Henry Schein 2009 Annual Report Download - page 47

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35
Gross Profit
Gross profit and gross margins for 2009 and 2008 by segment and in total were as follows (in thousands):
2009 2008 (1) $
Healthcare distribution ................ 1,792,516$ 28.2 % 1,753,655$ 28.2 % 38,861$ 2.2 %
Technology .................................. 124,304 71.8 120,640 73.9 3,664 3.0
Total ................................... 1,916,820$ 29.3 1,874,295$ 29.4 42,525$ 2.3
Gross Gross Increase / (Decrease)
Margin % Margin % %
(1) Adjusted to reflect the effects of discontinued operations.
Gross profit increased $42.5 million, or 2.3%, for the year ended December 26, 2009 compared to the
prior year period. As a result of different practices of categorizing costs associated with distribution networks
throughout our industry, our gross margins may not necessarily be comparable to other distribution
companies. Additionally, we realize substantially higher gross margin percentages in our technology segment
than in our healthcare distribution segment. These higher gross margins result from being both the developer
and seller of software products, as well as certain financial services. For a number of reasons, the software
industry typically realizes higher gross margins to recover investments in research and development.
Healthcare distribution gross profit increased $38.9 million, or 2.2%, for the year ended December 26,
2009 compared to the prior year period. Healthcare distribution gross profit margin remained constant at
28.2% for the year ended December 26, 2009 compared with the comparable prior year period.
Technology gross profit increased $3.7 million, or 3.0%, for the year ended December 26, 2009 compared
to the prior year period. Technology gross profit margin decreased to 71.8% for the year ended December 26,
2009 from 73.9% for the comparable prior year period, primarily due to changes in the product sales mix.
Selling, General and Administrative
Selling, general and administrative expenses by segment and in total for 2009 and 2008 were as follows
(in thousands):
2009 2008 (1) $
Healthcare distribution .............. 1,387,581$ 21.8 % 1,368,108$ 22.0 % 19,473$ 1.4 %
Technology ............................... 62,134 35.9 63,661 39.0 (1,527) (2.4)
Total ................................. 1,449,715$ 22.2 1,431,769$ 22.4 17,946$ 1.3
Net Sales Net Sales %
% of % of
Respective Respective Increase / (Decrease)
(1) Adjusted to reflect the effects of discontinued operations.
Selling, general and administrative expenses increased by $17.9 million, or 1.3%, for the year ended
December 26, 2009 compared to the prior year period. This increase results from $10.5 million in expense
reductions and a $28.4 million net increase from the effects of foreign exchange offset by the additional
selling, general and administrative costs from operations acquired. As a percentage of net sales, selling,
general and administrative expenses decreased to 22.2% from 22.4% from the comparable year period.
As a component of total selling, general and administrative expenses, selling expenses decreased $9.7
million, or 1.0%, for the year ended December 26, 2009 from the prior year period. As a percentage of net
sales, selling expenses decreased to 14.7% from 15.2% for the comparable prior year period.