cash on hand............... (8.87)
------
Dilution per share to new investors in this offering.................................. $21.87
======

The following table summarizes, on an as adjusted basis, as of September 30,
2001, the total number of shares of our common stock, the total cash
consideration paid and the average price per share paid by the existing
stockholders and by the new investors in this offering before deducting the
underwriting discount and estimated offering expenses:

Shares Purchased Total Consideration Average
------------------ ------------------- Price Per
Number Percent Amount Percent Share
----------- ------- ------------ ------- ---------

Existing stockholders 18,216,212 56.5% $ 17,662,712 8.8% $ 0.97
New investors........ 14,000,000 43.5 182,000,000 91.2 13.00
----------- ----- ------------ -----
Total............. 32,216,212 100.0% $199,662,712 100.0%
=========== ===== ============ =====

The foregoing discussion and table assume no exercise of any stock options
or warrants outstanding as of September 30, 2001. As of September 30, 2001,
there were options or warrants outstanding to purchase a total of 1,781,790
shares of our common stock and 2,000,000 shares reserved for issuance pursuant
to future grants of options under our 1996 Stock Incentive Plan and our 2001
Stock Incentive Plan. To the extent that any of these shares are issued, there
will be further dilution to new investors. See "Capitalization," "Management"
and Note 10 to our Consolidated Financial Statements.

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 2001:

. on an actual basis; and

. on a pro forma as adjusted basis, giving effect to this offering at an
assumed initial public offering price of $13.00 per share, which is the
mid-point in the offering range set forth on the cover page of this
prospectus, the concurrent note offering and the intended application of
the net proceeds therefrom and the use of $12.0 million of cash on hand.

As of September 30, 2001
-----------------------
Pro Forma
Actual As Adjusted(1)
------- --------------
(dollars in millions)

Total debt:
Credit facility:
Revolving credit facility (2)................................................ $ -- $ --
Term loan A.................................................................. 49.0 28.3
Term loan B.................................................................. 197.5 114.0
% senior subordinated notes offered concurrently with this offering........... -- 150.0
13.5% senior subordinated notes.................................................. 20.0 20.0
Senior notes..................................................................... 116.6 68.8
Other debt....................................................................... 1.5 1.5
Unamortized discount............................................................. (13.2) (8.8)
------- -------
Total debt................................................................... 371.4 373.8
------- -------
Series A redeemable preferred stock, $.01 par value, 3,000,000 shares authorized;
2,998,408 shares issued and outstanding, actual; no shares issued and outstanding,
pro forma as adjusted............................................................. 86.3 --
Series B redeemable preferred stock, $.01 par value, 3,000,000 shares authorized;
2,970,822 shares issued and outstanding, actual; no shares issued and outstanding,
pro forma as adjusted............................................................. 83.9 --
Stockholders' equity:...............................................................
Common stock, $.01 par value; 24,000,000 shares authorized, 18,216,212 shares
issued and outstanding, actual; 75,000,000 shares authorized and
32,216,212 shares issued and outstanding, pro forma as adjusted (3)............ 0.2 0.3
Additional paid-in capital....................................................... 26.8 194.6
Notes receivable from stockholders............................................... (0.5) (0.5)
Accumulated deficit.............................................................. (122.4) (130.7)
Accumulated comprehensive loss................................................... (2.0) (2.0)
------- -------
Total stockholders' equity (deficit)......................................... (97.9) 61.7
------- -------
Total capitalization......................................................... $ 443.7 $ 435.5
======= =======

--------

(1) The pro forma as adjusted data are presented as if this offering, the
concurrent note offering and the application of the net proceeds therefrom
and the use of $12.0 million of cash on hand had occurred at September 30,
2001. The closing of the concurrent note offering will occur simultaneously
with the closing of this offering.

(2) The revolving credit facility provides for borrowings of up to $50.0
million.
(3) Share information is based on the number of shares outstanding as of
September 30, 2001 and:

. excludes 631,800 shares of common stock issuable upon exercise of
outstanding options under our stock incentive plans, at an exercise
price of $1.00 per share;

. excludes 2,000,000 shares available for future issuance under our stock
incentive plans; and

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

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected historical consolidated financial data as of and for the years
ended December 31, 2000, 1999, 1998, 1997 and 1996 have been derived from our
audited financial statements. These financial statements were audited by Arthur
Andersen LLP. The selected historical consolidated financial data as of and for
the nine months ended September 30, 2001 and 2000 have been derived from our
unaudited interim financial statements and include, in the opinion of
management, all adjustments necessary for a fair presentation of our financial
position and operating results for those periods and as of those dates. Our
results for interim periods are not necessarily indicative of our results for a
full year's operations. You should read the selected financial data presented
below together with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and related notes. Our audited consolidated financial statements as of December
31, 2000 and 1999 and for each of the three years in the period ended December
31, 2000 and our unaudited, consolidated financial statements as of and for the
nine months ended September 30, 2001 and for the nine months ended September
30, 2000 are included in this prospectus.

Nine Months Ended
September 30, Year Ended December 31,
------------------ ------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share amounts)

Statements of Operations Data:
Laboratory revenue........................ $101,855 $ 90,831 $119,300 $103,282 $ 89,896 $ 68,997 $ 56,774
Animal hospital revenue................... 207,665 182,716 240,624 217,988 191,888 165,848 120,110
Other revenue (1)......................... 1,500 425 925 5,100 5,100 5,764 8,674
Intercompany.............................. (5,655) (4,691) (6,162) (5,810) (5,845) (4,696) (4,130)
-------- -------- -------- -------- -------- -------- --------
Total revenue............................. 305,365 269,281 354,687 320,560 281,039 235,913 181,428
Direct costs.............................. 212,042 191,269 254,787 232,493 209,380 178,630 138,854
Selling, general and administrative....... 24,166 20,465 26,994 23,622 19,693 17,676 19,735
Depreciation and amortization............. 19,121 13,200 18,878 16,463 13,132 11,199 7,496
Recapitalization costs.................... -- 34,268 34,268 -- -- -- --
Year 2000 remediation expense............. -- -- -- 2,839 -- -- --
Restructuring and merger costs............ -- -- -- -- -- -- 5,690
Other non-cash operating items............ 16,356 555 555 (1,873) -- -- 12,424
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)................ 33,680 9,524 19,205 47,016 38,834 28,408 (2,771)
Net interest expense...................... 32,387 8,433 19,892 9,449 8,832 7,411 3,325
Other (income) expense.................... 233 (3,200) 1,800 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before minority
interest, provision for income
taxes and extraordinary item.......... 1,060 4,291 (2,487) 37,567 30,002 20,997 (6,096)
Minority interest in income of
subsidiaries............................. 1,104 808 1,066 850 780 424 6,577
Provision for income taxes................ 6,741 2,709 2,199 14,360 12,954 9,347 1,959
Extraordinary loss on early
extinguishment of debt (net of taxes).... -- 2,659 2,659 -- -- -- --
Increase in carrying amount of
redeemable preferred stock............... 15,583 539 5,391 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss) available to
common stockholders................... $(22,368) $ (2,424) $(13,802) $ 22,357 $ 16,268 $ 11,226 $(14,632)
======== ======== ======== ======== ======== ======== ========

Basic earnings (loss) per share........... $ (1.27) $ (0.01) $ (0.06) $ 0.07 $ 0.05 $ 0.04 $ (0.06)
Diluted earnings (loss) per share......... $ (1.27) $ (0.01) $ (0.06) $ 0.07 $ 0.05 $ 0.04 $ (0.06)
Shares used for computing basic earnings
(loss) per share......................... 17,643 306,718 234,055 315,945 305,250 294,390 239,130
Shares used for computing diluted earnings
(loss) per share......................... 17,643 306,718 234,055 329,775 329,100 315,195 239,130

Other Financial Data:
Adjusted EBITDA (2)(3).............. $ 71,017 $ 57,547 $ 73,526 $ 64,445 $ 51,966 $ 39,607 $ 22,839
Adjusted EBITDA margin (4).......... 23.3% 21.4% 20.7% 20.1% 18.5% 16.8% 12.6%

Laboratory EBITDA................... $ 35,264 $ 30,495 $ 38,827 $ 32,273 $ 24,215 $ 20,142 $ 16,565
Laboratory EBITDA margin (4)........ 34.6% 33.6% 32.5% 31.2% 26.9% 29.2% 29.2%

Animal hospital EBITDA.............. $ 43,159 $ 34,287 $ 42,985 $ 37,237 $ 31,975 $ 23,243 $ 15,794
Animal hospital EBITDA margin (4)... 20.8% 18.8% 17.9% 17.1% 16.7% 14.0% 13.1%

Net cash provided by operating
activities......................... $ 49,316 $ 46,975 $ 60,054 $ 38,467 $ 27,123 $ 22,674 $ 1,603
Capital expenditures................ 10,604 13,686 22,555 21,803 11,678 7,241 6,962
Balance Sheet Data (at period end):
Cash and cash equivalents........... $ 23,631 $ 17,031 $ 10,519 $ 10,620 $ 8,977 $ 19,882 $ 29,621
Net working capital................. 2,175 8,240 5,289 9,605 6,694 (4,454) (10,221)
Total assets........................ 501,227 481,709 483,070 426,500 393,960 386,089 354,009
Total debt.......................... 371,365 358,908 362,749 161,535 159,787 173,875 148,822
Total redeemable preferred stock.... 170,205 149,771 154,622 -- -- -- --
Total stockholders' equity (deficit) (97,946) (69,934) (81,310) 231,229 202,685 180,851 167,350

--------
(1)Other revenue includes consulting fees of $1.5 million and $425,000 for the
nine months ended September 30, 2001 and 2000; and of $925,000, $5.1
million, $5.1 million and $4.7 million for the years ended December 31,
2000, 1999, 1998 and 1997. For the years ended December 31, 1997 and 1996
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 (loss) before depreciation and amortization.
Adjusted EBITDA represents EBITDA adjusted to exclude management fees,
recapitalization costs, Year 2000 remediation expense and other non-cash
operating items. EBITDA and Adjusted EBITDA are not measures of financial
performance under generally accepted accounting principles, or GAAP.
Although EBITDA and Adjusted EBITDA should not be considered in isolation or
as substitutes 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 understand that EBITDA and
Adjusted EBITDA are widely used by financial analysts as a measure of
financial performance. Our calculation of EBITDA and Adjusted EBITDA may not
be comparable to similarly titled measures reported by other companies.

The calculation of EBITDA and Adjusted EBITDA is shown below (dollars in
thousands):

Nine Months Ended
September 30, Year Ended December 31,
----------------- ----------------------------------------
2001 2000 2000 1999 1998 1997 1996
------- ------- ------- ------- ------- ------- -------

Operating income (loss).......... $33,680 $ 9,524 $19,205 $47,016 $38,834 $28,408 $(2,771)
Depreciation and amortization.... 19,121 13,200 18,878 16,463 13,132 11,199 7,496
------- ------- ------- ------- ------- ------- -------
EBITDA........................ 52,801 22,724 38,083 63,479 51,966 39,607 4,725
Management fees(a)............... 1,860 -- 620 -- -- -- --
Recapitalization costs........... -- 34,268 34,268 -- -- -- --
Year 2000 remediation expense.... -- -- -- 2,839 -- -- --
Restructuring and merger costs... -- -- -- -- -- -- 5,690
Other non-cash operating items(b) 16,356 555 555 (1,873) -- -- 12,424
------- ------- ------- ------- ------- ------- -------
Adjusted EBITDA............... $71,017 $57,547 $73,526 $64,445 $51,966 $39,607 $22,839
======= ======= ======= ======= ======= ======= =======

--------
(a)Management fees are paid pursuant to our management services agreement and
are included in selling, general and administrative expense in our
statements of operations. Upon the closing of this offering, the parties
have agreed to terminate the management services agreement.

(b)Other non-cash operating items include a write-down and loss on sale of
assets of $8.7 million and stock-based compensation expense of $7.6
million for the nine months ended September 30, 2001; stock-based
compensation expense of $555,000 for the nine months ended September 30,
2000 and for the year ended December 31, 2000; reversal of restructuring
charges of $1.9 million for the year ended December 31, 1999; reversal of
restructuring charges of $2.1 million and restructuring charges of $2.1
million for the year ended December 31, 1997; and restructuring charges of
$2.9 million and a write-down of assets of $9.5 million for the year ended
December 31, 1996. Numbers may not add due to rounding.

(3)Adjusted EBITDA is the sum of laboratory EBITDA, animal hospital EBITDA and
other revenue, less corporate selling, general and administrative expense,
excluding management fees. For the years ended December 31, 1997 and 1996,
Adjusted EBITDA also includes EBITDA of our pet products joint venture of
$168,000 and a loss of $1.1 million.

The calculation of Adjusted EBITDA is shown below (dollars in thousands):

Nine Months Ended
September 30, Year Ended December 31,
----------------- --------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- ------- ------- -------- ------- ------- -------

Laboratory EBITDA.................... $ 35,264 $30,495 $38,827 $ 32,273 $24,215 $20,142 $16,565
Animal hospital EBITDA............... 43,159 34,287 42,985 37,237 31,975 23,243 15,794
Other revenue........................ 1,500 425 925 5,100 5,100 4,700 --
Corporate, selling and administrative
expense............................. (10,766) (7,660) (9,831) (10,165) (9,324) (8,646) (8,386)
Management fees (a).................. 1,860 -- 620 -- -- -- --
Pet products joint venture EBITDA.... -- -- -- -- -- 168 (1,134)
-------- ------- ------- -------- ------- ------- -------
Adjusted EBITDA................... $ 71,017 $57,547 $73,526 $ 64,445 $51,966 $39,607 $22,839
======== ======= ======= ======== ======= ======= =======

(4)Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total
revenue. Laboratory EBITDA margin is calculated by dividing laboratory
EBITDA by laboratory revenue. Animal hospital EBITDA margin is calculated by
dividing animal hospital EBITDA by animal hospital revenue.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

You should read the following discussion and analysis of our financial
condition and results of operations together with our consolidated financial
statements and related notes included elsewhere in this prospectus. Some of the
information contained in this discussion and analysis or set forth elsewhere in
this prospectus, including information with respect to our plans and strategies
for our business, includes forward-looking statements that involve risk and
uncertainties. You should review the "Risk Factors" section of this prospectus
for a discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking
statements contained herein.

Overview

Our company was formed in 1986 by Robert Antin, Arthur Antin and Neil
Tauber, who have served since our inception as our Chief Executive Officer,
Chief Operating Officer and Senior Vice President of Development, respectively.
During the 1990s, we established a premier position in the veterinary
diagnostic laboratory and animal hospital markets through both internal growth
and acquisitions. By 1997, we achieved a critical mass, building a laboratory
network of 12 laboratories servicing animal hospitals in all 50 states and
completing acquisitions for a total of 160 animal hospitals. At September 30,
2001, our laboratory network consisted of 15 laboratories serving all 50 states
and our animal hospital network consisted of 214 animal hospitals in 33 states.
We are focusing primarily on generating internal growth to increase revenue and
profitability. In order to augment internal growth, we may selectively acquire
laboratories and intend to acquire approximately 15-25 animal hospitals per
year, depending upon the attractiveness of candidates and the strategic fit
with our existing operations.

The following table summarizes our growth in facilities for the periods
presented:

Nine Months Ended Year Ended
September 30, December 31,
---------------- -------------
2001 2000 2000 1999 1998
---- ---- ---- ---- ----

Laboratories:
Beginning of period...................... 15 13 13 12 12
Acquisitions & new facilities............ -- 2 3 3 1
Relocated into other labs operated by us. -- (1) (1) (2) (1)
--- --- --- --- ---
End of period............................ 15 14 15 13 12
=== === === === ===
Animal hospitals:
Beginning of period...................... 209 194 194 168 160
Acquisitions............................. 18 16 24 39 11
Relocated into hospitals operated by us.. (10) (5) (8) (11) (1)
Sold or closed........................... (3) -- (1) (2) (2)
--- --- --- --- ---
End of period............................ 214 205 209 194 168
=== === === === ===
Owned at end of period................... 161 151 157 149 145
Managed at end of period................. 53 54 52 45 23

We were a publicly traded company from 1991 until September 2000, when we
completed a recapitalization with an entity controlled by Leonard Green &
Partners. The recapitalization was completed in a financial market which we
believed did not adequately value companies of our size and type because the
market's focus and attention was largely on technology and internet based
companies. Our subsequent performance and the changing market dynamics support
the determination by our Board of Directors to re-enter the public sector. The
recapitalization was financed by:

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

. borrowings of $250.0 million under a $300.0 million credit facility,

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

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

Upon consummation of this offering, the parties have agreed to terminate
non-competition agreements with four members of our senior management and the
management services agreement with Leonard Green & Partners. In connection with
the termination of these agreements, we will take a non-cash charge of
approximately $10.4 million and a cash charge of $8.0 million. In addition, we
are considering terminating a portion of our collar agreement in the fourth
quarter of 2001 which may result in a cash charge of approximately $2.5
million. For a description of these agreements, see "Related Party
Transactions--Non-Competition Agreements," "Related Party
Transactions--Management Services Agreement" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--New Accounting
Pronouncements--Derivatives--Our Collar Agreement."

Basis of Reporting

General

We report our operations in three segments: laboratory, animal hospital and
corporate.

Revenue Recognition

Revenue is recognized only after the following criteria are met:

. there exists adequate evidence of the transaction;

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

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

Laboratory Revenue

A portion of laboratory revenue is intercompany revenue that was generated
by providing laboratory services to our animal hospitals. 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 our laboratory internal
revenue growth rate for the applicable period, we compare our laboratory
revenue net of estimated laboratory revenue of newly acquired laboratories, to
our laboratory revenue as reported for the prior comparable period. We believe
this fairly presents our laboratory internal revenue growth for the periods
presented, although our calculation may not be comparable to similarly titled
measures by other companies.

Animal Hospital Revenue

Animal hospital revenue is comprised of revenue of the animal hospitals that
we own and the management fees of animal hospitals that we manage. Certain
states prohibit business corporations from providing or holding themselves out
as providers of veterinary medical care. In these states, we enter into
arrangements with a veterinary medical group that provides all veterinary
medical care, although we manage the administrative functions associated with
the operation of the animal hospitals. In return for our services, the
veterinary medical group pays us a management fee. We do not consolidate the
operations of animal hospitals that we manage. However, for purposes of
calculating same-facility revenue growth in our animal hospitals, we use the
combined revenue of animal hospitals owned and managed for the entire periods
presented.

Other Revenue

Other revenue is comprised of consulting fees from Heinz Pet Products
relating to the marketing of its proprietary pet food.

Direct Costs

Laboratory direct costs are comprised of all costs of laboratory services,
including salaries of veterinarians, technicians and other non-administrative,
laboratory-based personnel, facilities rent, occupancy costs and supply costs.
Animal hospital direct costs are comprised of all costs of services and
products at the hospitals, including salaries of veterinarians, technicians and
all other hospital-based personnel employed by the hospitals we own, facilities
rent, occupancy costs, supply costs and costs of goods sold associated with the
retail sales of pet food and pet supplies.

Selling, General and Administrative

Our selling, general and administrative expense is divided between our
laboratory, animal hospital and corporate segments. Laboratory selling, general
and administrative expense consists primarily of sales and administrative
personnel and selling, marketing and promotional expense. Animal hospital
selling, general and administrative expense consists primarily of field
management and administrative personnel, recruiting and marketing expense.
Corporate selling, general and administrative expense consists of
administrative expense at our headquarters, including the salaries of corporate
officers, professional expense, rent and occupancy costs.

EBITDA and Adjusted EBITDA

EBITDA is operating income (loss) before depreciation and amortization.
Adjusted EBITDA represents EBITDA adjusted to exclude management fees paid
pursuant to our management services agreement, recapitalization costs, Year
2000 remediation expense and other non-cash operating items. Corporate EBITDA
is comprised of other revenue less corporate selling, general and
administrative expense.

EBITDA and Adjusted EBITDA are not measures of financial performance under
generally accepted accounting principles, or GAAP. Although EBITDA and Adjusted
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 understand that EBITDA and Adjusted EBITDA are widely used by
financial analysts as a measure of financial performance. Our calculation of
EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures
reported by other companies.

Results of Operations

The following table sets forth components of our statements of operations
data expressed as a percentage of revenue for the indicated periods:

Nine Months Ended
September 30, Year Ended December 31,
--------------- ----------------------
2001 2000 2000 1999 1998
----- ----- ----- ----- -----

Revenue:
Laboratory.................................... 33.4% 33.7% 33.6% 32.2% 32.0%
Animal hospital............................... 68.0 67.8 67.8 68.0 68.3
Other......................................... 0.5 0.2 0.3 1.6 1.8
Intercompany.................................. (1.9) (1.7) (1.7) (1.8) (2.1)
----- ----- ----- ----- -----
Total revenue............................. 100.0 100.0 100.0 100.0 100.0
Direct costs..................................... 69.4 71.0 71.8 72.5 74.5
Selling, general and administrative.............. 7.9 7.6 7.6 7.4 7.0
Depreciation and amortization.................... 6.3 4.9 5.4 5.1 4.7
Recapitalization costs........................... -- 12.9 9.7 -- --
Year 2000 remediation expense.................... -- -- -- 0.9 --
Other non-cash operating items................... 5.4 0.1 0.1 (0.6) --
----- ----- ----- ----- -----
Operating income.............................. 11.0 3.5 5.4 14.7 13.8
Interest expense, net............................ 10.6 3.1 5.6 2.9 3.1
Other (income) expense........................... -- (1.2) 0.5 -- --
Minority interest................................ 0.4 0.3 0.3 0.3 0.3
Income tax provision............................. 2.2 1.0 0.6 4.5 4.6
Extraordinary loss on early extinguishment....... -- 1.0 0.8 -- --
----- ----- ----- ----- -----
Net income (loss)......................... (2.2)% (0.7)% (2.4)% 7.0% 5.8%
===== ===== ===== ===== =====

Nine Months Ended September 30, 2001 and 2000

Revenue

The following table summarizes our revenue for the nine months ended
September 30, 2001 and 2000 (dollars in thousands, unaudited):

Percentage
2001 2000 Change
-------- -------- ----------

Laboratory................... $101,855 $ 90,831 12.1%
Animal hospital.............. 207,665 182,716 13.7%
Other........................ 1,500 425
Intercompany................. (5,655) (4,691)
-------- --------
Total revenue............. $305,365 $269,281 13.4%
======== ========

Laboratory Revenue

Laboratory revenue increased $11.0 million, or 12.1%, for the nine months
ended September 30, 2001 compared to the nine months ended September 30, 2000.
The increase primarily was due to internal growth of 11.5%, which resulted from
an increase in the overall number of tests and requisitions and an increase in
the average revenue per requisition. These increases primarily were due to the
continued emphasis on selling our pet health and wellness programs and the
implementation of a price increase for most tests in February 2001.

Animal Hospital Revenue

The following table summarizes our animal hospital revenue as reported and
the combined revenue of animal hospitals that we owned and managed had we
consolidated the operating results of the animal hospitals we manage into our
operating results for the nine months ended September 30, 2001 and 2000
(dollars in thousands, unaudited):

Percentage
2001 2000 Change
-------- -------- ----------

Animal hospital revenue as reported........... $207,665 $182,716 13.7%
Less: Management fees paid to us by veterinary
medical groups.............................. (28,270) (23,965)
Add: Revenue of animal hospitals managed...... 52,580 45,745
-------- --------
Combined revenue of animal hospitals owned
and managed.............................. $231,975 $204,496 13.4%
======== ========

Animal hospital revenue as reported increased $24.9 million, or 13.7%, for
the nine months ended September 30, 2001 compared to the nine months ended
September 30, 2000. The increase in animal hospital revenue as reported during
this period resulted primarily from the net addition of nine animal hospitals
that we owned or managed subsequent to September 30, 2000. The increase also
was due to same-facility revenue growth of 4.4% for the nine months ended
September 30, 2001. Same-facility revenue growth primarily was due to an
increase in the average amount spent per visit and revenue generated by
customers referred from our relocated animal hospitals.

Other Revenue

Other revenue increased $1.1 million for the nine months ended September 30,
2001 compared to the nine months ended September 30, 2000. Our consulting
agreement with Heinz Pet Products expired February 1, 2000. Under this
agreement, we had received monthly consulting fees of $425,000. We entered into
a new agreement with Heinz Pet Products effective October 1, 2000, which
provides for monthly consulting fees of $167,000 over a term of 24 months.
Consequently, for the nine months ended September 30, 2001, other revenue
includes consulting fees for nine months as compared to one month for the
period ended September 30, 2000.

Direct Costs

The following table summarizes our direct costs and our direct costs as a
percentage of applicable revenue for the nine months ended September 30, 2001
and 2000 (dollars in thousands, unaudited):

2001 2000
---------------- ----------------
% of % of Percentage
$ Revenue $ Revenue Change
-------- ------- -------- ------- ----------

Laboratory............ $ 60,154 59.1% $ 54,348 59.8% 10.7%
Animal hospital....... 157,543 75.9% 141,612 77.5% 11.2%
Other................. -- --
Intercompany.......... (5,655) (4,691) 20.5%
-------- --------
Total direct costs. $212,042 69.4% $191,269 71.0% 10.9%
======== ========

Laboratory Direct Costs

Laboratory direct costs increased $5.8 million, or 10.7%, for the nine
months ended September 30, 2001 compared to the nine months ended September 30,
2000. Laboratory direct costs as a percentage of laboratory

revenue decreased to 59.1% for the nine months ended September 30, 2001 from
59.8% for the nine months ended September 30, 2000. The decrease in laboratory
direct costs as a percentage of laboratory revenue during this period primarily
was attributable to the increase in laboratory revenue combined with the
operating leverage associated with the laboratory business, as a majority of
the costs associated with the laboratory business are relatively fixed and the
remaining costs do not increase proportionately with an increase in volume of
tests.

Animal Hospital Direct Costs

The following table summarizes our animal hospital direct costs as reported
and the combined direct costs of animal hospitals that we owned and managed had
we consolidated the operating results of the animal hospitals we manage into
our operating results for the nine months ended September 30, 2001 and 2000
(dollars in thousands, unaudited):

2001 2000
----------------- -----------------
% of % of
Combined Combined Percentage
$ Revenue $ Revenue Change
-------- -------- -------- -------- ----------

Animal hospital direct costs as
reported..................... $157,543 75.9% $141,612 77.5% 11.2%
Add: Direct costs of animal
hospitals managed............ 52,580 45,745
Less: Management fees charged
by us to veterinary medical
groups....................... (28,270) (23,965)
-------- --------
Combined direct costs of animal
hospitals owned and managed.. $181,853 78.4% $163,392 79.9% 11.3%
======== ========

Animal hospital direct costs as reported increased $15.9 million, or 11.2%,
for the nine months ended September 30, 2001 compared to the nine months ended
September 30, 2000. Animal hospital direct costs as a percentage of animal
hospital revenue decreased to 75.9% for the nine months ended September 30,
2001 from 77.5% for the nine months ended September 30, 2000. The decrease in
animal hospital direct costs as a percentage of animal hospital revenue during
this period primarily was attributable to the increase in animal hospital
revenue combined with the operating leverage associated with the animal
hospital business, as most of the costs associated with this business do not
increase proportionately with increases in the volume of services rendered.

Selling, General and Administrative

The following table summarizes our selling, general and administrative
expense and our selling, general and administrative expense as a percentage of
applicable revenue for the nine months ended September 30, 2001 and 2000
(dollars in thousands, unaudited):

2001 2000
-------------- --------------
% of % of Percentage
$ Revenue $ Revenue Change
------- ------- ------- ------- ----------

Laboratory.................... $ 6,437 6.3% $ 5,988 6.6% 7.5%
Animal hospital............... 6,963 3.4% 6,817 3.7% 2.1%
Corporate..................... 10,766 3.5% 7,660 2.8% 40.5%
------- -------
Total selling, general and
administrative........... $24,166 7.9% $20,465 7.6% 18.1%
======= =======

Laboratory Selling, General and Administrative

Laboratory selling, general and administrative expense increased $449,000,
or 7.5%, for the nine months ended September 30, 2001 compared to the nine
months ended September 30, 2000. The increase primarily was

due to an increase in commission payments to sales representatives, which was
caused by an increase in sales. Laboratory selling, general and administrative
expense as a percentage of laboratory revenue was 6.3% for the nine months
ended September 30, 2001, compared to 6.6% for the nine months ended September
30, 2000.

Animal Hospital Selling, General and Administrative

Animal hospital selling, general and administrative expense increased
$146,000, or 2.1%, for the nine months ended September 30, 2001 compared to the
nine months ended September 30, 2000. The increase in animal hospital selling,
general and administrative expense primarily was due to cost of living
increases in salaries. Animal hospital selling, general and administrative
expense as a percentage of animal hospital revenue was 3.4% for the nine months
ended September 30, 2001 compared to 3.7% for the nine months ended September
30, 2000. The decrease in animal hospital selling, general and administrative
expense as a percentage of animal hospital revenue primarily was due to
operating efficiencies associated with our infrastructure.

Corporate Selling, General and Administrative

Corporate selling, general and administrative expense increased $3.1
million, or 40.5%, for the nine months ended September 30, 2001 compared to the
nine months ended September 30, 2000. Corporate selling, general and
administrative expense as a percentage of total revenue was 3.5% for the nine
months ended September 30, 2001 compared to 2.8% for the nine months ended
September 30, 2000.

The increase in corporate selling, general and administrative expense
primarily was the result of management fees of $1.9 million for the nine months
ended September 30, 2001 paid pursuant to our management services agreement,
dated as of September 20, 2000. For a description of the management services
agreement, see "Related Party Transactions--Management Services Agreement."
Excluding the management fees, corporate selling, general and administrative
expense increased 16.3% for the nine months ended September 30, 2001 compared
to the comparable prior period and represented 2.9% of total revenue for the
nine months ended September 30, 2001.

Adjusted EBITDA

The following table summarizes our Adjusted EBITDA and our Adjusted EBITDA
as a percentage of applicable revenue for the nine months ended September 30,
2001 and 2000 (dollars in thousands, unaudited):

2001 2000
--------------- ---------------
% of % of Percentage
$ Revenue $ Revenue Change
------- ------- ------- ------- ----------

Laboratory............... $35,264 34.6% $30,495 33.6% 15.6%
Animal hospital.......... 43,159 20.8% 34,287 18.8% 25.9%
Corporate................ (7,406) (7,235)
------- -------
Total Adjusted EBITDA. $71,017 23.3% $57,547 21.4% 23.4%
======= =======

Depreciation and Amortization

Depreciation and amortization expense increased $5.9 million, or 44.9%, for
the nine months ended September 30, 2001 compared to the nine months ended
September 30, 2000. The increase in depreciation and amortization expense
primarily was due to the amortization over a three-year period of $15.6 million
paid to our executives pursuant to non-competition agreements entered into in
September 2000, the purchase of property and equipment and the acquisition of
animal hospitals.

Other Non-Cash Operating Items

Other non-cash operating items for the nine months ended September 30, 2001
consisted of an $8.7 million write-down and loss on sale of assets and $7.6
million of stock-based compensation expense. The write-down of assets was
attributable to the relocation of five of our animal hospitals into existing
animal hospitals we operated, the determination that goodwill was impaired at
one of our existing animal hospitals and the write-down of real property
available for sale to fair market value. The stock-based compensation expense
resulted from the effect of the increase in the fair market value of our common
stock on our stock options with variable accounting treatment during the nine
months ended September 30, 2001. Other non-cash operating items for the nine
months ended September 30, 2000 consisted of $555,000 of stock-based
compensation expense.

Net Interest Expense

Net interest expense increased $24.0 million, or 284.1%, to $32.4 million
for the nine months ended September 30, 2001 from $8.4 million for the nine
months ended September 30, 2000. The increase in net interest expense primarily
was due to debt we incurred in connection with our recapitalization.

Other (Income) Expense

Other expense was $233,000 for the nine months ended September 30, 2001 and
consisted of a non-cash loss on a hedging instrument, pertaining to the changes
in the time value of our collar agreement. Other income was $3.2 million for
the nine months ended September 30, 2000 and consisted of the gain on sale of
our investment in Veterinary Pet Insurance, Inc.

Income Taxes

Provision for income taxes was $6.7 million and $2.7 million for the nine
months ended September 30, 2001 and 2000. The effective income tax rate for the
nine months ended September 30, 2001 was higher than the statutory rate
primarily due to the non-deductibility for income tax purposes of the
amortization of a portion of goodwill, the write-down of assets and the
stock-based compensation expense.

Minority Interest

Minority interest in income of our consolidated subsidiaries was $1.1
million and $808,000 for the nine months ended September 30, 2001 and 2000,
respectively. Minority interest in income represents our partners'
proportionate share of net income generated by our subsidiaries that we do not
wholly own.

Increase in Carrying Amount of Redeemable Preferred Stock

The holders of our series A preferred stock and our series B preferred stock
are entitled to receive dividends at a rate of 14% and 12%, respectively. We
are not required to pay these dividends in cash. The dividends that are not
paid in cash compound quarterly. The dividends earned in the nine months ended
September 30, 2001 have been added to the liquidation preference of the
preferred stock.

Years Ended December 31, 2000, 1999 and 1998

Revenue

The following table summarizes our revenue for the years ended December 31,
2000, 1999 and 1998 (dollars in thousands):

Percentage Change
-----------------
2000 1999 1998 2000 1999
-------- -------- -------- ----- -----

Laboratory....... $119,300 $103,282 $ 89,896 15.5% 14.9%
Animal hospital.. 240,624 217,988 191,888 10.4% 13.6%
Other............ 925 5,100 5,100
Intercompany..... (6,162) (5,810) (5,845)
-------- -------- --------
Total revenue. $354,687 $320,560 $281,039 10.6% 14.1%
======== ======== ========

Laboratory Revenue

Laboratory revenue increased $16.0 million, or 15.5%, for the year ended
December 31, 2000 compared to the year ended December 31, 1999, which increased
$13.4 million, or 14.9%, compared to the year ended December 31, 1998. The
increase in laboratory revenue for the year ended December 31, 2000 compared to
the comparable prior period primarily was due to internal growth of 12.6%. This
internal laboratory revenue growth resulted primarily from an increase in the
overall number of tests and requisitions and an increase in the average revenue
per requisition. These increases primarily were due to the development and sale
of new programs, the implementation of a price increase for most tests in
February 2000 and the continued growth of our Test Express business. The
increase in laboratory revenue for the year ended December 31, 1999 compared to
the comparable prior period primarily was due to internal growth of 9.1%. This
internal laboratory revenue growth resulted primarily from an increase in the
overall number of tests due in part to the development of our Test Express
business.

