Henry Schein 2003 Annual Report Download - page 28

The following table summarizes selected measures of liquidity and capital resources (in thousands):
December 27, December 28,
2003 2002
Cash and cash equivalents $157,351 $200,651
Marketable securities, including non-current 14,496 55,185
Working capital 637,296 604,199
Debt, net of cash and cash equivalents and
marketable securities (1) 84,565 __
(1) Debt includes bank credit lines and current and non-current portions of long-term debt, including Senior Notes and loans payable to
banks and capital lease obligations.
Our cash and cash equivalents consist of bank balances and investments in money market funds. These investments have staggered
maturity dates, none of which exceed three months, and have a high degree of liquidity since the securities are traded in public markets.
Our marketable securities consist of short and long-term debt securities classified as available for sale, including corporate bonds rated
AAA by Moody’s (or an equivalent rating) and commercial paper rated P-1 by Moody’s (or an equivalent rating). The fair values of our
marketable securities are determined by quoted market prices.
Our business requires a substantial investment in working capital that is susceptible to large variations 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, new customer build-up requirements and the desired level of investment inventory. Working capital has increased
primarily as a result of our higher sales volume.
Our accounts receivable days sales outstanding improved to 46.4 days for the year ended December 27, 2003 from 48.2 days for the
comparable prior year period primarily due to our continued focus on actively pursuing collection of aged receivables and tightening
credit standards. Our inventory turns improved to 6.9 turns for the year ended December 27, 2003 from 6.6 turns for the prior year as a
result of increased sales of higher turnover products. We anticipate future increases in our working capital requirements as a result of
continued sales growth.
The following table shows our contractual obligations related to fixed and variable rate long-term debt, excluding interest, as well as lease
obligations and inventory purchase commitments as of December 27, 2003 (See Notes 8 and 13 to our consolidated financial statements):
Payments due by period (in thousands)
< 1 year 1 - 3 years 4 - 5 years > 5 years Total
Contractual obligations:
Inventory purchase commitments $149,891 $129,440 $ –– $ –– $279,331
Long-term debt 2,622 24,362 42,316 178,715 248,015
Operating lease obligations 22,286 35,348 20,725 24,419 102,778
Capital lease obligations 631 943 376 388 2,338
Total $175,430 $190,093 $63,417 $203,522 $632,462
In prior years, we completed private placement transactions under which we issued $130.0 million and $100.0 million in Senior Notes.
The $130.0 million notes come due on June 30, 2009 and bear interest at a fixed rate of 6.94% per annum. Principal payments totaling
$20.0 million are due annually starting September 25, 2006 on the $100.0 million notes and bear interest at a fixed rate of 6.66% per
annum. Interest on both notes is payable semi-annually.
During the fourth quarter of 2003, we entered into agreements relating to the $230.0 million Senior Notes to exchange our fixed interest
rates for variable interest rates. The weighted-average variable interest rate is 4.25%. This weighted-average variable interest rate is
comprised of LIBOR, plus the spread, and resets on the interest due dates for the Senior Notes.
We have a Revolving Credit Facility of $200.0 million that is a four-year committed line scheduled to terminate in May 2006. There were
no borrowings under this credit facility as of December 27, 2003. As of December 27, 2003, certain of our subsidiaries had revolving
credit facilities, which had outstanding balances of $6.1 million, against aggregate borrowing limits of $32.6 million.
In connection with our pending acquisition of demedis and EDH for approximately 255 million euros, as previously discussed, after making
a deposit on January 20, 2004 of 35 million euros, we will be paying approximately 220 million euros at closing. The remaining purchase
price will be paid from existing cash resources and/or the proceeds of (i) a bridge loan and/or (ii) the issuance or sale in a public or private
placement of equity interests or notes, debentures or other debt securities (or another debt financing) with a maturity in excess of one
year (in any case, a "Permanent Financing"). We have obtained commitments for a $150.0 million bridge loan facility scheduled to mature
on the six-month anniversary of the closing of the acquisition. The bridge loan will be unsecured, and will bear interest, at our option, at
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