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HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(in thousands, except per share data)
81
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 distributor in the Middle East that had
primarily served as an importer that distributed products largely to other distributors. The divestiture resulted in a
one-time loss, which is recorded in a separate line item, “Loss on sale of equity investment” within our
consolidated statements of income and within the cash flows from operating activities section of our consolidated
statements of cash flows, of $12.5 million, or $0.14 per diluted share, in the third quarter of 2013. Pursuant to the
terms of this divestiture, we made cash payments, which are recorded in a separate line item, “Payments related to
sale of equity investment”, within the cash flows from investing activities section of our consolidated statements of
cash flows, to this distributor in the aggregate amount of $13.4 million, which it was required 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.
Loan and Investment Agreement
On December 12, 2008, we converted $10.4 million of loan receivables and related accrued interest into an
equity interest of 15.33% in D4D Technologies, LLC (“D4D”). Since that date, we have accounted for our equity
interest in D4D under the equity method of accounting.
On August 3, 2009, we entered into an amendment whereby we paid certain of D4D’ s members approximately
$8.0 million. Such payment is included in Investments and other in our consolidated financial statements and is
being amortized over a period of 15 years. On September 30, 2013, we purchased additional equity in D4D,
increasing our ownership to 21.4%.
Note 10 – Plans of Restructuring
During the year ended December 29, 2012, we incurred restructuring costs of approximately $15.2 million
(approximately $10.5 million after taxes) consisting of employee severance pay and benefits related to the
elimination of approximately 200 positions; facility closing costs, representing primarily lease terminations and
property and equipment write-off costs; and outside professional and consulting fees directly related to the
restructuring plan. This restructuring program is complete and we do not expect any additional costs from this
program.
The costs associated with this restructuring are included in a separate line item, “Restructuring costs” within
our consolidated statements of income.
The following table shows 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, which is included in Accrued expenses: Other and Other liabilities within our consolidated balance sheet:
Facility
Severance Closing
Costs Costs Total
Balance, December 25, 2010 .........................................................
.
1,992 2,351 4,343
Provision .......................................................................................
.
- - -
Payments and other adjustments ...................................................
.
(1,423) (1,800) (3,223)
Balance, December 31, 2011 .........................................................
.
569 551 1,120
Provision .......................................................................................
.
12,841 2,351 15,192
Payments and other adjustments ...................................................
.
(11,584) (1,671) (13,255)
Balance, December 29, 2012 .........................................................
.
1,826 1,231 3,057
Provision .......................................................................................
.
- - -
Payments and other adjustments ...................................................
.
(1,599) (747) (2,346)
Balance, December 28, 2013 .........................................................
.
$ 227 $ 484 $ 711