Animal Hospital Revenue

The following table summarizes our animal hospital revenue as reported and
the combined revenue of animal hospitals that we owned and managed had we
consolidated the operating results of the animal hospitals we manage into our
operating results for the years ended December 31, 2000, 1999 and 1998 (dollars
in thousands):

Percentage Change
-----------------
2000 1999 1998 2000 1999
-------- -------- -------- ----- -----

Animal hospital revenue as reported........... $240,624 $217,988 $191,888 10.4% 13.6%
Less: Management fees paid to us by veterinary
medical groups.............................. (31,133) (30,202) (19,325)
Add: Revenue of animal hospitals managed...... 60,380 42,829 24,914
-------- -------- --------
Combined revenue of animal hospitals
owned and managed.......................... $269,871 $230,615 $197,477 17.0% 16.8%
======== ======== ========

Animal hospital revenue increased $22.6 million, or 10.4%, for the year
ended December 31, 2000 compared to the year ended December 31, 1999, which
increased $26.1 million, or 13.6%, compared to the year ended December 31,
1998. The increase in animal hospital revenue for the year ended December 31,
2000 as compared to the comparable prior period resulted primarily from the net
addition of 15 animal hospitals that we owned or managed subsequent to December
31, 1999. Similarly, the increase for the year ended December 31, 1999 as
compared to the comparable prior period resulted primarily from the net
addition of 26 animal hospitals that we owned or managed subsequent to December
31, 1998. The increase in animal hospital revenue for the year ended December
31, 2000 also was due to same-facility revenue growth of 7.0%, and the increase
in animal

hospital revenue for the year ended December 31, 1999 also was due to
same-facility revenue growth of 2.6%. Same-facility revenue growth in both
years primarily was due to increases in the average amount spent per visit and
revenue generated by customers referred from our relocated animal hospitals.

Other Revenue

Other revenue decreased $4.2 million for the year ended December 31, 2000
compared to each of the years ended December 31, 1999 and 1998. Our consulting
agreement with Heinz Pet Products expired February 1, 2000. Under this
agreement we had received monthly consulting fees of $425,000. We entered into
a new agreement with Heinz Pet Products effective October 1, 2000 which
provides for monthly consulting fees of $167,000 over a term of 24 months.
Consequently, for the year ended December 31, 2000, other revenue includes
consulting fees for an aggregate of four months as compared to the entire
periods in each of the years ended December 31, 1999 and 1998.

Direct Costs

The following table summarizes our direct costs and our direct costs as a
percentage of applicable revenue for the years ended December 31, 2000, 1999
and 1998 (dollars in thousands):

2000 1999 1998 Percentage Change
----------------- ----------------- ----------------- -----------------
% of % of % of
$ Revenue $ Revenue $ Revenue 2000 1999
-------- ------- -------- ------- -------- ------- ----- -------

Laboratory............ $ 72,559 60.8% $ 64,234 62.2% $ 60,206 67.0% 13.0% 6.7%
Animal hospital....... 188,390 78.3% 174,069 79.9% 155,019 80.8% 8.2% 12.3%
Other................. -- -- --
Intercompany.......... (6,162) (5,810) (5,845) 6.1% (0.6)%
-------- -------- --------
Total direct costs. $254,787 71.8% $232,493 72.5% $209,380 74.5% 9.6% 11.0%
======== ======== ========

Laboratory Direct Costs

Laboratory direct costs increased $8.3 million, or 13.0%, for the year ended
December 31, 2000 compared to the year ended December 31, 1999, which increased
$4.0 million, or 6.7%, compared to the year ended December 31, 1998. Laboratory
direct costs as a percentage of laboratory revenue decreased to 60.8% for the
year ended December 31, 2000 from 62.2% for the year ended December 31, 1999,
which decreased from 67.0% for the year ended December 31, 1998. The decreases
in laboratory direct costs as a percentage of laboratory revenue during these
periods primarily were attributable to increases in laboratory revenue combined
with operating leverage associated with our laboratory business.

Animal Hospital Direct Costs

The following table summarizes our animal hospital direct costs as reported
and the combined direct costs of animal hospitals owned and managed had we
consolidated the operating results of the animal hospitals we manage into our
operating results for the years ended December 31, 2000, 1999 and 1998 (dollars
in thousands):

2000 1999 1998 Percentage Change
------------------ ------------------ ------------------ -----------------
% of % of % of
Combined Combined Combined
$ Revenue $ Revenue $ Revenue 2000 1999
-------- -------- -------- -------- -------- -------- ------ -------

Animal hospital direct costs as reported $188,390 78.3% $174,069 79.9% $155,019 80.8% 8.2% 12.3%
Add: Direct costs of animal
hospitals managed...................... 60,380 42,829 24,914
Less: Management fees charged
by us to veterinary medical
groups................................. (31,133) (30,202) (19,325)
-------- -------- --------
Combined direct costs of animal
hospitals owned and managed............ $217,637 80.6% $186,696 81.0% $160,608 81.3% 16.6% 16.2%
======== ======== ========

Animal hospital direct costs increased $14.3 million, or 8.2%, for the year
ended December 31, 2000 compared to the year ended December 31, 1999, which
increased $19.1 million, or 12.3%, compared to the year ended December 31,
1998. Animal hospital direct costs as a percentage of animal hospital revenue
decreased to 78.3% for the year ended December 31, 2000 from 79.9% for the year
ended December 31, 1999, which decreased from 80.8% for the year ended December
31, 1998. The decreases in animal hospital direct costs as a percentage of
animal hospital revenue during these periods primarily were due to a reduction
in some of our obligations to the animal hospitals we manage which reduced our
costs, together with a corresponding reduction in our management fees. These
decreases also were attributable to the increase in revenue combined with the
operating leverage associated with the animal hospital business, as most of the
costs associated with this business do not increase proportionately with
increases in the volume of services rendered.

Selling, General and Administrative

The following table summarizes our selling, general and our administrative
expense and expense as a percentage of applicable revenue for the years ended
December 31, 2000, 1999 and 1998 (dollars in thousands):

Percentage
2000 1999 1998 Change
--------------- --------------- --------------- ------------
% of % of % of
$ Revenue $ Revenue $ Revenue 2000 1999
------- ------- ------- ------- ------- ------- ------ -----

Laboratory.................... $ 7,914 6.6% $ 6,775 6.6% $ 5,475 6.1% 16.8% 23.7%
Animal hospital............... 9,249 3.8% 6,682 3.1% 4,894 2.6% 38.4% 36.5%
Corporate..................... 9,831 2.8% 10,165 3.2% 9,324 3.3% (3.3)% 9.0%
------- ------- -------
Total selling, general and
administrative........... $26,994 7.6% $23,622 7.4% $19,693 7.0% 14.3% 20.0%
======= ======= =======

Laboratory Selling, General and Administrative

Laboratory selling, general and administrative expense for the year ended
December 31, 2000 increased $1.1 million, or 16.8%, compared to the year ended
December 31, 1999, which increased $1.3 million, or 23.7%, compared to the year
ended December 31, 1998. The increase in laboratory selling, general and
administrative expense for the year ended December 31, 2000 compared to the
comparable prior period primarily was due to an increase in commission payments
to sales representatives, which was caused by an increase in sales, and
salaries attributable to new sales representatives. The increase in laboratory
selling, general and administrative expense for the year ended December 31,
1999 compared to the comparable prior period primarily was due to centralizing
certain administrative functions that previously were handled by and charged as
a direct cost to the individual laboratories.

Animal Hospital Selling, General and Administrative

Animal hospital selling, general and administrative expense for the year
ended December 31, 2000 increased $2.6 million, or 38.4%, compared to the year
ended December 31, 1999, which increased $1.8 million, or 36.5%, compared to
the year ended December 31, 1998. The increases in animal hospital selling,
general and administrative expense for the years ended December 31, 2000 and
1999 primarily were attributable to salaries associated with new personnel
hired in connection with the expansion of our management and administrative
infrastructure to support the additional number of animal hospitals we owned
and managed. The increases in animal hospital selling, general and
administrative expense as a percentage of animal hospital revenue in the years
ended December 31, 2000 and 1999 primarily were due to increases in the expense
associated with our management and administrative infrastructure without a
proportionate increase in animal hospital revenue.

Corporate Selling, General and Administrative

Corporate selling, general and administrative expense for the year ended
December 31, 2000 decreased $334,000, or 3.3%, compared to the year ended
December 31, 1999, which increased $841,000, or 9.0%,

compared to the year ended December 31, 1998. The decrease in corporate
selling, general and administrative expense for the year ended December 31,
2000 compared to the comparable prior period primarily due to efficiencies
realized in our information systems, accounting and finance departments that
resulted from our systems upgrade. The increase in corporate selling, general
and administrative expense for the year ended December 31, 1999 compared to the
comparable prior period primarily was due to the expansion of our information
systems and accounting departments.

Adjusted EBITDA

The following table summarizes our Adjusted EBITDA and our Adjusted EBITDA
as a percentage of applicable revenue of the years ended December 31, 2000,
1999 and 1998 (dollars in thousands):

Percentage
2000 1999 1998 Change
---------------- ---------------- ---------------- -----------
% of % of % of
$ Revenue $ Revenue $ Revenue 2000 1999
------- ------- ------- ------- ------- ------- ----- -----

Laboratory............... $38,827 32.5% $32,273 31.2% $24,215 26.9% 20.3% 33.3%
Animal hospital.......... 42,985 17.9% 37,237 17.1% 31,975 16.7% 15.4% 16.5%
Corporate................ (8,286) (5,065) (4,224)
------- ------- -------
Total Adjusted EBITDA. $73,526 20.7% $64,445 20.1% $51,966 18.5% 14.1% 24.0%
======= ======= =======

Depreciation and Amortization

Depreciation and amortization expense increased $2.4 million, or 14.7%, for
the year ended December 31, 2000 compared to the year ended December 31, 1999,
which increased $3.3 million, or 25.4%, compared to the year ended December 31,
1998. The increases in depreciation and amortization expense primarily were due
to the amortization over a three-year period of $15.6 million paid to our
executives pursuant to non-competition agreements entered into in September
2000, the purchase of property and equipment and the acquisition of animal
hospitals and diagnostic laboratories.

Recapitalization Costs

We incurred $34.3 million of recapitalization costs for the year ended
December 31, 2000 pertaining to our recapitalization in September 2000. These
costs consisted of $24.1 million associated with the buy-out of stock options
held by employees, $1.2 million paid to our employees for services rendered in
connection with our recapitalization, $7.6 million of professional fees and
$1.4 million of other expenses.

Other Non-Cash Operating Items

Other non-cash operating items consisted of $555,000 of stock-based
compensation expense for the year ended December 31, 2000. Other non-cash
operating items for the year ended December 31, 1999 consisted of a $1.9
million reversal of restructuring charges pertaining to our 1996 and 1997
restructuring plans.

Net Interest Expense

Net interest expense increased $10.4 million, or 110.5% to $19.9 million for
the year ended December 31, 2000 from $9.4 million for the year ended December
31, 1999, which represented an increase of $617,000, or 7.0%, from $8.8 million
for the year ended December 31, 1998. The increase in net interest expense in
2000 primarily was due to debt we incurred in connection with the
recapitalization.

Other (Income) Expense

Other (income) expense was $1.8 million for the year ended December 31,
2000, consisting of a $3.2 million gain on sale of our investment in Veterinary
Pet Insurance, Inc. and a $5.0 million loss resulting from the write-down of
our investment in Zoasis.com, Inc.

Income Taxes

Provision for income taxes was $2.2 million, $14.4 million and $13.0 million
for the years ended December 31, 2000, 1999 and 1998. Our effective income tax
rate for each year was higher than the statutory rate primarily due to the
non-deductibility for income tax purposes of the amortization of a portion of
goodwill. In 2000, our effective income tax rate also was impacted by the
change in valuation allowance associated with our recapitalization and our
write-down of the Zoasis investment. As a result of a favorable change in the
U.S. tax regulations with respect to limitations on the use of net operating
loss carryforwards, we recorded a deferred tax benefit of $2.1 million in 1999.

Minority Interest

Minority interest in income of the consolidated subsidiaries was $1.1
million, $850,000 and $780,000 for the years ended December 31, 2000, 1999 and
1998, respectively. Minority interest in income represents our partners'
proportionate share of net income generated by our subsidiaries that we do not
wholly own.

Increase in Carrying Amount of Redeemable Preferred Stock

The holders of our series A preferred stock and our series B preferred stock
are entitled to receive dividends at a rate of 14% and 12%, respectively. We
are not required to pay these dividends in cash. The dividends that are not
paid in cash compound quarterly. The dividends earned from September 20, 2000
through December 31, 2000 were added to the liquidation preference of the
preferred stock.

Quarterly Results

The following tables set forth selected unaudited quarterly results for the
eleven quarters commencing January 1, 1999 and ending September 30, 2001. The
quarterly financial data as of each period presented below have been derived
from our unaudited consolidated financial statements for those periods. Results
for these periods are not necessarily indicative of results for the full year.
The quarterly financial data should be read in conjunction with this
Management's Discussion and Analysis of Financial Condition and Results of
Operations and our consolidated financial statements and related notes included
elsewhere in this prospectus.

2001 Quarter Ended, 2000 Quarter Ended, 1999 Quarter Ended,
----------------------------- -------------------------------------- -------------------------------------
Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31
-------- -------- ------- ------- -------- ------- ------- ------- -------- ------- -------
(dollars in thousands, except per share amounts, unaudited)

Revenue:
Laboratory..... $ 33,471 $ 35,707 $32,677 $28,469 $ 30,105 $31,921 $28,805 $24,846 $25,591 $27,276 $25,569
Animal hospital 70,531 72,780 64,354 57,908 63,449 63,472 55,795 52,228 58,150 59,159 48,451
Other.......... 500 500 500 500 -- -- 425 1,275 1,275 1,275 1,275
Intercompany... (1,866) (1,938) (1,851) (1,471) (1,558) (1,459) (1,674) (1,381) (1,426) (1,546) (1,457)
-------- -------- ------- ------- -------- ------- ------- ------- ------- ------- -------
Total revenue... 102,636 107,049 95,680 85,406 91,996 93,934 83,351 76,968 83,590 86,164 73,838
Adjusted EBITDA. 24,507 27,186 19,324 15,986 20,334 21,980 15,226 13,794 17,663 19,949 13,039
Operating
income (loss).. 16,024 8,393 9,263 9,681 (19,075) 17,524 11,075 10,512 12,414 14,915 9,175
Net income
(loss)......... 2,024 (5,820) (2,989) (6,526) (16,713) 8,436 6,392 4,305 7,462 6,890 3,700
Diluted EPS..... $ (0.19) $ (0.63) $ (0.46) $ (0.65) $ (0.06) $ 0.02 $ 0.02 $ 0.01 $ 0.02 $ 0.02 $ 0.01

Revenue:
Laboratory..... 32.6% 33.3% 34.1% 33.3% 32.7% 34.0% 34.6% 32.2% 30.6% 31.6% 34.7%
Animal hospital 68.7% 68.0% 67.3% 67.8% 69.0% 67.6% 66.9% 67.9% 69.6% 68.7% 65.6%
Other.......... 0.5% 0.5% 0.5% 0.6% -- -- 0.5% 1.7% 1.5% 1.5% 1.7%
Intercompany... (1.8)% (1.8)% (1.9)% (1.7)% (1.7)% (1.6)% (2.0)% (1.8)% (1.7)% (1.8)% (2.0)%
-------- -------- ------- ------- -------- ------- ------- ------- ------- ------- -------
Total revenue... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Adjusted EBITDA. 23.9% 25.4% 20.2% 18.7% 22.1% 23.4% 18.3% 17.9% 21.1% 23.2% 17.7%
Operating
income (loss).. 15.6% 7.8% 9.7% 11.3% (20.7)% 18.7% 13.3% 13.7% 14.9% 17.3% 12.4%
Net income
(loss)......... 2.0% (5.4)% (3.1)% (7.6)% (18.2)% 9.0% 7.7% 5.6% 8.9% 8.0% 5.0%

Although not readily detectable because of the impact of acquisitions, our
operations are subject to seasonal fluctuation. In particular, our revenue
historically has been greater in the second and third quarters than in the
first and fourth quarters.

The demand for our veterinary services are significantly higher during
warmer months because pets spend a greater amount of time outdoors, where they
are more likely to be injured and are more susceptible to disease and
parasites. In addition, use of veterinary services may be affected by levels of
infestation of fleas, heartworms and ticks and the number of daylight hours. A
substantial portion of our costs are fixed and do not vary with the level of
demand. Consequently, our EBITDA, Adjusted EBITDA and operating income, as well
as our EBITDA, Adjusted EBITDA and operating margins, generally have been
higher for the second and third quarters than that experienced in the first and
fourth quarters.

Liquidity and Capital Resources

Net cash provided by operations for the nine months ended September 30, 2001
and 2000 was $49.3 million and $47.0 million, and for the years ended December
31, 2000, 1999 and 1998 was $60.1 million, $38.5 million and $27.1 million. The
increases are primarily attributable to increases in revenue and operating
margins.

Net cash used by investing activities for the nine months ended September
30, 2001 and 2000 was $30.3 million and $29.1 million, and for the years ended
December 31, 2000, 1999 and 1998 was $47.7 million, $13.7 million and $19.5
million. In the nine months ended September 30, 2001 and 2000, and in the years
ended December 31, 2000, 1999 and 1998, we used cash of $10.6 million, $13.7
million, $22.6 million, $21.8 million and $11.7 million for property and
equipment additions. In these same periods, we used $20.6 million to acquire 18
animal hospitals, $9.0 million to acquire 16 hospitals, $18.2 million to
acquire 24 animal hospitals and one laboratory, $16.1 million to acquire 39
animal hospitals and two laboratories and $17.1 million to acquire 11 animal
hospitals and one laboratory. In the nine months ended September 30, 2001, we
did not purchase any real estate in connection with our acquisitions and in the
years ended December 31, 2000, 1999 and 1998, we used $1.8 million, $4.2
million and $4.3 million to purchase real estate in connection with our
acquisitions.

In connection with the recapitalization transaction, we received $149.2
million from the issuance of preferred stock, $14.4 million from the issuance
of common stock, $1.1 million from the issuance of stock warrants and $356.7
million from the issuance of long-term debt. These proceeds were primarily used
to repay long-term obligations in the amount of $172.9 million, to repurchase
common stock in the amount of $314.5 million and to make 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. For a description of these
non-competition agreements, see "Related Party Transactions--Non-Competition
Agreements." For the year ended December 31, 1999 and 1998, cash used in
financing activities was $23.1 million and $18.6 million in each year primarily
for repayment of long term debt.

At September 30, 2001, we had cash and cash equivalents of $23.6 million and
indebtedness of $371.4 million. The aggregate maturities of principal of our
debt obligations for 2001 is $5.8 million.

We intend to continue our growth through the selective acquisition of animal
hospitals primarily for cash. We anticipate acquiring additional animal
hospitals in 2001. As of September 30, 2001, in accordance with specified
covenants in our credit facility, we anticipate spending $2.6 million for
additional acquisitions in 2001. In the fourth quarter of 2001, we will pay
approximately $422,000 related to acquisition costs on completed acquisitions
and we expect to spend approximately $5.0 million for additions to property and
equipment. We continue to examine acquisition opportunities in the laboratory
field, which may impose additional cash requirements.

We review the financial performance of our animal hospitals each year in
conjunction with our annual budgeting process, or if there occur unfavorable
events in regard to a particular facility. The review process involves an
assessment of both financial performance and relevant operational factors
including, but not limited to, staffing, capacity and local economy. The cash
costs we typically incur to sell or close are not significant. However, we may
incur non-cash operating costs consisting primarily of the write-down of some
of our assets, including real estate, leasehold improvements and covenants not
to compete, to fair market value.

We believe we will be able to fund our future cash requirements for
operations primarily from operating cash flows, cash on hand and, if needed,
borrowings under the $50.0 million revolving credit facility, which we have not
yet utilized as of September 30, 2001. We believe these sources of funds will
be sufficient to continue our operations and planned capital expenditures and
satisfy our scheduled principal and interest payments under debt and capital
lease obligations for at least the next 12 months. However, a significant
portion of our cash requirements will be determined by the pace and size of our
acquisitions.

For a description of the application of the proceeds from this offering and
the concurrent note offering, please refer to "Use of Proceeds."

Description of Indebtedness

Concurrent Note Offering

We anticipate that the notes to be issued in the concurrent note offering
will have terms substantially similar to the terms of our senior subordinated
notes.

Credit Facility

We, through our wholly owned subsidiary, have a $300.0 million credit
facility, dated as of September 20, 2000, with the lenders party thereto,
Goldman Sachs Credit Partners, L.P., as syndication agent, and Wells Fargo
Bank, N.A., as administrative agent.

Structure. The credit facility consists of a $50.0 million revolving
facility, a $50.0 million term loan A facility and a $200.0 million term loan B
facility. Under the revolving facility, up to $50.0 million may be used and the
lesser of (1) $5.0 million, or (2) the aggregate unused amount of the revolving
facility then in effect may be borrowed under a "swing line" facility on
same-day notice to the lenders. As of the date of this prospectus, we have no
borrowings under the revolving facility.

Maturity. We are required to repay the amounts borrowed under the term loan
A facility in quarterly installments. Quarterly payments equal $250,000 per
quarter in year one, $1.5 million per quarter in year two, $1.75 million per
quarter in year three, $2 million per quarter in year four, $2.75 million per
quarter in year five and $4.25 million per quarter in year six. The term loan A
facility matures on September 20, 2006.

We are required to repay the amounts borrowed under the term loan B facility
in quarterly installments. Quarterly payments equal $625,000 per quarter in
years one through six and $23.125 million per quarter in years seven and eight.
The term loan B facility matures on September 20, 2008. The entire outstanding
principal amount under the revolving facility is due on September 20, 2006.
Mandatory prepayments under the term loan facilities are applied pro rata to
each required quarterly payment, subject to a lender's ability to waive a term
loan B facility payment and have it applied to other facilities. The term
facilities and the revolving facility may be voluntarily prepaid in whole or in
part without premium or penalty.

Since September 20, 2000, quarterly payments have reduced the outstanding
principal amount under the credit facility to $49.0 million for the term loan A
facility and $197.5 million for the term loan B facility.

Upon the consummation of this offering and the concurrent note offering we
intend to repay approximately $104.2 million of borrowings under our credit
facility.

Guarantees and Security. Our obligations under the credit facility are
guaranteed by us and our wholly owned, consolidated subsidiaries. The
borrowings under the credit facility and the subsidiary guarantees are secured
by substantially all of our consolidated assets. In addition, borrowings under
the credit facility are secured by a pledge of substantially all of the capital
stock, or similar equity interests, of our wholly owned, consolidated
subsidiaries.

Interest Rate. In general, borrowings under the credit facility bear
interest based, at our option, on either:

. the base rate (as defined below) plus a margin ranging from 1.00% to
2.25% per annum for the term loan A facility and the revolving facility
and a margin of 2.75% per annum for the term loan B facility; or

. the adjusted eurodollar rate (as defined below) plus a margin ranging
from 2.00% to 3.25% per annum for the term loan A facility and the
revolving facility and a margin of 3.75% per annum for the term loan B
facility.

The base rate is the higher of Wells Fargo's prime rate or the federal funds
rate plus 0.5%. The adjusted eurodollar rate is defined as the rate per annum
obtained by dividing (1) the rate of interest offered to Wells Fargo on the
London interbank market by (2) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements applicable to any member bank of the
Federal Reserve System in respect of "eurocurrency liabilities."

Swing line borrowings bear interest at the base rate, plus a margin ranging
from 1.00% to 2.25%.

Covenants. Upon the closing of this offering, the credit facility will
contain amended financial covenants that require us to satisfy, on a
consolidated basis, specified quarterly financial tests, including:

. a minimum consolidated interest expense coverage ratio;

. a minimum fixed charge coverage ratio;

. a maximum consolidated senior leverage ratio; and

. a maximum consolidated total leverage ratio.

The credit facility also contains a number of other customary covenants
that, among other things, restrict our ability to:

. dispose of assets;

. incur additional debt;

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

. pay dividends;

. create liens on assets;

. make investments, loans or advances;

. make acquisitions;

. engage in mergers or consolidations;

. change the business conducted by us;

. engage in sale and leaseback transactions;

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

. make capital expenditures or engage in transactions with affiliates; and

. otherwise undertake various corporate activities.

Events of Default. The credit facility also contains customary events of
default, including defaults based on:

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

. cross-defaults to other debt;

. breach of specified covenants;

. material inaccuracy of representations and warranties;

. specified other defaults under other credit documents;

. events of bankruptcy and insolvency;

. material judgments;

. dissolution and liquidation;

. specified occurrences relating to subordinated debt;

. change in control; and

. invalidity of any guaranty or security interest.

Change of Control. Upon the closing of this offering, a change of control
will trigger an event of default and permit the acceleration of the credit
facility debt. A change of control will occur if:

. prior to the consummation of this offering, specified persons, including
Leonard Green & Partners, its affiliated co-investors and management
investors, collectively cease to own and control at least 51% of the
voting interests of our capital stock and concurrently with or at any
time after the consummation of our proposed initial public offering,
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 of
our capital stock;

. prior to this offering, any person or group, other than Leonard Green &
Partners, has acquired 35% or more on a fully diluted basis of the
voting interests in our capital stock and concurrently with or at any
time after the consummation of this offering 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;

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

. 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;

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

. the majority of the seats on the board of directors of our wholly-owned
subsidiary cease to be occupied by persons who were either members of
its board of directors on September 20, 2000 or 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 such directors; or

. any change of control has occurred under our senior notes, our
outstanding senior subordinated notes or the notes being offered in our
concurrent note offering.

Senior Subordinated Notes

On September 20, 2000, we, through our wholly owned subsidiary, issued $20.0
million principal amount of senior subordinated notes due 2010 pursuant to an
indenture of the same date with Chase Manhattan Bank and Trust Company,
National Association, as trustee.

Interest Rate. Interest on the senior subordinated notes is payable in cash,
semi-annually in arrears, commencing March 31, 2001, at the rate of 13.5% per
annum; provided, however, that if we fail timely to meet specified obligations
to holders of the senior subordinated notes as set forth in an exchange and
registration rights agreement dated as of September 20, 2000, interest on the
senior subordinated notes may increase by up to 1% per annum.

Guarantee. The senior subordinated notes are general unsecured and
subordinated obligations, and are guaranteed by our wholly owned, consolidated
subsidiaries, that mature on September 20, 2010.

Redemption. The senior subordinated notes have specified optional redemption
provisions. An aggregate principal amount of at least $5.0 million of the
senior subordinated notes may be prepaid, at our option:

. in whole or in part, at any time on or after September 20, 2003,
initially at 106.75% of their principal amount at maturity and declining
in annual increments to 101.35% of such principal amount on and after
September 20, 2009, in each case plus accrued interest; provided that,
so long as certain initial purchasers own a majority of the principal
amount of the senior subordinated notes outstanding, our senior notes
must be prepaid first;

. 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; provided that, so long as
certain initial purchasers own a majority of the principal amount of the
senior subordinated notes outstanding, our senior notes must be prepaid
first; and

. up to 35% of the aggregate principal amount of the senior subordinated
notes, at any time prior to September 20, 2002 from the proceeds of a
public offering of our common stock at a price of 110% of the principal
amount plus accrued interest; provided that, so long as certain initial
purchasers own a majority of the principal amount of the senior
subordinated notes outstanding, our senior notes must be prepaid first;
provided further that, after giving effect to the prepayment, at least
65% of the original principal amount of the senior subordinated notes
issued on September 20, 2000 remains outstanding.

Covenants. The indenture contains a number of covenants, including a
provision regarding a change of control. Upon the closing of this offering, a
change of control will occur upon:

. 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;

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

. the consummation of any transaction as result of which,

. prior to the senior subordinated notes being registered or exchanged
for registered notes,

. specified persons, including Leonard Green & Partners, its
affiliated co-investors and management investors, collectively
own less than 40% of the voting interests in our capital stock, or

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

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

. 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
such person or group; or

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

In the event of a change of control event, or in the event of specified
dispositions of assets by us or our subsidiaries, the proceeds of which are
neither used to repay the credit facility, the senior subordinated notes or to
acquire long term assets, our wholly owned subsidiary is required to offer to
repurchase the senior subordinated notes at a purchase price equal to 101% (in
the case of a specified change of control) or 100% (in the case of specified
disposition of assets) of the principal amount thereof, in each case plus
accrued interest.

The indenture governing the senior subordinated notes also contains
covenants that restrict the ability of our wholly owned subsidiary and our
other indirect wholly owned subsidiaries to:

. incur additional debt;

. incur specified liens on our assets;

. pay dividends on stock or repurchase stock;

. make investments;

. engage in specified transactions with affiliates;

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

. sell assets;

. engage in specified sale/lease-back transactions;

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

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

Events of Default. The indenture governing the senior subordinated notes
also provides for various defaults, including

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

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

. failure to observe or perform any other covenant or agreement in the
indenture governing the senior subordinated notes where such failure
continues for thirty (30) days after actual knowledge thereof by a
senior officer; and

. 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.

Senior Notes

On September 20, 2000, we issued $100.0 million principal amount of senior
notes due 2010 pursuant to an indenture of the same date with Chase Manhattan
Bank and Trust Company, National Association, as trustee.

Interest Rate. Interest on the senior notes is payable semi-annually in
arrears, commencing March 31, 2001, at the rate of 15.5% per annum; provided
that on any semi-annual interest payment date prior to September 20, 2005, we
have the option to pay all or any portion of the interest payable on said date
by issuing additional senior notes in a principal amount equal to the interest
we elect not to pay in cash on such date; and further provided, however, that
if we fail timely to meet specified obligations to holders of the senior notes
as set forth in an exchange and registration rights agreement dated as of
September 20, 2000, interest on the senior notes may increase by up to 1% per
annum. We have issued an aggregate of $16.6 million in additional senior notes
to pay interest since the issue date.

Guarantee. The senior notes are general unsecured and unsubordinated
obligations that mature on September 20, 2010.

Redemption. The senior notes have specified optional redemption provisions.
An aggregate principal amount of at least $5.0 million of the 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% of their principal amount at maturity and declining in annual
increments to 101.55% of such principal amount on and after September 20,
2009, in each case plus accrued interest;

. up to 35% of the aggregate principal amount of the senior notes, at any
time prior to September 20, 2002 from the proceeds of a public offering of
our common stock at a price of 110% 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 notes issued on
September 20, 2000, plus all senior notes issued in lieu of cash interest
thereon, remains outstanding.

Upon the consummation of this offering and the concurrent note offering, we
intend to use $52.6 million to pay $4.8 million in prepayment premiums and
reduce the outstanding principal amount of the senior notes to approximately
$68.8 million.

The senior notes are also subject to partial mandatory redemption, without
premium, on any interest payment date occurring after September 20, 2005, in an
aggregate amount equal to the difference, if any, between

. the aggregate amount which would be includable in the holders' gross
income for federal income tax purposes with respect to the senior notes
before such interest payment date, and

. the sum of the following:

. the aggregate amount of interest paid in cash under the senior notes
before such interest payment date, and

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

Any such partial mandatory redemption has been expressly subordinated in
time and right of payment by the holders of the senior notes to the prior
payment in full of all obligations under the credit facility, as it may be
supplemented, replaced, restructured, refinanced or otherwise modified from
time to time.

Covenants. The indenture contains a number of covenants, including a
provision regarding a change of control. Upon the closing of this offering, a
change of control will occur upon:

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

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

. the consummation of any transaction as result of which,

. prior to the senior notes being registered or exchanged for
registered notes,

. persons, including Leonard Green & Partners, its affiliated
co-investors management investors, collectively own less than 40%
of the voting interests in our capital stock, or

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

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

. 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 our outstanding capital
stock and Leonard & Green Partners, its affiliated co-investors and
management investors have less voting power than such person or
group; or

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

We are currently negotiating modifications to our senior notes, including
the change of control provision. The change of control provision, as modified,
will not be triggered by this offering.

In the event of a change of control event, or in the event of specified
dispositions of the assets by us or ours subsidiaries, the proceeds of which
are neither used to repay the credit facility, the senior notes or to acquire
long term assets, we are required to offer to repurchase the senior notes at a
purchase price equal to 101% (in the case of a specified change of control) or
100% (in the case of a specified disposition of assets) of the principal amount
thereof, in each case plus accrued interest.

The indenture governing the senior notes also contains covenants that
restrict the ability of us and our subsidiaries to:

. incur additional debt;

. incur specified liens on our assets;

. pay dividends on stock or repurchase stock;

. make investments;

. engage in specified transactions with affiliates;

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

. sell assets;

. engage in specified sale/lease-back transactions;

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

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

Events of Default. The indenture governing the senior notes also provides
for various defaults, including

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

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

. failure to observe or perform any other covenant or agreement in the
indenture governing the senior notes where such failure continues for
thirty (30) days after actual knowledge thereof by a senior officer; and

. 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.

New Accounting Pronouncements

Derivatives

Effective January 1, 2001, we adopted Statement of Financial Accounting
Standards, or SFAS, No. 133, Accounting for Derivative Instruments and Hedging
Activities. SFAS 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts and for hedging activities. All derivatives, whether designated
in hedging relationships or not, are required to be recorded on the balance
sheet at fair value with offsets to other comprehensive income or earnings,
depending on the type of derivative and/or the underlying cause for the change
in fair value.

Our Collar Agreement

On November 13, 2000, we entered into a no-fee interest rate collar
agreement with Wells Fargo Bank, N.A. effective November 15, 2000 and expiring
November 15, 2002. Our collar agreement is based on LIBOR, pays out monthly,
resets monthly and has a cap and floor notional amount of $62.5 million, with a
cap rate of 7.5% and floor rate of 5.9%.

Under SFAS 133, the actual cash paid by us as a result of LIBOR rates being
below the floor of our collar agreement are recorded as a component of
earnings. As of September 30, 2001, we have paid $600,000 because of LIBOR
rates being below the floor of 5.9%. These payments were all made for the nine
months ended September 30, 2001 and are included in interest expense.

Our collar agreement is considered a cash flow hedge. Because LIBOR rates at
September 30, 2001 were below the floor rate in the collar agreement of 5.9%
and are projected to remain below the floor rate through the term of the collar
agreement, the fair value of our collar agreement is a net liability to us of
$2.2 million at September 30, 2001. It is recorded in our balance sheet as part
of other accrued liabilities.

Goodwill and Other Intangible Assets

In July 2001, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 142, Goodwill and Other Intangible Assets, which changes the way companies
account for intangible assets and goodwill associated with business
combinations. The principal changes of SFAS 142 are as follows:

. All goodwill amortization will cease effective January 1, 2002. For the
nine months ended September 30, 2001, we recorded $6.9 million of
goodwill amortization.

. All of the goodwill on our balance sheet at June 30, 2001 will continue
to be amortized through the remaining months of 2001, in accordance with
their current amortization schedules.

. All goodwill acquired in acquisitions after June 30, 2001 is not subject
to amortization in 2001 or in the future.

. All goodwill will be reviewed annually, or as circumstances warrant,
using the fair-value-based goodwill impairment tests discussed in SFAS
142. As of September 30, 2001, our net goodwill balance was $316.3
million. Any impairment recognized associated with the adoption of SFAS
142 will be accounted for as a cumulative effect of change in accounting
principle.

We have not yet determined what the impact of SFAS 142 will be on our
financial statements.

In July, 2001, the FASB issued SFAS 141, Business Combinations, which
requires all business combinations initiated after June 30, 2001, to be
accounted for using the purchase method of accounting. We do not expect the
adoption of SFAS 141 to have a material impact on our financial statements or
our operations.

