Henry Schein 2009 Annual Report Download - page 74

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HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(In thousands, except share and per share data)
62
Note 1 – Significant Accounting Policies – (Continued)
Long-Lived Assets
Long-lived assets, other than goodwill and other indefinite-lived intangibles, are evaluated for
impairment whenever events or changes in circumstances indicate that the carrying amount of the assets
may not be recoverable through the estimated undiscounted future cash flows derived from such assets.
Definite-lived intangible assets primarily consist of non-compete agreements, trademarks, trade names,
customer lists, customer relationships and intellectual property. For long-lived assets used in operations,
impairment losses are only recorded if the asset’s carrying amount is not recoverable through its
undiscounted, probability-weighted future cash flows. We measure the impairment loss based on the
difference between the carrying amount and the estimated fair value. When an impairment exists, the
related assets are written down to fair value.
Cost of Sales
The primary components of cost of sales include the cost of the product (net of purchase discounts,
supplier chargebacks and rebates) and inbound and outbound freight charges. Costs related to purchasing,
receiving, inspections, warehousing, internal inventory transfers and other costs of our distribution
network are included in selling, general and administrative expenses along with other operating costs.
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. Total
distribution network costs from continuing operations were $54.6 million, $56.4 million and $48.8 million
for the years ended December 26, 2009, December 27, 2008 and December 29, 2007.
Comprehensive Income
Comprehensive income includes certain gains and losses that, under accounting principles generally
accepted in the United States, are excluded from net income as such amounts are recorded directly as an
adjustment to stockholders’ equity. Our comprehensive income is primarily comprised of net income,
foreign currency translation adjustments, unrealized gains (losses) on hedging activity and investment and
pension adjustments.