Henry Schein 2013 Annual Report Download - page 64

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55
If we determine through the impairment review process that goodwill or other indefinite-lived intangible assets
are impaired, we record an impairment charge in our consolidated 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 to provide distinct organizational focus for reaching and serving each
practitioner segment with the benefits of a global perspective, as well as global product and service offerings and
best practices.
In connection with this change in business groups, goodwill was reallocated to the new reporting units. Based
upon this change, we felt it was necessary to perform a quantitative assessment, in addition to a qualitative
assessment, of goodwill impairment as of the first day of the fourth quarter for the year ended December 29, 2012
in order to establish a new baseline calculation.
Based on a qualitative analysis, there were no events or circumstances from the date of that assessment through
December 28, 2013 that impacted our analysis. For the years ended December 28, 2013, December 29, 2012 and
December 31, 2011, the results of our goodwill impairment analysis did not result in any impairments.
Supplier Rebates
Supplier rebates are included as a reduction of cost of sales and are recognized over the period they are earned.
The factors we consider in estimating supplier rebate accruals include forecasted inventory purchases and sales in
conjunction with supplier rebate contract terms which generally provide for increasing rebates based on either
increased purchase or sales volume. Although we believe our judgments, estimates and/or assumptions related to
supplier rebates are reasonable, making material changes to such judgments, estimates and/or assumptions could
materially affect our financial results.
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. Although we believe our judgments, estimates and/or assumptions used in estimating cash flows and
determining fair value are reasonable, making material changes to such judgments, estimates and/or assumptions
could materially affect such impairment analyses and our financial results.
Stock-Based Compensation
We measure stock-based compensation at the grant date, based on the estimated fair value of the award. Prior
to March 2009, awards principally included a combination of at-the-money stock options and restricted stock
(including restricted stock units). Since March 2009, equity-based awards have been granted solely in the form of
restricted stock and restricted stock units, with the exception of stock options for certain pre-existing contractual
obligations.
We estimated the fair value of stock options using the Black-Scholes valuation model which required us to
make assumptions about the expected life of options, stock price volatility, risk-free interest rates and dividend
yields.
We issue restricted stock that vests solely based on the recipient’ s continued service over time (primarily four-
year cliff vesting) and restricted stock that vests based on our achieving specified performance measurements and
the recipient’ s continued service over time (primarily three-year cliff vesting).