Impairment of Long-Lived Assets

In August 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supercedes SFAS 121 and the accounting
and reporting provisions of Accounting Principles Board Opinion No. 30. SFAS
144 is intended to establish a single accounting model, based on the framework
established in SFAS 121, for long-lived assets to be disposed of by sale, and
to resolve certain implementation issues related to SFAS 121. The provisions of
SFAS 144 generally are to be applied prospectively. We will adopt SFAS 144 in
the first quarter of 2002. We have not yet determined what the impact of SFAS
144 will be on our financial statements.

Restructuring and Asset Write-Down

During 1996, we adopted and implemented a restructuring plan and recorded a
restructuring charge of $5.7 million and an asset write-down charge of $9.5
million. The major components of the 1996 restructuring plan included:

. the termination of leases, the write-down of intangibles, property and
equipment, and employee terminations in connection with the closure,
sale or consolidation of 12 animal hospitals;

. the termination of contracts and leases, the write-down of certain
property and equipment, and the termination of employees in connection
with the restructuring of our laboratory operations; and

. contract terminations and write-down of assets in connection with the
migration to common communications and computer systems.

Collectively, the 12 hospitals had aggregate revenue of $6.8 million and net
operating loss of $350,000 for the year ended December 31, 1996. The
restructuring of our laboratory operations consisted primarily of:

. plans to relocate our facility in Indiana to Chicago;

. the downsizing of our Arizona laboratory operations;

. the standardization of laboratory and testing methods throughout all of
our laboratories, resulting in the write-down of equipment that will no
longer be utilized; and

. the shutdown of a laboratory facility in the Midwest.

During 1999, pursuant to the 1996 restructuring plan, we incurred the
following:

. Cash expenditures of $345,000 for lease and other contractual
obligations.

. Non-cash asset write-downs of $157,000, primarily pertaining to
hospitals previously closed and our shutdown of certain computer systems.

. We recognized a $321,000 favorable settlement related to a laboratory
operations' contract that was terminated as part of the 1996
restructuring plan.

. During the fourth quarter of 1999, we were released from our contractual
obligation pertaining to certain facility leases for hospitals that were
sold in 1997. In addition, we reached a favorable settlement on
contractual obligations pertaining to our migration to common
communications and computer systems, a component of the 1996
restructuring plan. As a result of these two favorable outcomes, we
reversed $889,000 of restructuring charges.

During 1998, we took the following actions pursuant to the 1996
restructuring plan:

. We closed one animal hospital.

. We shut down certain computer hardware and software, as part of our
migration to common computer systems.

. We decided that two hospitals would continue to be operated instead of
closed as was originally outlined in the 1996 restructuring plan. The
hospitals' local markets improved since the 1996 restructuring plan was
determined, causing our management to revise its plan.

. We terminated our attempt to sell one hospital because it has been
unable to negotiate a fair sales price based on the hospital's operating
results.

Reserves of $593,000 related to the three hospitals we ultimately retained,
were utilized to offset increases in the expected cost to extinguish lease
commitments and contract obligations that were part of the 1996 restructuring
plan.

As of December 31, 1999, all phases of the 1996 restructuring plan were
complete and no restructuring reserves remained on our balance sheet.

During 1997, we reviewed the financial performance of our hospitals. As a
result of this review, an additional 12 hospitals were determined not to meet
our performance standards. Accordingly, we adopted phase two of our
restructuring plan resulting in restructuring and asset write-down charges of
$2.1 million. The major components of the 1997 restructuring plan consisted of
the termination of leases, amounting to $1.2 million, and the write-down of
intangibles, property and equipment, amounting to $876,000, in connection with
the closure or sale of 12 animal hospitals. Collectively, the 12 hospitals had
aggregate revenue of $5.4 million and net operating income of $176,000 for the
year ended December 31, 1997.

For the nine months ended September 30, 2001 and the year ended December 31,
2000, we incurred $52,000 and $190,000, of expenditures for lease and other
contractual obligations resulting from the 1997 restructuring plan.

During 1999, the actions taken pursuant to the 1997 restructuring plan were
as follows:

. We sold one hospital resulting in cash expenditures of $2,000 and
non-cash asset write-downs of $64,000.

. We closed three hospitals resulting in cash expenditures of $4,000 and
non-cash asset write-downs of $53,000.

. We incurred cash expenditures of $71,000 for lease and other contractual
obligations.

. We recorded an additional $28,000 non-cash asset write-down pertaining
to a hospital previously closed.

. During the fourth quarter of 1999, we reached favorable settlements from
the sale and/or closure of the hospitals noted in the first two bullet
points above. As a result we reversed $663,000 of restructuring charges.

During 1998, we closed three animal hospitals pursuant to the 1997
restructuring plan, resulting in the write-off of $299,000 of property and
equipment and cash expenditures of $81,000 for lease obligations and costs.
Also during 1998, we determined that five of the animal hospitals that were to
be sold as part of the 1997 restructuring plan would be kept due to their
improved performance.

At September 30, 2001 and December 31, 2000, $101,000 and $153,000,
respectively, of the restructuring reserves from the 1997 restructuring plan
remain on our balance sheet, consisting primarily of lease and other
contractual obligations. All significant phases of the 1997 restructuring plan
were complete as of December 31, 1999, although certain lease obligations will
continue through 2005.

Quantitative and Qualitative Disclosures about Market Risk

Our market risk exposure is confined to interest rate exposure of our debt
obligations that bear interest based on floating rates. Our revolving credit
facility and certain other debt obligations are subject to variable rate
interest which could be adversely affected by an increase in interest rates. As
of September 30, 2001, we had borrowings of $246.5 million under a $300.0
million credit facility. Interest on amounts borrowed under the credit facility
is subject to adjustment based on certain levels of financial performance. For
LIBOR borrowings, the applicable margin added to LIBOR can range from 2.00% to
3.25% for the term loan A facility and revolving loans, and is 3.75% for the
term loan B facility. For every one-half percent rise in interest rates on our
variable rate obligations held at September 30, 2001, interest expense would
increase by approximately $1.2 million for the twelve months ended September
30, 2002. For every one-half percent decline in interest rates below the floor
rate of 5.9% on our collar agreement for $62.5 million of our variable rate
obligations, interest expense would increase by approximately $313,000 for the
twelve months ended September 30, 2002.

We will repay a portion of our existing indebtedness with the proceeds from
this offering. We invest our cash in money market securities, which are subject
to minimal credit and market risk. In addition, our operations are solely in
the United States and accordingly we do not have any exposure to foreign
currency rate fluctuations.

Inflation

Historically, our operations have not been materially affected by inflation.
We cannot assure you that our operations will not be affected by inflation in
the future.

BUSINESS

General

We are a leading animal health care services company and operate the largest
networks of veterinary diagnostic laboratories and free-standing, full-service
animal hospitals in the United States. Our network of veterinary diagnostic
laboratories provides sophisticated testing and consulting services to the
veterinarian comparable to that provided by the human diagnostic laboratory to
the physician. Veterinarians use these services in the detection, diagnosis,
evaluation, monitoring, treatment and prevention of diseases and other
conditions affecting animals. With the only nationwide veterinary laboratory
network serving all 50 states, we provide diagnostic testing for an estimated
13,000 animal hospitals, a customer base over twice the size of our next
largest competitor. Our network of animal hospitals offers a full range of
general medical and surgical services for companion animals, as well as
specialized treatments including advanced diagnostic services, internal
medicine, oncology, ophthalmology, dermatology and cardiology. In addition, we
provide pharmaceutical products and perform a variety of pet wellness programs
including routine vaccinations, health examinations, diagnostic testing,
spaying, neutering and dental care. The more than 750 veterinarians supporting
our 214 animal hospitals had over 3 million patient visits in 2000.

Industry Overview

The U.S. population of companion animals has reached approximately 188
million, including about 141 million dogs and cats. The most recent industry
data show that over $11 billion was spent on 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.

The ownership of pets is widespread, with over 62% of U.S. households owning
at least one pet, including companion and other animals. Pet ownership is
highest among households with children under 18 and empty nesters whose pets
have become their new "children." We believe the pet population and the number
of pet-owning households should continue to grow, given that the number of
households with children under 18 was projected to increase and then remain
relatively stable between 1995 and 2010 and the number of empty-nest households
was projected to increase.

Among this expanding number of pet owners is a growing awareness of pet
health and wellness, including the benefits of preventive care and specialized
services. As technology continues to migrate from the human healthcare sector
into the practice of veterinary medicine, more sophisticated treatments and
diagnostic tests are becoming available to treat companion animals. These new
and increasingly complex procedures, diagnostic tests and pharmaceuticals are
gaining wider acceptance as pet owners are exposed to these previously
unconsidered treatment programs through literature and marketing programs
sponsored by large pharmaceutical and pet nutrition companies. We believe this
is evidenced by an industry survey revealing that 70% of pet owners view their
animals as important members of the family and are willing to pay for more
veterinary services to promote the good health and extend the life of their pet.

Even as treatments available in veterinary medicine become more complex,
prices for veterinary services typically remain a low percentage of a
pet-owner's income, facilitating payment at the time of service. Unlike the
human health care industry, providers of veterinary services are not dependent
on third-party payors in order to collect fees. As a consequence, providers of
veterinary services do not have 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 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 that time.
In addition, over the past three fiscal years, our bad debt expense has
averaged only 1% of total revenue.

The practice of veterinary medicine is subject to seasonal fluctuation. In
particular, demand for veterinary services is significantly higher during the
warmer months because pets spend a greater amount of time outdoors, where they
are more likely to be injured and are more susceptible to disease and
parasites. In addition, use of veterinary services may be affected by levels of
infestation of fleas, heartworms and ticks and the number of daylight hours.

Diagnostic Laboratories. Laboratory tests are used by veterinarians to
diagnose, monitor and treat illnesses and conditions in animals through the
detection of substances in urine, tissue, fecal and blood samples and other
specimens. As is the case with the physician treating a human patient,
laboratory diagnostic testing is becoming a routine diagnostic tool used by the
veterinarian.

Veterinary laboratory tests are performed primarily at free-standing
veterinary diagnostic laboratories, universities or animal hospitals using
on-site diagnostic equipment. For particular types of tests, on-site diagnostic
equipment can provide more timely results than outside laboratories, but this
in-house testing requires the animal hospital or veterinarian to purchase the
equipment, maintain and calibrate the equipment periodically to avoid testing
errors, and employ trained personnel to operate it. Conversely, veterinary
diagnostic laboratories can provide a wider range of tests than generally are
available on-site at most animal hospitals and do not require any up-front
investment on the part of the animal hospital or veterinarian. Also, leading
veterinary diagnostic laboratories employ highly trained individuals who
specialize in the detection and diagnosis of diseases and thus are a valuable
resource for the veterinarian.

Within the outsourcing market, our laboratories specialize in the veterinary
market and offer a broad spectrum of standard and customized tests, convenient
sample pick-up times, rapid test reporting and access to professional
consulting services provided by trained specialists. Providing the customer
with this level of service at competitive prices requires high throughput
volumes due to the operating leverage associated with the laboratory business.
As a result, larger laboratories likely maintain a competitive advantage
relative to smaller laboratories.

We believe that the outsourced laboratory testing market is one of the
fastest growing segments of the animal health care services industry, and
expect continued growth as a result of:

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

. 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;

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

. 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.

Animal Hospitals. Animal health care services are provided predominately by
the veterinarian practicing as a sole practitioner, or as part of a larger
animal medical group or hospital. Veterinarians diagnose and treat animal
illnesses and injuries, perform surgeries, provide routine medical exams and
prescribe medication. Some veterinarians specialize by type of medicine, such
as orthopedics, dentistry, ophthalmology or dermatology. Others focus on a
particular type of animal. The principal factors in a pet owner's decision as
to which veterinarian to use include convenient location, recommendation of
friends, reasonable fees, convenient hours and quality of care.

The U.S. market for veterinary services is highly fragmented, with more than
35,000 veterinarians practicing at over 18,000 companion animal hospitals.
Although most animal hospitals are single site, sole practitioner facilities,
we believe veterinarians are increasingly gravitating toward animal hospitals
that provide state-of-the-art facilities, treatments, methods and
pharmaceuticals to enhance the services they can provide their clients.

Well capitalized animal hospital operators have the opportunity to
supplement their internal growth with selective acquisitions. We believe the
extremely fragmented animal hospital industry is consolidating due to:

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

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

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

. 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

. 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.

Competitive Strengths

We believe that we are well-positioned for profitable growth due to the
following competitive strengths:

. 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. It would be
particularly difficult to replicate our team of specialists,
transportation network, management and systems infrastructure, size of
our veterinarian group and our customer relationships.

. 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 1998, 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 EBITDA margin
from 26.9% in 1998 to 33.5% for the twelve months ended September 30,
2001, and our laboratory operating margin from 22.4% to 29.9% over the
same period. In each quarter since 1998, 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
EBITDA margin from 16.7% in 1998 to 19.5% for the twelve months ended
September 30, 2001, and our animal hospital operating margin from 12.2%
to 14.3% 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.

. 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 85
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 customers, 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.

. 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, 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.

. 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. We believe the accumulation
of veterinary medical knowledge and experience among our veterinarian
group enables us to offer new services more rapidly than our
competitors, offer our services at a higher level of quality and remain
the leading source of veterinary information for interested companies
such as pharmaceutical and pet food companies.

Business Strategy

Our business strategy is to continue to expand our market leadership in
animal health care services through our diagnostic laboratories and animal
hospitals. Key elements of our strategy include:

. 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 customer 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. For example, in 2000, we implemented a senior wellness
program. This program bundles tests and animal hospital services,
seeking to promote recurring visits and to increase the average amount
spent per visit.

. 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 customers. For example, given that our nationwide
transportation network servicing our laboratory customers is a
relatively fixed cost, we are able to achieve significantly higher
margins on most incremental tests ordered by the same customer 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.

. Utilizing Enterprise-Wide Systems to Improve Operating Efficiencies. We
recently completed the migration of all animal hospital operations to an
enterprise-wide management information system. We believe that this
common system will enable us to more effectively manage the key
operating metrics that drive our business. With the aid of this system,
we seek to standardize pricing, expand the services our veterinarians
provide, capture unbilled service, increase volume and implement
targeted marketing programs.

. Pursue Selected Acquisitions. Although we have substantially completed
our laboratory infrastructure, we may make selective, strategic
laboratory acquisitions. 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 animals hospitals per year primarily
using internally generated cash.

Diagnostic Laboratories

We operate the only full-service, veterinary diagnostic laboratory network
serving all 50 states. We have a client base over two times that of our largest
competitor. In 2000, we performed approximately 19.8 million tests and handled
roughly 6.4 million requisitions in our state-of-the-art, automated diagnostic
laboratories. Our laboratory network services a diverse customer base of over
13,000 animal hospitals, and non-affiliated animal hospitals generated
approximately 95% of our laboratory revenue in 2000.

Services. Our diagnostic spectrum includes over 300 different tests in the
areas of chemistry, pathology, serotology, endocrinology, hematology, and
microbiology, as well as tests specific to particular diseases. The average
revenue per requisition is approximately $19. We do not conduct experiments on
animals and are not engaged in animal research.

Although modified to address the particular requirements of the species
tested, the tests performed in our veterinary laboratories are similar to those
performed in human clinical laboratories and utilize similar laboratory
equipment and technologies. The growing concern for animal health, combined
with the movement of veterinary medicine toward increasing specialization,
should spur the migration of additional areas of human testing into the
veterinary field. For example, we now provide cancer testing for household pets
whereas several years ago, these tests were not available.

Given the recent advancements in veterinary medical technology and the
increased breadth and depth of knowledge required for the practice of
veterinary medicine, many veterinarians solicit the knowledge and experience of
our 85 specialists to interpret test results, consult on the diagnosis of
illnesses and suggest treatment programs. This resource includes veterinarians,
chemists, and other scientists with expertise in pathology, internal medicine,
oncology, cardiology, dermatology, neurology and endocrinology. This depth of
experience and expertise enables our specialists to suggest additional testing
or provide diagnostic advice that assists the veterinarian in developing an
appropriate treatment plan.

Together with our specialist support, we believe the quality of our service
further distinguishes our laboratory services. We maintain quality assurance
programs to ensure that specimens are collected and transported properly, that
tests are performed accurately and that client, patient and test information is
reported and billed correctly. Our quality assurance programs include quality
control testing of specimens of known concentration or reactivity to ensure
accuracy and precision, routine checks and preventive maintenance of laboratory
testing equipment, and personnel standards ensuring that only qualified
personnel perform testing. As a result, we believe that our accuracy rate is
over 99%.

[MAP] MAP OF UNITED STATES

Our 15 laboratories enable us to service the entire United States. Our
laboratory network includes:

. two primary hubs that are open 24 hours per day and offer a full testing
menu, including our most complex tests,

. four secondary hubs that service large metropolitan areas, are open 24
hours per day and offer a wide testing menu, generally exclusive of our
most complex tests; and

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

We connect our laboratories to our customers with what we believe is the
industry's largest transportation network, which picks up an average of 20,000
to 25,000 requisitions daily through an extensive network of drivers and
independent couriers. For the nine months ended September 30, 2001, we derived
approximately 69.4% of our laboratory revenue from major metropolitan areas,
where we offer twice-a-day pick-up service and same-day results. In addition,
in these areas, we generally offer to report results within three hours of
pick-up. Outside of these areas, we typically provide test results to
veterinarians before 8:00 a.m. the following day.

Veterinarian customers located outside the areas covered by our
transportation network are serviced using our Test Express service. Users of
the Test Express service send patient specimens by Federal Express to our
Memphis laboratory, the proximity of which to the Federal Express primary
sorting facility permits speedy and cost-efficient testing.

Sales, Marketing and Customer Service. We employ 40 full-time sales and
field service representatives who market laboratory services and maintain
relationships with existing customers. The sales force is commissioned-based
and organized along geographic regions. We support our sales efforts by
strengthening our industry-leading team of specialists, developing marketing
literature, attending trade shows, participating in trade associations and
providing educational services to veterinarians. In addition, we employ over 90
customer service representatives who respond to customer inquiries, provide
test results and, when appropriate, introduce the customer to other services
offered by the laboratory.

Given the high margins we enjoy on many of our incremental tests, our sales
force is compensated primarily on its success in maximizing the amount of
business from existing customers as well as adding new customers.

Personnel. We employ a staff of approximately 1,000 full-time-equivalent
employees in our laboratory network. We employ on average 310 employees at each
of our primary laboratories. At a typical secondary laboratory, we employ on
average 93 employees and at our typical STAT laboratory we employ on average 18
employees. We employ some of our specialists and enter into consulting
arrangements with others. Our laboratory network consists of an eastern and
western division and we employ a vice president to manage each region. We
employ a manager at each of our laboratories and supervisors for each
department within the laboratories.

Animal Hospitals

At September 30, 2001, we operated 214 animal hospitals in 33 states that
were supported by over 750 veterinarians. Our nationwide network of
free-standing, full-service animal hospitals has facilities located in the
following states:

California 44 Connecticut 3
New York* 21 New Mexico 3
Florida 17 Minnesota* 2
Illinois 16 North Carolina* 2
Michigan 12 Utah 2
Pennsylvania 11 Alabama* 1
Maryland 9 Arizona 1
New Jersey* 9 Georgia 1
Texas* 9 Hawaii 1
Indiana 7 Louisiana* 1
Massachusetts 7 Missouri 1
Virginia 6 Nebraska* 1
Colorado 5 South Carolina 1
Nevada 5 Washington* 1
Ohio* 5 West Virginia* 1
Alaska 4 Wisconsin 1
Delaware 4

--------
* States where we manage animal hospitals owned by veterinary
medical groups.

We seek to provide quality medical care in clean, attractive facilities that
are open on average between 10 and 15 hours per day, six to seven days per
week. Our typical animal hospital:

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

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

. is supported by three to five veterinarians; and

. has an operating history of over ten years.

In addition to general medical and surgical services, we offer specialized
treatments for companion animals, including advanced diagnostic services,
internal medicine, oncology, ophthalmology, dermatology and cardiology. We also
provide pharmaceutical products for use in the delivery of treatments by our
veterinarians and pet owners. Many of our animal hospitals offer additional
services, including grooming, bathing and boarding. We also sell specialty pet
products at our hospitals, including pet food, vitamins, therapeutic shampoos
and conditioners, flea collars and sprays, and other accessory products.

As part of the growth strategy of our hospital business, we intend to
continue our disciplined acquisition strategy by identifying high quality
practices that may have value to be unlocked through the services and scale we
can provide. Our typical candidate mirrors the profile of our existing hospital
base. Acquisitions will be used to both expand in existing markets and enter
new geographical areas. By undertaking prudent acquisitions, we are able to
grow our hospital business without diluting the local market for veterinary
services. As of September 30, 2001, we had identified and were in negotiations
to acquire three animal hospitals.

Personnel. Our animal hospitals generally employ a staff of between 10 to 30
full-time equivalent employees, depending upon the facility's size and customer
base. The staff includes administrative and technical support personnel, three
to five veterinarians, an office manager who supervises the day-to-day
activities of the facility, and a small office staff. We employ a relatively
small corporate staff to provide centralized administrative services to all of
our animal hospitals.

We actively recruit highly qualified veterinarians and technicians and are
committed to supporting continuing education for our professional staff. We
operate post-graduate teaching programs for veterinarians at seven of our
facilities, which train approximately 40 veterinarians each year. We believe
that these programs enhance our reputation in the veterinary profession and
further our ability to continue to recruit the most talented veterinarians.

We seek to establish an environment that supports the veterinarian in the
delivery of quality medicine and fosters professional growth through increased
patient flow and a diverse case mix, continuing education, state-of-the-art
equipment and access to specialists. We believe our hospitals offer attractive
employment opportunities to veterinarians because of this professional
environment, competitive compensation programs, management opportunities,
employee benefits not generally available to a sole practitioner, scheduling
flexibility to accommodate personal lifestyles and the ability to relocate to
different regions of the country. Further, we permit some of our veterinarians
to participate with us in the ownership and operation of an animal hospital. In
these circumstances, the veterinarian purchases an equity position in our
animal hospital and is our partner in its operation. As of September 30, 2001,
we operated 24 hospitals under a partnership structure. Typically, the salary
of the veterinarian partner is based on a percentage of the revenue of the
animal hospital that is generated by the veterinarian. The operating income of
the partnership that is distributed to the veterinarian partner is based on the
veterinarian partner's percentage interest in the partnership, which is
typically between 10% and 25%.

We have established a Medical Advisory Board to support our operations. The
Medical Advisory Board's function, under the direction of our Chief Medical
Officer, is to recommend medical standards for our network of animal hospitals.
The committee is comprised of leading veterinarians representing both the
different geographic regions in which we operate and the medical specialties
practiced by our veterinarians. Currently, four members of the Medical Advisory
Board are faculty members at leading veterinary colleges in the United States.
These members serve as medical consultants to us.

Marketing. Our marketing efforts are primarily directed towards our existing
clients through customer education efforts. We inform and educate our clients
about pet wellness and quality care through mailings of the Healthy Pet
Magazine, a magazine focused on pet care and wellness published by an affiliate
of ours, targeted demographic mailings regarding specific pet health issues and
collateral health material available at each animal hospital. With these
internal marketing programs, we seek to leverage our existing customer base by
increasing

the number of visits of existing clients and intensity of the services used
during each visit. Further, reminder notices are used to increase awareness of
the advantages of regular, comprehensive veterinary medical care, inlcuding
preventive care such as vaccinations, dental screening and geriatric care.

We also enter into referral arrangements with local pet shops and humane
societies to increase our client base. In addition, we seek to obtain referrals
from veterinarians by promoting our specialized diagnostic and treatment
capabilities to veterinarians and veterinary practices that cannot offer their
clients these services.

Ownership Limitations. Some states have laws that prohibit business
corporations from providing veterinary services through the direct employment
of veterinarians. At September 30, 2001, we operated 53 animal hospitals in 11
states with these types of ownership restrictions. In these states, instead of
owning an animal hospital, we provide management services to veterinary medical
groups. We do not consolidate the operating results of these hospitals for
financial statement purposes. We provide our management services pursuant to
long-term management agreements with the veterinary medical groups, ranging
from 10 to 40 years, with non-binding renewal options where allowable. Pursuant
to the management agreements, the veterinary medical groups are each solely
responsible for all aspects of the practice of veterinary medicine, as defined
by their respective state. We are responsible for providing the following
services:
. availability of all facilities and equipment;

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

. maintenance of patient records;

. recruitment of veterinarians and animal hospital staff;

. marketing; and

. malpractice and general insurance.

As compensation for these services, we receive management fees, which are
included in animal hospital revenue.

Systems

We maintain a nationwide management information system to support our
veterinary laboratories. In 2000, we completed the migration of our animal
hospital operations onto an enterprise-wide management information network. All
of our financial and customer records and laboratory results are stored in
computer databases, most of which may be accessed by our management.
Substantially all of our animal hospitals utilize consistent patient
accounting/point-of-sale software, and we are able to track the performance of
hospitals on a per service, per veterinarian basis. Laboratory technicians and
specialists are able to electronically access test results from remote testing
sites, enabling our specialists from varying fields of veterinary medicine to
assist in the interpretation of test results and help structure potential
treatment programs. We expect that this operational visibility will lead to
increases in laboratory, veterinarian and hospital productivity.

We are continuing to upgrade and integrate our management information
systems. The upgrade of the laboratory system will enable us to communicate
diagnostic test results to veterinarian customers online and via electronic
mail, a service that we believe will provide additional tools for veterinarians
in their practice and will help to solidify our relationship with these
clients. The upgrade of the animal hospital system will allow us to track
performance data on a per customer basis. We expect this upgrade and
integration to cost approximately $250,000 and to be substantially complete in
early 2002.

Competition

The companion animal health care services industry is highly competitive and
subject to continual change in the manner in which services are delivered and
providers are selected. We believe that the primary factors

influencing a customer's selection of an animal hospital are convenient
location, recommendation of friends, reasonable fees, quality of care and
convenient hours. Our primary competitors for our animal hospitals in most
markets are individual practitioners or small, regional multi-clinic practices.
In addition, some national companies in the pet care industry, including the
operators of super-stores, are developing multi-regional networks of animal
hospitals in markets that include our animal hospitals. Among veterinary
diagnostic laboratories, we believe that quality, price, specialist support and
the time required to report results are the major competitive factors. Although
there are many individual clinical laboratories that provide a broad range of
diagnostic testing services in the same markets serviced by us, few outsourced
laboratory companies compete on a national level. Our client base is twice that
of our primary competitor in the laboratory business. In addition to competing
with dedicated veterinary laboratories, we face competition from several
providers of on-site diagnostic equipment that allow veterinarians to perform
their own laboratory tests.

Government Regulation

The laws of many states prohibit business corporations from providing, or
holding themselves out as providers of, veterinary medical care. These laws
vary from state to state and are enforced by the courts and by regulatory
authorities with broad discretion. We operate 53 hospitals in 11 states with
these laws, including 21 in New York. Although we seek to structure our
operations to comply with veterinary medicine laws of each state in which we
operate, given the varying and uncertain interpretations of these laws, we may
not be in compliance with restrictions on the corporate practice of veterinary
medicine in all states. A determination that we are in violation of applicable
restrictions on the practice of veterinary medicine in any state in which we
operate could have a material adverse effect on us, particularly if we were
unable to restructure our operations to comply with the requirements of that
state.

In addition, all of the states in which we operate impose various
registration requirements. To fulfill these requirements, we have registered
each of our facilities with appropriate governmental agencies and, where
required, have appointed a licensed veterinarian to act on behalf of each
facility. All veterinary doctors practicing in our clinics are required to
maintain valid state licenses to practice.

Acquisitions may be subject to pre-merger or post-merger review by
governmental authorities for antitrust and other legal compliance. Adverse
regulatory action could negatively affect our operations through the assessment
of fines or penalties against us or the possible requirement of divestiture of
one or more of our operations.

Employees

At September 30, 2001, we had approximately 3,350 full-time-equivalent
employees, including approximately 620 licensed veterinarians. None of our
employees is a party to a collective bargaining agreement with the exception of
our courier drivers in the State of New York. These employees are subject to a
collective bargaining agreement expiring on July 10, 2003 with the Teamsters
Local Union 813. We believe our employee relations to be good.

Properties

Our corporate headquarters and principal executive offices are located in
West Los Angeles, California, in approximately 30,000 square feet of leased
space. We maintain leased and owned facilities at 229 other locations that
house our animal hospitals and laboratories. We own 64 facilities and the
remainder are leased. We believe that our real property facilities are adequate
for our current needs.

Legal Proceedings

The Ohio Attorney General's office filed a lawsuit on December 14, 1998, in
the Franklin County Court of Common Pleas in the State of Ohio in which the
state alleged that our management of a veterinary medical group

licensed to practice veterinary medicine in that state violates the Ohio
statute prohibiting business corporations from providing, or holding themselves
out as providers of, veterinary medical care. On March 20, 2001, the trial
court in the case entered summary judgment in favor of the State of Ohio and
issued an order enjoining us from operating in the State of Ohio in a manner
that is in violation of the state statute. In response, we have restructured
our operations in the State of Ohio in a manner that we believe conforms to the
state law and the court's order. The Attorney General of the State of Ohio has
informed us that it disagrees with our position that we are in compliance with
the court's order. In June 2001, we appeared at a status conference before the
trial court at which time the court directed the parties to meet together to
attempt to settle this matter. Consistent with the trial court's directive, we
currently are engaged in discussions with the Attorney General's office in the
State of Ohio in an attempt to resolve this matter. An additional status
conference was scheduled to occur in August 2001 to report to the court with
regard to the terms of a settlement or, alternatively, that the parties cannot
reach agreement, in which case we will be subject to further court proceedings
to review our restructured operations under the Ohio statute. This status
conference was postponed and a new date has not been set. Our five animal
hospitals in the State of Ohio have a book value of $6.1 million as of
September 30, 2001. If we were required to discontinue our operations in the
State of Ohio, we may not be able to dispose of the hospital assets for their
book value. The animal hospitals located in the State of Ohio generated
revenue, EBITDA and operating income of $2.2 million, $754,000 and $513,000,
respectively, in the twelve months ended December 31, 2000 and $1.7 million,
$575,000 and $376,000, respectively, in the nine months ended September 30,
2001.

We have received a letter dated November 5, 2001 from a law firm
representing the two majority stockholders of a company that merged with
Zoasis.com, Inc. in June 2000. In the merger, the two stockholders received a
less than 10% interest in Zoasis. At the same time, we acquired a less than 20%
interest in Zoasis for an investment of $5.0 million. Robert Antin, our Chief
Executive Officer, President and Chairman of the Board, is the majority
stockholder of Zoasis and serves on its board of directors. See "Related Party
Transactions." The letter indicates that these stockholders intend to file a
lawsuit naming as defendants, among others, VCA and Robert Antin and alleging
claims including fraud, misrepresentation, civil conspiracy, rescission, and
declaratory relief arising from their investment in Zoasis. At this early
stage, we cannot determine whether a lawsuit will be filed or, if so, the
effect that any such lawsuit would have on our business or financial condition.
If a lawsuit is filed and served, we intend to vigorously defend against it.

We are a party to various other legal proceedings that arise in the ordinary
course of our business. Although we cannot determine the ultimate disposition
of these proceedings, we do not believe that adverse determinations in any or
all of these proceedings would have a material adverse effect upon our
financial condition, liquidity or results of operations.

MANAGEMENT

Directors and Executive Officers

The following persons are our directors and executive officers:

Directors Age Present Position
--------- --- ---------------------------------------------------------------

Robert L. Antin 51 Chief Executive Officer, President and Chairman of our Board of
Directors
Arthur J. Antin 54 Chief Operating Officer, Senior Vice President, Secretary and
Director
Neil Tauber.... 50 Senior Vice President of Development
Tomas W. Fuller 43 Chief Financial Officer, Vice President and Assistant Secretary
Dawn R. Olsen.. 42 Vice President, Controller
John M. Baumer. 33 Director
John G. Danhakl 45 Director
Melina Higgins. 34 Director
Peter J. Nolan. 43 Director

Our executive officers are appointed by and serve at the discretion of our
board of directors. Robert L. Antin and Arthur J. Antin are brothers. There are
no other family relationships between any of our directors and/or any executive
officers.

Robert L. Antin, one of our founders, has served as our Chief Executive
Officer, President and Chairman since our inception in 1986. From September
1983 until our founding, Mr. Antin was President, Chief Executive Officer, a
director and co-founder of AlternaCare Corp., a publicly held company that
owned, operated and developed freestanding out-patient surgical centers. From
July 1978 until September 1983, Mr. Antin was employed as an officer by
American Medical International, Inc., an owner and operator of health care
facilities. While at American Medical International, Inc., Mr. Antin initially
served as Director of Marketing of Professional Hospital Services, then as
Director of New Business Development responsible for non-hospital related
acquisitions and development, and then as a Vice President of American Medical
International, Inc. and President of AMI Ambulatory Center, Inc., a subsidiary
of American Medical International, Inc. operating a chain of ambulatory care
centers. Mr. Antin received his MBA with a certification in hospital and health
administration from Cornell University.

Arthur J. Antin, one of our founders, has served as our Chief Operating
Officer, Senior Vice President, Secretary and a director since our inception.
From October 1983 to September 1986, Mr. Antin served as Director of
Marketing/Investor Relations of AlternaCare Corp. At AlternaCare Corp., Mr.
Antin developed and implemented marketing strategies for a network of
outpatient surgical centers. Mr. Antin received an MA in Community Health from
New York University.

Neil Tauber, one of our founders, has served as our Senior Vice President of
Development since our inception. From 1984 to 1986, Mr. Tauber served as the
Director of Corporate Development at AlternaCare. At AlternaCare, Mr. Tauber
was responsible for the acquisition of new businesses and syndication to
hospitals and physician groups. From 1981 to 1984, Mr. Tauber served as Chief
Operating Officer of MDM Services, a wholly owned subsidiary of Mediq, a
publicly held health care company, where he was responsible for operating and
developing a network of retail dental centers and industrial medical clinics.
Mr. Tauber holds an MBA from Wagner College.

Tomas W. Fuller joined us in January 1988 and served as our Vice President
and Controller until November 1990 when he became Chief Financial Officer.
From 1980 to 1987, Mr. Fuller worked at Arthur Andersen LLP, the last two years
of which he served as audit manager. Mr. Fuller received his BA in
business/economics from the University of California at Los Angeles.

Dawn R. Olsen joined us in January 1997 as Vice President, Controller. From
April 1996 to December 1996, Ms. Olsen worked as an independent consultant at
the Rand Corporation. From November 1993 to March 1996, Ms. Olsen served as
Senior Vice President, Controller of Optel, Inc., a privately held
telecommunications company. From 1987 to 1993, Ms. Olsen served as Assistant
Controller and later as Vice President, Controller of Qintex Entertainment,
Inc., a publicly held television film distribution and production company. From
1981 to 1987, Ms. Olsen worked at Arthur Andersen LLP, the last year of which
she served as audit manager. Ms. Olsen is a certified public accountant and
received her BS in business/accounting from California State University,
Northridge.

