Henry Schein 2013 Annual Report Download

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ANNUAL REPORT 2013

Table of contents

  • Page 1
    A n n uAl RepoR t 2013

  • Page 2
    ... additional products available as special-order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services. Headquartered in Melville, New York, Henry Schein...

  • Page 3
    ... Select international opportunities 1,700 TELESALES REPRESENTATIvES 187 EqUIPMENT SALES & SERvICE CENTERS 130,000 CARTONS SHIPPED DAILy 2013 net sales of $1.6 billion or 17.2% TECHNOLOGY & VALUE-ADDED SERVICES Only practice management software solutions provider servicing dental, animal health...

  • Page 4
    ... to schools, community and student health centers, emergency medicine and government. During 2013, we continued to advance our objective to become the leading provider of dental digital solutions. Henry Schein is already a leading provider of digital imaging solutions and dental practice management...

  • Page 5
    ...based business to Henry Schein Animal Health. Supporting these three global business units is our Technology and Value-Added Services group, which has invested in expanding our offering of innovative practice management solutions and financial products and services that help our customers reduce...

  • Page 6
    ... wider benefits for society, and builds social capital within its organization. Henry Schein has been named to the FORTUNE® list of the "World's Most Admired Companies" for more than a decade, and is ranked first in social responsibility within the Wholesalers: Health Care industry. The Company is...

  • Page 7
    ... Officer, Global Animal Health and Strategic Partnership Group James P. Breslawski President, Henry Schein, Inc.; Chief Executive Officer, Henry Schein Global Dental Group Lorelei McGlynn Senior Vice President, Global Human Resources and Financial Operations Stanley M. Bergman Chairman of the...

  • Page 8
    ... outstanding debt related to the Henry Schein Animal Health, formerly Butler Schein Animal Health, transaction. As part of this transaction, we recorded a one-time interest charge of $6.2 million pre-tax ($2.7 million post-tax) related to the accelerated amortization of deferred financing costs. The...

  • Page 9
    ... quarterly and annual reports, contact our Investor Relations department at (631) 843-5611, or e-mail your request to [email protected]. printed materials can also be requested through the Company's website. FoRM 10-K Our Annual Report on Form 10-K for the fiscal year ending December 28, 2013...

  • Page 10
    ...Melville, New York (Address of principal executive offices) 11-3136595 (I.R.S. Employer Identification No.) 11747 (Zip Code) (631) 843-5500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value...

  • Page 11
    ... Statements and Supplementary Data ...Changes in and Disagreements With Accountants on Accounting and Financial Disclosure ...Controls and Procedures ...Other Information ... 30 33 35 56 57 99 99 101 Directors, Executive Officers and Corporate Governance ...Executive Compensation ...Security...

  • Page 12
    ..., France, Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Luxembourg, Mauritius, the Netherlands, New Zealand, Portugal, Slovakia, South Africa, Spain, Switzerland, Thailand and the United Kingdom. We offer a comprehensive selection of products and services and value-added solutions for...

  • Page 13
    ... Dental Supply Co. Ltd., National Veterinary Services and Alcyon SA, as well as a large number of dental, animal health and medical product distributors and manufacturers in Australia, Austria, Belgium, China, the Czech Republic, France, Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy...

  • Page 14
    ...form of special order items. • Technology and other value-added products and services. We sell practice management software systems to our dental, animal health and medical customers. Our practice management solutions provide practitioners with electronic medical records, patient treatment history...

  • Page 15
    ... equipment, technology and software products; non-recourse patient financing; collection services and credit card processing) at rates that we believe are generally lower than what our customers would be able to secure independently. We also provide dental practice valuation and brokerage services...

  • Page 16
    ... (3) ...Total health care distribution ...Technology: Software and related products and other value-added products (4) ...Total ...(1) 2012 53.4 26.0 17.4 96.8 2011 55.9 23.6 17.6 97.1 52.3 27.2 17.2 96.7 3.3 100.0 % 3.2 100.0 % 2.9 100.0 % Includes infection-control products, handpieces...

