Henry Schein 2003 Annual Report Download - page 39

HENRY SCHEIN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share data)
Note 1–Significant Accounting Policies
Nature of Operations
We distribute healthcare products and services primarily to office-based healthcare practitioners in the combined North American and
European markets with operations in the United States, Canada, the United Kingdom, the Netherlands, Belgium, Germany, France,
Austria, Spain, Ireland, Portugal, Australia and New Zealand. We sell products and services to customers in dental practices and dental
laboratories, as well as physician practices, veterinary clinics, government and other institutions.
Principles of Consolidation
Our consolidated financial statements include the accounts of Henry Schein, Inc. and all of our wholly-owned and majority-owned
subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Investments in unconsolidated affiliates, which
are greater than or equal to 20% and less than or equal to 50% owned, are accounted for under the equity method. Certain prior period
amounts have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from
those estimates.
Fiscal Year
We report our operations and cash flows on a 52-53 week basis ending on the last Saturday of December. Each of the three years ended
December 27, 2003 consisted of 52 weeks.
Revenue Recognition
We generate revenue from the sale of dental, medical and veterinary consumable products, as well as dental equipment, software
products and services and other sources. Provisions for discounts, rebates to customers, customer returns and other adjustments are
recorded based upon historical data and are provided for in the period in which the related sales are recognized.
Revenue derived from the sale of consumable products is recognized when products are shipped to customers. Such sales typically
entail high-volume, low-dollar orders shipped utilizing third-party common carriers. We believe that the shipment date is the most
appropriate point in time indicating the completion of the earnings process because we have no post-shipment obligations, the product
price is fixed and determinable, collection of the resulting receivable is probable and product returns are reasonably estimable.
Revenue derived from the sale of dental equipment is recognized when products are delivered to customers. Such sales typically entail
scheduled deliveries of large equipment primarily by equipment service technicians. Some equipment sales require minimal installation,
which is completed at the time of delivery.
Revenue derived from the sale of software products is recognized when products are shipped to customers. Such software is generally
installed by customers and does not require extensive training due to the nature of its design. Revenue derived from post-contract
customer support for software, including annual support and/or training, is recognized ratably over the period in which the services are
provided.
Revenue derived from other sources including freight charges, equipment repairs and financial services, is recognized when the related
product revenue is recognized or when the services are provided.
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