John M. Baumer has served as a director since September 2000. Mr. Baumer is
a partner in Leonard Green & Partners, where he has been employed since May
1999. Prior to joining Leonard Green & Partners, he served as a Vice President
in the Corporate Finance Division of Donaldson, Lufkin & Jenrette Securities
Corporation, or DLJ in Los Angeles. Prior to joining DLJ in 1995, Mr. Baumer
worked at Fidelity Investments and Arthur Andersen. Mr. Baumer currently serves
on the boards of directors of Intercontinental Art, Inc. and Petco Animal
Supplies, Inc. Mr. Baumer is a 1990 graduate of the University of Notre Dame.
He received his MBA from the Wharton School at the University of Pennsylvania.

John G. Danhakl has served as a director since September 2000. Mr. Danhakl
is a partner of Leonard Green & Partners. Prior to becoming a partner at
Leonard Green & Partners in 1995, Mr. Danhakl was a Managing Director at DLJ
and had been with DLJ since 1990. Prior to joining DLJ, Mr. Danhakl was a Vice
President at Drexel Burnham Lambert from 1985 to 1990. Mr. Danhakl presently
serves on the boards of directors of The Arden Group, Inc., Big 5 Holdings
Corp., Communications & Power Industries, Inc., TwinLab Corporation, Diamond
Triumph Auto Glass, Inc., Liberty Group Publishing, Inc., Leslie's Poolmart,
Inc. and Petco Animal Supplies, Inc., and on the board of managers of
AsianMedia Group LLC. Mr. Danhakl is a graduate of the University of California
at Berkeley. He received his MBA from the Harvard Business School.

Melina Higgins has served as a director since September 2000. Ms. Higgins is
Chief Financial Officer of GS Mezzanine Partners II, L.P. and GS Mezzanine II
Offshore, L.P., leveraged mezzanine funds managed by Goldman, Sachs & Co. Ms.
Higgins has been with Goldman Sachs for ten years and has been working with
Goldman Sachs mezzanine funds since their inception in 1996. Ms. Higgins
presently serves as a director on the boards of directors of the following
companies in which GS Mezzanine Partners has invested: Kranson Industries, Inc.
and Western Nonwovens Inc. Ms. Higgins holds an MBA from Harvard Business
School and a BA from Colgate University.

Peter J. Nolan has served as a director since September 2000. Mr. Nolan
became a partner of Leonard Green & Partners in April 1997. Mr. Nolan
previously served as Managing Director and Co-Head of DLJ's Los Angeles
Investment Banking Division since 1990. Prior to that, Mr. Nolan had been a
Vice President in corporate finance at Drexel Burnham Lambert since 1986. Prior
to that, Mr. Nolan was a First Vice President at Prudential Securities, Inc.
where he had worked from 1982 to 1986, after working as an Associate at
Manufacturers Hanover Trust. He presently serves on the boards of directors of
M2 Automotive, Liberty Group Publishing, Inc., Contractors Source, Inc. and
White Cap Industries, Inc. and on the board of managers of AsianMedia Group
LLC. Mr. Nolan is a graduate of Cornell University with a BS in Agricultural
Economics and Finance. He received his MBA from Cornell University.

Boardof Directors and Committees

Upon the closing of this offering, we will have authorized six directors. In
accordance with the terms of our certificate of incorporation, the terms of
office of our board of directors will be divided into three classes. As a
result, a portion of our board of directors will be elected each year. The
division of the three classes and their respective election dates are as
follows:

. the class I directors' term will expire at the annual meeting of
stockholders to be held in 2002;

. the class II directors' term will expire at the annual meeting of
stockholders to be held in 2003; and

. the class III directors' term will expire at the annual meeting of
stockholders to be held in 2004.

At each annual meeting of stockholders after the initial classification, the
successors to directors whose terms will then expire will be elected to serve
from the time of election and qualification until the third annual meeting
following election. In addition, our bylaws provide that the authorized number
of directors may be changed by an amendment to the bylaws duly adopted by the
board of directors or by the stockholders, or by a duly adopted amendment to
our certificate of incorporation. Any additional directorships resulting from
an increase in the number of directors will be distributed among the three
classes so that, as nearly as possible, each class will consist of one-third of
the total number of directors.

Our board of directors intends to create an audit committee and a
compensation committee. We expect that our audit committee will be comprised of
three independent directors whom it will appoint and will be charged with the
following responsibilities:

. recommending the engagement of our independent public accountants;

. reviewing the scope of the audit to be conducted by the independent
public accountants;

. meeting periodically with the independent public accountants and our
Chief Financial Officer to review matters relating to our financial
statements, our accounting principles and our system of internal
accounting controls; and

. reporting its recommendations as to the approval of our financial
statements to the board of directors.

We anticipate that the compensation committee will be composed of at least
two independent directors. The compensation committee will be responsible for
considering and making recommendations to the board of directors regarding
executive compensation and will be responsible for administering our stock
option and executive incentive compensation plans.

Director Compensation

Our directors are not entitled to any compensation for serving as a
director. Directors may be reimbursed for the actual reasonable costs incurred
in connection with attendance at board meetings. Upon the closing of this
offering, our directors who are not also our employees will receive $1,000 for
each meeting of the board of directors that they attend plus reimbursement of
all out-of-pocket expenses incurred in attending such meeting.

Compensation Committee Interlocks and Insider Participation

None of our executive officers or directors presently serves, or in the past
has served, on the compensation committee of any other company with which we
conduct business, nor do we expect any member of our compensation committee to
serve, or in the past to have served, on the compensation committee of a
company with which we conduct business.

Executive Compensation

The following table sets forth certain information with respect to
compensation awarded to, earned by or paid to each person who served as our
Chief Executive Officer or was one of our four other most highly compensated
executive officers during the fiscal year ended December 31, 2000. We refer to
these officers as our named executive officers.

Summary Compensation Table

Long Term
Compensation;
Awards;
Annual Compensation Securities
----------------------------------- Underlying
Other Annual Options/SARs All Other
Name and Principal Position Year Salary Bonus Compensation(1) (#) (2) Compensation
--------------------------- ---- -------- ---------- --------------- ------------- -------------

Robert L. Antin (3).................... 2000 $364,000 -- $2,377 15,000 $7,014,300(4)
Chairman of the Board, President and 1999 358,077 286,816(5) 1,921 -- --
Chief Executive Officer 1998 350,000 315,000(6) 1,675 -- --

Arthur J. Antin (3).................... 2000 260,000 -- 2,543 32,845 4,545,225(4)
Chief Operating Officer, 1999 255,769 182,108(5) 1,954 -- --
Senior Vice President and Secretary 1998 250,000 200,000(6) 1,851 -- --

Neil Tauber (3)........................ 2000 197,000 -- 2,163 30,000 2,863,950(4)
Senior Vice President of Development 1999 194,385 121,102(5) 1,955 -- --
1998 190,000 70,989(6) 1,425 -- --

Tomas W. Fuller (3).................... 2000 187,200 -- 1,815 20,000 2,948,750(4)
Chief Financial Officer, Vice 1999 184,154 114,729(5) 1,921 -- --
President and Assistant Secretary 1998 180,000 121,406(6) 1,047 -- --

Dawn R. Olsen.......................... 2000 141,000 35,000 -- 42,995 --
Vice President and Controller 1999 130,808 9,773(5) -- -- --
1998 125,000 13,090(6) -- 15,500 --

--------
(1)Represents amounts paid as automobile allowance.
(2)All numbers reflect the number of shares of our common stock subject to
options granted during the fiscal year.
(3)For a description of the employment agreement between us and the officer,
see below.
(4)Consists of amounts paid to these officers in connection with the
recapitalization which includes amounts paid under then existing employment
agreements and in consideration of executing non-competition agreements.
(5)Reflects the fair market value on January 20, 2000 of restricted stock bonus
awards granted in January 2000 for services rendered during the fiscal year
ended December 31, 1999.
(6)Reflects the fair market value on February 12, 1999 of restricted stock
bonus awards granted in February 1999 for services rendered during the
fiscal year ended December 31 ,1998.

Option/SAR Grants in the Last Fiscal Year

The following table sets forth certain information regarding the grant of
stock options to purchase shares of our common stock made during the fiscal
year ended December 31, 2000 to our named executive officers.

Individual Grants
---------------------------------------------------------------------------

Potential Realizable Value at
Number of Assumed Rate of Stock Price
Securities Percent of Total Appreciation for Option Term
Underlying Options Granted to (1)
Option/SARs Employees in Fiscal Exercise or Base Expiration -----------------------------
Name Granted (#) Year (2) Price ($/SH) (3) Date 5% 10%
---- ----------- ------------------- ---------------- ---------- -------- -------

Robert L. Antin 15,000(4) 1.1% $1.00 9/20/10 $ 9,433 $23,906
Arthur J. Antin 32,845(4) 2.5% 1.00 9/20/10 20,656 52,346
Neil Tauber 30,000(4) 2.3% 1.00 9/20/10 18,867 47,812
Tomas W. Fuller 20,000(4) 1.5% 1.00 9/20/10 12,578 31,875
Dawn R. Olsen 23,000(5) 1.7% 1.00 9/20/10 14,465 36,656
19,995(6) 1.5% 0.20 9/20/10 28,571 47,863

--------
(1)The potential realizable value is based on the assumption that our common
stock appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration of the option term. These amounts are
calculated pursuant to applicable requirements of the Commission and do not
represent a forecast of the future appreciation of our common stock.
(2)Options covering an aggregate of 1,325,670 shares were granted to eligible
persons under our stock incentive plan during the fiscal year ended December
31, 2000.
(3)The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares, subject to specified conditions.
(4)Options vest in 24 equal monthly installments commencing on October 1, 2001.
(5)Options vest in 30 equal monthly installments commencing on July 1, 2002.
(6)Options vested on September 20, 2000.

Option Exercises in Last Fiscal Year and Year-End Option Values

The following table sets forth, for each of our named executive officers,
certain information regarding the exercise of stock options to purchase shares
of our common stock during the fiscal year ended December 31, 2000, the number
of shares of common stock underlying stock options held at fiscal year end and
the value of options held at fiscal year end.

Number of Securities
Underlying Unexercised Value of Unexercised In-
Shares Options/SARs at Fiscal The-Money Options/SARs
Acquired Year End (#) at Fiscal Year End ($)(1)
Upon Value ------------------------- -------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ---------- ----------- ------------- ----------- -------------

Robert L. Antin 1,205,000 $5,794,375 -- 15,000 -- --
Arthur J. Antin 678,500 3,714,042 -- 32,845 -- --
Neil Tauber.... 525,000 2,685,775 -- 30,000 -- --
Tomas W. Fuller 460,667 2,364,071 -- 20,000 -- --
Dawn R. Olsen.. 30,500 90,813 19,995 23,000 15,996 --

--------
(1)There was no public trading market for our common stock as of December 31,
2000. Accordingly, these values have been calculated based on our board of
directors' determination of the fair market value of the underlying shares
as of December 31, 2000 of $1.00 per share, less the applicable exercise
price per share, multiplied by the number of underlying shares.

1996 Stock Incentive Plan

On November 7, 1995, we adopted, and on July 19, 1996, our stockholders
approved, the 1996 Stock Incentive Plan. On August 6, 2001, we adopted and our
stockholders approved an amendment to the 1996 plan. The 1996 plan is intended
to secure for us the benefits arising from stock ownership by selected key
employees as our board of directors may from time to time determine. The
following are the material terms of the 1996 plan:

. Shares Subject to Plan. Effective as of August 6, 2001, no additional
stock options may be granted under the 1996 plan. The number of shares
of stock reserved and available for issuance under the 1996 plan is
631,800, which is the number of shares of stock underlying outstanding
stock options as of August 6, 2001. The number of shares reserved for
issuance is generally subject to equitable adjustment upon the
occurrence of any stock dividend or other distribution,
recapitalization, stock split, reorganization, merger, consolidation,
combination, repurchase, or share exchange, or other similar corporate
transaction or event.

. Administration. The 1996 plan is administered by our board of directors.
Upon the closing of this offering, the 1996 plan will be administered by
the compensation committee as designated by our board of directors. Each
member of the committee is a "nonemployee director" (within the meaning
of Rule 16b-3 promulgated under Section 16 of the Securities Exchange
Act of 1934) and an "outside director" (within the meaning of Section
162(m) of the Internal Revenue Code). The committee has authority to
construe and interpret the 1996 plan and any awards made thereunder, to
grant and determine the terms of awards and to make any necessary rules
and regulations for the administration of the 1996 plan.

. Eligibility. Effective as of August 6, 2001, no additional stock options
may be granted under the 1996 plan.

. Type of Awards. Outstanding awards granted under the 1996 plan include
both incentive stock options, also known as ISOs, within the meaning of
Section 422 of the Internal Revenue Code, and non-qualified stock
options that do not qualify as ISOs.

. Amendment and Termination. The 1996 plan may be amended by the board of
directors, at any time, subject to stockholder approval, where necessary
to satisfy federal tax or other applicable laws or stock exchange
requirements, or to materially increase the shares of stock reserved for
issuance under the 1996 plan, materially increase the benefits accruing
to participants or materially modify eligibility requirements.

. Exercisability, Vesting and Price of Awards. The stock options will vest
at the times and upon the conditions that the committee may determine,
but are exercisable at least as quickly as 20% per year beginning on the
date of grant. The price at which shares subject to any stock options
may be purchased are reflected in each particular stock option agreement.

2001 Stock Incentive Plan

On August 6, 2001, we adopted, and our stockholders approved, the 2001 Stock
Incentive Plan. The 2001 plan is intended to secure for us the benefits arising
from stock ownership by selected key employees as our board of directors may
from time to time determine. The following are the material terms of the 2001
plan:

. Shares Subject to Plan. 2,000,000 shares of our common stock have been
reserved for issuance under the 2001 plan. There are no options
outstanding under the 2001 plan. Unexercised options or purchase rights
that are subsequently reacquired by us, or shares issued under the 2001
plan that are reacquired by us through forfeiture or right of
repurchase, may be available for reissuance under the 2001 plan. The
number of shares reserved for issuance is generally subject to equitable
adjustment upon the occurrence of any stock dividend or other
distribution, recapitalization, stock split, reorganization, merger,
consolidation, combination, repurchase, or share exchange, or other
similar corporate transaction or event.

. Administration. The 2001 plan is administered by our board of directors.
Upon the closing of this offering, the 2001 plan will be administered by
the compensation committee as designated by our board of directors. Each
member of the committee is a "nonemployee director" (within the meaning
of Rule 16b-3 promulgated under Section 16 of the Securities Exchange
Act of 1934) and an "outside director" (within the meaning of Section
162(m) of the Internal Revenue Code). The committee has authority to
construe and interpret the 2001 plan and any awards made thereunder, to
grant and determine the terms of awards and to make any necessary rules
and regulations for the administration of the 2001 plan.

. Eligibility. Options may be granted to our directors, officers,
employees and consultants and those of our subsidiaries. The 2001 plan
limits to 500,000 the number of shares that can be granted to any
participant in any calendar year.

. Type of Awards. Upon the closing of this offering, the 2001 plan will
permit the compensation committee to grant stock options, stock purchase
rights or a combination thereof. Stock options may be ISOs or
non-qualified stock options that do not qualify as ISOs.

. Amendment and Termination. The 2001 plan may be amended or terminated by
the board of directors, at any time, subject to stockholder approval
where necessary to satisfy federal tax or other applicable laws or stock
exchange requirements. The 2001 plan will terminate no later than August
6, 2011.

. Exercisability, Vesting and Price of Awards. Stock options will vest at
the times and upon the conditions that the committee may determine, and
the price at which shares subject to the stock option may be purchased
will be reflected in each particular stock option agreement. The stock
purchase price, right of repurchase by us, if any, and other conditions
determined by the committee, will be reflected in each particular stock
purchase right agreement.

Employment Agreements

We have employment agreements with Robert L. Antin, Arthur J. Antin, Neil
Tauber and Tomas W. Fuller.

Robert L. Antin. Mr. Antin's employment agreement will be amended effective
upon the closing of this offering and will provide for Mr. Antin to serve as
our Chairman of Board, Chief Executive Officer and President for a term five
years from any given date, such that there shall always be a minimum of at
least five years remaining under his employment agreement. The employment
agreement provides for Mr. Antin to receive an annual base salary of $513,000,
subject to annual increase based on comparable compensation packages provided
to executives in similarly situated companies, and to participate in a bonus
plan based on annual performance standards to be established by the
compensation committee. Mr. Antin is also entitled to specified perquisites.

If Mr. Antin's employment is terminated due to his death, the employment
agreement provides that we will pay Mr. Antin's estate his remaining base
salary during the remaining scheduled term of the employment agreement,
accelerated vesting of options and the continuation of family medical benefits.
If Mr. Antin's employment is terminated due to his disability, the employment
agreement provides that we will pay Mr. Antin his remaining base salary during
the remaining scheduled term of the employment agreement (reduced by any
amounts paid under long-term disability insurance policy maintained by us for
the benefit of Mr. Antin), accelerated vesting of options and the continuation
of specified benefits and perquisites. In the case of termination due to death
or disability, any unexercised options will remain exercisable for their full
term.

If Mr. Antin terminates the employment agreement for cause, if we terminate
the employment agreement without cause or in the event of a change of control,
in which event the employment of Mr. Antin terminates automatically, we will
pay Mr. Antin his remaining base salary during the remaining scheduled term of
the employment agreement and an amount based on his past bonuses, accelerated
vesting of his options and continue to provide specified benefits and
perquisites. In these circumstances, Mr. Antin may exercise his options
immediately upon termination and thereafter during the full term of the option.

If Mr. Antin terminates the employment agreement without cause or we
terminate the employment agreement for cause, Mr. Antin is entitled to receive
all accrued and unpaid salary and other compensation and all accrued and unused
vacation and sick pay. If any of the payments due Mr. Antin upon termination
qualify as "excess parachute payments" under the Internal Revenue Code, Mr.
Antin also is entitled to an additional payment to cover the tax consequences
associated with excess parachute payments.

Arthur J. Antin. Mr. Antin's employment agreement will be amended effective
upon the closing of this offering and will provide for Mr. Antin to serve as
our Chief Operating Officer, Senior Vice President and Secretary for a term
equal to three years from any given date, such that there shall always be a
minimum of at least three years remaining under his employment agreement. The
employment agreement provides for Mr. Antin to receive an annual base salary of
$410,400, subject to annual increase based on comparable compensation packages
provided to executives in similarly situated companies, and to participate in a
bonus plan based on annual performance standards to be established by the
compensation committee. Mr Antin is also entitled to specified perquisites.

Neil Tauber. Mr. Tauber's employment agreement, dated as of September 20,
2000, provides for Mr. Tauber to serve as our Senior Vice President for a term
of three years. The employment agreement provides for Mr. Tauber to receive an
annual base salary and additional compensation of not less than $248,000,
subject to annual increase based on the Consumer Price Index for Los Angeles
County, and to participate in a bonus plan based on annual performance
standards to be established by the board of directors.

If Mr. Tauber's employment is terminated due to his death or disability, the
employment agreement provides that we will pay Mr. Tauber or his estate, as
applicable, the amount he would have earned as base salary during the 12 months
following the termination date (reduced by any amounts paid under any life
insurance policy or long-term disability insurance policy, as applicable,
maintained by us for the benefit of Mr. Tauber), accelerated vesting of options
and the continuation of specified benefits for the 12 months following the
termination date. In these circumstances, Mr. Tauber may exercise his options
during the remainder of their term.

If Mr. Tauber terminates the employment agreement for cause, if we terminate
the employment agreement without cause or in the event of a change of control,
in which event the employment of Mr. Tauber terminates automatically, we will
pay Mr. Tauber the amount he would have earned as base salary during the 12
months following the termination date (or a lesser amount if Mr. Tauber is
terminated by us without cause and he had not

completed 15 months of consecutive service), an amount based on his past
bonuses, accelerated vesting of his options and continue to provide specified
benefits for the 12 months following the termination date. In these
circumstances, Mr. Tauber may exercise his options during the full term of the
option.

Mr. Tauber may terminate his employment with us at any time in which event
he is entitled to receive all accrued and unpaid salary and other compensation
and all accrued and unused vacation and sick pay. If any of the payments due
Mr. Tauber upon termination qualify as "excess parachute payments" under the
Internal Revenue Code, Mr. Tauber also is entitled to an additional payment to
cover the tax consequences associated with excess parachute payments.

Tomas W. Fuller. Mr. Fuller's employment agreement will be amended effective
upon the closing of this offering and will provide for Mr. Fuller to serve as
our Chief Financial Officer, Vice President and Assistant Secretary for a term
equal to two years from any given date, such that there shall always be a
minimum of at least two years remaining under his employment agreement. The
employment agreement provides for Mr. Fuller to receive an annual base salary
of not less than $205,200, subject to annual increase based on comparable
compensation packages provided to executives in similarly situated companies,
and to participate in a bonus plan based on annual performance standards to be
established by the compensation committee.

If Mr. Fuller's employment is terminated due to his death, the employment
agreement provides that we will pay Mr. Fuller's estate his remaining base
salary during the remaining scheduled term of the employment agreement,
accelerated vesting of options and the continuation of family medical benefits.
If Mr. Fuller's employment is terminated due to his disability, the employment
agreement provides that we will pay Mr. Fuller his remaining base salary during
the remaining scheduled term of the employment agreement (reduced by any
amounts paid under long-term disability insurance policy maintained by us for
the benefit of Mr. Fuller), accelerated vesting of options and the continuation
of specified benefits and perquisites. In the case of termination due to death
or disability, any unexercised options will remain exercisable for their full
term.

If Mr. Fuller terminates the employment agreement for cause, if we terminate
the employment agreement without cause or in the event of a change of control,
in which event the employment of Mr. Fuller terminates automatically, we will
pay Mr. Fuller his remaining base salary during the remaining scheduled term of
the employment agreement and an amount based on his past bonuses, accelerated
vesting of his options and continue to provide specified benefits and
perquisites. In these circumstances, Mr. Fuller may exercise his options
immediately upon termination and thereafter for the full term of the option.

If Mr. Fuller terminates the employment agreement without cause or we
terminate the employment agreement for cause, Mr. Fuller is entitled to receive
all accrued and unpaid salary and other compensation and all accrued and unused
vacation and sick pay. If any of the payments due Mr. Fuller upon termination
qualify as "excess parachute payments" under the Internal Revenue Code, Mr.
Fuller also is entitled to an additional payment to cover the tax consequences
associated with excess parachute payments.

In the event of a change of control and at our request, each of Messrs.
Robert L. Antin, Arthur J. Antin, Neil Tauber and Tomas W. Fuller is obligated
to continue to serve under his employment agreement for a period of up to 180
days following the termination date at his then current base salary.

PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding beneficial ownership of
our common stock as of September 30, 2001 by:

. each of our directors;

. each of our named executive officers;

. all of our directors and executive officers as a group; and

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

Beneficial ownership is determined in accordance with the rules of the SEC.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock subject to options
held by that person that are currently exercisable or exercisable within 60
days of the date as of which this information is provided, and not subject to
repurchase as of that date, are deemed outstanding. These shares, however, are
not deemed outstanding for the purposes of computing the percentage ownership
of any other person.

Except as indicated in the notes to this table, and except pursuant to
applicable community property laws, each stockholder named in the table has
sole voting and investment power with respect to the shares shown as
beneficially owned by them. Percentage ownership is based on 18,216,212 shares
of common stock outstanding on September 30, 2001 and 32,216,212 shares of
common stock outstanding after completion of this offering. This table assumes
no exercise of the underwriters' over-allotment option. Unless otherwise
indicated, the address for each of the stockholders listed below is c/o VCA
Antech, Inc., 12401 West Olympic Boulevard, Los Angeles, California 90064.

Number of Shares
of Common Stock Percent of Common
Name and Address of Beneficial Owner Beneficially Owned Stock Outstanding
------------------------------------ ------------------ ----------------
Before After
Offering Offering
-------- --------

Green Equity Investors III, L.P.(1)(2)........................ 9,221,031 50.6% 28.6%
Leonard Green & Partners, L.P. entities(2)(3)................. 3,263,468 17.9 10.1
VCA Co-Investment Fund I, LLC(1)(2)........................... 1,851,613 10.2 5.8
Robert L. Antin(4)............................................ 1,807,005 9.9 5.6
Arthur J. Antin(5)............................................ 401,374 2.2 1.3
Tomas W. Fuller(6)............................................ 200,843 1.1 *
Neil Tauber(7)................................................ 51,245 * *
Dawn R. Olsen................................................. 19,995 * *
John M. Baumer(8)............................................. 14,336,112 78.7 44.5
John G. Danhakl(8)............................................ 14,336,112 78.7 44.5
Melina Higgins................................................ 0 * *
Peter J. Nolan(8)............................................. 14,336,112 78.7 44.5
All directors and executive officers as a group (9 Persons)(9) 16,816,574 92.3% 52.2%

--------
* Indicates less than one percent

(1)Green Equity Investors III, L.P. and VCA Co-Investment Fund I, LLC are
managed by Leonard Green & Partners, L.P.
(2)The address of Leonard Green & Partners, L.P. is 11111 Santa Monica
Boulevard, Suite 2000, Los Angeles, California 90025.

(3)Includes: (a) 833,220 shares of common stock held by VCA Co-Investment Fund
II, LLC, (b) 833,220 shares of common stock held by VCA Co-Investment Fund
III, LLC, (c) 462,900 shares of common stock held by VCA Co-Investment Fund
IV, LLC, (d) 462,900 shares of common stock held by VCA Co-Investment Fund
V, LLC, (e) 185,175 shares of common stock held by VCA Co-Investment Fund
VI, LLC, (f) 462,900 shares of common stock held by VCA Co-Investment Fund
VII, LLC, and (g) 23,145 shares of common stock held by VCA Co-Investment
Fund VIII, LLC. Each VCA Co-Investment Fund LLC is managed by Leonard Green
& Partners, L.P.
(4)Includes: (a) 250,000 shares held by family trusts established for the
benefit of Mr. Antin's family; (b) 60,000 shares held by Mr. Robert Antin's
minor children; and (c) 625 shares of common stock reserved for issuance
upon exercise of stock options that are or will be exercisable on or before
November 29, 2001.
(5)Includes 1,369 shares of common stock reserved for issuance upon exercise of
stock options which are or will become exercisable on or before November 29,
2001.
(6)Includes 833 shares of common stock reserved for issuance upon exercise of
stock options which are or will become exercisable on or before November 29,
2001.
(7)Includes 1,250 shares of common stock reserved for issuance upon exercise of
stock options which are or will become exercisable on or before November 29,
2001.
(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)Includes: (a) 2,476,385 shares of common stock; and (b) 7,144 shares of
common stock reserved for issuance upon exercise of options and are or will
be exercisable on or before November 29, 2001.

RELATED PARTY TRANSACTIONS

Recapitalization Transaction

On September 20, 2000, we completed a recapitalization with an entity
controlled by Leonard Green & Partners. In the recapitalization, each
outstanding share of our common stock, other than shares retained by management
and employees, was canceled and converted into the right to receive $1.00. The
recapitalization was financed by:

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

. our issuance of an aggregate of $20.0 million of senior subordinated
notes;

. borrowings of $250.0 million under our $300.0 million credit facility;
and

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

Upon the completion of the recapitalization, Robert L. Antin, Arthur J.
Antin, Neil Tauber, Tom Fuller, other stockholders and a group of investors led
by Leonard Green & Partners acquired 17,524,337 shares of common stock at a
purchase price of $1.00 per share. Goldman Sachs Credit Partners L.P. is a
lender under our credit facility. GS Mezzanine Partners II, L.P. and GS
Mezzanine II Offshore, L.P., affiliates of Goldman, Sachs & Co., purchased
portions of our securities for an aggregate purchase price of $85.0 million.
Melina Higgins, one of our directors, is the Chief Financial Officer of GS
Mezzanine Partners II, L.P. and GS Mezzanine II Offshore, L.P. The following
partners of Leonard Green & Partners also serve on our board of directors: John
M. Baumer, John G. Danhakl and Peter J. Nolan.

Stockholders Agreement

On September 20, 2000, we entered into a stockholders agreement with each of
our stockholders.

Under the stockholders agreement, each party to the stockholders agreement
has call rights with respect to shares of common stock and stock options held
by members of management in the event of termination of employment for any
reason. Upon the closing of an initial public offering of our shares of common
stock,

. Call rights will expire 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 the closing date as though the initial public offering had
occurred on October 1, 2001;

. Call rights will expire 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 six months following the closing date, and on the
remaining one-half one year following the closing date, in each event as
though the initial public offering had occurred on October 1, 2001; and

. Call rights will expire on one-half of the other employee's shares that
initially were subject to the stockholders agreement. Of the remaining
shares, call rights will expire ratably over a 12-month period
commencing seven months following the closing date as though the initial
public offering had occurred on October 1, 2001.

The stockholders agreement also provided for the discharge of $579,514 and
$108,486 of indebtedness owing to us from Robert L. Antin and Arthur J. Antin,
respectively, including interest accrued thereon. This indebtedness was
incurred on January 22, 1997 in the form of promissory notes with principal
amounts of $459,399 for Mr. Robert L. Antin and $86,000 for Mr. Arthur J. Antin
as payment for the exercise price of stock options. Each note was subject to
interest at the midterm applicable federal rate. This indebtedness was forgiven
January 3, 2001.

Management Services Agreement

On September 20, 2000, we entered into a 10-year management services
agreement with Leonard Green & Partners. The agreement provides that Leonard
Green & Partners will provide general investment-banking services, management,
consulting and financial planning services and transaction-related financial
advisory and investment banking services to us and our subsidiaries. We paid a
one-time structuring fee of $7.5 million to Leonard Green & Partners in
September 2000 under the agreement. Leonard Green & Partners receives an annual
fee of $2.5 million as compensation for the general services and normal and
customary fees for transaction-related services. If the group of investors led
by Leonard Green & Partners invests any additional capital pursuant to the
agreement, this annual fee will increase by 1.6% of the amount of the
additional investment. We also agreed to indemnify Leonard Green & Partners and
the other investors for any losses and liabilities arising out of the
agreement. In 2000 and the nine months ended September 30, 2001, we paid
management fees in an aggregate amount of $620,000 and $1.9 million. Upon the
closing of this offering, the parties have agreed to terminate the management
services agreement. In connection with the termination, we will pay Leonard
Green & Partners $8.0 million.

Non-Competition Agreements

On September 20, 2000, Robert L. Antin, Arthur J. Antin, Neil Tauber and
Tomas W. Fuller each entered into non-competition agreements with us for a term
of three years. Generally, the non-competition agreements restrict these
individuals from:

. owning, operating, managing or controlling or in any way being connected
with a veterinary medical or laboratory practice within certain
geographical areas;

. disclosing our confidential information; and

. soliciting or diverting away our customers and employees.

In consideration for the execution of the non-competition agreements, we
paid approximately $6.2 million, $4.0 million, $2.7 million and $2.5 million to
Robert L. Antin, Arthur J. Antin, Neil Tauber and Tomas W. Fuller, or their
affiliates, respectively. Upon the closing of this offering, the parties have
agreed to terminate these non-competition agreements.

Investment in Zoasis

During the year ended December 31, 2000, we made a $5.0 million investment
in Zoasis.com, Inc., an internet start-up company, majority owned by Robert L.
Antin, our Chief Executive Officer and Chairman of the Board. During the nine
months ended September 30, 2001, we incurred $460,000 of marketing expense for
services provided by Zoasis. During the year ended December 31, 2000, we
incurred $81,000 of marketing expense for services provided by Zoasis. In
December 2000, the Company determined that the value of this investment was
impaired and, as a result, recognized a loss of $5.0 million on the write-down
of its investment in Zoasis.

Investment in Vet's Choice and the Wisdom Group, L.P.

In September 2000, we sold our entire equity interest in Vet's Choice, which
had zero cost basis, to Heinz Pet Products. We received $500,000 in the sale.
At the time of the sale, one of our directors, Mr. John A. Heil, served as
president of an affiliate of Heinz Pet Products. In connection with the sale,
Heinz Pet Products also paid us $1.0 million which was transferred to the
Wisdom Group, L.P. and used to redeem the limited partnership interests in the
Wisdom Group, L.P. Members of our executive management had a 30.5% ownership
interest in the Wisdom Group, L.P. as limited partners and a subsidiary of ours
owned a 1% ownership interest as the general partner. The Wisdom Group, L.P.
was dissolved in November 2000 upon redemption of all the partnership
interests. The nature of the business of the Wisdom Group, L.P. was to provide
consulting services to Vet's Choice with respect to the development, marketing
and sale of premium pet food products.

We believe, based on our reasonable judgement, but without further
investigation, that the terms of each of the foregoing transactions or
arrangements between us on one hand and our affiliates, officers, directors or
stockholders which were parties to the transactions on the other hand, were, on
an overall basis, at least as favorable to us as could then have been obtained
from unrelated parties.

Receipt of Proceeds from this Offering and the Concurrent Note Offering

Affiliates of Leonard Green & Partners own 2,826,000 shares of our 14%
series A redeemable preferred stock and 2,800,000 shares of our 12% series B
redeemable preferred stock. Affiliates of Goldman, Sachs & Co. own 122,123
shares of our 14% series A redeemable preferred stock and 121,000 shares of our
12% series B redeemable preferred stock and, as of September 30, 2001, held
approximately $82.5 million aggregate principal amount of our senior notes and
approximately $14.2 million aggregate principal amount of our senior
subordinated notes. An affiliate of Goldman, Sachs & Co. is the syndication
agent and a lender under our credit facility. Upon consummation of this
offering and the concurrent note offering, we intend to repay $104.2 million of
borrowings under our credit facility, $47.8 million aggregate principal amount
of the senior notes and redeem all of the shares of preferred stock. See "Use
of Proceeds."

DESCRIPTION OF CAPITAL STOCK

This prospectus contains a summary of the material terms of our capital
stock. The following description of our capital stock is subject to, and
qualified in its entirety by, our certificate of incorporation and bylaws,
which are included as exhibits to the registration statement of which this
prospectus forms a part, and by the provisions of applicable Delaware law.

Following this offering, our certificate of incorporation will provide that
our authorized capital stock will consist of 75,000,000 shares of common stock,
par value $.001 per share, and 5,000,000 shares of preferred stock, par value
$.001 per share. As of the date of this prospectus, our authorized capital
stock consists of 24,000,000 shares of common stock, of which 18,216,212 shares
are outstanding and held of record by approximately 70 recordholders and
6,000,000 shares of preferred stock, of which 5,969,230 shares are outstanding.

Common Stock

Voting Rights. The holders of common stock are entitled to one vote per
share on all matters submitted to a vote of our stockholders. The common stock
does not have cumulative voting rights.

Dividends. Subject to preferences that may be applicable to any preferred
stock outstanding at the time, the holders of outstanding shares of common
stock are entitled to receive ratably any dividends out of assets legally
available therefor as our board of directors may from time to time determine.
For a description of our dividend policy, please refer to the information in
this prospectus under the heading "Dividend Policy."

Liquidation and Dissolution. Upon our liquidation, dissolution or winding
up, holders of our common stock are entitled to share ratably in all assets
remaining after payment of all liabilities and the liquidation preference of
any then outstanding shares of preferred stock.

