Henry Schein 2014 Annual Report Download - page 71

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57
For the years ended December 27, 2014, December 28, 2013 and December 29, 2012, 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 to be 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/units.
Since March 2009, equity-based awards have been granted solely in the form of restricted stock/units, with the
exception of providing stock options to employees pursuant to 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.
Grants of restricted stock/units are stock-based awards granted to recipients with specified vesting provisions.
In the case of restricted stock, common stock is delivered on the date of grant, subject to vesting conditions. In the
case of restricted stock units, common stock is generally delivered on or following satisfaction of vesting
conditions. Prior to February 2014, we issued restricted stock/units that vest solely based on the recipient’ s
continued service over time (primarily four-year cliff) and restricted stock/units that vest based on our achieving
specified performance measurements and the recipient’ s continued service over time (primarily three-year cliff
vesting). Since February 2014, we have issued restricted stock/units that vest solely based on the recipient’ s
continued service over time (primarily four-year cliff vesting under our 2013 Stock Incentive Plan and primarily
13-month cliff vesting under our 1996 Non-Employee Director Stock Incentive Plan) and restricted stock/units that
vest based on our achieving specified performance measurements and the recipient’ s continued service over time
(primarily three-year cliff vesting under our 2013 Stock Incentive Plan).