  • Page 17
    ... and our dental distribution customers. In the animal health business, we have opportunities to cross-sell practice management software and other products. In the medical business, we have opportunities to expand our vaccine, injectables and other pharmaceuticals sales to health care practitioners...

  • Page 18
    ... loss of sales representatives; • costs related to acquisitions and/or integrations of technologies or businesses; • costs associated with our self-insured medical and dental insurance programs; • general market and economic conditions, as well as those specific to the health care industry and...

  • Page 19
    ...manufacture, advertising, labeling, packaging, storage, handling, reporting, marketing and distribution of, and record keeping for, pharmaceuticals and medical devices shipped in interstate commerce, and states may similarly regulate such activities within the state. Section 361 of the Public Health...

  • Page 20
    ... 10 years, and is intended to build a national electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States. The Drug Supply Chain Security Act provides specific track and trace requirements for manufacturers, wholesalers, repackagers...

  • Page 21
    ... programs and controls in place to ensure substantial compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could adversely affect our business...

  • Page 22
    ... intended for use in health care settings, and has been developing policies on regulating clinical decision support tools as medical devices. Certain of our businesses involve the development and sale of software and related products to support physician and dental practice management, and it...

  • Page 23
    ... became directly subject to such rules because such businesses serve as "business associates" of HIPAA covered entities, such as health care providers. On January 17, 2013 the Office for Civil Rights of the Department of Health and Human Services released a final rule implementing the HITECH Act and...

  • Page 24
    ...Internet website at www.sec.gov, where the above information can be viewed. Our principal executive offices are located at 135 Duryea Road, Melville, New York 11747, and our telephone number is (631) 843-5500. Unless the context specifically requires otherwise, the terms the "Company," "Henry Schein...

  • Page 25
    ..., Medical Group President, International Dental Group Executive Vice President, Chief Strategic Officer, Director Executive Vice President, Chief Financial Officer, Director Senior Vice President, Chief Merchandising Officer Senior Vice President, Global Supply Chain CEO, Global Animal Health and...

  • Page 26
    ... Olympus Medical North America and as General Manager for the Bard Urology and Bard Germany businesses. Mr. McKinley currently serves on the Health Industry Distributors Association (HIDA) Education Foundation. Bob Minowitz has been President of Henry Schein' s International Dental Group since 2012...

  • Page 27
    ...Chief Executive Officer, among others. The loss of the services of Mr. Bergman could have a material adverse effect on our business. We have an employment agreement with Mr. Bergman. We do not currently have "key man" life insurance policies on any of our employees. Competition for senior management...

  • Page 28
    ... loss of sales representatives; • costs related to acquisitions and/or integrations of technologies or businesses; • costs associated with our self-insured medical and dental insurance programs; • general market and economic conditions, as well as those specific to the health care industry and...

  • Page 29
    ...for medical products than we are able to obtain. The multi-tiered costing structure continues to expand as many large integrated health care providers and others with significant purchasing power, such as GPOs, demand more favorable pricing terms. Additionally, the formation of provider networks and...

  • Page 30
    ...way health care is financed by both governmental and private payers. We expect expansion of access to health insurance to increase the demand for our products and services, but other provisions of the Health Care Reform Law could affect us adversely. Additionally, further federal and state proposals...

  • Page 31
    ..., state, federal and international laws and regulations applicable to the distribution of pharmaceuticals and medical devices, and human cells, tissue, and cellular and tissue-based products, also known as HCT/P products. Among the federal laws with which we must comply are the Controlled Substances...

  • Page 32
    Applicable federal, state and local laws and regulations also may require us to meet various standards relating to, among other things, licensure or registration, sales and marketing practices, product integrity and supply tracking to the manufacturer of the product, personnel, privacy and security ...

  • Page 33
    ... only indirectly subject to federal HIPAA privacy and security rules became directly subject to such rules because the businesses serve as "business associates" to our customers. On January 17, 2013, the Office for Civil Rights of the Department of Health and Human Services released a final rule...

  • Page 34
    ... we expect. We are in the process of integrating companies that we acquired and including the operations, services, products and personnel of each company within our management policies, procedures and strategies. We cannot be sure that we will achieve the benefits of revenue growth that we expect...