No Preemptive or Similar Rights. Holders of our common stock have no right
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the common stock.

Holders of shares of the common stock are not required to make additional
capital contributions. All outstanding shares of common stock are fully paid
and nonassessable.

Preferred Stock

As of September 30, 2001, we have outstanding the following shares of
preferred stock:

. 2,998,408 shares of 14% series A redeemable preferred stock, having an
aggregate liquidation preference of $86.3 million; and

. 2,970,822 shares of 12% series B redeemable preferred stock, having an
aggregate liquidation preference of $83.9 million.

Upon the consummation of this offering and the concurrent note offering, we
intend to redeem all of our outstanding shares of series A and series B
preferred stock.

Following this offering, our certificate of incorporation will provide that
our board of directors will have the authority, without further action by the
stockholders, to issue up to 5.0 million shares of preferred stock in one or
more series. Our board of directors will be able to fix the rights,
preferences, privileges and restrictions of the preferred stock, including
dividend rights, conversion rights, voting rights, terms of redemption,
liquidation

preferences, sinking fund terms and the number of shares constituting any
series or the designation of this series. The issuance of preferred stock could
adversely affect the voting power of holders of common stock, and the
likelihood that holders of preferred stock will receive dividend payments and
payments upon liquidation may have the effect of delaying, deferring or
preventing a change in control of us, which could depress the market price of
our common stock.

Warrants

As of September 30, 2001, warrants to purchase 1,149,990 shares of common
stock were outstanding. The warrants are exercisable at any time prior to the
closing of this offering with an exercise price of $0.0007 per share. Warrants
not exercised prior to the closing of this offering will expire immediately
upon the closing of this offering.

Registration Rights

Upon completion of this offering, under our stockholders agreement, the
holders of 18,216,212 shares of common stock and warrants to purchase 1,149,990
shares of common stock, or their transferees, will be entitled to register
these shares under the Securities Act.

Under the stockholders agreement, holders may demand that we file a
registration statement under the Securities Act covering some or all of the
holder's registrable securities. The stockholder agreement limits the number of
demand registrations that we are required to make on behalf of the holders. In
an underwritten offering, the managing underwriter has the right, subject to
specified conditions, to limit the number of registrable securities.

In addition, holders have "piggyback" registration rights. If we propose to
register any of our equity securities under the Securities Act other than
pursuant to demand registration right noted above or specified excluded
registrations, holders may require us to include all or a portion of their
registrable securities in the registration and in any related underwriting. In
an underwritten offering, the managing underwriter, if any, has the right,
subject to specified conditions, to limit the number of registrable securities.

In general, we will bear all fees, costs and expenses of registrations,
other than underwriting discounts and commissions.

Anti-Takeover Provisions of Delaware Law

We are subject to Section 203 of the Delaware General Corporation Law.
Section 203 provides that specified persons who, together with affiliates and
associates, own, or within three years did own, 15% or more of the outstanding
voting stock of a corporation cannot engage in specified business combinations
with the corporation for a period of three years after the date on which the
person became an interested stockholder, unless:

. 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;

. 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

. 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.

Section 203 defines "business combination" to include:

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

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

. 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.

Anti-Takeover Provisions of Our Charter

On the closing of this offering, our bylaws will provide that candidates for
director may be nominated only by the board of directors or by a stockholder
who gives written notice to us no later than 90 days prior nor earlier than 120
days prior to the first anniversary of the last annual meeting of stockholders.
The board of directors may consist of one or more members to be determined from
time to time by the board of directors. The board of directors currently
consists of six members divided into three different classes. As a result, only
one class of directors will be elected at each annual meeting of our
stockholders, with the other classes continuing for the remainder of their
respective terms. Between stockholder meetings, the board of directors may
appoint new directors to fill vacancies or newly created directorships.

On the closing of this offering, our certificate of incorporation will
require that any action required or permitted to be taken by our stockholders
must be effected at a duly called annual or special meeting of stockholders and
may not be effected by a consent in writing. Our certificate of incorporation
also will provide that the authorized number of directors may be changed only
by resolution of the board of directors. Delaware law and these charter
provisions may have the effect of deterring hostile takeovers or delaying
changes in control of our management, which could depress the market price of
our common stock.

Indemnification of Directors and Officers and Limitation of Liability

Our certificate of incorporation and bylaws allow us to eliminate the
personal liability of our directors and to indemnify directors and officers to
the fullest extent permitted by the Delaware General Corporation law.

We also intend to enter into indemnity agreements with each of our directors
and officers, which provide for mandatory indemnity of an officer or director
made party to a "proceeding" by reason of the fact that he or she is or was a
director of ours, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to our best interests. These
agreements also obligate us to advance expenses to a director provided that he
or she will repay advanced expenses in the event he or she is not entitled to
indemnification. Directors are also entitled to partial indemnification, and
indemnification for expenses incurred as a result of acting at our request as a
director, officer or agent of an employee benefit plan or other partnership,
corporation, joint venture, trust or other enterprise owned or controlled by us.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the above statutory provisions or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission that indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is U.S. Stock Transfer
Corporation.

Listing

We have applied to have our common stock approved for quotation on The
Nasdaq Stock Market's National Market under the symbol "WOOF."

SHARES ELIGIBLE FOR FUTURE SALE

Prior to our September 2000 recapitalization, our common stock was listed on
The Nasdaq Stock Market's National Market. In connection with the
recapitalization, we terminated our listing, and there is currently no public
market for our common stock. We can make no prediction as to the effect, if
any, that market sales of shares of common stock or the availability of shares
of common stock for sale will have on the market price prevailing time to time.
The sale of substantial amounts of common stock in the public market could
adversely affect the prevailing market price of the common stock and our
ability to raise equity capital in the future.

Sale of Restricted Securities

Upon completion of this offering, we will have outstanding an aggregate of
32,216,212 shares of common stock, assuming no exercise of the underwriters'
over-allotment option and no exercise of outstanding options and warrants to
purchase common stock. Of these shares, all of the shares sold in this offering
will be freely tradable without restriction or further registration under the
Securities Act, unless these shares are purchased by affiliates. The remaining
18,216,212 shares of common stock held by existing stockholders are restricted
securities. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration described
below under Rules 144, 144(k) or 701 under the Securities Act.

As a result of the contractual restrictions described below and the
provisions of Rules 144, 144(k) and 701, the restricted shares will be
available for sale in the public market as follows:

. 14,000,000 shares will be eligible for immediate sale on the date of
this prospectus;

. 18,216,212 shares will be eligible for sale upon the expiration of the
lock-up agreements, described below, 180 days after the date of this
prospectus; and

. 28,538 shares will be eligible for sale upon the exercise of vested
options or warrants 180 days after the date of this prospectus.

If the outstanding warrants to purchase shares of common stock are
exercised, there will be an additional 1,149,990 shares of common stock
eligible for sale at times beginning more than 180 days after the date of this
prospectus. If not exercised, these warrants will terminate on the closing of
this offering.

Lock-Up Agreements

Our directors and officers and all of our security holders are subject to
lock-up agreements under which they agreed not to sell, dispose of, loan,
pledge or grant any rights to any shares of common stock or any securities
convertible into or exchangeable or exercisable for any shares of common stock
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus.

Credit Suisse First Boston Corporation may choose to release some of these
shares from these restrictions before the expiration of the 180-day period at
any time without notice. Credit Suisse First Boston Corporation has no current
intention to release any shares subject to lock-up agreements. In considering a
request to release any shares, Credit Suisse First Boston Corporation would
consider, among other factors, the particular circumstances surrounding the
request, including, but not limited to, the number of shares requested to be
released, the possible impact on the market for our common stock and the
reasons for the request.

Rule 144

In general, under Rule 144 as currently in effect, commencing 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year, including a person who is

an affiliate, is entitled to sell within any three-month period a number of
shares that does not exceed the greater of:

. 1% of the number of shares of our common stock then outstanding; or

. the average weekly trading volume of our common stock on The Nasdaq
Stock Market's National Market during the four calendar weeks preceding
the filing of a notice on Form 144 with respect to the sale, subject to
restrictions specified in Rule 144.

Sales under Rule 144 are also subject to manner of sale provisions and
notice requirements and to the availability of current public information about
us.

Under Rule 144(k), a person who has not been one of our affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
these shares without regard to the volume, manner of sale or other limitations
contained in Rule 144. These shares are subject to the lock-up agreements and
will be available for sale in the open market beginning 180 days after the date
of this prospectus.

Rule 701

In general, under Rule 701 of the Securities Act, any of our employees,
consultants or advisors who purchase shares from us in connection with a
compensatory stock plan or contract is eligible to resell the shares 90 days
after the effective date of this offering in reliance on Rule 144, but without
compliance with various restrictions, including the holding period, contained
in Rule 144 so long as they are not an affiliate of ours. If they are an
affiliate, they are eligible to resell the shares 90 days after the effective
date of this offering in reliance on Rule 144 but without compliance with the
holding period contained in Rule 144. These shares are subject to the lock-up
agreements and will be available for sale in the open market beginning 180 days
after the date of this prospectus.

Stock Options

Immediately after this offering, we intend to file a registration statement
under the Securities Act covering the shares of common stock reserved for
issuance under our 1996 Stock Incentive Plan and our 2001 Stock Incentive Plan,
including 631,800 shares of common stock underlying outstanding options. These
registration statements are expected to be filed and become effective as soon
as practicable after the closing of this offering. Accordingly, shares
registered under the registration statements will, subject to any vesting
provisions and Rule 144 volume limitations applicable to affiliates, be
available for sale in the open market beginning 180 days after the date of this
prospectus.

Registration Rights

Some of our existing stockholders are parties to a stockholders agreement
with us that provides for registration rights to cause us to register under the
Securities Act all or part of the shares of our common stock. Registration of
the sale of these shares of our common stock would permit their sale into the
market immediately. If our existing stockholders sell a large number of shares,
the market price of our common stock could decline. These holders of
registration rights are subject to lock-up periods of 180 days following the
date of this prospectus. Please refer to the information in the prospectus
under the heading "Description of Capital Stock-- Registration Rights" for a
more detailed discussion of these registration rights.

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2001, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Banc of America Securities LLC, Jefferies & Company, Inc. and Wells Fargo Van
Kasper, LLC are acting as representatives, the following respective numbers of
shares of common stock:

Number
Underwriter of Shares
----------- ----------

Credit Suisse First Boston Corporation
Goldman, Sachs & Co...................
Banc of America Securities LLC........
Jefferies & Company, Inc..............
Wells Fargo Van Kasper, LLC...........
----------
Total.............................. 14,000,000
==========

The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering may be terminated.

We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to 2,100,000 additional shares at the initial public offering
price less the underwriting discounts and commissions. The option may be
exercised only to cover any over-allotments of common stock.

The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the
representatives may change the public offering price and concession and
discount to broker/dealers.

The following table summarizes the compensation and estimated expenses we
will pay:

Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------

Underwriting Discounts and Commissions
paid by us . . . . . . . ........... $ $ $ $
Expenses payable by us . . . . . . . . $ $ $ $

The underwriters do not intend to confirm sales to any accounts over which
they exercise discretionary authority.

The offering is being conducted in accordance with the applicable provisions
of Rule 2720 of the National Association of Securities Dealers, Inc. Conduct
Rules because affiliates of Goldman, Sachs & Co., one of the underwriters, own
more than 10% of our subordinated debt. Rule 2720 requires that the initial
public offering price of the shares of common stock not be higher than that
recommended by a "qualified independent underwriter" meeting specified
standards. Accordingly, Credit Suisse First Boston Corporation is assuming the

responsibilities of acting as the qualified independent underwriter in pricing
the offering and conducting the due diligence. The initial public offering
price of the shares of common stock will be no higher than the price
recommended by Credit Suisse First Boston Corporation.

We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act relating
to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus.

Our officers and directors and the holders of all of our common stock have
agreed that they will not offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, any shares of common stock or securities
convertible into or exchangeable or exercisable for any shares of our common
stock, enter into a transaction that would have the same effect, or enter into
any swap, hedge or other arrangement that transfers, in whole or in part, any
of the economic consequences of ownership of our common stock, whether any of
these transactions are to be settled by delivery of our common stock or other
securities, in cash or otherwise, or publicly disclose the intention to make
any offer, sale, pledge or disposition, or to enter into any transaction, swap,
hedge or other arrangement, without, in each case, the prior written consent of
Credit Suisse First Boston Corporation for a period of 180 days after the date
of this prospectus.

The underwriters have reserved for sale at the initial public offering price
up to 725,000 shares of the common stock for employees and other persons
associated with us who express an interest in purchasing common stock in the
offering. No shares have been reserved by the underwriters for purchase by our
directors. The number of shares available for sale to the general public in the
offering will be reduced to the extent these persons purchase the reserved
shares. Any reserved shares not so purchased will be offered by the
underwriters to the general public on the same terms as the other shares. Any
reserved shares purchased by these persons will not be subject to the lock-up
described in the previous paragraph but will be restricted to the extent
required by the Conduct Rules of the National Association of Securities
Dealers, Inc. from sale, transfer, assignment, pledge or hypothecation for a
period of three months following the date of this prospectus.

We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments that the underwriters may be required
to make in that respect.

As of September 30, 2001, GS Mezzanine Partners II, L.P. and GS Mezzanine II
Offshore, L.P., affiliates of Goldman, Sachs & Co., held an aggregate of
122,123 shares of Series A preferred stock and 121,000 shares of Series B
junior preferred stock; an aggregate principal amount of $82.5 million of our
senior notes; and an aggregate principal amount of $14.2 million of our senior
subordinated notes, and warrants to purchase 814,575 shares of our common stock
at an exercise price of $0.0007 per share.

Melina Higgins, one of our directors, is the Chief Financial Officer of GS
Mezzanine Partners II, L.P. and GS Mezzanine II Offshore, L.P.

Some of the representatives or their affiliates have provided investment
banking and advisory services for us from time to time for which they have
received customary fees and reimbursements of expenses and may in the future
provide additional services. In connection with our recapitalization, an
affiliate of Goldman, Sachs & Co. acted as sole lead arranger for our $300.0
million credit facility and received customary fees in connection therewith.
The affiliate currently acts as the syndication agent and as a lender
thereunder. Goldman, Sachs & Co. is also acting as the initial purchaser in our
concurrent note offering. In addition, Credit Suisse First Boston Corporation
and Jefferies and Company, Inc. provided advisory services in connection with
our recapitalization and each received customary fees for their services.

Prior to this offering, there has been no public trading market for the
common stock. The initial public offering price for the common stock will be
determined by negotiation between us and the representatives. The principal
factors to be considered in determining the initial public offering price
include:

. the information included in this prospectus and otherwise available to
the representatives;

. the history and the prospects of the industry in which we compete;

. the ability of our management;

. our past and present operations;

. our prospects for future earnings;

. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies;

. market conditions for initial public offerings; and

. the general condition of the securities markets at the time of this
offering.

We cannot assure you that the initial public offering price will correspond
to the price at which our common stock will trade in the public market
subsequent to the offering or that an active trading market for our common
stock will develop and continue after the offering.

In connection with the offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

. Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any short position by either
exercising their over-allotment option and/or purchasing shares in the
open market.

. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares
through the over-allotment option. If the underwriters sell more shares
than could be covered by the over-allotment option, a naked short
position, the position can only be closed out by buying shares in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there could be downward pressure on the
price of the shares in the open market after pricing that could
adversely affect investors who purchase in the offering.

. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of our
common stock or preventing or retarding a decline in the market price of our
common stock. As a result the price of our common stock may be higher than the
price that might

otherwise exist in the open market. These transactions may be effected on The
Nasdaq Stock Market's National Market or otherwise and, if commenced, may be
discontinued at any time.

A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make internet distributions on the
same basis as other allocations. Credit Suisse First Boston Corporation may
effect an on-line distribution through its affiliate, CSFBdirect Inc., an
on-line broker/dealer, as a selling group member.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are made. Any resale of the common stock in Canada must
be made under applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the common stock.

Representations of Purchasers

By purchasing common stock in Canada and accepting a purchase confirmation a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that:

. the purchaser is entitled under applicable provincial securities laws to
purchase the common stock without the benefit of a prospectus qualified
under those securities laws,

. where required by law, that the purchaser is purchasing as principal and
not as agent, and

. the purchaser has reviewed the text above under "Resale Restrictions".

Rights of Action (Ontario Purchasers)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and about the eligibility of the common
stock for investment by the purchaser under relevant Canadian legislation.

Relationship Between Us and Certain Underwriters

We are currently in compliance with the terms of our senior notes and our
senior subordinated notes. GS Mezzanine Partners II, L.P. and GS Mezzanine II
Offshore, L.P. had no involvement in determining whether or not to distribute
the shares of common stock in this offering or the terms of this offering. The
only benefits that Goldman, Sachs & Co. will receive from this offering are
described in this prospectus.

U.S. TAX CONSEQUENCES TO NON-U.S. HOLDERS

Overview

The following general discussion summarizes the material U.S. federal income
and estate tax aspects of the acquisition, ownership and disposition of our
common stock applicable to beneficial owners that are non-U.S. holders
purchasing our common stock pursuant to this offering and that will hold our
common stock as a capital asset (generally, property held for investment). In
general, a "non-U.S. holder" is a beneficial owner of our common stock who is
an individual or entity other than:

. a citizen or resident of the U.S.;

. 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;

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

. 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
entities described above have authority to control all substantial
decisions of the trust; or

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

This discussion is based upon the Internal Revenue Code of 1986, as amended,
U.S. Treasury regulations, Internal Revenue Service rulings and pronouncements,
judicial decisions and other applicable authorities, all as now in effect, all
of which are subject to change (possibly on a retroactive basis). The
discussion does not address aspects of U.S. federal taxation other than income
and estate taxation and does not address all aspects of U.S. federal income and
estate taxation, that may be relevant to non-U.S. holders that may be subject
to special treatment under such law, such as insurance companies, tax-exempt
organizations, financial institutions, dealers in securities or currencies,
partnerships, holders whose "functional currency" is not the U.S. dollar,
holders of securities held as part of a straddle, hedge or conversion
transaction, U.S. expatriates, controlled foreign corporations, passive foreign
investment companies or foreign personal holding companies. The discussion also
does not address U.S. state or local or foreign tax consequences. We have not
sought, and will not seek, any ruling from the IRS with respect to the tax
consequences discussed in this prospectus, and there can be no assurance that
the IRS will not take a position contrary to the tax consequences discussed
below or that any positions taken by the IRS would not be sustained.

INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK ARE URGED TO CONSULT
THEIR TAX ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS
TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER
THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL OR
FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Dividends

Subject to the discussion below under "--Income or Gains Effectively
Connected With a U.S. Trade or Business," if any dividend is paid on our common
stock, the gross amount of such dividends paid to a non-U.S. holder generally
will be subject to withholding of U.S. federal income tax at a 30 percent rate,
or a lower rate prescribed by an applicable tax treaty.

A non-U.S. holder who wishes to claim the benefit of an applicable treaty
rate (and avoid backup withholding as discussed below) will be required to
satisfy applicable certification and other requirements. If a non-U.S. holder
holds our common stock through a foreign partnership or a foreign intermediary,
the foreign partnership or foreign intermediary will also be required to comply
with certain certification requirements. A non-U.S. holder who is eligible for
a reduced rate of U.S. withholding tax under an income tax treaty may obtain a
refund of any excess amounts withheld by filing an appropriate claim for refund
with the Internal Revenue Service.

Disposition of Common Stock

A non-U.S. holder generally will not be subject to U.S. federal income tax
(including by way of withholding) on gains recognized on the sale, exchange or
other disposition of our common stock unless (1) such non-U.S. holder is an
individual who is present in the U.S. for 183 days or more in the taxable year
of the sale, exchange or other disposition, and other required conditions are
met; (2) such gain is effectively connected with the conduct by the non-U.S.
holder of a trade or business in the U.S. and, if an applicable income tax
treaty requires, is attributable to a U.S. permanent establishment maintained
by the non-U.S. holder.

Unless an applicable treaty provides otherwise, a non-U.S. holder described
in clause (1) above will be subject to a flat 30% U.S. federal income tax on
the gain realized on the sale, which may be offset by U.S. source capital
losses. Gain described in clause (2) above will be subject to the U.S. federal
income tax in the manner discussed below under "--Income or Gains Effectively
Connected With A U.S. Trade or Business."

Income or Gains Effectively Connected With a U.S. Trade or Business

If a non-U.S. holder is engaged in a trade or business in the U.S. and if
dividends on our common stock or gain realized on the sale, exchange or other
disposition of our common stock is effectively connected with the non-U.S.
holder's conduct of such trade or business (and, if an applicable tax treaty
requires, is attributable to a U.S. permanent establishment maintained by the
non-U.S. holder in the U.S.), the non-U.S. holder, although exempt from
withholding tax (provided that the certification requirements discussed in the
next sentence are met), will generally be subject to U.S. federal income tax on
such dividends or gain on a net income basis in the same manner as if it were a
U.S. holder. The non-U.S. holder will be required, under currently effective
Treasury Regulations, to provide a properly executed Internal Revenue Service
form W-8ECI or successor form in order to claim an exemption from U.S.
withholding tax. In addition, if such non-U.S. holder is a foreign corporation,
it may be subject to a branch profits tax equal to 30 percent (or such lower
rate provided by an applicable U.S. income tax treaty) of a portion of its
effectively connected earnings and profits for the taxable year.

Estate Tax

Common stock owned, or treated as owned, by an individual non-U.S. holder at
the time of death will be includable in the individual's gross estate for U.S.
federal estate tax purposes and may be subject to U.S. federal estate tax,
unless an applicable treaty provides otherwise.

Backup Withholding and Information Reporting

A non-U.S. holder may have to comply with specific certification procedures
to establish that the holder is not a U.S. person in order to avoid backup
withholding tax requirements with respect to our payments of dividends on the
common stock. We must report annually to the Internal Revenue Service and to
each non-U.S. holder the amount of any dividends paid to such holder and the
tax withheld with respect to such dividends, regardless of whether any tax was
actually withheld. Copies of these information returns may also be made
available under the provisions of a specific treaty or agreement to the tax
authorities of a country in which the non-U.S. holder resides.

Information reporting and backup withholding will generally not apply to
payments of proceeds of a sale or other taxable disposition of our common stock
effected outside the U.S. by a foreign office of a foreign broker. Both
information reporting and backup withholding will apply, however, to payments
of proceeds of a sale or other taxable disposition of our common stock effected
outside the U.S. by a foreign office of a U.S. broker or a foreign broker with
certain types of relationships to the U.S., unless the broker has documentary
evidence in its records that the holder is a non-U.S. holder and certain
conditions are met, or the holder otherwise establishes an exemption. Payment
of the proceeds from a sale, exchange or other disposition by a non-U.S. holder
made by or through the U.S. office of a broker is generally subject to
information reporting and backup withholding unless the non-U.S. holder
certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption from information reporting and backup withholding.

Any amounts withheld under the backup withholding rules from a payment to a
non-U.S. holder of common stock will be allowed as a refund or credit against
such holder's U.S. federal income tax provided that the required information is
furnished to the Internal Revenue Service in a timely manner.

LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed
upon for us by our legal counsel, Akin, Gump, Strauss, Hauer & Feld, LLP, Los
Angeles, California. Various legal matters in connection with this offering
will be passed on for the underwriters by Skadden, Arps, Slate, Meagher & Flom,
LLP, Los Angeles, California.

EXPERTS

The audited financial statements and schedules included in this prospectus
and elsewhere in the registration statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in giving said reports.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the Commission
regarding this offering. The registration statement of which this prospectus is
a part contains additional relevant information about us and our capital stock
and you should refer to the registration statement and its exhibits to read
that information. References in this prospectus to any of our contracts or
other documents are not necessarily complete, and you should refer to the
exhibits attached to the registration statement for copies of the actual
contract or document.

You may read and copy the registration statement, the related exhibits and
the other material we file with the Commission and the Commission's Public
Reference Room at 450 Fifth Street, N.W., Washington D.C. 20549.

You can also request copies of those documents, upon payment of a
duplicating fee, by writing to the Commission. Please call the Commission at
1-800-SEC-0330 for further information on the operation of the public reference
rooms.

The Commission also maintains an Internet site that contains reports, proxy
and information statements and other information regarding issuers that file
with the Commission. The site's address is www.sec.gov. You may also request a
copy of these filing, at no cost, by writing or telephoning us as follows:
12401 West Olympic Boulevard, Los Angeles, California 90064-1022, Attention:
Chief Financial Officer, or 310-571-6500.

As a result of this offering, we will become subject to the information and
reporting requirements of the Securities Exchange Act and, in accordance with
those requirements, will file periodic reports, proxy statements and other
information with the SEC. We intend to furnish our stockholders with annual
reports containing financial statements audited by our independent accountants.

[LOGO] Veterinary Centers of America
VCA ANTECH, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

-----------------

Page

----
Report of Independent Public Accountants....................................................... F-2
Consolidated Balance Sheets as of December 31, 2000 and 1999................................... F-3
Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998..... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999 and
1998......................................................................................... F-5
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2000, 1999
and 1998..................................................................................... F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998..... F-7
Notes to Consolidated Financial Statements--December 31, 2000.................................. F-9
Condensed Consolidated Balance Sheets as of September 30, 2001 and
December 31, 2000 (unaudited)................................................................. F-32
Condensed Consolidated Statements of Operations for the Nine Months Ended
September 30, 2001 and 2000 (unaudited)....................................................... F-33
Consolidated Statement of Stockholders' Equity for the Nine Months Ended September 30, 2001.... F-34
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2001 and 2000 (unaudited)....................................................... F-35
Notes to Condensed Consolidated Financial Statements--September 30, 2001 (unaudited)........... F-36

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of VCA Antech, Inc.:

We have audited the accompanying consolidated balance sheets of VCA Antech,
Inc. (a Delaware corporation) and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of operations, stockholders'
equity, comprehensive income, and cash flows for each of the three years in the
period ended December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of VCA Antech, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000, in conformity with accounting principles generally accepted
in the United States.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Los Angeles, California
March 28, 2001

F-2

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2000 and 1999
(In thousands, except par value)

2000 1999
--------- --------

ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 10,519 $ 10,620
Marketable securities.......................................................... -- 5,313
Trade accounts receivable, less allowance for uncollectible accounts of
$4,110 and $7,162 at December 31, 2000 and 1999, respectively................ 15,450 15,276
Inventory...................................................................... 5,773 5,455
Prepaid expense and other...................................................... 3,424 4,544
Deferred income taxes.......................................................... 4,655 4,213
Prepaid income taxes........................................................... 9,402 3,986
--------- --------
Total current assets....................................................... 49,223 49,407
Property and equipment, net....................................................... 86,972 70,336
Other Assets:
Goodwill, net.................................................................. 310,185 291,286
Covenants not to compete, net.................................................. 19,549 4,450
Notes receivable, net.......................................................... 2,178 1,891
Investment in VPI.............................................................. -- 5,000
Deferred financing costs, net.................................................. 13,373 1,515
Other.......................................................................... 1,590 2,615
--------- --------
$ 483,070 $426,500
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long-term obligations....................................... $ 5,756 $ 21,901
Accounts payable............................................................... 8,393 8,715
Accrued payroll and related liabilities........................................ 8,335 7,258
Accrued recapitalization costs................................................. 3,459 --
Other accrued liabilities...................................................... 13,228 7,896
--------- --------
Total current liabilities.................................................. 39,171 45,770
Long-term obligations, less current portion....................................... 356,993 139,634
Deferred income taxes............................................................. 8,484 6,655
Other liabilities................................................................. 1,500 --
Minority interest................................................................. 3,610 3,212
Series A Redeemable Preferred Stock, at redemption value.......................... 77,875 --
Series B Redeemable Preferred Stock, at redemption value.......................... 76,747 --
Stockholders' Equity (Deficit):
Common stock, par value $.01 as of December 31, 2000, 24,000 shares authorized
as of December 31, 2000, 17,524 and 325,620 outstanding as of December 31,
2000 and 1999, respectively.................................................. 175 3,256
Additional paid-in capital..................................................... 19,053 210,492
Retained earnings (accumulated deficit)........................................ (100,020) 25,737
Accumulated comprehensive loss--unrealized loss on investment.................. -- (361)
Notes receivable from stockholders............................................. (518) (654)
Less: cost of common stock held in treasury.................................... -- (7,241)
--------- --------
Total stockholders' equity (deficit)....................................... (81,310) 231,229
--------- --------
$ 483,070 $426,500
========= ========

The accompanying notes are an integral part of these consolidated balance
sheets.

F-3

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2000, 1999 and 1998
(In thousands, except per share amounts)

2000 1999 1998

-------- -------- --------
Revenue.................................................................... $354,687 $320,560 $281,039
Direct costs (excludes operating depreciation of $6,872, $6,853, and $4,698
for the years ended December 31, 2000, 1999 and 1998, respectively)...... 254,787 232,493 209,380
-------- -------- --------
99,900 88,067 71,659
Selling, general and administrative........................................ 26,994 23,622 19,693
Depreciation and amortization.............................................. 18,878 16,463 13,132
Year 2000 remediation expense.............................................. -- 2,839 --
Reversal of restructuring charges.......................................... -- (1,873) --
Recapitalization costs..................................................... 34,268 -- --
Stock-based compensation................................................... 555 -- --
-------- -------- --------
Operating income........................................................ 19,205 47,016 38,834
Interest income............................................................ 850 1,194 2,357
Interest expense........................................................... 20,742 10,643 11,189
Other (income) expense..................................................... 1,800 -- --
-------- -------- --------
Income (loss) before minority interest, provision for income taxes and
extraordinary item.................................................... (2,487) 37,567 30,002
Minority interest in income of subsidiaries................................ 1,066 850 780
-------- -------- --------
Income (loss) before provision for income taxes and
extraordinary item.................................................... (3,553) 36,717 29,222
Provision for income taxes................................................. 2,199 16,462 12,954
Income tax adjustment...................................................... -- (2,102) --
-------- -------- --------
Income (loss) before extraordinary item................................. (5,752) 22,357 16,268
Extraordinary loss on early extinguishment of debt
(net of income tax benefit of $1,845).................................... 2,659 -- --
-------- -------- --------
Net income (loss)....................................................... $ (8,411) $ 22,357 $ 16,268
======== ======== ========
Increase in carrying amount of Redeemable Preferred Stock.................. 5,391 -- --
-------- -------- --------
Net income (loss) available to common stockholders...................... $(13,802) $ 22,357 $ 16,268
======== ======== ========
Basic earnings (loss) per common share:
Income (loss) before extraordinary item................................. $ (0.05) $ 0.07 $ 0.05
Extraordinary loss on early extinguishment of debt...................... (0.01) -- --
-------- -------- --------
Earnings (loss) per common share........................................ $ (0.06) $ 0.07 $ 0.05
======== ======== ========
Diluted earnings (loss) per common share:
Income (loss) before extraordinary item................................. $ (0.05) $ 0.07 $ 0.05
Extraordinary loss on early extinguishment of debt...................... (0.01) -- --
-------- -------- --------
Earnings (loss) per common share........................................ $ (0.06) $ 0.07 $ 0.05
======== ======== ========
Shares used for computing basic earnings (loss) per share.................. 234,055 315,945 305,250
======== ======== ========
Shares used for computing diluted earnings (loss) per share................ 234,055 329,775 329,100
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-4

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

For the Years Ended December 31, 2000, 1999 and 1998
(In thousands)

Notes
Common Stock Additional Treasury Shares Receivable Accumulated
----------------- Paid-In --------------- From Retained Comprehensive
Shares Amount Capital Shares Amount Stockholders (Deficit) Loss
-------- ------- ---------- ------ ------- ------------ --------- -------------

Balances, December 31, 1997............. 304,800 $ 3,048 $ 193,717 (3,405) $(2,480) $(546) $ (12,888)
Net income........................... -- -- -- -- -- -- 16,268 --
Unrealized loss on investments....... -- -- -- -- -- -- -- $(870)
Unrealized loss recognized on
investments......................... -- -- -- -- -- -- -- 402
Exercise of stock options............ 2,910 29 2,008 -- -- -- -- --
Interest on notes.................... -- -- -- -- -- (71) -- --
Business acquisitions................ 2,610 26 3,121 -- -- -- -- --
Conversion of convertible debt....... 180 2 83 -- -- -- -- --
Settlement of guaranteed purchase
price contingently payable in cash
or common stock..................... 315 3 (3) -- -- -- -- --
Restricted stock bonus............... 1,425 14 822 -- -- -- -- --
-------- ------- --------- ------ ------- ----- --------- -----
Balances, December 31, 1998............. 312,240 3,122 199,748 (3,405) (2,480) (617) 3,380 (468)
Net income........................... -- -- -- -- -- -- 22,357 --
Unrealized loss on investments....... -- -- -- -- -- -- -- (218)
Unrealized loss recognized on
investments......................... -- -- -- -- -- -- -- 325
Exercise of stock options............ 750 8 527 -- -- -- -- --
Exercise of warrants................. 45 -- -- -- -- -- -- --
Interest on notes.................... -- -- -- -- -- (37) -- --
Business acquisitions................ 8,820 88 8,740 -- -- -- -- --
Conversion of convertible debt....... 150 2 72 -- -- -- -- --
Restricted stock bonus............... 3,615 36 1,405 -- -- -- -- --
Purchase of treasury shares.......... -- -- -- (5,895) (4,761) -- -- --
-------- ------- --------- ------ ------- ----- --------- -----
Balances, December 31, 1999............. 325,620 3,256 210,492 (9,300) (7,241) (654) 25,737 (361)
Net loss............................. -- -- -- -- -- -- (8,411) --
Unrealized loss on investments....... -- -- -- -- -- -- -- (219)
Unrealized loss recognized on
investments......................... -- -- -- -- -- -- -- 580
Exercise of stock options............ 1,830 18 905 -- -- -- -- --
Restricted stock bonus............... 3,060 31 1,071 -- -- -- -- --
Interest on notes.................... -- -- -- -- -- (34) -- --
Purchase of treasury shares.......... -- -- -- (7,715) (3,323) -- -- --
Retirement of treasury shares........ (17,015) -- -- 17,015 10,564 -- -- --
Issuance of common stock............. 14,865 149 14,716 -- -- (518) -- --
Issuance of warrants................. -- -- 1,149 -- -- -- -- --
Write-off of notes as part of
Recapitalization.................... -- -- -- -- -- 688 -- --
Increase in carrying amount of
Redeemable Preferred Stock.......... -- -- -- -- -- -- (5,391) --
Repurchase and retirement of
common stock........................ (310,836) (3,279) (209,835) -- -- -- (111,955) --
Stock-based compensation............. -- -- 555 -- -- -- -- --
-------- ------- --------- ------ ------- ----- --------- -----
Balances, December 31, 2000............. 17,524 $ 175 $ 19,053 -- $ -- $(518) $(100,020) $ --
======== ======= ========= ====== ======= ===== ========= =====

Total
---------

Balances, December 31, 1997............. $ 180,851
Net income........................... 16,268
Unrealized loss on investments....... (870)
Unrealized loss recognized on
investments......................... 402
Exercise of stock options............ 2,037
Interest on notes.................... (71)
Business acquisitions................ 3,147
Conversion of convertible debt....... 85
Settlement of guaranteed purchase
price contingently payable in cash
or common stock..................... --
Restricted stock bonus............... 836
---------
Balances, December 31, 1998............. 202,685
Net income........................... 22,357
Unrealized loss on investments....... (218)
Unrealized loss recognized on
investments......................... 325
Exercise of stock options............ 535
Exercise of warrants................. --
Interest on notes.................... (37)
Business acquisitions................ 8,828
Conversion of convertible debt....... 74
Restricted stock bonus............... 1,441
Purchase of treasury shares.......... (4,761)
---------
Balances, December 31, 1999............. 231,229
Net loss............................. (8,411)
Unrealized loss on investments....... (219)
Unrealized loss recognized on
investments......................... 580
Exercise of stock options............ 923
Restricted stock bonus............... 1,102
Interest on notes.................... (34)
Purchase of treasury shares.......... (3,323)
Retirement of treasury shares........ 10,564
Issuance of common stock............. 14,347
Issuance of warrants................. 1,149
Write-off of notes as part of
Recapitalization.................... 688
Increase in carrying amount of
Redeemable Preferred Stock.......... (5,391)
Repurchase and retirement of
common stock........................ (325,069)
Stock-based compensation............. 555
---------
Balances, December 31, 2000............. $ (81,310)
=========

The accompanying notes are an integral part of these consolidated financial
statements.

