Henry Schein 2003 Annual Report Download - page 5

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2003 FINANCIAL RESULTS AND HIGHLIGHTS
During 2003 we posted record net sales of $3.4 billion, an increase of 19% from
2002. In local currencies, our sales rose 15%, including 13% internal growth. Sales
for our Dental Group in 2003 were a record $1.4 billion. This represents an 11%
increase over 2002, or 10% in local currencies, of which 8% was internally generated.
Our Medical Group posted record sales for 2003 of $1.3 billion, 22% higher than
2002, with internal growth accounting for 21%. For 2003, record International sales
were $577 million, growing by 32% in U.S. dollars and 13% in local currencies over
last year, with 7% internally generated. And last, Technology and Value-Added
Services sales for 2003 were a record $74 million, a growth of 11% over 2002,
substantially all of which was internally generated.
Net income from continuing operations for the year was $139.5 million, up 18% (20%
on a comparable basis) compared with 2002, and earnings per diluted share from
continuing operations were $3.10, up 18% (19% on a comparable basis) over the
prior year.
In 2003 we achieved impressive growth and gained
market share in each of our four business Groups, but
these financial results are just part of the story in a year
marked by progress across a number of initiatives.
Strategic acquisitions – We completed several
strategic acquisitions in 2003, including Colonial
Surgical, Hager Dental, American Medical Services
and Damer & Cartwright. We also began the process
of acquiring three of Europe’s leading dental
distributors—with our pending acquisitions of
demedis GmbH, KRUGG S.p.A., and DentalMV
GmbH (Muller & Weygandt).
Vaccines and injectables – This growing product
category contributed to our success in 2003, as we
shipped more than 20 million doses of influenza
vaccine during the U.S. flu season. We also signed
new agreements that added important products to
our offering. For example, as part of our growing
Henry Schein Rx Services, we now distribute
Remicade, Centocor’s intravenous infusion therapy
for treating rheumatoid arthritis and Crohn’s disease,
to physician offices across the United States.
Corporate responsibility – Through broad-based programs supported by Henry
Schein Cares, we demonstrated our commitment to corporate responsibility more
clearly and strongly than ever before, including our continuing commitment to the
American Dental Association’s “Give Kids a SmileSM” Day and the Institute for Diversity
in Leadership. In addition, in support of the U.S. Centers for Disease Control and
Prevention’s (CDC) national education campaign and immunization initiative, Henry
Schein donated flu vaccine to CDC selected sites across the country.
Corporate governance – In 2003, we increased the size of our Board of Directors
by adding two valuable new independent members: Louis W. Sullivan, M.D., former
U.S. Secretary of Health and Human Services, and the founding Dean, Director, and
President Emeritus of the Morehouse School of Medicine in Atlanta; and Margaret A.
Hamburg, M.D., former Assistant Secretary for Planning and Evaluation, U.S.
Department for Health and Human Services, and former Commissioner of Health for
the City of New York.
OUR FUTURE LOOKS BRIGHT
2003 was a banner year for Henry Schein, but for a number of reasons I am confident
that our best years are yet to come.
We serve attractive markets. The population of the geographies we serve is aging,
and the market to serve their healthcare needs is growing.
We have powerful strengths to build upon. Henry Schein has unique sales and
marketing expertise, a world-class centralized infrastructure, and a broad product
offering at highly competitive prices. We are committed to providing superior
customer service, and have a large user base of practice management software.
We have clear growth strategies. We are dedicated to further transitioning our
business from being a pure distributor of products to becoming a provider of
integrated products and services. To achieve this we will expand our offering of value-
added products and services, and continue to further build customer loyalty by
providing critical practice-enhancing tools. We will expand Privileges™, our highly
successful customer loyalty program for dental customers, and offer a portfolio of
exclusive and semi-exclusive products. We will also grow our customer base by
increasing the number and productivity of our field sales consultants and by using our
extensive customer database to focus our marketing efforts.
Another important growth strategy is to continue pursuing complementary initiatives
to accelerate future growth in sales and operating income. To achieve this we will
continue to develop our high-growth dental
specialty business and implement our Henry Schein
Rx Services plan, adding new vaccines, injectables
and related services to our medical offering.
In addition, we will continue to pursue strategic
acquisitions, selectively capitalizing on consolidation
opportunities to increase sales, and our force of field
sales consultants, equipment sales specialists, and
equipment service technicians. We will also seek
acquisition opportunities that improve our product
offering by providing us with greater expertise in
a particular product category, enhancing our
procurement leverage, or adding new product lines.
We have clear priorities to help reach our goals.
To achieve success, we are committed to attracting,
training and retaining highly qualified and motivated
people. We will continue to gather and analyze
information to help us better understand and serve
our customers. And we will make investments in
technology to expand our e-commerce and other
systems capabilities as we institutionalize best-
practices on a company-wide basis.
ONE WORLD, ONE COMPANY, ONE TEAM – HENRY SCHEIN
We are confident that our growth strategies will continue to support and enhance
partnerships with our current and future customers, helping practitioners to improve
their practice efficiency and profitability, while delivering the highest quality care.
Finally, we will work to further diversity within the healthcare industry, with the goal of
increasing access to care as it affects professionals and their patients in underserved
communities. As part of this commitment, we will endeavor to ensure that Team
Schein reflects the cultural diversity of our customer base, and support programs that
enhance this diversity, thereby helping our customers better serve their patients.
One world of customers looking to one company to serve their needs, and one team
rising to meet this challenge. This is our vision for the future of Henry Schein.
Sincerely,
Stanley M. Bergman
Chairman, Chief Executive Officer and President
ONEWORLD.ONECOMPANY. ONETEAM.
SHAREHOLDERSLETTER
2003 was a banner
year for
Henry Schein...
for a number of
reasons I am
confident that our
best years are
yet to come.