  • Page 35
    ... adverse publicity against us, could have an adverse effect on our business and our reputation. Our technology segment depends upon continued software and e-services product development, technical support and successful marketing. Competition among companies supplying practice management software...

  • Page 36
    ... of thousands of inventory items from numerous distribution centers; receive, process and ship orders on a timely basis; manage the accurate billing and collections for thousands of customers; process payments to suppliers; and maintain certain of our customers' electronic medical records. A cyber...

  • Page 37
    ...market price of their shares. The provisions of our certificate of incorporation and by-laws may make it more difficult for a third party to acquire us, may discourage acquisition bids and may limit the price that certain investors might be willing to pay in the future for shares of our common stock...

  • Page 38
    ...other distribution, office, showroom, manufacturing and sales space in locations including the United States, Australia, Austria, Belgium, Canada, China, the Czech Republic, France, Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Luxembourg, Mauritius, the Netherlands, New Zealand, Portugal...

  • Page 39
    ...-100 stock market index. The following table sets forth, for the periods indicated, the high and low reported sales prices of our common stock as reported on NASDAQ for each quarterly period in fiscal 2013 and 2012: High Fiscal 2013: 1st Quarter ...$ 2nd Quarter ...3rd Quarter ...4th Quarter ...92...

  • Page 40
    ...program during the fiscal quarter ended December 28, 2013 Fiscal Month 09/29/13 through 11/02/13 11/03/13 through 11/30/13 12/01/13 through 12/28/13 Total Number of Shares Average Price Paid Per Share $ 107.78 Total Number of Shares Purchased as Part of Our Publicly...

  • Page 41
    ... U.S. Health Care Index and the NASDAQ Stock Market Composite Index. COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN $350 $300 $250 $200 $150 $100 $50 December 2008 December 2009 December 2010 Henry Schein, Inc. December 2011 December 2012 December 2013 Dow Jones US Health Care Index...

  • Page 42
    ...below should also be read in conjunction with ITEM 7, "Management' s Discussion and Analysis of Financial Condition and Results of Operations" and ITEM 8, "Financial Statements and Supplementary Data." Income Statement Data: Net sales ...$ Gross profit ...Selling, general and administrative...

  • Page 43
    ... products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. Consists of practice management software and other value-added products, which are distributed primarily to health care...

  • Page 44
    ... channels identified on the investor relations page of our website. Executive-Level Overview We believe we are the world' s largest provider of health care products and services primarily to office-based dental, animal health and medical practitioners. We serve more than 800,000 customers worldwide...

  • Page 45
    ..., equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. Our global dental group serves office-based dental practitioners, dental laboratories, schools and other institutions. Our global animal health...

  • Page 46
    ... a result of these market dynamics, annual expenditures for health care services continue to increase in the United States. Given current operating, economic and industry conditions, we believe that demand for our products and services will grow at slower rates. The Centers for Medicare and Medicaid...

  • Page 47
    ..., federal and foreign governmental laws and regulations applicable to the distribution of pharmaceuticals and medical devices. Additionally, government and private insurance programs fund a large portion of the total cost of medical care, and there has been an emphasis on efforts to control medical...

  • Page 48
    ... programs and controls in place to ensure substantial compliance, we cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could adversely affect our business...

  • Page 49
    ... 10 years, and is intended to build a national electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States. The Drug Supply Chain Security Act provides specific track and trace requirements for manufacturers, wholesalers, repackagers...

  • Page 50
    ... use in health care settings, and has been developing policies on regulating clinical decision support tools and other types of software as medical devices. Certain of our businesses involve the development and sale of software and related products to support physician and dental practice management...

  • Page 51
    E-Commerce Electronic commerce solutions have become an integral part of traditional health care supply and distribution relationships. Our distribution business is characterized by rapid technological developments and intense competition. The continuing advancement of online commerce requires us to...

  • Page 52
    ...2012, we have reported net sales and prior-year sales comparisons for each of our global dental, animal health and medical and global technology and value-added services business groups. This sales reporting is consistent with our global business groups as realigned in 2012. These groups were formed...

