Henry Schein 2009 Annual Report Download - page 55

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Some minority shareholders in certain of our subsidiaries have the right, at certain times, to require us to
acquire their ownership interest in those entities at fair value based on third-party valuations. Effective
December 28, 2008, we have adopted the provisions of ASC Topic 480-10. ASC Topic 480-10 is applicable
for noncontrolling interests where we are or may be required to purchase all or a portion of the outstanding
interest in a consolidated subsidiary from the noncontrolling interest holder under the terms of a put option
contained in contractual agreements. As a result of the adoption of the provisions of ASC Topic 480-10, we
have recorded the estimated fair value of the redeemable securities ($178.6 million, $233.0 million and
$150.0 million at December 26, 2009, December 27, 2008 and December 29, 2007, respectively) and reduced
Additional paid-in capital and Noncontrolling interests within the Stockholders’ equity section of our
consolidated balance sheets. The components of the change in the fair value of the Redeemable
noncontrolling interests for the years ended December 26, 2009, December 27, 2008 and December 29, 2007
are presented in the following table:
December 26,
2009
December 27,
2008
December 29,
2007
Balance, beginning of year ......................................................... 233,035$ 150,028$ 111,902$
Acquisitions of additional ownership from
noncontrolling interests ......................................................... (69,157) - -
Initial noncontrolling interests and adjustments related to
business acquisitions ............................................................. (3,270) 14,994 270
Net income attributable to noncontrolling interests .................... 21,975 21,929 17,350
Dividends paid ........................................................................... (5,973) (2,994) (1,362)
Effect of foreign currency translation attributable to
noncontrolling interests ......................................................... 2,541 (2,060) 854
Change in fair value of redeemable securities ............................ (581) 51,138 21,014
Balance, end of year ................................................................... 178,570$ 233,035$ 150,028$
Changes in the estimated redemption amounts of the noncontrolling interests subject to put options are
adjusted at each reporting period with a corresponding adjustment to Additional paid-in capital. Future
reductions in the carrying amounts are subject to a “floor” amount that is equal to the fair value of the
redeemable noncontrolling interests at the time they were originally recorded. The recorded value of the
redeemable noncontrolling interests cannot go below the floor level. These adjustments will not impact the
calculation of earnings per share.
Additionally, some prior owners of such acquired subsidiaries are eligible to receive additional purchase
price cash consideration if certain profitability targets are met. For acquisitions completed prior to 2009, we
accrue liabilities that may arise from these transactions when we believe that the outcome of the contingency
is determinable beyond a reasonable doubt. For 2009 and future acquisitions, as required by ASC Topic 805,
“Business Combinations,” we will accrue liabilities for the estimated fair value of additional purchase price
adjustments at the time of the acquisition. Any adjustments to these accrual amounts will be recorded in our
consolidated statement of income.
As more fully disclosed in Note 10 of “Notes to Consolidated Financial Statements,” we adopted ASC
Topic 740, “Income Taxes,” effective December 31, 2006. We cannot reasonably estimate the timing of
future cash flows related to the unrecognized tax benefits, including accrued interest, of $20.9 million as of
December 26, 2009.