F-5

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2000, 1999 and 1998
(In thousands)

2000 1999 1998
------- ------- -------

Net income (loss).................................. $(8,411) $22,357 $16,268
Other comprehensive income:
Unrealized loss on investments.................. (219) (218) (870)
Recognized loss on investments.................. 580 325 402
------- ------- -------
Other comprehensive income (loss).................. 361 107 (468)
------- ------- -------
Net comprehensive income (loss).................... $(8,050) $22,464 $15,800
======= ======= =======
Accumulated comprehensive loss at beginning of year $ (361) $ (468) $ --
Other comprehensive income (loss).................. 361 107 (468)
------- ------- -------
Accumulated comprehensive loss at end of year...... $ -- $ (361) $ (468)
======= ======= =======

The accompanying notes are an integral part of these consolidated financial
statements.

F-6

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2000, 1999 and 1998
(In thousands)

2000 1999 1998
--------- -------- --------

Cash flows from operating activities:
Net income (loss)....................................................... $ (8,411) $ 22,357 $ 16,268
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization........................................ 18,878 16,463 13,132
Amortization of deferred financing costs and debt discount........... 836 241 431
Provision for uncollectible accounts................................. 3,105 2,515 2,898
Extraordinary loss on early extinguishment of debt................... 4,504 -- --
Recapitalization costs............................................... 34,268 -- --
Stock-based compensation............................................. 555 -- --
Interest paid in kind on senior subordinated notes................... 4,306 -- --
Gain on sale of investment in VPI.................................... (3,200) -- --
Loss recognized on investment in Zoasis.............................. 5,000 -- --
Minority interest in income of subsidiaries.......................... 1,066 850 780
Distributions to minority interest partners.......................... (1,400) (926) (627)
Increase in accounts receivable...................................... (3,362) (5,535) (3,749)
Increase in inventory................................................ (167) (347) (242)
Increase (decrease) in accounts payable and accrued liabilities...... 5,932 (1,383) (4,872)
Decrease (increase) in prepaid income taxes.......................... (5,416) 1,054 594
Decrease (increase) in prepaid expense and other..................... 2,173 (414) (1,061)
Increase in deferred income tax asset................................ (442) (102) (1,043)
Increase in deferred income tax liability............................ 1,829 3,694 4,614
--------- -------- --------
Net cash provided by operating activities............................... 60,054 38,467 27,123
--------- -------- --------
Cash flows from investing activities:
Business acquisitions, net of cash acquired.......................... (18,183) (16,079) (17,108)
Real estate acquired in connection with business acquisitions........ (1,800) (4,241) (4,270)
Property and equipment additions, net................................ (22,555) (21,803) (11,678)
Investments in marketable securities................................. (129,992) (58,258) (44,902)
Proceeds from sales or maturities of marketable securities........... 135,666 86,410 62,447
Payment for covenants not to compete................................. (15,630) -- --
Investment in VPI.................................................... -- -- (4,000)
Net proceeds from sale of investment in VPI.......................... 8,200 -- --
Investment in Zoasis................................................. (5,000) -- --
Other................................................................ 1,615 295 37
--------- -------- --------
Net cash used in investing activities................................... (47,679) (13,676) (19,474)
--------- -------- --------
Cash flows from financing activities:
Repayment of long-term debt.......................................... (172,854) (18,922) (20,591)
Proceeds from the issuance of long-term debt......................... 356,670 -- --
Payment of deferred financing costs.................................. (13,958) -- --
Proceeds from issuance of common stock under stock option plans...... 923 535 2,037
Proceeds from issuance of preferred stock............................ 149,231 -- --
Proceeds from issuance of common stock............................... 14,350 -- --
Proceeds from issuance of stock warrants............................. 1,149 -- --
Repurchase of common stock........................................... (314,508) -- --
Purchase of treasury stock........................................... (3,323) (4,761) --
Payments for recapitalization expense................................ (30,156) -- --
--------- -------- --------
Net cash used in financing activities................................... (12,476) (23,148) (18,554)
--------- -------- --------
Increase (decrease) in cash and cash equivalents............................ (101) 1,643 (10,905)
Cash and cash equivalents at beginning of year.............................. 10,620 8,977 19,882
--------- -------- --------
Cash and cash equivalents at end of year.................................... $ 10,519 $ 10,620 $ 8,977
========= ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-7

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

For the Years Ended December 31, 2000, 1999 and 1998
(In thousands)

2000 1999 1998
-------- -------- --------

Supplemental disclosures of cash flow information:
Interest paid.......................................... $ 15,237 $ 10,517 $ 11,301
Income taxes paid...................................... 4,337 9,603 10,944
Supplemental schedule of noncash investing and
financing activities:
In connection with acquisitions, assets acquired
and liabilities assumed were as follows:
Fair value of assets acquired.......................... $ 29,616 $ 53,209 $ 30,740
Less consideration given:
Cash paid and acquisition costs..................... (18,230) (19,497) (20,255)
Cash paid in settlement of assumed liabilities...... (1,262) (517) (812)
Common stock issued................................. -- (8,828) (3,100)
-------- -------- --------
Liabilities assumed including notes payable issued..... $ 10,124 $ 24,367 $ 6,573
======== ======== ========

The accompanying notes are an integral part of these consolidated financial
statements.

F-8

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2000

1. The Company

Based in Los Angeles, California, VCA Antech, Inc. ("VCA"), a Delaware
corporation, is an animal health care services company with positions in two
core businesses, animal hospitals ("Animal Hospitals") and veterinary
diagnostic laboratories ("Laboratories"). In 2000, the Company established a
new legal structure, comprised of a holding company and an operating company.
VCA is the holding company ("Holding Company"). Vicar Operating, Inc.
("Operating Company") is wholly-owned by the Holding Company and owns the
capital stock of all of the Company's subsidiaries. Collectively, the Holding
Company and the Operating Company are referred to as VCA or the Company. Prior
to September 24, 2001, VCA was known as Veterinary Centers of America, Inc.

Animal Hospitals offer a full range of general medical and surgical services
for companion animals. Animal Hospitals treat diseases and injuries, provide
pharmaceutical products and perform a variety of pet wellness programs,
including routine vaccinations, health examinations, spaying, neutering and
dental care.

The Company operates a full-service, veterinary diagnostic laboratory
network serving all 50 states. The laboratory network provides sophisticated
testing and consulting services used by veterinarians in the detection,
diagnosis, evaluation, monitoring, treatment and prevention of diseases and
other conditions affecting animals. The Company does not conduct experiments on
animals and is not engaged in animal research.

At December 31, 2000, the Company owned or operated 209 animal hospitals
throughout 30 states, as follows:

California 45 Delaware 4
New York (a) 24 Connecticut 3
Florida 18 New Mexico 3
Illinois 15 Colorado 2
Michigan 12 North Carolina (a) 2
Pennsylvania 10 Utah 2
Maryland 9 Alabama (a) 1
Texas (a) 9 Arizona 1
New Jersey (a) 8 Georgia 1
Indiana 7 Hawaii 1
Massachusetts 7 Louisiana (a) 1
Nevada 6 Missouri 1
Virginia 5 Nebraska (a) 1
Ohio (a) 5 South Carolina 1
Alaska 4 West Virginia (a) 1

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

F-9

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 2000, the Company operated 15 full-service laboratories. Our
laboratory network includes primary hubs that are open 24 hours per day and
offer a full testing menu, secondary laboratories, that service large
metropolitan areas, are open 24 hours per day and offer a wide testing menu and
nine STAT laboratories that service other locations with demand sufficient to
warrant nearby laboratory facilities and are open during daytime hours.

Primary Hubs Secondary Hubs STAT laboratories
------------ -------------- -----------------

California 1 Arizona 1 California 1
New York 1 Georgia 1 Colorado 1
Illinois 1 Florida 1
Tennessee 1 Hawaii 1
Michigan 1
Oregon 1
Texas 2
Washington 1
- - -
Totals 2 4 9
= = =

The Company was formed in 1986 and during the 1990s, established a position
in the veterinary diagnostic laboratory and animal hospital markets through
both internal growth and acquisitions. By 1997, the Company had built a
laboratory network of 12 laboratories servicing animal hospitals in all 50
states and operated a total of 160 animal hospitals.

On September 20, 2000, the Company completed a recapitalization transaction
(the "Recapitalization") with certain investors who are affiliated with Leonard
Green & Partners, L.P. The Company purchased 99% of its outstanding shares of
common stock for $1.00 per share for a total consideration of $314.5 million,
and such shares were subsequently retired. The Company then issued 14,350,005
new common shares to certain investors in exchange for an 80% controlling
interest in the Company. An additional 517,995 shares of common stock were
issued to certain members of management. In connection with the
Recapitalization, the Company also authorized and issued preferred stock for
which it received approximately $149.2 million and entered into various debt
agreements through which it received approximately $356.7 million in cash.

The Recapitalization did not result in a change in the historical cost basis
of the Company's assets and liabilities because certain management shareholders
retained their ownership of the Company common stock, which amounted to
approximately 20% of the Company's outstanding common stock following the
Recapitalization. The Company incurred $34.3 million of Recapitalization costs
for the year ended December 31, 2000 which consisted of $24.1 million
associated with the buy-out of stock options held by employees, $1.2 million
paid to employees for services rendered in connection with the
Recapitalization, $7.6 million in professional fees and $1.4 million of other
expenses. Additionally, the Company paid $15.6 million out of these proceeds
for covenants not to compete to the following executive officers: Robert L.
Antin, Chief Executive Officer; Arthur J. Antin, Chief Operating Officer; Tomas
W. Fuller, Chief Financial Officer; and Neil Tauber, Senior Vice President of
Development. The payments made for the covenants not to compete are being
amortized over a three-year period commencing September 20, 2000.

2. Summary of Significant Accounting Policies

a. Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and all those majority-owned subsidiaries where the Company has control.
Significant intercompany transactions and balances have been eliminated.

F-10

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company provides management services to certain veterinary medical
groups in states with laws that prohibit business corporations from providing
veterinary services through the direct employment of veterinarians. As of
December 31, 2000, the Company operated in nine of these states. In these
states, instead of owning a animal hospital, the Company provides management
services to veterinary medical groups. The Company provides management services
pursuant to long-term management agreements (the "Management Agreements") with
the veterinary medical groups, ranging from 10 to 40 years with non-binding
renewal options, where allowable. Pursuant to the Management Agreements, the
veterinary medical groups are each solely responsible for all aspects of the
practice of veterinary medicine, as defined by their respective state. The
Company is responsible for providing the following services:

. availability of all facilities and equipment

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

. maintenance of patient records

. recruitment of veterinary and hospitals staff

. marketing

. malpractice and general insurance

The Company does not consolidate the operations of the veterinary medical
groups since it has no control over the practice of veterinary medicine at
these hospitals. As compensation for the Company's services, it receives
management fees which are included in revenue and were $31.1 million, $30.2
million and $19.3 million for the years ended December 31, 2000, 1999 and 1998,
respectively.

b. Cash and Cash Equivalents

For purposes of the balance sheets and statements of cash flows, the Company
considers only highly liquid investments to be cash equivalents.

Cash and cash equivalents at December 31 consisted of (in thousands):

2000 1999
------- -------

Cash.............. $ 3,443 $ 8,160
Money market funds 7,076 2,460
------- -------
$10,519 $10,620
======= =======

c. Marketable Securities

During the year ending December 31, 2000, the Company realized a loss on the
sale of an investment of $1.3 million; however, the Company recorded unrealized
losses of $727,000 on this investment in years prior to 2000.

d. Property and Equipment

Property and equipment is recorded at cost. Equipment held under capital
leases is recorded at the lower of the present value of the minimum lease
payments or the fair value of the equipment at the beginning of the lease term.

F-11

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Depreciation and amortization are provided for on the straight-line method
over the following estimated useful lives:

Buildings and improvements........ 5 to 30 years
Leasehold improvements............ Lesser of lease term or 15 years
Furniture and equipment........... 5 to 7 years
Property held under capital leases 5 to 30 years

Property and equipment at December 31, consisted of (in thousands):

2000 1999
-------- --------

Land........................................... $ 19,788 $ 14,423
Building and improvements...................... 33,920 24,615
Leasehold improvements......................... 17,565 13,428
Furniture and equipment........................ 43,771 35,206
Equipment held under capital leases............ 1,533 1,552
Construction in progress....................... 1,293 4,479
-------- --------
Total fixed assets............................. 117,870 93,703
Less--Accumulated depreciation and amortization (30,898) (23,367)
-------- --------
$ 86,972 $ 70,336
======== ========

Accumulated depreciation on equipment held under capital leases amounted to
$1.3 million and $1.2 million at December 31, 2000 and 1999, respectively.

e. Goodwill

Goodwill relating to acquisitions represents the purchase price paid and
liabilities assumed in excess of the fair market value of net assets acquired.
Goodwill is amortized on a straight-line basis over the expected period to be
benefited, not exceeding 40 years.

The Company continually evaluates whether events, circumstances or net
losses on the entity level have occurred that indicate the remaining estimated
useful life of goodwill may warrant revision or that the remaining balance of
goodwill may not be recoverable. When factors indicate that goodwill should be
evaluated for possible impairment, the Company uses an estimate of the related
facility's undiscounted, tax adjusted net income over the remaining life of the
goodwill to measure whether the goodwill is recoverable. If it is determined
that goodwill on a given entity is partially or totally unrecoverable, losses
will be recognized to the extent that projected aggregate tax adjusted net
income over the life of the goodwill does not cover the goodwill balance at the
date of impairment. Accumulated amortization of goodwill was $35.0 million and
$27.2 million at December 31, 2000 and 1999, respectively.

f. Covenants Not to Compete

Covenants not to compete are amortized on a straight-line basis over the
term of the agreements, usually three to ten years. Accumulated amortization of
covenants not to compete was $6.6 million and $4.7 million at December 31, 2000
and 1999, respectively.

F-12

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

g. Notes Receivable

Notes receivable are not market traded financial instruments. The amounts
recorded approximate fair value and are shown net of valuation allowances of
$63,000 and $270,000 as of December 31, 2000 and 1999, respectively. The notes
bear interest at rates varying from 7% to 9% per annum.

h. Deferred Revenue

As part of a partnership with Heinz Pet Products ("HPP"), the Company agreed
to provide certain consulting and management services for a three-year period
commencing on February 1, 1997, for an aggregate fee of $15.3 million payable
in semi-annual installments over a five-year period. Consulting and management
fees earned under this agreement are included in revenue and amounted to
$425,000 for the year ended December 31, 2000, and $5.1 million for each of the
years ended December 31, 1999 and 1998, respectively. The agreement expired
February 1, 2000.

In October 2000, the Company entered into a two-year consulting agreement
with HPP for which the Company was paid $5.0 million. Of the $5.0 million
received, $4.0 million will be recognized as revenue ratably over the life of
the agreement and $1.0 million will be used for certain marketing obligations
under the agreement. As of December 31, 2000, $500,000 has been recognized as
revenue and deferred revenue of $2.0 million and $1.5 million is recorded in
other accrued liabilities and other liabilities, respectively.

i. Deferred Financing Costs

In connection with the issuance of long-term debt in 2000, the Company
incurred $13.9 million of deferred financing costs. These costs are shown net
of accumulated amortization of $586,000 in the Consolidated Balance Sheet at
December 31, 2000. The deferred financing costs are amortized using the
effective interest method over the life of the related debt.

j. Investment in VPI and Zoasis

During portions of 2000 and 1999, the Company had investments in Veterinary
Pet Insurance, Inc. ("VPI") and Zoasis.com, Inc. ("Zoasis"), both of which were
accounted for on the cost basis. See Footnote 4, Joint Ventures and
Investments, for a description of these investments.

k. Fair Value of Financial Instruments and Concentration of Credit Risk

The carrying amount reported in the balance sheets for cash, accounts
receivable, accounts payable and accrued liabilities approximates fair value
because of the immediate or short-term maturity of these financial instruments.
Concentration of credit risk with respect to accounts receivable are limited
due to the diversity of the Company's customer base.

l. Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and contingent liabilities at
the date of the financial statements and the reported amounts of revenue and
expense during the reporting period. Actual results could differ from those
estimates.

F-13

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

m. Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133, which as
amended is effective beginning in the fiscal year beginning after June 15,
2000, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities, (collectively referred to as
"derivatives"). It requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at
fair value.

Under the provisions of the Credit and Guaranty Agreement, dated September
20, 2000, the Company was required to enter into an arrangement to hedge
interest rate exposure for a minimum notional amount of $62.0 million and a
minimum term of two years. On November 13, 2000, the Company entered into a no
fee interest rate collar agreement with Wells Fargo Bank effective November 15,
2000 and expiring November 15, 2002, (the "Collar Agreement"). The Collar
Agreement is based on LIBOR, which resets monthly, and has a cap and floor
notional amount of $62.5 million, with a cap and floor interest rate of 7.5%
and 5.9%, respectively.

The Collar Agreement is accounted for as a cash flow hedge which will
require that the Company report the market value of the Collar Agreement in the
balance sheet. Payments made or received as a result of a LIBOR outside of the
cap or floor of the Collar Agreement will be accounted for as a component of
net income.

The Company adopted SFAS 133 effective January 1, 2001; however, had the
Company adopted it in the year ending December 31, 2000, it would have reported
a liability from interest rate hedging activities at the market rate of
$525,000, $411,000 of which would have been recognized in comprehensive income
and $114,000 which would have been recognized in other (income) expense. No
payments were required under the Collar Agreement during the year ending
December 31, 2000.

With the exception of the Collar Agreement, management does not intend to
enter into derivative contracts in the future and does not expect the
implementation of SFAS 133 to have a material impact on its future earnings.

n. Reclassifications

Certain 1999 and 1998 balances have been reclassified to conform with the
2000 financial statement presentation.

o. Revenue Recognition

Revenue is recognized only after the following criteria are met: (i) there
exists adequate evidence of the transactions; (ii) delivery of goods has
occurred or services have been rendered; and (iii), the price is not contingent
on future activity and collectibility is reasonably assured.

p. Related Party Transactions

As part of an often-used acquisition strategy, the Company hires the selling
doctor upon purchase of their practice. The Company may lease facilities from
the selling doctor; the related lease agreements are negotiated as part of the
acquisition before the doctor is hired. These arrangements are not contingent
upon the current or future employment of the doctors.

F-14

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In June 2000, the Company invested $5.0 million for convertible preferred
stock of Zoasis, an internet start-up business, majority-owned by Robert A.
Antin, the Company's Chief Executive Officer and a director of the Company. In
December 2000, the Company determined that the value of this investment was
impaired and, as a result, recognized a loss of $5.0 million. (See Footnote 4,
Joint Ventures and Investments, for a description of Zoasis and the reason for
impairment). Zoasis continues to provide marketing reminder services to the
Company. The Company incurred $81,000 during the year ended December 31, 2000
for these marketing reminder services.

In September 2000, the Company sold its entire equity interest in Vet's
Choice, which had zero cost basis, to Heinz Pet Products. The Company received
$500,000 in the sale. At the time of the sale, one of the Company's directors,
Mr. John A. Heil, served as president of an affiliate of Heinz Pet Products. In
connection with the sale, Heinz Pet Products also paid the Company $1.0 million
which was transferred to the Wisdom Group, L.P. and used to redeem the limited
partnership interests in the Wisdom Group, L.P. Members of the Company's
executive management had a 30.5% ownership interest in the Wisdom Group, L.P.
as limited partners and a subsidiary of the Company owned a 1% ownership
interest as the general partner. The Wisdom Group, L.P. was dissolved in
November 2000 upon redemption of all the partnership interests. The nature of
the business of the Wisdom Group, L.P. was to provide consulting services to
Vet's Choice with respect to the development, marketing and sale of premium pet
food products.

On September 20, 2000, the Company entered into a ten-year management
services agreement with Leonard Green & Partners, L.P. ("Leonard Green") for
services relating to investment banking, general consulting and financial
planning. The agreement calls for monthly payments of $207,000 and is subject
to an increase of 1.6% of any additional capital invested by Green Equity
Investors, III, L.P., a Delaware limited partnership, any of its affiliates, or
any of its co-investors in the Company. In addition, Leonard Green received
one-time fees of approximately $7.6 million in connection with the Company's
recapitalization on September 20, 2000.

q. Marketing and Advertising

Marketing and advertising production costs are expensed as incurred or the
first time the advertisement is run. Media (primarily print) placement costs
are expensed in the month the advertising appears. Total marketing and
advertising expense is included in direct costs and amounted to $5.6 million,
$4.3 million and $3.2 million for the years ended December 31, 2000, 1999 and
1998, respectively.

3. Acquisitions

During 2000, the Company purchased 24 animal hospitals and one veterinary
diagnostic laboratory, all of which were accounted for as purchases. Three of
the acquired animal hospitals and the laboratory were merged into existing VCA
facilities upon acquisition. Including acquisition costs, VCA paid an aggregate
consideration of $29.6 million, consisting of $18.2 million in cash, $11.1
million in debt, and the assumption of liabilities totaling $315,000. The
aggregated purchase price was allocated as follows: $2.7 million to tangible
assets, $21.6 million to goodwill and $5.3 million to other intangibles.

During 1999, the Company purchased 24 animal hospitals and two veterinary
diagnostic laboratories all of which were accounted for as purchases. Five of
the acquired animal hospitals and both laboratories were merged into existing
VCA facilities upon acquisition. Including acquisition costs, VCA paid an
aggregate consideration of $24.2 million, consisting of $10.4 million in cash,
$12.4 million in debt, 70,712 shares of common stock of the Company with a
value of $1.1 million, and the assumption of liabilities totaling $369,000. The
aggregated purchase price was allocated as follows: $1.9 million to tangible
assets, $18.6 million to goodwill and $3.8 million to other intangibles.

F-15

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In addition, on April 1, 1999, the Company completed the acquisition of AAH
Management Corp. ("AAH") for a total consideration (including acquisition
costs) of $29.0 million, consisting of 517,585 shares of VCA common stock, with
a value at the date of acquisition of $7.8 million, $9.1 million in cash, $1.2
million in notes payable and the assumption of $10.9 million in liabilities.
AAH operated 15 animal hospitals located in New York and New Jersey. The
acquisition of AAH was accounted for as a purchase. The purchase price has been
allocated as follows: $6.3 million to tangible assets, $21.9 million to
goodwill, and $725,000 to other intangible assets.

During 1998, the Company completed the acquisitions of 11 animal hospitals
and one veterinary diagnostic laboratory. In connection with these
acquisitions, which were accounted for as purchases, VCA paid an aggregate
consideration including acquisition costs of $30.7 million, consisting of $20.2
million in cash, $6.5 million in debt, 171,564 shares of common stock of the
Company with a value of $3.1 million, and the assumption of liabilities
totaling $903,000. The $30.7 million aggregate purchase price was allocated
$6.2 million to tangible assets, $23.4 million to goodwill and $1.2 million to
other intangible assets.

The pro forma results listed below are unaudited and reflect purchase price
accounting adjustments assuming 2000 and 1999 acquisitions occurred at January
1, 1999. The pro forma results are not necessarily indicative of what actually
would have occurred if the acquisitions had been in effect for the entire
periods presented. In addition, they are not intended to be a projection of
future results and do not reflect any efficiencies that might be achieved from
the combined operation.

For the Years Ended December 31,
(In thousands, except per share amounts)
(Unaudited)
---------------------------------------
2000 1999
-------- --------

Revenue....................................... $369,958 $365,391
Net income (loss) available to common
stockholders................................ $(12,587) $ 24,224
Diluted earnings per share.................... $ (0.05) $ (0.07)
Shares used for computing diluted earnings per
share....................................... 234,055 329,775

In connection with certain acquisitions, the Company assumed certain
contractual arrangements whereby cash may be issued to former owners of
acquired hospitals upon attainment of specified financial criteria over periods
of three to five years ("Earn-Out Payments"), as set forth in the respective
agreements (the "Earn-Out Arrangements"). The Earn-Out Arrangements provide for
contingent Earn-Out Payments if the acquired entity achieves or exceeds
contractually defined revenue targets during the defined earn-out period. The
payments are either fixed in amount or are based on a multiplier of revenue.
When the contingency is resolved and the additional consideration is
distributed, the Company records the consideration issued as an additional cost
of the acquired entity. The additional consideration of affected assets,
usually goodwill, is amortized over the remaining life of the asset. Earn-Out
Payments in 2000 and 1999 consisted entirely of cash approximating $486,000 and
$326,000, respectively. Earn-Out Payments in 1998 amounted to approximately
$358,000, consisting of $311,000 in cash and 2,394 shares of common stock
valued on the date of issuance at $47,000.

4. Joint Ventures and Investments

During fiscal year 2000, the Company invested $5.0 million for convertible
preferred stock of Zoasis, an internet start-up business, majority-owned by
Robert L. Antin, the Company's Chief Executive Officer and a director of the
Company. Zoasis was to develop and provide services to the veterinary industry
such as consumer e-commerce, e-commerce of veterinary supplies for hospitals,
internet diagnostic laboratory results, on-line continuing education for
veterinarians, hosted web sites for veterinarian clients, and a marketing
reminder

F-16

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

service. Due to the decline in the market value of many internet companies,
Zoasis was not able to raise additional capital to continue its development.
Zoasis scaled back its operations significantly. In December 2000, the Company
determined that the value of this investment was impaired and, as a result,
recognized a loss of $5.0 million on the write-down of its investment in Zoasis.

In September 2000, the Company sold its 50.5% equity interest in Vet's
Choice, which had a zero cost basis, to HPP. The Company received $500,000 in
the sale. In connection with the sale, the Company also received $1.0 million,
which was transferred to the Wisdom Group, L.P. in January 2001.

In December 1997 and January 1998, the Company made a combined $5.0 million
investment in VPI, the largest provider of pet health insurance in the United
States. The Company sold its investment in VPI and received $8.2 million in
cash in February 2000, resulting in a one-time gain of approximately $3.2
million.

F-17

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

5. Long-Term Obligations

Long-term obligations consisted of the following at December 31 (in
thousands):

2000 1999
--------- ---------

Senior Term A Notes payable of Operating Company, maturing in
2006, secured by assets, variable interest rates
(weighted average interest rate at 9.882%
during the year ended December 31, 2000, and
an interest rate of 9.938% at December 31,
2000)........................................... $ 50,000 $ --
Senior Term B Notes payable of Operating Company, maturing in
2008, secured by assets, variable interest rates
(weighted average interest rate at 10.382%
during the year ended December 31, 2000, and
an interest rate of 10.438% at December 31,
2000)........................................... 200,000 --
Senior Subordinated Notes payable of Operating Company, maturing in
Notes 2010, unsecured, fixed interest rate of 13.5%... 20,000 --
Holding Company Notes payable of Holding Company, maturing in
Senior Notes 2010, unsecured, fixed interest rate of 15.5%... 104,306 --
Secured seller notes Notes payable and other obligations, various 1,328 69,213
maturities through 2014, secured by assets and
stock of certain subsidiaries, various interest
rates ranging from 5.3% to 12.0%................
Mortgage debt Notes payable and other obligations, various
maturities through 2008, secured by land and
buildings of certain subsidiaries, various
interest rates ranging From 7.0% to 9.0%........ -- 3,212
Convertible debt Notes payable, convertible into VCA common
stock at prices ranging from $0.47 to $1.00 per
share, due through 2013, secured by stock of
certain subsidiaries at interests rates ranging
from 7.0% to 10.0%.............................. -- 1,803
Unsecured debt Notes payable, various maturities through 2004,
adjustable interest rates of 6.2% and fixed
interest rates ranging from 7.0% to 12.0%....... 350 2,982
Debentures Convertible subordinated 5.25% debentures, due
in 2006, convertible into approximately 36.8
million shares of VCA common stock at $2.29
per share....................................... -- 84,385
--------- ---------
Total debt obligations............................ 375,984 161,595
Capital lease obligations......................... 110 187
Less--unamortized discount........................ (13,345) (247)
--------- ---------
362,749 161,535
Less--current portion............................. (5,756) (21,901)
--------- ---------
$356,993 $139,634
========= =========

F-18

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The annual aggregate scheduled maturities of debt obligations for the five
years subsequent to December 31, 2000 are presented below (in thousands):

2001...... $ 5,756
2002...... 8,592
2003...... 8,960
2004...... 9,850
2005...... 17,486
Thereafter 325,340
--------
$375,984
========

During the year ended December 31, 2000, the Company recorded an
extraordinary loss of approximately $4.5 million, before effect of the income
tax benefit, primarily as a result of the early redemption of $84.4 million of
convertible subordinated 5.25% debentures.

The Company entered into a Credit and Guaranty Agreement, dated September
20, 2000, with various lenders for $300.0 million of Senior Secured Credit
Facilities (the "Credit Agreement"). The Credit Agreement includes a $50.0
million Revolving Credit Facility and the Senior Term A and B Notes. A first
priority lien has been granted on certain of the Company's assets, including a
pledge of all the capital stock of the Operating Company's subsidiaries, to
secure the borrowings under the Credit Agreement. The Revolving Credit Facility
allows the Company to borrow up to an aggregate principal amount of $50.0
million and expires in 2006. As of December 31, 2000, the Company has not
utilized the Revolving Credit Facility.

The Revolving Credit Facility and the Senior Term A Notes bear interest at
an annual rate equal to:

(1)the greater of Wells Fargo Bank's prime lending rate or the Federal
funds effective rate plus 0.5% (the "Base Rate"), plus an applicable
margin for unpaid principal amounts maintained as base rate loans; or

(2)the average British Bankers Association Interest Settlement Rate for
deposits ("LIBOR") plus an applicable margin for unpaid principal
amounts maintained as eurodollar rate loans.

The applicable margin is 3.25% for the first twelve months ending September
20, 2001. Thereafter, applicable margin varies based upon the Company's
leverage ratio as defined in the Credit Agreement. The applicable margin varies
from 3.25% for a leverage ratio of 3.75 to 1.0 to 2.00% for a leverage ratio of
2.25 to 1.0.

The Senior Term B Notes bear interest at an annual rate equal to:

(1)the Base Rate plus 2.75% for unpaid principal amounts maintained as base
rate loans; or

(2)LIBOR plus 3.75% for unpaid principal amounts maintained as eurodollar
rate loans.

Interest for the Senior Term A and B Notes is payable in cash at the earlier
of the maturity of a eurodollar rate loan or on a quarterly basis.

Maturities of Senior A Term Notes principal during each of the years 2001
through 2006 are $2.5 million, $6.3 million, $7.2 million, $8.7 million, $12.5
million and $12.8 million, respectively. The principal for the Senior B Term
Notes matures at $2.5 million per year for the first six years and $92.5
million per year for 2007 and 2008.

F-19

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Credit Agreement contains certain financial covenants pertaining to
interest coverage, fixed charge coverage and leverage ratios which commence in
2001. In addition, the Credit Agreement has restrictions pertaining to capital
expenditures, acquisitions and the payment of dividends on all classes of stock.

On September 20, 2000, the Operating Company issued $20.0 million of 13.5%
Senior Subordinated Notes, which are subordinated to the borrowings under the
Credit Agreement. Interest on the Senior Subordinated Notes is payable in cash
on a semi-annual basis. The effective interest rate for these notes is 16.2%.
The $20.0 million aggregate principal amount of the Senior Subordinated Notes
is due in full in September 2010.

In addition, on September 20, 2000, the Holding Company issued $100.0
million of 15.5% Senior Notes (the "Holding Company Senior Notes"). The Holding
Company Senior Notes are subordinated to the Operating Company's liabilities.
Interest on the Holding Company Senior Notes is payable on a semi-annual basis.
At the Company's sole discretion it may issue additional Holding Company Senior
Notes in lieu of cash payments for all interest due through March 2005.
Thereafter, interest is payable in cash on a semi-annual basis. The effective
rate for these notes is 17.3%. A mandatory redemption of principal and
accumulated interest paid in kind approximating $80.0 million is due September
2005. The remaining principal is due in full in September 2010.

There were no significant differences between the carrying amount and fair
values of the Company's long-term debt as of December 31, 2000.

6. Redeemable Preferred Stocks

In 2000, the Company adopted an Amended and Restated Certificate of
Incorporation, which authorized the issuance of up to 6,000,000 shares of
preferred stock. In connection with the Recapitalization, the Company issued
2,998,408 shares of Series A Senior Redeemable Exchangeable Cumulative
Preferred Stock ("Series A Preferred Stock"), par value $.01 per share, and
2,970,822 shares of Series B Junior Redeemable Cumulative Preferred Stock
("Series B Preferred Stock"), par value $.01 per share. In exchange for the
issuance of the Series A Preferred Stock and Series B Preferred Stock, the
Company received $75.0 million and $74.3 million, respectively. The Series A
and Series B Preferred Stock earn dividends at the rate of 14% and 12% per
annum of the liquidation preference, respectively. The liquidation preference
and redemption value for both the Series A and Series B Preferred Stock is the
sum of $25.00 per share plus accrued and unpaid dividends less any special
dividend paid. Holders of preferred stock are entitled to receive dividends,
whether or not declared by the Board of Directors, out of funds legally
available. Dividends are payable in cash on a quarterly basis. If dividends are
not paid when due, the amount payable is added to the liquidation preference
and redemption value. For the year ended December 31, 2000, dividends earned
but not paid were $2.9 million and $2.5 million for the Series A and Series B
Preferred Stock, respectively. These dividends were recorded as an increase to
preferred stock and a corresponding decrease to retained earnings.

The Company has the option to redeem both series of preferred stock
beginning September 2002. The prepayment premium at September 2002 is 109%, at
September 2003 is 106%, and at September 2004 is 103%. Beginning September 2005
and thereafter, the Company has the option to redeem the preferred shares at
100% of the liquidation preference. The Company is required to redeem the
preferred shares at 100% of liquidation preference in September 2012 from funds
legally available.