  • Page 53
    ... growth in sales within our animal health businesses, which typically include a greater percentage of lower-margin pharmaceutical products than our other operating units. Technology and value-added services gross profit increased $21.1 million, or 11.5%, for the year ended December 28, 2013 compared...

  • Page 54
    ... use to reduce its debt, pay certain trade payables and provide working capital. The investment in this distributor had been fully impaired as of the end of 2012. There is no tax benefit related to the loss on this divestiture. Net Income Net income increased $48.1 million, or 11.4%, for the year...

  • Page 55
    ... products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. Consists of practice management software and other value-added products, which are distributed primarily to health care...

  • Page 56
    ...prior year period. The decrease in our health care distribution gross profit margin is primarily due to growth in sales within our animal health businesses, which typically include a greater percentage of lower-margin pharmaceutical products than our other operating units. Technology and value-added...

  • Page 57
    ...increased by $0.8 million due primarily to a gain related to an increase in the fair value of an equity affiliate which is now being reported as a consolidated entity beginning in the third quarter of 2012. Income Taxes For the year ended December 29, 2012, our effective tax was 31.1% compared to 31...

  • Page 58
    ... and business acquisitions, partially offset by increased purchases of fixed assets, payments made related to a sale of an equity investment and reduced proceeds from sales of available-for-sale securities. Net cash used in financing activities was $336.0 million for the year ended December 28, 2013...

  • Page 59
    ...the year ended December 28, 2013 from 6.2 for the year ended December 29, 2012. Our working capital accounts may be impacted by current and future economic conditions. Contractual obligations The following table summarizes our contractual obligations related to fixed and variable rate long-term debt...

  • Page 60
    ...000 (1) Annual repayments of approximately $7.1 million for this borrowing will commence on January 20, 2016. Henry Schein Animal Health During the first quarter of 2013, we repaid the then outstanding debt related to the HSAH transaction using our existing Credit Agreement. As part of...

  • Page 61
    ... to use to reduce its debt, pay certain trade payables and provide working capital. The investment in this distributor had been fully impaired as of the end of 2012. There is no tax benefit related to the loss on this divestiture. Stock repurchases From June 21, 2004 through December 28, 2013, we...

  • Page 62
    ... from the sale of dental, animal health and medical consumable products, as well as equipment, software products and services and other sources. Provisions for discounts, rebates to customers, customer returns and other contra-revenue adjustments are recorded based upon historical data and estimates...

  • Page 63
    ... annually. Such impairment analyses for goodwill require a comparison of the fair value to the carrying value of reporting units. We regard our reporting units to be our operating segments: health care distribution (global dental, animal health and medical) and technology and value-added services...

  • Page 64
    ... statements of income. Beginning with the first quarter of 2012, we changed our reporting units from dental, animal health, medical, international and technology to global dental, global animal health, global medical and global technology and value-added services. These groups have been formed...

  • Page 65
    ... targets are provided for significant events such as acquisitions, divestitures, new business ventures and share repurchases. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted upward or downward...

  • Page 66
    ... STATEMENTS HENRY SCHEIN, INC Consolidated Financial Statements: Page 58 Report of Independent Registered Public Accounting Firm ... Balance Sheets as of December 28, 2013 and December 29, 2012 ...Statements of Income for the years ended December 28, 2013, December 29, 2012...

  • Page 67
    ... PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Henry Schein, Inc. Melville, New York We have audited the accompanying consolidated balance sheets of Henry Schein, Inc. as of December 28, 2013 and December 29, 2012 and the related consolidated statements of income, comprehensive income...

  • Page 68
    ... ...Common stock, $.01 par value, 240,000,000 shares authorized, 85,622,452 outstanding on December 28, 2013 and 87,850,671 outstanding on December 29, 2012 ...Additional paid-in capital ...Retained earnings ...Accumulated other comprehensive income ...Total Henry Schein, Inc. stockholders...

  • Page 69
    HENRY SCHEIN, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) December 28, 2013 Net sales ...$ Cost of sales ...Gross profit ...Operating expenses: Selling, general and administrative ...Restructuring costs ...Operating income ...Other income (expense): Interest income ...

