Henry Schein 2003 Annual Report Download - page 24

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Gross Profit
Gross profit and gross margins for 2003 and 2002 by segment and in total were as follows (in thousands):
Gross Gross
2003 Margin % 2002 Margin %
Healthcare distribution $870,499 26.5% $743,880 27.0%
Technology 56,695 76.3% 51,024 76.5%
Total $927,194 27.6% $794,904 28.1%
Gross profit increased $132.3 million or 16.6%, to $927.2 million for the year ended December 27, 2003 compared to the prior year
period.
Healthcare distribution gross profit increased $126.6 million or 17.0% to $870.5 million for the year ended December 27, 2003 compared
to the prior year period. Healthcare distribution gross profit margin decreased to 26.5% for the year ended December 27, 2003 from
27.0% for the comparable prior year period, primarily due to our medical business experiencing higher sales of lower margin injectable
pharmaceutical products, partially offset by a change in sales mix in our dental business.
Technology gross profit increased $5.7 million or 11.1% to $56.7 million for the year ended December 27, 2003 compared to the prior year
period. Technology gross profit margin decreased slightly to 76.3% for the year ended December 27, 2003 from 76.5% for the comparable
prior year period, primarily due to changes in sales mix.
Selling, General and Administrative
Selling, general and administrative expenses by segment and in total for 2003 and 2002 were as follows (in thousands):
% of % of
Respective Respective
2003 Net Sales 2002 Net Sales
Healthcare distribution $665,470 20.3% $573,627 20.8%
Technology 28,005 37.7% 25,008 37.5%
Total $693,475 20.7% $598,635 21.2%
Selling, general and administrative expenses increased $94.8 million or 15.8% to $693.5 million for the year ended December 27, 2003
compared to the prior year period. As a percentage of sales, selling, general and administrative expenses decreased to 20.7% from
21.2% for the comparable prior year period. This decrease was primarily due to lower payroll and rent costs in our healthcare distribution
business as a percentage of sales, realized through leveraging our infrastructure.
As a component of total selling, general and administrative expenses, selling and shipping expenses increased $67.4 million or 18.2% to
$437.5 million for the year ended December 27, 2003 from $370.1 million for the prior year period. The increase was primarily due to
expenses directly associated with supporting increased sales volume. As a percentage of net sales, selling and shipping expenses
decreased slightly to 13.0% from 13.1% for the comparable prior year period.
As a component of total selling, general and administrative expenses, general and administrative expenses increased $27.4 million or
12.0% to $256.0 million for the year ended December 27, 2003 from $228.5 million for the prior year period. As a percentage of net sales,
general and administrative expenses decreased to 7.6% from 8.1% for the comparable prior year period primarily for the reasons stated
above.
Other Expense, Net
Other expense, net increased $1.4 million to $7.9 million for the year ended December 27, 2003 compared to the prior year period. The
net increase was primarily due to decreased interest income primarily due to lower cash and cash equivalents and marketable securities
balances during 2003.
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