The Series A Preferred Stock is ranked senior to the Series B Preferred
Stock and the Company's common stock. The Company has the option to exchange
all the Series A Preferred Stock into 14% Senior Subordinated Debentures due
2012 (the "Exchange Debentures"). The Exchange Debentures are subordinated to
the Holding Company Senior Notes.

F-20

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Series B Preferred Stock is ranked senior to the Company's common stock.
Neither series of preferred stock is convertible into common stock or
securities convertible into common stock.

Prior to the Recapitalization, there were no preferred shares of the Company
issued or outstanding.

7. Common Stock

In 2000, the Company's Board of Directors declared a fifteen-for-one stock
split. The stock split has been retroactively reflected in the accompanying
financial statements and footnotes.

During 2000 and prior to the Recapitalization, the Company repurchased
7,715,000 shares of its common stock for $3.3 million. These shares, along with
all other treasury shares held prior to 2000, were retired.

On September 20, 2000, in connection with the Recapitalization, the Company
repurchased and retired a majority of the outstanding common stock of the
Company. Certain members of senior management that held 2,656,335 shares before
the Recapitalization continued to hold those shares.

In 2000, the Company adopted an Amended and Restated Certificate of
Incorporation, which authorized the issuance of up to 24,000,000 common shares
with a par value of $.01 per common share. The Company had approximately
17,524,000 and 325,620,000 common shares outstanding at December 31, 2000 and
1999, respectively.

During 1999, the Company issued 8,820,000 shares of its common stock valued
at $8.8 million, the fair market value at the date of commitment, as a portion
of the consideration for certain acquisitions.

During 1999, the Company repurchased 5,895,000 shares of its common stock
for $4.8 million.

8. Warrants

In connection with the Recapitalization, the Company issued warrants to
purchase 1,149,990 shares of the Company's common stock to certain investors.
The warrants allow the holders to purchase common shares at a price equal to
$0.0007. The Company valued these warrants at their fair market value on the
date of issuance at $1.1 million, which was recorded as part of stockholders'
equity.

9. Notes Receivable from Stockholders

Concurrent with the Recapitalization, the Company sold 518,000 common shares
to certain non-executive employees of the Company. As consideration for the
issuance of common stock, the Company received notes with an aggregate value
approximating $518,000. Each note earns interest at the rate of 6.2% per annum,
is compounded annually and is due and payable on September 16, 2007. The notes
are collateralized by the Company's common stock which was purchased by the
stockholders.

At December 31, 1999, the Company held two notes receivable with balances
totaling $654,000 from certain management stockholders of the Company. These
notes arose from transactions whereby the Company loaned funds to the
management stockholders to purchase an aggregate of 2,739,990 shares of the
Company's common stock. These notes had an interest rate of 6.1% per annum and
had a maturity date of January 22, 2001. The receivables are shown in the
accompanying 1999 consolidated balance sheet as a reduction of stockholders'
equity. In connection with the Recapitalization in September 2000, the Company
forgave the indebtedness of these notes. The total principal and interest
approximating $688,000 are included in Recapitalization costs.

F-21

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

10. Stock-Based Compensation Plans

The Company has granted stock options to various employees. The Company
accounts for these plans under APB Opinion 25.

In November 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 recommends changes in accounting for
employee stock-based compensation plans and requires certain disclosures with
respect to these plans. SFAS 123 disclosures have been adopted by the Company
effective January 1, 1996.

Had compensation cost for these plans been determined consistent with SFAS
123, the Company's net income (loss) and earnings (loss) per share would have
been reduced to the following pro forma amounts (in thousands, except per share
amounts):

2000 1999 1998
-------- ------- -------

Net income (loss) available to common stockholders:
As reported..................................... $(13,802) $22,357 $16,268
Pro forma....................................... (14,178) 19,214 12,040
Diluted earnings (loss) per share:
As reported..................................... $ (0.06) $ 0.07 $ 0.05
Pro forma....................................... (0.06) 0.06 0.04

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions:

2000 1999 1998
----- ----- -----

Risk free interest rate..... 6.0% 5.8% 5.0%
Dividend yield.............. 0.0% 0.0% 0.0%
Expected volatility......... 0.0% 54.2% 64.5%
Weighted fair value average. $0.78 $7.97 $9.25
Expected option life (years) 5 7 7

In connection with the Recapitalization, certain of the Company's employees
elected to exchange their stock options for newly issued stock options. The
number of stock options issued to each employee was equal to the intrinsic
value of their old stock options divided by the strike price of the new stock
options ($0.20). These stock options will be accounted for as variable awards,
and related expense of $555,000 was recorded in the year ended December 31,
2000. As of December 31, 2000, 693,870 such new options are outstanding. These
options are fully vested and expire in 2010.

In September 2000, the Company issued 631,800 stock options under the 1996
Stock Incentive Plan. These options vest ratably over four years from the date
of grant. The exercise price of these options is $1.00 (the fair market value
at such date) and they expire in 2010.

F-22

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The table below summarizes the transactions in the Company's stock option
plans (in thousands, except per share amounts):

2000 1999 1998
------- ------ ------

Options outstanding at beginning of year........ 57,300 57,315 53,760
Exchanged in connection with Recapitalization... 694 -- --
Granted......................................... 632 2,490 7,275
Exercised....................................... (1,815) (750) (2,910)
Purchased....................................... (54,585) -- --
Canceled........................................ (900) (1,755) (810)
------- ------ ------
Options outstanding at end of year
(Exercise prices ranging from $0.20 to $1.00
at December 31, 2000)......................... 1,326 57,300 57,315
======= ====== ======
Exercisable at end of year...................... 694 30,465 25,110
======= ====== ======

The following table summarizes information about certain options in the
stock option plans outstanding as of December 31, 2000 in accordance with SFAS
123:

Options Outstanding Options Exercisable
------------------------------------------------------- --------------------------
Weighted Avg.
Remaining
Number Contractual Weighted Avg. Number Weighted Avg.
Exercise Price Outstanding Life Exercise Price Exercisable Exercise Price
-------------- ----------- ------------- -------------- ----------- --------------

$0.20 694 9.73 $ 0.20 694 $ .20
1.00 632 9.73 1.00 -- 1.00
----- ----
1,326 694
===== ====

11. Commitments and Contingencies

a. Leases

The Company operates many of its animal hospitals from premises that are
leased from the hospitals' previous owners under operating leases with terms,
including renewal options, ranging from one to 35 years. Certain leases include
purchase options which can be exercised at the Company's discretion at various
times within the lease terms.

The annual lease payments under the lease agreements have provisions for
annual increases based on the Consumer Price Index or other amounts specified
within the lease contracts.

The future minimum lease payments on operating leases at December 31, 2000,
including renewal option periods, are as follows (in thousands):

2001......................... $ 11,161
2002......................... 10,825
2003......................... 10,746
2004......................... 10,828
2005......................... 10,626
Thereafter................... 112,065
--------
$166,251
========

F-23

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Rent expense totaled $11.7 million, $10.4 million and $9.1 million for the
years ended December 31, 2000, 1999 and 1998, respectively. Rental income
totaled $259,000, $310,000 and $203,000 for the years ended December 31, 2000,
1999 and 1998, respectively.

b. Earn-out Payments

In connection with certain acquisitions, the Company assumed certain
contractual arrangements whereby additional cash may be paid to former owners
of acquired hospitals upon attainment of specified financial criteria over
periods of one to two years, as set forth in the respective agreements. The
amount to be paid cannot be determined until the earn-out periods expire and
the attainment of criteria is established. If the specified financial criteria
is attained in the future, but not exceeded, the Company will be obligated to
make cash payments of approximately $1.1 million over the next two years.

c. Officers' Compensation

Effective upon the closing of the Company's initial public offering, three
members of the Company's executive management will amend and restate employment
agreements with the Company. These members include the Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer. The Senior Vice President
will retain his existing employment agreement. These agreements aggregate to
$1.4 million in salary per year. The agreements allow for upward adjustments to
annual salary based on the Consumer Price Index for Los Angeles County. The
agreements also call for a maximum of $1.1 million to be paid as annual bonuses
based on annual performance goals to be set by the compensation committee of
the board of directors, except for the Senior Vice President, whose annual
bonus is based on EBITDA targets. Lastly, the agreements call for aggregate
severance payments under different scenarios with the maximum amount
approximating $8.5 million.

d. Management Services

On September 20, 2000, the Company entered into a ten-year management
services agreement with Leonard Green & Partners, L.P. for services relating to
investment banking, general consulting and financial planning. The agreement
calls for monthly payments of $207,000 and is subject to an increase of 1.6% of
any additional capital invested by Green Equity Investors III, L.P., a Delaware
limited partnership, any of its affiliates, or any of its co-investors in the
Company. In addition, Leonard Green received one-time fees of approximately
$7.6 million in connection with the Company's recapitalization on September 20,
2000.

e. State Laws

The laws of many states prohibit business corporations from providing, or
holding themselves out as providers of, veterinary medical care. These laws
vary from state to state and are enforced by the courts and by regulatory
authorities with broad discretion. While the Company seeks to structure its
operations to comply with the corporate practice of veterinary medicine laws of
each state in which it operates, there can be no assurance that, given varying
and uncertain interpretations of such laws, the Company would be found to be in
compliance with restrictions on the corporate practice of veterinary medicine
in all states. A determination that the Company is in violation of applicable
restriction on the practice of veterinary medicine in any state in which it
operates could have a material adverse effect on the Company, if the Company
were unable to restructure its operations to comply with the requirements of
such state.

F-24

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

believes conforms to the state law and the court's order. The Attorney General
of the State of Ohio has informed the Company that it disagrees with the
Company's position and that it does not believe that the Company is in
compliance with the court's order. The Company is currently in discussions with
the Attorney General's office in the State of Ohio in an attempt to resolve
this matter. The Company may not be able to reach a settlement, in which case
we would be required to discontinue our operations in the state. The Company's
five animal hospitals in the State of Ohio have a book value of $6.0 million as
of December 31, 2000. If the Company is required to discontinue its operations
in the State of Ohio, it may not be able to dispose of the hospital assets for
their book value. The animal hospitals located in the State of Ohio generated
revenue and operating income of $2.2 million and $513,000, respectively, in
2000.

f. Other Contingencies

The Company has certain contingent liabilities resulting from litigation and
claims incident to the ordinary course of its business. Management believes
that the probable resolution of such contingencies will not affect the
Company's financial position or results of operations.

12. Calculation of Per Share Amounts

A reconciliation of the income and shares used in the computations of the
basic and diluted earnings (loss) per share ("EPS") for each of the three years
in the period ended December 31, 2000 follows (amounts shown in thousands,
except per share amounts):

2000 1999 1998
-------- -------- --------

Income (loss) before extraordinary item.................................. $ (5,752) $ 22,357 $ 16,268
Increase in carrying amount of Redeemable Preferred Stock............. (5,391) -- --
-------- -------- --------
Income (loss) from continuing operations available to Common stockholders
(Basic and Diluted).................................................... $(11,143) $ 22,357 $ 16,268
======== ======== ========
Weighted average common shares outstanding:
Basic................................................................. 234,055 315,945 305,250
Effect of dilutive common shares stock options.................... -- 13,830 23,850
-------- -------- --------
Diluted............................................................... 234,055 329,775 329,100
======== ======== ========
Earnings per share (before extraordinary items)
Basic................................................................. $ (0.05) $ 0.07 $ 0.05
Diluted............................................................... $ (0.05) $ 0.07 $ 0.05

On September 20, 2000, the Company paid $1.00 per share, for a total payment
of $314.5 million, to repurchase 310,836,000 shares of its outstanding common
stock in connection with the Recapitalization, of which approximately $3.7
million was attributable to costs incurred in connection with the repurchase of
the Company's common stock. These per share and share amounts have been
adjusted to reflect a 15-for-1 stock split which took place after the
Recapitalization. Immediately after this repurchase, the Company issued 517,995
and 14,350,005 shares of common stock to its management and certain investors,
respectively, for $1.00 per share. As consideration for these shares, the
management shareholders signed promissory notes which become due in 2007 and
accrue interest at the rate of 6.22% per year, compounded annually.

At December 31, 2000, warrants to purchase an aggregate of 1,149,990 common
shares and 1,325,675 stock options were outstanding but were not included in
the computation of Diluted EPS because conversion would have an antidilutive
effect on Diluted EPS.

The $84.4 million of 5.25% convertible debentures which were convertible
into 36,849,345 shares of common stock were outstanding at both December 31,
1999 and 1998, but were not included in the computation of Diluted EPS, because
conversion would have an antidilutive effect on Diluted EPS. These convertible
debentures were retired in 2000.

F-25

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

13. Income Taxes

The provision for income taxes is comprised of the following for the three
years ended December 31, (in thousands):

2000 1999 1998
------ ------- -------

Federal:
Current.. $ (889) $10,161 $ 8,064
Deferred. 1,219 515 2,080
------ ------- -------
330 10,676 10,144
------ ------- -------
State:
Current.. (142) 2,850 2,157
Deferred. 166 834 653
------ ------- -------
24 3,684 2,810
------ ------- -------
$ 354 $14,360 $12,954
====== ======= =======

The consolidated statement of operations for the year ended December 31,
2000 includes a provision for income taxes of $2.2 million and a benefit for
income taxes of $1.8 million associated with the early extinguishment of debt;
the net provision is approximately $354,000 as reflected in the table above.

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards 109, "Accounting for Income Taxes" ("SFAS 109").
SFAS 109 requires recognition of deferred tax liabilities and assets for the
expected future consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates for the year in
which the differences are expected to reverse.

The net deferred tax asset (liability) at December 31 is comprised of (in
thousands):

2000 1999
------ -------

Current deferred tax assets (liabilities):
Accounts receivable........................... $1,273 $ 2,782
State taxes................................... (903) (457)
Other liabilities and reserves................ 3,696 2,347
Start-up costs................................ 66 66
Restructuring charges......................... -- 815
Other assets.................................. (294) (299)
Inventory..................................... 817 817
Valuation allowance........................... -- (1,858)
------ -------
Total current deferred tax asset, net..... $4,655 $ 4,213
====== =======

2000 1999
-------- -------

Non-current deferred tax (liabilities) assets:
Net operating loss carryforwards...................... $ 6,460 $ 5,704
Write-down of assets.................................. 1,377 1,433
Start-up costs........................................ 302 300
Other assets.......................................... 3,537 445
Intangible assets..................................... (11,934) (9,204)
Property and equipment................................ (1,720) (1,267)
Unrealized loss on investments........................ 2,555 355
Valuation allowance................................... (9,061) (4,421)
-------- -------
Total non-current deferred tax liability, net..... $ (8,484) $(6,655)
======== =======

F-26

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Under the Tax Reform Act of 1986, the utilization of NOL carryforwards to
reduce taxable income will be restricted under certain circumstances. Events
that cause such a limitation include, but are not limited to, a cumulative
ownership change of more than 50% over a three-year period. Management believes
that the Pets' Rx, Pet Practice and AAH mergers caused such a change of
ownership and, accordingly, utilization of the NOL carryforwards may be limited
in future years. Accordingly, the valuation allowance is principally related to
subsidiaries' NOL carryforwards as well as certain acquisition related
expenditures where the realization of this deduction is uncertain at this time.

At December 31, 2000, the Company has Federal net operating loss ("NOL")
carryforwards of approximately $20.3 million, comprised principally of NOL
carryforwards acquired in the Pets' Rx, Pet Practice and AAH mergers. Also
included in this amount is the loss generated in the current year which can be
utilized with no cumulative ownership change limitations in future years. These
NOL carryforwards expire at various dates through 2015.

On October 25, 1999, the FASB's Emerging Issues Task Force ("EITF") reached
consensus in Issue 99-15, "Accounting for Decreases in Deferred Tax Asset
Valuation Allowances Established in a Purchase Business Combination as a Result
of a Change in Tax Regulation" ("Issue No. 99-15"). Issue No. 99-15 is the
EITF's response to the Internal Revenue Services's June 25, 1999 ruling, as
stated in Treasury Regulation 1.1502-21, reducing the requirements for using
certain net operating loss carryovers and carrybacks ("NOLs"). As a result, the
Company recorded a deferred tax benefit during the year ended December 31, 1999
equal to $2.1 million.

As a result of a loss of $5.0 million recognized by the Company on its
investment in Zoasis, the valuation allowance is increased since it is more
likely than not that the carrying amount of the asset will not be recognized
due to the character of the loss.

A reconciliation of the provision for income taxes to the amount computed at
the Federal statutory rate for the three years ended December 31, is as follows:

2000 1999 1998
---- ---- ----

Federal income tax at statutory rate............................... (35)% 35% 35%
Effect of amortization of goodwill................................. 18 4 3
State taxes, net of federal benefit................................ (2) 7 6
Tax exempt income.................................................. (1) (1) (1)
Change in valuation allowance associated with the Recapitalization,
and the write-off of investments................................. 24 (6) --
Other.............................................................. -- -- 1
--- -- --
4% 39% 44%
=== == ==

14. 401(k) Plan

During 1992, the Company established a voluntary retirement plan under
Section 401(k) of the Internal Revenue Code. The plan covers all employees with
at least six months of employment with the Company and provides for annual
matching contributions by the Company at the discretion of the Company's board
of directors. In 2000, 1999 and 1998, the Company provided a total matching
contribution approximating $715,000, $353,000 and $942,000, respectively.

F-27

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. Lines of Business

During the three years ending December 31, 2000, the Company had three
reportable segments: Animal Hospital, Laboratory and Corporate. These segments
are strategic business units that have different products, services and
functions. The segments are managed separately because each is a distinct and
different business venture with unique challenges, rewards and risks. The
Animal Hospital segment provides veterinary services for companion animals and
sells related retail products. The Laboratory segment provides testing services
for veterinarians both associated with the Company and independent of the
Company. Corporate provides selling, general and administrative support for the
other segments and recognizes revenue associated with consulting agreements.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company evaluates
performance of segments based on profit or loss before income taxes, interest
income, interest expense and minority interest, which are evaluated on a
consolidated level. For purposes of reviewing the operating performance of the
segments, all intercompany sales and purchases are accounted for as if they
were transactions with independent third parties at current market prices.

The following is a summary of certain financial data for each of the three
segments (in thousands):

Intercompany
Animal Sales
Hospital Laboratory Corporate Eliminations Total
-------- ---------- --------- ------------ --------

2000
Revenue.......................... $240,624 $119,300 $ 925 $(6,162) $354,687
Operating income (loss).......... 30,818 34,355 (45,968) -- 19,205
Recapitalization costs........... -- -- 34,268 -- 34,268
Depreciation/amortization expense 12,167 4,472 2,239 -- 18,878
Identifiable assets.............. 312,473 109,453 61,144 -- 483,070
Capital expenditures............. 18,751 2,194 1,610 -- 22,555

1999
Revenue.......................... $217,988 $103,282 $ 5,100 $(5,810) $320,560
Operating income (loss).......... 26,765 28,039 (7,788) -- 47,016
Year 2000 remediation costs...... -- -- 2,839 -- 2,839
Reversal of restructuring charges -- -- 1,873 -- 1,873
Depreciation/amortization expense 10,472 4,234 1,757 -- 16,463
Identifiable assets.............. 280,742 105,224 40,534 -- 426,500
Capital expenditures............. 15,970 1,997 3,836 -- 21,803

1998
Revenue.......................... $191,888 $ 89,896 $ 5,100 $(5,845) $281,039
Operating income (loss).......... 23,487 20,141 (4,794) -- 38,834
Depreciation/amortization expense 8,488 4,074 570 -- 13,132
Identifiable assets.............. 226,182 106,217 60,484 -- 392,883
Capital expenditures............. 7,450 3,813 415 -- 11,678

Corporate operating loss includes salaries, general and administrative
expense for the executive, finance, accounting, human resources, marketing,
purchasing and regional operational management functions that support the
Animal Hospital and Laboratory segments.

F-28

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The following is a reconciliation between total segment operating income
after eliminations and consolidated income (loss) before provision for income
taxes and extraordinary items as reported on the consolidated statements of
operations (in thousands):

2000 1999 1998
-------- -------- --------

Total segment operating income after eliminations................ $ 19,205 $ 47,016 $ 38,834
Interest income.................................................. 850 1,194 2,357
Interest expense................................................. (20,742) (10,643) (11,189)
Minority interest................................................ (1,066) (850) (780)
Gain on sale of VPI.............................................. 3,200 -- --
Loss on investment in Zoasis..................................... (5,000) -- --
-------- -------- --------
Income (loss) before provision for income taxes and extraordinary
items.......................................................... $ (3,553) $ 36,717 $ 29,222
======== ======== ========

16. Restructuring and Asset Write-Down

During 1996, the Company adopted and implemented a restructuring plan (the
"1996 Plan") and recorded a restructuring charge of $5.7 million and an asset
write-down charge of $9.5 million. The major components of the 1996 Plan
included:

. the termination of leases, the write-down of intangibles, property and
equipment, and employee terminations in connection with the closure,
sale or consolidation of 12 animal hospitals;

. the termination of contracts and leases, the write-down of certain
property and equipment, and the termination of employees in connection
with the restructuring of the Company's laboratory operations; and

. contract terminations and write-down of assets in connection with the
migration to common communications and computer systems.

Collectively, the 12 hospitals had aggregate revenue of $6.8 million and net
operating loss of $350,000 for the year ended December 31, 1996. The
restructuring of the Company's laboratory operations consisted primarily of:

. plans to relocate the Company's facility in Indiana to Chicago;

. the downsizing of its Arizona laboratory operations;

. the standardization of laboratory and testing methods throughout all of
the Company's laboratories, resulting in the write-down of equipment
that will no longer be utilized; and

. the shutdown of a laboratory facility in the Midwest.

During 1999, pursuant to the 1996 Plan, the Company incurred the following:

. Cash expenditures for $345,000 for lease and other contractual
obligations.

. Non-cash asset write-downs of $157,000, primarily pertaining to
hospitals previously closed and the shutdown of certain computer systems.

. The Company recognized a $321,000 favorable settlement related to a
laboratory operations' contract that was terminated as part of the 1996
restructuring plan.

. During the fourth quarter of 1999, the Company was released from its
contractual obligation pertaining to certain facility leases for
hospitals that were sold in 1997. In addition, the Company reached a
favorable settlement on contractual obligations pertaining to its
migration to common communications and computer systems, a component of
the 1996 Plan. As a result of these two favorable outcomes, the Company
reversed $889,000 of restructuring charges.

F-29

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

During 1998, the Company took the following actions pursuant to the 1996
Plan:

. The Company closed one animal hospital.

. The Company shutdown certain computer hardware and software, as part of
our migration to common computer systems.

. The Company decided that two hospitals would continue to be operated
instead of closed as was originally outlined in the 1996 restructuring
plan. The hospitals' local markets improved since the 1996 Plan was
determined, causing the Company's management to revise its plan.

. The Company terminated its attempt to sell one hospital because it has
been unable to negotiate a fair sales price based on the hospital's
operating results.

Reserves of $593,000 related to the three hospitals were ultimately
retained, were utilized to offset increases in the expected cost to extinguish
lease commitments and contract obligations that were part of the 1996 Plan.

As of December 31, 1999, all phases of the 1996 Plan were complete and no
restructuring reserves remained on the Company's balance sheet.

During 1997, the Company reviewed the financial performance of its
hospitals. As a result of this review, an additional 12 hospitals were
determined not to meet the Company's performance standards. Accordingly, the
Company adopted phase two of its restructuring plan (the "1997 Plan") resulting
in restructuring and asset write-down charges of $2.1 million. The major
components of the 1997 Plan consisted of the termination of leases, amounting
to $1.2 million, and the write-down of intangibles, property and equipment,
amounting to $876,000, in connection with the closure or sale of 12 animal
hospitals. Collectively, the 12 hospitals had aggregate revenue of $5.4 million
and net operating income of $176,000 for the year ended December 31, 1997.

During the year ended December 31, 2000, the Company incurred $190,000 of
expenditures for lease and other contractual obligations.

During 1999, the actions taken pursuant to the 1997 Plan were as follows:

. The Company sold one hospital resulting in cash expenditures of $2,000
and non-cash asset write-downs of $64,000.

. The Company closed three hospitals resulting in cash expenditures of
$4,000 and non-cash asset write-downs of $53,000.

. The Company incurred cash expenditures of $71,000 for lease and other
contractual obligations.

. The Company recorded an additional $28,000 non-cash asset write-down
pertaining to a hospital previously closed.

. During the fourth quarter of 1999, the Company reached favorable
settlements from the sale and/or closure of the hospitals noted in the
first two bulleted points above. As a result the Company reversed
$663,000 of restructuring charges.

During 1998, the Company closed three animal hospitals pursuant to the 1997
Plan, resulting in the write-off of $299,000 of property and equipment and cash
expenditures of $81,000 for lease obligations and closing costs. Also during
1998, we determined that five of the animal hospitals that were to be sold as a
part of the 1997 Plan would be kept due to their improved performance.

F-30

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 2000, $153,000 of the restructuring reserves from the 1997
Plan remain on our balance sheet, consisting primarily of lease and other
contractual obligations. All significant phases of the 1997 Plan were complete
as of December 31, 1999, although certain lease obligations will continue
though 2005.

The following tables summarize the activity in the Company's restructuring
reserves (in thousands):

The 1996 Plan
-------------
Cash Non-Cash
Charges Charges Total
------- -------- ------

Balance, December 31, 1997....................................... $2,635 $ 377 $3,012
Cash expenditures for lease and other contractual obligations. (989) -- (989)
Non-cash net assets write-downs............................... -- (632) (632)
Reclassifications............................................. (255) 255 --
------ ----- ------
Balance, December 31, 1998....................................... 1,391 -- 1,391
Cash expenditures for lease and other contractual obligations. (345) -- (345)
Non-cash net asset write-downs................................ -- (157) (157)
Reclassifications............................................. (157) 157 --
Reversal of restructuring reserves............................ (889) -- (889)
------ ----- ------
Balance, December 31, 1999....................................... $ -- $ -- $ --
====== ===== ======

The 1997 Plan
-------------
Cash Non-Cash
Charges Charges Total
------- -------- ------

Balance, December 31, 1997....................................... $ 842 $ 766 $1,608
Cash expenditures for lease and other contractual obligations. (81) -- (81)
Non-cash net assets write-downs............................... -- (299) (299)
Reclassifications............................................. 105 (105) --
------ ----- ------
Balance, December 31, 1998....................................... 866 362 1,228
Cash expenditures for lease and other contractual obligations. (77) -- (77)
Non-cash net asset write-downs................................ -- (145) (145)
Reversal of restructuring reserves............................ (446) (217) (663)
------ ----- ------
Balance, December 31, 1999....................................... 343 -- 343
Cash expenditures for lease and other contractual obligations. (190) -- (190)
------ ----- ------
Balance, December 31, 2000....................................... $ 153 $ -- $ 153
====== ===== ======

17. Subsequent Events

From January 1, 2001 through March 28, 2001, the Company has acquired nine
animal hospitals, of which two were merged upon acquisition into existing VCA
facilities, for an aggregate consideration (including acquisition costs) of
$11.9 million, consisting of $10.3 million in cash, $1.5 million in debt and
the assumption of liabilities totaling $80,000. In addition, on January 30,
2001, the Company opened a diagnostics imaging center that performs CT scans
and MRI's. The total cost of forming the center was $800,000, consisting of
equipment and leasehold improvements.

F-31

VCA ANTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

As of September 30, 2001 and December 31, 2000

(Unaudited)

(In thousands)

ASSETS

September 30,
2001 December 31,
(Restated) 2000
------------- ------------

Current assets:
Cash and equivalents.................................................... $ 23,631 $ 10,519
Trade accounts receivable, less allowance for uncollectible accounts of
$5,077 and $4,110 at September 30, 2001 and December 31, 2000,
respectively.......................................................... 17,138 15,450
Inventory, prepaid expense and other.................................... 8,080 9,197
Deferred income taxes................................................... 5,837 4,655
Prepaid income taxes.................................................... 8,923 9,402
--------- ---------
Total current assets................................................ 63,609 49,223
Property and equipment, net................................................ 89,060 86,972
Goodwill, net.............................................................. 316,308 310,185
Covenants not to compete, net.............................................. 15,512 19,549
Notes receivable, net...................................................... 2,983 2,178
Deferred financing costs, net.............................................. 11,839 13,373
Other...................................................................... 1,916 1,590
--------- ---------
$ 501,227 $ 483,070
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations................................ $ 8,952 $ 5,756
Accounts payable........................................................ 7,885 8,393
Accrued payroll and related liabilities................................. 12,265 8,335
Other accrued liabilities............................................... 17,653 16,687
--------- ---------
Total current liabilities........................................... 46,755 39,171
Long-term obligations, less current portion................................ 362,413 356,993
Deferred income taxes...................................................... 14,657 8,484
Minority interest.......................................................... 5,143 3,610
Other liabilities.......................................................... -- 1,500
Series A Redeemable Preferred Stock, at redemption value................... 86,342 77,875
Series B Redeemable Preferred Stock, at redemption value................... 83,863 76,747
Stockholders' equity (deficit):
Common stock............................................................ 182 175
Additional paid-in capital.............................................. 26,796 19,053
Notes receivable from stockholders...................................... (518) (518)
Accumulated deficit..................................................... (122,388) (100,020)
Accumulated comprehensive loss.......................................... (2,018) --
--------- ---------
Total stockholders' deficit......................................... (97,946) (81,310)
--------- ---------
$ 501,227 $ 483,070
========= =========

The accompanying notes are an integral part of these condensed consolidated
balance sheets.

F-32

VCA ANTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2001 and 2000
(Unaudited)
(In thousands)

Nine Months Ended
September 30,
-------------------
2001
(Restated) 2000
---------- --------

Revenue............................................................................... $305,365 $269,281
Direct costs (excludes operating depreciation of $6,182 and $4,998 for the nine months
ended September 30, 2001 and 2000, respectively).................................... 212,042 191,269
-------- --------
93,323 78,012
Selling, general and administrative................................................... 24,166 20,465
Depreciation and amortization......................................................... 19,121 13,200
Write-down and loss on sale of assets................................................. 8,745 --
Recapitalization costs................................................................ -- 34,268
Stock-based compensation.............................................................. 7,611 555
-------- --------
Operating income................................................................... 33,680 9,524
Net interest expense.................................................................. 32,387 8,433
Other (income) expense................................................................ 233 (3,200)
-------- --------
Income before minority interest and provision for income taxes..................... 1,060 4,291
Minority interest in income of subsidiaries........................................... 1,104 808
-------- --------
Income (loss) before provision for income taxes and extraordinary item............. (44) 3,483
Provision for income taxes............................................................ 6,741 2,709
-------- --------
Income (loss) before extraordinary item............................................ (6,785) 774
Extraordinary loss on early extinguishment of debt (net of income tax benefit
of $1,845)........................................................................... -- 2,659
-------- --------
Net income (loss).................................................................. $ (6,785) $ (1,885)
======== ========
Increase in carrying amount of redeemable preferred stock............................. 15,583 539
-------- --------
Net income (loss) available to common stockholders.................................... $(22,368) $ (2,424)
======== ========
Basic earnings (loss) per common share:
Income (loss) before extraordinary item............................................ $ (1.27) $ --
Extraordinary loss on early extinguishment of debt................................. -- (0.01)
-------- --------
Earnings (loss) per common share................................................... $ (1.27) $ (0.01)
======== ========
Diluted earnings (loss) per common share:
Income (loss) before extraordinary item............................................ $ (1.27) $ --
Extraordinary loss on early extinguishment of debt................................. -- (0.01)
-------- --------
Earnings (loss) per common share................................................... $ (1.27) $ (0.01)
======== ========
Shares used for computing basic earnings (loss) per share.......................... 17,643 306,718
======== ========
Shares used for computing diluted earnings (loss) per share........................ 17,643 306,718
======== ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-33

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

For the Nine Months Ended September 30, 2001

(Unaudited)

(Restated)

(In thousands)

Notes
Common Stock Additional Receivable Accumulated
------------- Paid-In From Retained Comprehensive
Shares Amount Capital Stockholders (Deficit) Loss Total
------ ------ ---------- ------------ --------- ------------- --------

BALANCES, December 31, 2000......... 17,524 $175 $19,053 $(518) $(100,020) $ -- $(81,310)
Net loss......................... -- -- -- -- (6,785) -- (6,785)
Unrealized loss on collar
agreement....................... -- -- -- -- -- (2,018) (2,018)
Stock-based compensation......... -- -- 7,611 -- -- -- 7,611
Increase in carrying amount of
Redeemable Preferred Stock...... -- -- -- -- (15,583) -- (15,583)
Exercise of stock options........ 692 7 132 -- -- -- 139
------ ---- ------- ----- --------- ------- --------
BALANCES, September 30, 2001......... 18,216 $182 $26,796 $(518) $(122,388) $(2,018) $(97,946)
====== ==== ======= ===== ========= ======= ========

F-34

VCA ANTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2001 and 2000
(Unaudited)
(In thousands)

2001
(Restated) 2000
---------- ---------

Cash flows from operating activities:
Net income (loss).......................................................... $ (6,785) $ (1,885)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization........................................... 19,121 13,200
Amortization of debt discount and deferred financing costs.............. 1,667 283
Extraordinary loss on early extinguishment of debt...................... -- 4,504
Recapitalization costs.................................................. -- 34,268
Interest paid in kind on senior notes................................... 12,259 --
Write-down and loss on sale of assets................................... 8,745 --
Gain on sale of investment in VPI....................................... -- (3,200)
Minority interest in income of subsidiaries............................. 1,104 808
Distributions to minority interest partners............................. (1,083) (1,031)
Stock-based compensation................................................ 7,611 555
Provision for uncollectible accounts.................................... 2,182 2,379
Increase in accounts receivable, net.................................... (3,736) (5,139)
Decrease (increase) in inventory, prepaid expense and other assets...... 686 (16)
Decrease (increase) in prepaid income taxes............................. 479 (3,103)
Increase in accounts payable and accrued liabilities.................... 3,575 5,352
Decrease in deferred revenue............................................ (1,500) --
Change in deferred taxes, net........................................... 4,991 --
-------- ---------
Net cash provided by operating activities............................ 49,316 46,975
-------- ---------
Cash flows from investing activities:
Property and equipment additions........................................ (10,604) (13,686)
Business acquisitions, net of cash acquired............................. (20,615) (8,988)
Proceeds from sales of marketable securities, net....................... -- 135,666
Investments in marketable securities, net............................... -- (129,992)
Payment for covenants not to compete.................................... -- (15,630)
Proceeds from sale of real estate....................................... 603 --
Net proceeds from sale of investment in VPI............................. -- 8,200
Investment in Zoasis ................................................... -- (5,000)
Other................................................................... 285 317
-------- ---------
Net cash used in investing activities................................ (30,331) (29,113)
-------- ---------
Cash flows from financing activities:
Repayment of long-term obligations...................................... (3,735) (172,342)
Net payments related to recapitalization................................ (2,138) (29,643)
Proceeds from issuance of long-term debt................................ -- 356,670
Payment of deferred financing costs..................................... -- (13,958)
Proceeds from issuance of common stock under stock option plans......... -- 923
Purchase of treasury stock.............................................. -- (3,323)
Proceeds from issuance of preferred stock............................... -- 149,231
Proceeds from issuance of common stock.................................. -- 14,350
Proceeds form issuance of stock warrants................................ -- 1,149
Repurchase of common stock.............................................. -- (314,508)
-------- ---------
Net cash used in financing activities................................ (5,873) (11,451)
-------- ---------
Increase (decrease) in cash and equivalents.................................... 13,112 6,411
Cash and equivalents at beginning of period.................................... 10,519 10,620
-------- ---------
Cash and equivalents at end of period.......................................... $ 23,631 $ 17,031
======== =========

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-35

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2001
(Unaudited)

(1) General

The accompanying unaudited condensed consolidated financial statements of
VCA Antech, Inc. and subsidiaries (the "Company" or "VCA") have been prepared
in accordance with accounting principles generally accepted in the United
States for interim financial information and in accordance with the rules and
regulations of the United States Securities and Exchange Commission (the
"SEC"). Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States for
complete financial statements as permitted under applicable rules and
regulations. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. The results of operations for the
nine months ended September 30, 2001 are not necessarily indicative of the
results to be expected for the full year. For further information, refer to the
Company's 2000 consolidated financial statements and footnotes thereto included
in the Company's S-1 Registration Statement filed on August 9, 2001 with the
SEC. Prior to September 24, 2001, VCA was known as Veterinary Centers of
America, Inc.