  • Page 70
    HENRY SCHEIN, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) December 28, 2013 Net income ...$ Other comprehensive income (loss...889 (36,106) 359,731 471,462 $ December 29, 2012 423,388 $ December 31, 2011 404,656 Unrealized gain (loss) from foreign currency hedging activities ...

  • Page 71
    ...interests and adjustments related to business acquisitions ...Change in fair value of redeemable securities ...Repurchase and retirement of common stock ...(3,072,942) Stock issued upon exercise of stock options, including tax benefit of $18,410 ...743,651 Stock-based compensation expense ...349,804...

  • Page 72
    ...(benefit from) deferred income taxes ...Stock issued to 401(k) plan ...Equity in earnings of affiliates ...Distributions from equity affiliates ...Other ...Changes in operating assets and liabilities, net of acquisitions: Accounts receivable ...Inventories ...Other current assets ...Accounts payable...

  • Page 73
    ..., Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Luxembourg, Mauritius, the Netherlands, New Zealand, Portugal, Slovakia, South Africa, Spain, Switzerland, Thailand and the United Kingdom. Principles of Consolidation Our consolidated financial statements include the accounts of Henry...

  • Page 74
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 1 - Significant Accounting Policies - (Continued) Revenue derived from the sale of equipment is recognized when products are delivered to customers. Such sales typically entail ...

  • Page 75
    ... million for the years ended December 28, 2013, December 29, 2012 and December 31, 2011. Additionally, advertising and promotional costs incurred in connection with direct marketing, including product catalogs and printed material, are deferred and amortized on a straight-line basis over the period...

  • Page 76
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 1 - Significant Accounting Policies - (Continued) Income Taxes We account for income taxes under an asset and liability approach that requires the recognition of deferred income ...

  • Page 77
    ... annually. Such impairment analyses for goodwill require a comparison of the fair value to the carrying value of reporting units. We regard our reporting units to be our operating segments: health care distribution (global dental, animal health and medical) and technology and value-added services...

  • Page 78
    ... statements of income. Beginning with the first quarter of 2012, we changed our reporting units from dental, medical, animal health, international and technology to global dental, global animal health, global medical and global technology and value-added services. These groups have been formed...

  • Page 79
    ... to other distribution companies. Total distribution network costs were $62.2 million, $59.5 million and $59.1 million for the years ended December 28, 2013, December 29, 2012 and December 31, 2011. Comprehensive Income Comprehensive income includes certain gains and losses that, under accounting...

  • Page 80
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 2 - Property and Equipment, Net Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed primarily under the straight-line method over ...

  • Page 81
    ... CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 3 - Goodwill and Other Intangibles, Net The changes in the carrying amount of goodwill for the years ended December 28, 2013 and December 29, 2012 were as follows: Technology and Value-Added Services 98,860...

  • Page 82
    ..., 2020. See Note 9 - Business Acquisitions, Divestiture and Other Transaction for additional details of the loan receivable from BioHorizons, Inc. Amortization expense related to other long-term assets for the years ended December 28, 2013, December 29, 2012 and December 31, 2011 was $6.0 million...

  • Page 83
    ... Schein Animal Health ("HSAH"), formerly Butler Schein Animal Health, transaction using our existing Credit Agreement. As part of this transaction, we recorded a one-time interest expense charge of $6.2 million related to the accelerated amortization of deferred financing costs. U.S. Trade Accounts...

  • Page 84
    ... December 28, 2013 250,000 $ 160,000 73 December 29, 2012 250,000 11,352 220,439 Private placement facilities ...$ U.S. trade accounts receivable securitization ...Notes payable to banks at a weighted-average interest rate of 8.23% ...Butler Schein Animal Health Supply notes payable to banks...

  • Page 85
    ..., 2013 2012 2011 Balance, beginning of period ...$ 435,175 $ 402,050 $ 304,140 Decrease in redeemable noncontrolling interests due to redemptions ...(9,028) (23,637) (160,254) Increase in redeemable noncontrolling interests due to business acquisitions ...11,542 30,935 13,618 Net income attributable...

