Henry Schein 2013 Annual Report Download - page 58

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49
Liquidity and Capital Resources
Our principal capital requirements include funding of acquisitions, purchases of additional noncontrolling
interests, repayments of debt principal, the funding of working capital needs, purchases of fixed assets and
repurchases of common stock. Working capital requirements generally result from increased sales, special
inventory forward buy-in opportunities and payment terms for receivables and payables. Historically, sales have
tended to be stronger during the third and fourth quarters and special inventory forward buy-in opportunities have
been most prevalent just before the end of the year, and have caused our working capital requirements to have been
higher from the end of the third quarter to the end of the first quarter of the following year.
We finance our business primarily through cash generated from our operations, revolving credit facilities and
debt placements. Our ability to generate sufficient cash flows from operations is dependent on the continued
demand of our customers for our products and services, and access to products and services from our suppliers.
Our business requires a substantial investment in working capital, which is susceptible to fluctuations during
the year as a result of inventory purchase patterns and seasonal demands. Inventory purchase activity is a function
of sales activity, special inventory forward buy-in opportunities and our desired level of inventory. We anticipate
future increases in our working capital requirements.
We finance our business to provide adequate funding for at least 12 months. Funding requirements are based
on forecasted profitability and working capital needs, which, on occasion, may change. Consequently, we may
change our funding structure to reflect any new requirements.
We believe that our cash and cash equivalents, our ability to access private debt markets and public equity
markets, and our available funds under existing credit facilities provide us with sufficient liquidity to meet our
currently foreseeable short-term and long-term capital needs. We have no off-balance sheet arrangements.
Net cash provided by operating activities was $664.2 million for the year ended December 28, 2013, compared
to $408.1 million for the prior year. The net change of $256.1 million was primarily attributable to net income
improvements and favorable working capital changes attributable to inventory buy-ins that occurred during the
fourth quarter of 2012 in advance of potential price increases related to the medical device excise tax.
Net cash used in investing activities was $266.6 million for the year ended December 28, 2013, compared to
$269.6 million for the prior year. The net change of $3.0 million was primarily due to decreased payments for
equity investments 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, compared to
$170.6 million for the prior year. The net change of $165.4 million was primarily due to increased net payments
for long-term debt and decreased proceeds from issuance of stock upon exercise of stock options.
The following table summarizes selected measures of liquidity and capital resources (in thousands):
December 28, December 29,
2013 2012
Cash and cash equivalents ..................................................................................................
.
$ 188,616 $ 122,080
Working capital ..................................................................................................................
.
1,284,002 1,231,668
Debt:
Bank credit lines ............................................................................................................
.
$ 29,508 $ 27,166
Current maturities of long-term debt .............................................................................
.
5,441 17,992
Long-term debt ..............................................................................................................
.
450,233 488,121
Total debt ..................................................................................................................
.
$ 485,182 $ 533,279
Our cash and cash equivalents consist of bank balances and investments in money market funds representing
overnight investments with a high degree of liquidity.