As described in Footnote 9--Stock-Based Compensation, the Company has
restated its previously issued results of operations for the nine months ended
September 30, 2001.

(2) Acquisitions

During the third quarter of 2001, the Company purchased five animal
hospitals, one of which was merged into existing VCA facilities, for an
aggregate consideration (including acquisition costs) of $7.4 million,
consisting of $6.0 million in cash, $1.4 million in debt and the assumption of
liabilities totaling $40,000. The $7.4 million aggregate purchase price was
allocated as follows: $425,000 to tangible assets, $5.8 million to goodwill and
$1.2 million to other intangible assets.

During the second quarter of 2001, the Company purchased four animal
hospitals, two of which were merged into existing VCA facilities, for an
aggregate consideration (including acquisition costs) of $2.7 million,
consisting of $2.4 million in cash, $320,000 in debt and the assumption of
liabilities totaling $30,000. The $2.7 million aggregate purchase price was
allocated as follows: $82,000 to tangible assets, $2.0 million to goodwill and
$609,000 to other intangible assets.

During the first quarter of 2001, the Company purchased nine animal
hospitals, two of which were merged into existing VCA facilities for an
aggregate consideration (including acquisition costs) of $11.9 million,
consisting of $10.4 million in cash, $1.4 million in debt and the assumption of
liabilities totaling $80,000. The $11.9 million aggregate purchase price was
allocated as follows: $827,000 to tangible assets, $9.5 million to goodwill and
$1.6 million to other intangible assets.

(3) Write-down and loss on sale of assets

The Company periodically evaluates whether events, circumstances or net
losses at the entity level have occurred that indicate the remaining estimated
useful life of goodwill may warrant revision or that the remaining balance may
not be recoverable. As a result of such analysis, the Company recorded a
write-down of goodwill at one animal hospital in the amount of approximately
$800,000 during 2001.

Also during 2001, five animal hospitals were closed because their operating
performance was unsatisfactory. The book value of the related goodwill and
certain other assets that were determined to be unrecoverable of approximately
$6.0 million was written off during 2001.

During the nine months ended September 30, 2001, the Company determined to
sell three properties whose fair value was less than their respective book
value.

F-36

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In 2001, the Company sold substantially all the assets of one animal
hospital and a portion of real estate related to another animal hospital. Both
sales were completed during the nine months ended September 30, 2001 for
aggregate cash proceeds of $603,000. In connection with these asset sales, the
Company recorded a pre-tax loss of $778,000.
As a result of the items discussed above, a non-cash charge to operations in
the amount of approximately $8.7 million was recorded in 2001.

(4) Calculation of Per Share Amounts

Below is a reconciliation of the income (loss) and shares used in the
computations of the basic and diluted earnings (loss) per share before
extraordinary items ("EPS") (amounts in thousands, except per share amounts):

Nine Months Ended
September 30,
-------------------
2001
(Restated) 2000
---------- --------

Income (loss) before extraordinary item............................................. $ (6,785) $ 774
Increase in carrying amount of Redeemable Preferred Stock........................... (15,583) (539)
-------- --------
Income (loss) from continuing operations available to common shareholders (basic and
diluted).......................................................................... $(22,368) $ 235
======== ========
Weighted average common shares outstanding:
Basic............................................................................ 17,643 306,718
Effect of dilutive common shares:
Stock options................................................................ -- 535
Warrants..................................................................... -- 1,149
-------- --------
Diluted.......................................................................... 17,643 308,402
======== ========
Earnings (loss) per share (before extraordinary items):
Basic............................................................................ $ (1.27) $ --
======== ========
Diluted.......................................................................... $ (1.27) $ --
======== ========

(5) Comprehensive Loss

Below is a calculation of comprehensive loss (in thousands):

Nine Months Ended
September 30,
------------------
2001
(Restated) 2000
---------- -------

Net loss............................................... $(6,785) $(1,885)
Decrease in the intrinsic value of the collar agreement (2,018) --
Decrease in unrealized loss on investment.............. -- 361
------- -------
Net comprehensive loss................................. $(8,803) $(1,524)
======= =======

No income tax benefit related to the unrealized loss on investment was
recognized due to the potential tax treatment of investment losses. See
Footnote 8, Derivatives, for additional information regarding the collar
agreement.

F-37

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

(6) Lines of Business

During the nine months ended September 30, 2001 and 2000, the Company had
three reportable segments: Animal Hospital, Laboratory and Corporate. These
segments are strategic business units that have different products, services
and functions. The segments are managed separately because each is a distinct
and different business venture with unique challenges, rewards and risks. The
Animal Hospital segment provides veterinary services for companion animals and
sells related retail products. The Laboratory segment provides testing services
for veterinarians both associated with the Company and independent of the
Company. Corporate provides selling, general and administrative support for the
other segments and recognizes revenue associated with consulting agreements.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies as detailed in the Company's
2000 Financial Statements included in the Company's S-1 filing. The Company
evaluates performance of segments based on profit or loss before income taxes,
interest income, interest expense and minority interest, which are evaluated on
a consolidated level. For purposes of reviewing the operating performance of
the segments, all intercompany sales and purchases are accounted for as if they
were transactions with independent third parties at current market prices.

Below is a summary of certain financial data for each of the three segments
(in thousands):

Animal Intercompany
Hospital Laboratory Corporate Eliminations Total
-------- ---------- --------- ------------ --------

Nine Months Ended September 30, 2001
Revenue........................... $207,665 $101,855 $ 1,500 $(5,655) $305,365
Operating income (loss)........... 32,330 31,807 (14,101) -- 50,036
Depreciation/amortization expense. 10,829 3,457 4,835 -- 19,121
Capital expenditures.............. 7,093 1,548 1,963 -- 10,604

Nine Months Ended September 30, 2000
Revenue........................... $182,716 $ 90,831 $ 425 $(4,691) $269,281
Operating income (loss)........... 25,114 27,165 (7,932) -- 44,347
Depreciation/amortization expense. 9,173 3,330 697 -- 13,200
Capital expenditures.............. 11,144 1,208 1,334 -- 13,686

At September 30, 2001
Identifiable assets............... 323,764 110,480 66,983 -- 501,227
At December 31, 2000
Identifiable assets............... 312,473 109,453 61,144 -- 483,070

F-38

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Below is a reconciliation between total segment operating income after
eliminations and consolidated income (loss) before provision for income taxes
as reported on the condensed consolidated statements of operations (in
thousands):

Nine Months Ended
September 30,
------------------
2001
(Restated) 2000
---------- -------

Total segment operating income after eliminations $50,036 $44,347
Write-down and loss on sale of assets......... 8,745 --
Stock-based compensation...................... 7,611 555
Recapitalization costs........................ -- 34,268
------- -------
Total reported operating income.................. 33,680 9,524

Net interest expense.......................... 32,387 8,433
Other (income) expense........................ 233 (3,200)
Minority interest............................. 1,104 808
------- -------
Income (loss) before provision for income taxes.. $ (44) $ 3,483
======= =======

(7) Other (Income) Expense

The components of other (income) expense are as follows:

. Loss on hedging instrument--For the nine months ended September 30,
2001, the Company incurred non-cash charges of $233,000 for changes in
the time value of a collar agreement. See Footnote 8, "Derivatives", for
additional information.

. Gain on sale of VPI--The Company sold its investment in VPI and received
$8.2 million in cash in February 2000, resulting in a one-time gain of
approximately $3.2 million for the nine months ended September 30, 2000.

(8) Derivatives

Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments
and Hedging Activities ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities,
(collectively referred to as "derivatives"). All derivatives, whether
designated in hedging relationships or not, are required to be recorded on the
balance sheet at fair value with offsets to other comprehensive income or
earnings, depending on the type of derivative and/or the underlying cause for
the change in fair value.

On November 13, 2000, the Company entered into a no-fee interest rate collar
agreement with Wells Fargo Bank effective November 15, 2000 and expiring
November 15, 2002 (the "collar agreement"). The collar agreement is based on
LIBOR, pays out monthly, resets monthly and has a cap and floor notional amount
of $62.5 million, with a cap rate of 7.5% and floor rate of 5.9%.

The actual cash paid by the Company as a result of LIBOR rates being below
the floor of the collar agreement are recorded as a component of earnings. As
of September 30, 2001, the Company has paid $600,000 because of LIBOR rates
being below the floor of 5.9%. These payments were all made during the nine
months ended September 30, 2001 and are included in interest expense.

F-39

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company's objective for entering into the collar agreement is to
minimize the interest rate risks related to our variable rate debt.

The collar agreement is considered a cash flow hedge. Because LIBOR rates at
September 30, 2001 were below the floor rate in the collar agreement of 5.9%
and are projected to remain below the floor rate through the term of the collar
agreement, the fair value of the collar agreement is a net liability to the
Company of $2.2 million at September 30, 2001. The net liability is recorded in
the Company's balance sheet as part of other liabilities. The valuation of the
collar agreement is the sum of the following:

. Non-cash charges for the changes in the time value of the collar
agreement were recorded as a component of other income and expense of
$233,000 for the nine months ending September 30, 2001. The cumulative
effect of changes in the value of the collar agreement prior to adoption
of SFAS 133 was immaterial.

. A non-cash charge for the changes in the intrinsic value of the collar
agreement resulting in a cumulative net charge of $2.0 million to other
comprehensive income as of September 30, 2001.

(9) Stock-Based Compensation

In connection with the Recapitalization, employee option holders were
allowed to exchange their stock options for new stock options with the same
intrinsic value. The stock option exchange offer resulted in variable
accounting treatment for the new stock options. The Company engaged an
appraisal firm to determine the fair value of its common stock as of June 30,
2001. The appraisal firm determined that the fair value of the Company's common
stock was $1.55 per share, an increase from the $1.00 per share fair value at
the time of the Recapitalization. The Company recorded stock-based compensation
expense of $382,000 for the nine months ended September 30, 2001 due to the
increase in the fair value of Company's common stock from $1.00 per share to
$1.55 per share. As the Company is now preparing to issue shares of its common
stock in an offering that may be priced at $12.00 per share, the prior estimate
of the fair value of the Company's common stock does not appear to take into
consideration the actual fair value of such common stock in light of these
circumstances. As a result, the Company has restated its previously issued
financial statements for the nine months ended September 30, 2001 to reflect a
compensation charge of $7.6 million related to these stock options. The
additional compensation charge of $7.2 million reduced net income from $444,000
to a net loss of $6.8 million, increased net loss available to common
shareholders from $15.1 million to $22.4 million and increased the net loss per
common share from $0.86 to $1.27.

In August 2001, all of these options were exercised by the holders, which
caused variable accounting treatment to cease.

(10) Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 142, Goodwill and Other Intangible Assets, which changes the way companies
account for intangible assets and goodwill associated with business
combinations. The principle changes of SFAS No. 142 are as follows:

. All goodwill amortization will cease effective January 1, 2002. For the nine
months ended September 30, 2001, the Company recorded $6.9 million of
goodwill amortization.

. All of the goodwill on the Company's balance sheet at June 30, 2001 will
continue to be amortized through the remaining months of 2001, under their
current amortization schedules.

. All goodwill acquired in acquisitions after June 30, 2001 will not be
subject to amortization in 2001 or in the future.

F-40

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

. All goodwill will be reviewed annually, or as circumstances warrant, using
the fair-value-based goodwill impairment tests discussed in SFAS No. 142. As
of September 30, 2001, our goodwill balance was $316.3 million. Any
impairment recognized associated with the adoption of SFAS No. 142 will be
accounted for as a cumulative effect of change in accounting principal.

All other intangible assets typically included in goodwill will be valued
independently and amortized over their useful lives. For the Company these
intangibles may include:

. the value of names and addresses associated with customer lists, and

. the value of established business names.

The impact of SFAS No. 142 on the Company's financial statements has not yet
been determined.

In July, 2001, the FASB issued SFAS No. 141, Business Combinations, which
requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method of accounting. The Company does not
expect the impact of SFAS No. 141 to have a material impact on its financials
statements or its operations.

In August 2001, FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS No. 144 supercedes SFAS No. 121 and the
accounting and reporting provisions of Accounting Principles Board Opinion No.
30. SFAS No. 144 is intended to establish a single accounting model, based on
the framework established in SFAS No. 121, for long-lived assets to be disposed
of by sale, and to resolve certain implementation issues related to SFAS No.
121. The provisions of SFAS No. 144 generally are to be applied prospectively.
The Company will adopt SFAS No. 144 in the first quarter of 2002. The Company
has not yet determined what the impact of SFAS No. 144 will be on its financial
statements.

(11) Reclassifications

Certain 2000 balances have been reclassified to conform to the 2001
financial statement presentation.

(12) Commitments and Contingencies

a. Officers' Compensation

Effective upon the closing of the Company's initial public offering, three
members of the Company's executive management will amend and restate employment
agreements with the Company. These members include the Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer. The Senior Vice President
will retain his existing employment agreement. These agreements aggregate to
$1.4 million in salary per year. The agreements allow for upward adjustments to
annual salary based on comparable compensation packages for executives at
similarly-situated companies, except for the Senior Vice President, whose
upward annual salary adjustment is based on the Consumer Price Index for Los
Angeles County. The agreements also call for a maximum of $1.1 million to be
paid as annual bonuses based on annual performance goals to be set by the
compensation committee of the board of directors, except for the Senior Vice
President, whose annual bonus is based on EBITDA targets. Lastly, the
agreements call for aggregate severance payments under different scenarios with
the maximum amount approximating $8.5 million.

b. State Laws

F-41

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

regulatory authorities with broad discretion. While the Company seeks to
structure its operations to comply with the corporate practice of veterinary
medicine laws of each state in which it operates, there can be no assurance
that, given varying and uncertain interpretations of such laws, the Company
would be found to be in compliance with restrictions on the corporate practice
of veterinary medicine in all states. A determination that the Company is in
violation of applicable restriction on the practice of veterinary medicine in
any state in which it operates could have a material adverse effect on the
Company, if the Company were unable to restructure its operations to comply
with the requirements of such state.

For example, the Company is currently a party to a lawsuit in the State of
Ohio in which the State has alleged that the Company's management of a licensed
veterinary medical group violates the Ohio statute prohibiting business
corporations from providing or holding themselves out as providers of
veterinary medical care. On March 20, 2001, the trial court in the case entered
summary judgment in favor of the State of Ohio and issued an order enjoining
the Company from operating in the State of Ohio in a manner that is in
violation of the state statute. In response, the Company has restructured its
operations in the State of Ohio in a manner that it believes conforms to the
state law and the court's order. The Attorney General of the State of Ohio has
informed the Company that it disagrees with the Company's position and that it
does not believe that the Company is in compliance with the court's order. The
Company is currently in discussions with the Attorney General's office in the
State of Ohio in an attempt to resolve this matter. The Company may not be able
to reach a settlement, in which case we would be required to discontinue our
operations in the State. The Company's five animal hospitals in the State of
Ohio have a book value of $6.1 million as of September 30, 2001. If the Company
is required to discontinue its operations in the State of Ohio, it may not be
able to dispose of the hospital assets for their book value. The animal
hospitals located in the State of Ohio generated revenue and operating income
of $1.7 million and $376,000, respectively, for the nine months ended September
30, 2001.

F-42

[LOGO] VCA ANTECH

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table itemizes the expenses incurred by the Registrant in
connection with the issuance and distribution of the Securities being
registered, other than underwriting discounts. All the amounts shown are
estimates except the Securities and Exchange Commission registration fee and
the NASD filing fee.

Registration fee--Securities and Exchange Commission....... $ 60,375
Filing fee--National Association of Securities Dealers, Inc 24,650
Listing fee--The Nasdaq National Market.................... 95,000
Accounting fees and expenses............................... 250,000
Legal fees and expenses (other than blue sky).............. 450,000
Blue sky fees and expenses, including legal fees........... 10,000
Printing; stock certificates............................... 200,000
Transfer agent and registrar fees.......................... 15,000
Miscellaneous.............................................. 50,000
----------
Total................................................... $1,155,025
==========

Item 14. Indemnification of Directors and Officers.

Subsection (a) of Section 145 of the General Corporation Law of the State of
Delaware, the "DGCL," empowers a corporation to indemnify any person who by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful.

Subsection (b) of Section 145 empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he acted in any of
the capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards, except
that no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
action or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.

Section 145 further provides that to the extent that a director or officer
of a corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
Section 145, or in the defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith; that indemnification
provided by, or granted pursuant to, Section 145 shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled; and
empowers the corporation to purchase and maintain insurance on
behalf of any person who is or was a director or officer of the corporation, or
is or was serving at the request of

II-1

the corporation as a director, officer, employee or against another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.

As permitted by Delaware law, our amended and restated certificate of
incorporation, which is filed as Exhibit 3.1, provides that no director of ours
will be personally liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, except for the following:

. for liability for any breach of duty of loyalty to us or to our
stockholders;

. for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law;

. for unlawful payment of dividends or unlawful stock repurchases or
redemptions under Section 174 of the Delaware General Corporation Law; or

. for any transaction from which the director derived an improper personal
benefit.

Our amended and restated certificate of incorporation further provides that
we must indemnify our directors and executive officers and may indemnify our
other officers and employees and agents to the fullest extent permitted by
Delaware law. We believe that indemnification under our amended and restated
certificate of incorporation covers negligence and gross negligence on the part
of indemnified parties. Our by-laws, which is filed as Exhibit 3.2, provides us
with the authority to indemnify our directors, officers and agents to the full
extent allowed by Delaware law.

We intend to enter into indemnification agreements, the form of which is
filed as Exhibit 10.13, with each of our directors and officers. These
agreements, among other things, will require us to indemnify each director and
officer for certain expenses including attorneys' fees, judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in our right, arising out of the person's services
as our director or officer, any subsidiary of ours or any other company or
enterprise to which the person provides services at our request.

The underwriting agreement will provide for indemnification by our
underwriters, our directors, our officers who sign the registration statement,
and our controlling persons for some liabilities, including liabilities arising
under the Securities Act.

Item 15. Recent Sales of Unregistered Securities.

In January 2000, we granted 793,860 shares of restricted stock bonus awards
to Robert L. Antin, 504,045 shares to Arthur J. Antin, 335,190 shares to Neil
Tauber, 317,550 shares to Tomas W. Fuller and 30,000 shares to Dawn Olsen for
an aggregate of 1,980,645 shares of common stock. These stock bonus awards have
all been exercised. These shares were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act.

In February 1999 and January 1998, we granted 1,212,660 shares of restricted
stock bonus awards to Robert L. Antin, 752,940 shares to Arthur J. Antin,
330,675 shares to Neil Tauber, 394,620 shares to Tomas W. Fuller and 49,350
shares to Dawn Olsen for an aggregate of 2,740,245 shares of common stock.
These stock bonus awards have all been exercised. These shares were issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act.

As part of our recapitalization, on September 20, 2000 we made the following
sales of unregistered securities:

. Issued and sold 17,524,337 shares of our common stock at a per share
purchase price of $1.00 for an aggregate purchase price of $17.5 million
to the following: Robert L. Antin, 1,906,380 shares; Arthur J. Antin,
400,005 shares; Neil Tauber, 49,995 shares; Tomas W. Fuller, 200,010
shares; certain entities

II-2

controlled by Leonard Green & Partners, 14,336,112 shares; and certain
of our employees, some of whom are accredited and some of whom are
unaccredited, 631,835 shares. These securities were issued in reliance
on the exemption from registration provided by Regulation D, Rule 506,
of the Securities Act.

. Issued and sold 2,998,408 shares of 14% Series A Senior Redeemable
Exchangeable Cumulative Preferred Stock at a per share purchase price of
$25.00 for an aggregate purchase price of approximately $75.0 million to
the following: Green Equity Investors III, L.P. and affiliated
investment funds, 2,826,000 shares; GS Mezzanine Partners II, L.P. and
affiliated investment funds, 122,123 shares; TCW Leveraged Income Trust,
L.P. and affiliated investment funds, 35,918 shares; and The
Northwestern Mutual Life Insurance Company, 14,367 shares. These
securities were issued in reliance on the exemption from registration
provided by Regulation D, Rule 506, of the Securities Act.

. Issued and sold 2,970,822 shares of 12% Series B Junior Redeemable
Cumulative Preferred Stock at a per share purchase price of $25.00 for
an aggregate purchase price of approximately $74.3 million to the
following: Green Equity Investors III, L.P. and affiliated investment
funds, 2,800,000 shares; GS Mezzanine Partners II, L.P. and affiliated
investment funds, 121,000 shares; TCW Leveraged Income Trust, L.P. and
affiliated investment funds, 35,588 shares; and The Northwestern Mutual
Life Insurance Company, 14,234 shares. These securities were issued in
reliance on the exemption from registration provided by Regulation D,
Rule 506, of the Securities Act.

. Sold $100.0 million in Senior Notes due 2010 pursuant to an indenture of
the same date with Chase Manhattan Bank and Trust Company, National
Association, as trustee, to the following: GS Mezzanine Partners II,
L.P. and affiliated investment funds, $70.8 million; TCW Leveraged
Income Trust, L.P. and affiliated funds, $20.8 million; and The
Northwestern Mutual Life Insurance Company, $8.3 million. In connection
with the sale of the Senior Notes, VCA Antech issued warrants to
purchase up to 1,149,990 shares of common stock to the following
investors: GS Mezzanine Partners II, L.P. and affiliated investment
funds, 814,575 warrants; TCW Leveraged Income Trust, L.P. and affiliated
funds, 239,580 warrants; and The Northwestern Mutual Life Insurance
Company, 95,835 warrants. The warrants allow the holders to purchase the
common shares at a price of $0.0007 on or before the closing of an
initial public offering of our common stock. These securities were
issued in reliance on the exemption from registration provided by
Regulation D, Rule 506, of the Securities Act.

. Sold $20.0 million in Senior Subordinated Notes due 2010 pursuant to an
indenture of the same date with Chase Manhattan Bank and Trust Company,
National Association, as trustee, to the following: GS Mezzanine
Partners II, L.P. and affiliated investment funds, $14.2 million; TCW
Leveraged Income Trust, L.P. and affiliated funds, $4.2 million; and The
Northwestern Mutual Life Insurance Company, $1.7 million. These
securities were issued in reliance on the exemption from registration
provided by Section 4(2) of the Securities Act.

Concurrently with this offering, our wholly owned subsidiary is offering
$150.0 million in % Senior Subordinated Notes due 2009. The concurrent note
offering will close simultaneously with this offering. The concurrent note
offering is being underwritten by Goldman, Sachs & Co., a qualified
institutional buyer, and the aggregate underwriting discounts or commissions is
$ . Goldman, Sachs & Co. will offer the notes to qualified institutional
buyers in reliance on the exemption from registration provided by Section 4(2)
and Rule 506 of Regulation D of the Securities Act.

II-3

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits

Number Exhibit Description
------ -------------------

1.1 Form of Underwriting Agreement.(4)
3.1 Amended and Restated Certificate of Incorporation of the Registrant.(1)

3.2 Certificate of Correction to the Amended and Restated Certificate of Incorporation of the
Registrant.(4)
3.3 Form of Amended and Restated Certificate of Incorporation of Registrant.(4)
3.4 Form of Amended and Restated Bylaws of Registrant.(2)
4.1 Stockholders Agreement by and among Registrant, Green Equity Investors III, L.P., Co-Investment
Funds and Stockholders.(2)
4.2 Amendment No. 1 to Stockholders Agreement by and among Registrant, Green Equity Investors III,
L.P., GS Mezzanine Partners II. L.P. and Robert L. Antin.(1)
4.3 Indenture Agreement, dated as of September 20, 2000, by and between Registrant and Chase
Manhattan Bank and Trust Company, National Association.(2)
4.4 Indenture Agreement, dated as of September 20, 2000, by and among Vicar Operating, Inc., Chase
Manhattan Bank and Trust Company, National Association, with Registrant and its subsidiaries as
Guarantors.(2)
4.5 Credit and Guaranty Agreement, dated as of September 20, 2000, by and among Registrant, Vicar
Operating, Inc., certain subsidiaries of Registrant as Guarantors, Goldman Sachs Credit Partners
L.P. and Wells Fargo Bank, National Association as Administrative and Collateral Agent.(2)
4.6 Form of First Amendment to the Indenture Agreement, dated as of September 20, 2000, by and
between Registrant and Chase Manhattan Bank and Trust Company, National Association, as
trustee.(4)
4.7 Form of First Amendment to the Indenture Agreement, dated as of September 20, 2000, by and
among Vicar Operating, Inc., Chase Manhattan Bank and Trust Company, National Association, as
trustee, and Registrant and certain subsidiaries of Vicar Operating, Inc. as Guarantors.(4)
4.8 Form of Second Amendment to Credit and Guaranty Agreement, dated as of September 20, 2000,
by and among Registrant, Vicar Operating, Inc., certain subsidiaries of Vicar Operating, Inc. as
Guarantors, Goldman Sachs Credit Partners L.P. and Wells Fargo Bank, National Association as
Administrative and Collateral Agent.(4)
4.9 Specimen Certificate for shares of common stock of VCA Antech, Inc.(4)
5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, LLP, regarding validity of securities.(1)
10.1 Form of Employment Agreement by and between Registrant and Robert L. Antin.(1)
10.2 Form of Employment Agreement by and between Registrant and Arthur J. Antin.(1)
10.3 Form of Employment Agreement by and between Registrant and Tomas W. Fuller.(1)
10.4 Employment Agreement by and between Registrant and Neil Tauber.(1)
10.5 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Robert
L. Antin.(2)
10.6 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Arthur J.
Antin.(2)
10.7 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and
Tomas W. Fuller.(2)
10.8 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and
Neil Tauber.(2)
10.9 Amended and Restated 1996 Stock Incentive Plan.(1)
10.10 2001 Stock Incentive Plan.(1)
10.11 Corporate Headquarters Lease, dated as of January 1, 1999, by and between Registrant and Werner
Wolfen, Michael Duritz, Nancy Bruch, Dorothy A. Duritz, Harvey Rosenberg and Judy Rosenberg
(Landlords).(3)
10.12 Management Services Agreement, dated as of September 20, 2000, by and among Registrant, Vicar
Operating, Inc. and Leonard Green and Partners, L.P.(2)
10.13 Form of Indemnification Agreement.(2)
10.14 Amended and Restated Agreement and Plan of Merger, dated as of August 11, 2000, by and among
Registrant, Vicar Operating, Inc. and Vicar Recap, Inc.(2)
21.1 List of Subsidiaries of Registrant.(1)

II-4

Number Exhibit Description
------ -------------------

23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, LLP (Set forth in Exhibit 5.1).(1)
24.1 Power of Attorney.(2)

--------

(1) Previously filed as an exhibit to Amendment No. 2 to the Registration
Statement filed on October 31, 2001.

(2) Previously filed as an exhibit to the Registration Statement filed on
August 9, 2001.

(3) Previously filed as an exhibit to Amendment No. 1 to the Registration
Statement filed on October 15, 2001.

(4)Previously filed as an exhibit to Amendment No. 3 to the Registration
Statement filed on November 16, 2001.

(b) Financial Statement Schedules:

. Report of Independent Public Accountants

. Schedule II--Valuation and Qualifying Accounts

II-5

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of VCA Antech, Inc.:

We have audited in accordance with auditing standards generally accepted in
the United States, the consolidated financial statements of VCA Antech, Inc.
and subsidiaries included in this registration statement and have issued our
report thereon dated March 28, 2001. Our audits were made for the purpose of
forming an opinion on the basic financial statements taken as a whole. Schedule
II--Valuation and Qualifying Accounts is the responsibility of the company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.

/S/ ARTHUR ANDERSEN LLP
_____________________________________
Arthur Andersen LLP

Los Angeles, California
March 28, 2001

II-6

SCHEDULE II
VCA ANTECH, INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS

For the Years Ended December 31, 2000, 1999 and 1998
(in thousands)

Balance at Charged to Balance
beginning costs and at end
of period expenses Write-offs Other(1) of period
---------- ---------- ---------- -------- ---------

Year ended December 31, 2000
Allowance for uncollectible accounts(2) $7,432 $3,105 $(6,771) $407 $4,173
Year ended December 31, 1999
Allowance for uncollectible accounts(2) $6,532 $2,515 $(2,252) $637 $7,432
Year ended December 31, 1998
Allowance for uncollectible accounts(2) $5,128 $2,898 $(1,831) $337 $6,532

--------
(1)"Other" changes in the allowance for uncollectible accounts include
allowances acquired with animal hospitals and laboratories acquisitions.
(2)Balance includes allowance for trade accounts receivable and notes
receivable.

Item 17. Undertakings.

(a) The undersigned Registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer of controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the Offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-1 and has duly caused this Amendment No. 4 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on November
16, 2001.

/s/ TOMAS W. FULLER
By:
_____________________________________
Tomas W. Fuller
Its:
Chief Financial Officer, Principal
Accounting
Officer, Vice President and
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

Signature Title Date
--------- ----- ----

* November 16, 2001
---------------------- Chairman of the Board, President and
Robert L. Antin Chief Executive Officer

---------------------- Director, Chief Operating Officer, November 16, 2001
Arthur J. Antin Senior Vice President and Secretary

/s/ TOMAS W. FULLER Chief Financial Officer, Principal November 16, 2001
---------------------- Accounting Officer, Vice President
Tomas W. Fuller and Assistant Secretary

* Director November 16, 2001
----------------------
John M. Baumer

* Director November 16, 2001
----------------------
John G. Danhakl

---------------------- Director November 16, 2001
Melina Higgins

* Director November 16, 2001
----------------------
Peter J. Nolan

*By: November 16, 2001
/s/ TOMAS W. FULLER
----------------------
Attorney-in-Fact

II-8

EXHIBIT INDEX

Number Exhibit Description
------ -------------------

1.1 Form of Underwriting Agreement.(4)
3.1 Amended and Restated Certificate of Incorporation of the Registrant.(1)
3.2 Certificate of Correction to the Amended and Restated Certificate of Incorporation of the Registrant.(4)
3.3 Form of Amended and Restated Certificate of Incorporation of Registrant.(4)
3.4 Form of Amended and Restated Bylaws of Registrant.(2)
4.1 Stockholders Agreement by and among Registrant, Green Equity Investors III, L.P., Co-Investment Funds
and Stockholders.(2)
4.2 Amendment No. 1 to Stockholders Agreement by and among Registrant, Green Equity Investors III, L.P.,
GS Mezzanine Partners II. L.P. and Robert L. Antin.(1)
4.3 Indenture Agreement, dated as of September 20, 2000, by and between Registrant and Chase Manhattan
Bank and Trust Company, National Association.(2)
4.4 Indenture Agreement, dated as of September 20, 2000, by and among Vicar Operating, Inc., Chase
Manhattan Bank and Trust Company, National Association, with Registrant and its subsidiaries as
Guarantors.(2)
4.5 Credit and Guaranty Agreement, dated as of September 20, 2000, by and among Registrant, Vicar
Operating, Inc., certain subsidiaries of Registrant as Guarantors, Goldman Sachs Credit Partners L.P. and
Wells Fargo Bank, National Association as Administrative and Collateral Agent.(2)
4.6 Form of First Amendment to the Indenture Agreement, dated as of September 20, 2000, by and between
Registrant and Chase Manhattan Bank and Trust Company, National Association, as trustee.(4)
4.7 Form of First Amendment to the Indenture Agreement, dated as of September 20, 2000, by and among
Vicar Operating, Inc., Chase Manhattan Bank and Trust Company, National Association, as trustee, and
Registrant and certain subsidiaries of Vicar Operating, Inc. as Guarantors.(4)
4.8 Form of Second Amendment to Credit and Guaranty Agreement, dated as of September 20, 2000, by and
among Registrant, Vicar Operating, Inc., certain subsidiaries of Vicar Operating, Inc. as Guarantors,
Goldman Sachs Credit Partners L.P. and Wells Fargo Bank, National Association as Administrative and
Collateral Agent.(4)
4.9 Specimen Certificate for shares of common stock of VCA Antech, Inc.(4)
5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, LLP, regarding validity of securities.(1)
10.1 Form of Employment Agreement by and between Registrant and Robert L. Antin.(1)
10.2 Form of Employment Agreement by and between Registrant and Arthur J. Antin.(1)
10.3 Form of Employment Agreement by and between Registrant and Tomas W. Fuller.(1)
10.4 Employment Agreement by and between Registrant and Neil Tauber.(1)
10.5 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Robert L.
Antin.(2)
10.6 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Arthur J.
Antin.(2)
10.7 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Tomas W.
Fuller.(2)
10.8 Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Neil Tauber.(2)
10.9 Amended and Restated 1996 Stock Incentive Plan.(1)
10.10 2001 Stock Incentive Plan.(1)
10.11 Corporate Headquarters Lease, dated as of January 1, 1999, by and between Registrant and Werner
Wolfen, Michael Duritz, Nancy Bruch, Dorothy A. Duritz, Harvey Rosenberg and Judy Rosenberg
(Landlords).(3)
10.12 Management Services Agreement, dated as of September 20, 2000, by and among Registrant, Vicar
Operating, Inc. and Leonard Green and Partners, L.P.(2)
10.13 Form of Indemnification Agreement.(2)
10.14 Amended and Restated Agreement and Plan of Merger, dated as of August 11, 2000, by and among
Registrant, Vicar Operating, Inc. and Vicar Recap, Inc.(2)
21.1 List of Subsidiaries of Registrant.(1)
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, LLP (Set forth in Exhibit 5.1).(1)
24.1 Power of Attorney.(2)

--------

(1) Previously filed as an exhibit to Amendment No. 2 to the Registration
Statement filed on October 31, 2001.

(2) Previously filed as an exhibit to the Registration Statement filed on
August 9, 2001.

(3) Previously filed as an exhibit to Amendment No. 1 to the Registration
Statement filed on October 15, 2001.

(4)Previously filed as an exhibit to Amendment No. 3 to the Registration
Statement filed on November 16, 2001.