  • Page 86
    ... table summarizes our total comprehensive income, net of applicable taxes as follows: December 28, 2013 Comprehensive income attributable to Henry Schein, Inc...$ Comprehensive income attributable to noncontrolling interests ...Comprehensive income attributable to Redeemable noncontrolling...

  • Page 87
    ...the fair value of our debt include market conditions, prepayment and make-whole provisions, liquidity levels in the private placement market, variability in pricing from multiple lenders and term of debt. Derivative contracts Derivative contracts are valued using quoted market prices and significant...

  • Page 88
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 8 - Fair Value Measurements - (Continued) Redeemable noncontrolling interests Some minority shareholders in certain of our subsidiaries have the right, at certain times, to require...

  • Page 89
    ... from Arseus NV. The businesses combine for annual sales of approximately $97 million and include a dental practice management software company in France and distributors of dental products in France, the Netherlands and Belgium. This transaction was completed during the first quarter of 2014. 80

  • Page 90
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 9 - Business Acquisitions, Divestiture and Other Transaction - (Continued) Divestiture of an Equity Affiliate On July 10, 2013, we divested our investment in a dental wholesale ...

  • Page 91
    ... table shows, by reportable segment, the amounts expensed and paid for restructuring costs that were incurred during our 2013, 2012 and 2011 fiscal years and the remaining accrued balance of restructuring costs as of December 28, 2013: Technology and Health Care Value-Added Distribution Services...

  • Page 92
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 12 - Income Taxes Income before taxes, equity in earnings of affiliates and loss on sale of equity investment was as follows Years ended December 28, 2013 517,950 $ 146,744 664,...

  • Page 93
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 12 - Income Taxes - (Continued) The tax effects of temporary differences that give rise to our deferred income tax asset (liability) were as follows Years Ended December 28, 2013...

  • Page 94
    ...212 Income tax provision at federal statutory rate ...$ State income tax provision, net of federal income tax effect ...Foreign income tax benefit ...Valuation allowance ...Interest expense related to loans ...Other ... Total income tax provision ...$ For the year ended December 28, 2013, our...

  • Page 95
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 12 - Income Taxes - (Continued) The total amount of unrecognized tax benefits as of December 28, 2013 was approximately $54.1 million, of which $40.3 million would affect the ...

  • Page 96
    ... somewhat limited due to a relatively large customer base and its dispersion across different types of health care professionals and geographic areas. No single customer accounted for more than 0.8% of our net sales in 2013. With respect to our sources of supply, our top 10 health care distribution...

  • Page 97
    ..., equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. Our global dental group serves office-based dental practitioners, dental laboratories, schools and other institutions. Our global animal health...

  • Page 98
    ...affiliates Health care distribution ...$ Technology and value-added services ... Total ...$ Depreciation and Amortization: Health care distribution ...$ Technology and value-added services ... Total ...$ Income Tax Expense: Health care distribution ...$ Technology and value-added...

  • Page 99
    ...-line basis over the requisite service period. Our stock-based compensation expense is reflected in selling, general and administrative expenses in our consolidated statements of income. Stock-based awards are provided to certain employees and non-employee directors under the terms of our 2013 Stock...

  • Page 100
    .... The weighted-average grant date fair value of stock-based awards granted before forfeitures was $89.97, $73.42 and $68.25 per share during the years ended December 28, 2013, December 29, 2012 and December 31, 2011. Total unrecognized compensation cost related to non-vested awards as of December 28...

  • Page 101
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 16 - Employee Benefit Plans - (Continued) A summary of the stock option activity under the Plans is presented below: Years Ended December 28, 2013 Weighted Average Exercise Price ...

  • Page 102
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 16 - Employee Benefit Plans - (Continued) The total cash received as a result of stock option exercises for the years ended December 28, 2013, December 29, 2012 and December 31, ...

  • Page 103
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 16 - Employee Benefit Plans - (Continued) Deferred Compensation Plan During 2011, we began to offer a deferred compensation plan to a select group of management or highly ...

  • Page 104
    ... one year. Purchase Commitments In our health care distribution business, we sometimes enter into long-term purchase commitments to ensure the availability of products for distribution. Future minimum annual payments for inventory purchase commitments as of December 28, 2013 were Litigation 2014...

  • Page 105
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 18 - Quarterly Information (Unaudited) The following tables present certain quarterly financial data Quarters ended March 30, 2013 (1) 2,293,511 $ 646,991 153,629 98,686 June 29,...

  • Page 106
    ... loss of sales representatives; • costs related to acquisitions and/or integrations of technologies or businesses; • costs associated with our self-insured medical and dental insurance programs; • general market and economic conditions, as well as those specific to the health care industry and...

  • Page 107
    HENRY SCHEIN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (in thousands, except per share data) Note 19 - Supplemental Cash Flow Information Cash paid for interest and income taxes was: Years ended December 28, December 29, December 31, 2013 2012 2011 Interest ...$ 19,893 $ 23,358...

  • Page 108
    ... 2013. The effectiveness of our internal control over financial reporting as of December 28, 2013 has been independently audited by BDO USA, LLP, an independent registered public accounting firm, and their attestation is included herein. Limitations of the Effectiveness of Internal Control A control...

  • Page 109
    ...of Independent Registered Public Accounting Firm Board of Directors and Stockholders Henry Schein, Inc. Melville, New York We have audited Henry Schein, Inc.' s internal control over financial reporting as of December 28, 2013, based on criteria established in Internal Control - Integrated Framework...

  • Page 110
    ... 2014 Proxy Statement. We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, Vice President of Corporate Finance and Controller. We make available free of charge through our Internet website, www.henryschein.com, under the "About Henry Schein...

  • Page 111
    ... 14A. ITEM 14. Principal Accountant Fees and Services The information required by this item is hereby incorporated by reference to the Section entitled "Independent Registered Public Accounting Firm Fees and Pre-Approval Policies and Procedures" in our definitive 2014 Proxy Statement to be...

  • Page 112
    PART IV ITEM 15. Exhibits, Financial Statement Schedules 1. Financial Statements: Our Consolidated Financial Statements filed as a part of this report are listed on the index on page 57. 2. Financial Statement Schedules: Schedule II No other schedules are required. 3. Exhibits: The exhibits required...

  • Page 113
    ..., thereunto duly authorized. Henry Schein, Inc. By: /s/ STANLEY M. BERGMAN Stanley M. Bergman Chairman and Chief Executive Officer February 11, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 114
    ... INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders Henry Schein, Inc. Melville, New York The audits referred to in our report dated February 11, 2014 relating to the consolidated financial statements of Henry Schein, Inc., which is contained in Item 8 of this Form 10...

  • Page 115
    ... to statement of income (1) Charged to other accounts (2) Balance at end of period Description Deductions (3) Year ended December 28, 2013: Allowance for doubtful accounts, sales returns and other ...$ Year ended December 29, 2012: Allowance for doubtful accounts, sales returns...

  • Page 116
    ...Facility, dated as of February 14, 2012, by and among us, New York Life Investment Management LLC and each New York Life affiliate which becomes party thereto. (Incorporated by reference to Exhibit 4.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on February 15...

  • Page 117
    ...Proxy Statement on Schedule 14A filed on April 27, 2004.)** Amendment Number Two to the Henry Schein, Inc. 1996 Non-Employee Director Stock Incentive Plan, effective as of January 1, 2005. (Incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the fiscal year ended December...

  • Page 118
    ... 10.26 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on February 15, 2012.)** Amendment Number Two to the Henry Schein, Inc. Deferred Compensation Plan, effective as of January 1, 2011.+ Amendment Number Three to the Henry Schein, Inc. Deferred Compensation Plan...

  • Page 119
    ... us, Burns Veterinary Supply, Inc. and Butler Animal Health Holding Company, LLC. (Incorporated by reference to Exhibit 10.45 to our Annual Report on Form 10-K for the fiscal year ended December 25, 2010 filed on February 22, 2011.) Receivables Purchase Agreement, dated as of April 17, 2013, by and...

  • Page 120
    ... groups from time to time party thereto and Receivables Sales Agreement, dated as of April 17, 2013, by and among us, certain of our wholly-owned subsidiaries and HSFR, Inc., as buyer. (Incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended...