10-Q 1 the10_1q19.htm THE 1Q19 QUARTERLY 10-Q REPORT UNITED STATES

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

 

X          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 30, 2019

or

__         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to ____________

Commission File Number:   0-27078 

 

HENRY SCHEIN, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

11-3136595

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

135 Duryea Road

Melville, New York

(Address of principal executive offices)

11747

(Zip Code)

 

(631) 843-5500

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes X  

 

No  __

 

           Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes X  

 

No  __

 

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer X  

 

 

Accelerated filer __

Non-accelerated filer  __

 

Smaller reporting company  __

   Emerging growth company  __

 

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □

 

            Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __  

No 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $.01 per share

HSIC

The Nasdaq Global Select Market

As of April 29, 2019there were 149,074,485 shares of the registrant’s common stock outstanding.

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HENRY SCHEIN, INC.

INDEX

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

PART I.  FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Consolidated Financial Statements:

 

 

 

 

 

 

 

 

 

 

 

Balance Sheets as of March 30, 2019 and December 29, 2018  ..................................................................................................................................................

3

 

 

 

 

 

 

 

 

 

 

Statements of Income for the three months ended

 

 

 

 

 

March 30, 2019 and March 31, 2018  ...................................................................................................................................................................................

4

 

 

 

 

 

 

 

 

 

 

Statements of Comprehensive Income for the three months ended

 

 

 

 

 

March 30, 2019 and March 31, 2018  ...................................................................................................................................................................................

5

 

 

 

 

 

 

 

 

 

 

Statement of Changes in Stockholders' Equity for the three months ended

 

 

 

 

 

March 30, 2019 and March 31, 2018....................................................................................................................................................................................

6

 

 

 

 

 

 

 

 

 

 

Statements of Cash Flows for the three months ended

 

 

 

 

 

March 30, 2019 and March 31, 2018  ...................................................................................................................................................................................

7

 

 

 

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements  ...............................................................................................................................................................................

8

 

 

 

      Note 1 – Basis of Presentation  ...............................................................................................................................................................................................

8

 

 

 

      Note 2 – Discontinued Operations  .........................................................................................................................................................................................

9

 

 

 

      Note 3 – Accounting Pronouncements Adopted and Critical Accounting Policies and

 

 

 

 

           Estimates  ...........................................................................................................................................................................................................................

12

 

 

 

      Note 4 – Revenue from Contracts with Customers  ................................................................................................................................................................

15

 

 

 

      Note 5 – Segment Data  ..........................................................................................................................................................................................................

16

 

 

 

      Note 6 – Debt  ........................................................................................................................................................................................................................

17

 

 

 

      Note 7 – Leases  .....................................................................................................................................................................................................................

20

 

 

 

      Note 8 – Redeemable Noncontrolling Interests  ......................................................................................................................................................................

22

 

 

 

      Note 9 – Comprehensive Income  ...........................................................................................................................................................................................

23

 

 

 

      Note 10 – Fair Value Measurements  .....................................................................................................................................................................................

24

 

 

 

      Note 11 – Business Acquisitions  ...........................................................................................................................................................................................

27

 

 

 

      Note 12 – Plans of Restructuring  ...........................................................................................................................................................................................

28

 

 

 

      Note 13 – Earnings Per Share  ................................................................................................................................................................................................

29

 

 

 

      Note 14 – Income Taxes  ........................................................................................................................................................................................................

29

 

 

 

      Note 15 – Derivatives and Hedging Activities  .......................................................................................................................................................................

30

 

 

 

      Note 16 – Stock-Based Compensation  ..................................................................................................................................................................................

31

 

 

 

      Note 17 – Supplemental Cash Flow Information  ...................................................................................................................................................................

33

 

 

 

      Note 18 – Legal Proceedings  .................................................................................................................................................................................................

33

 

 

 

 

 

 

 

ITEM 2.

 

Management's Discussion and Analysis of  

 

 

 

 

Financial Condition and Results of Operations  ....................................................................................................................................................................

38

 

 

 

 

 

 

 

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk  ..................................................................................................................................................

57

 

 

 

 

 

 

 

ITEM 4.

 

Controls and Procedures  ...............................................................................................................................................................................................................

58

 

 

 

 

 

 

 

PART II.  OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

Legal Proceedings  ...........................................................................................................................................................................................................................

59

 

 

 

 

 

 

 

ITEM 1A.

 

Risk Factors  ....................................................................................................................................................................................................................................

63

 

 

 

 

 

 

 

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds  ....................................................................................................................................................

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 6.

 

Exhibits  ...........................................................................................................................................................................................................................................

64

 

 

 

 

 

 

 

 

 

Signature  .........................................................................................................................................................................................................................................

65

 

 

 

 

 

 

 

   


PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

HENRY SCHEIN, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

 

 

March 30,

 

December 29,

 

 

 

 

 

2019

 

2018

 

 

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents ..............................................................................................................................................................  

 

$

88,115

 

$

56,885

 

Accounts receivable, net of reserves of $52,205 and $53,121 ................................................................................................................  

 

 

1,193,054

 

 

1,168,776

 

Inventories, net .............................................................................................................................................................................  

 

 

1,370,376

 

 

1,415,512

 

Prepaid expenses and other .............................................................................................................................................................  

 

 

457,566

 

 

451,033

 

Assets of discontinued operations......................................................................................................................................................  

 

 

-

 

 

1,083,014

 

 

 

Total current assets ................................................................................................................................................................  

 

 

3,109,111

 

 

4,175,220

Property and equipment, net ................................................................................................................................................................  

 

 

315,393

 

 

314,221

Operating lease right-of-use asset, net.....................................................................................................................................................  

 

 

248,122

 

 

-

Goodwill ..........................................................................................................................................................................................  

 

 

2,413,566

 

 

2,081,029

Other intangibles, net ..........................................................................................................................................................................  

 

 

654,668

 

 

376,031

Investments and other........................................................................................................................................................................  

 

 

404,004

 

 

420,367

Assets of discontinued operations..........................................................................................................................................................  

 

 

-

 

 

1,133,659

 

 

 

Total assets ..........................................................................................................................................................................  

 

$

7,144,864

 

$

8,500,527

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable ..........................................................................................................................................................................  

 

$

695,204

 

$

785,756

 

Bank credit lines ............................................................................................................................................................................  

 

 

299,914

 

 

951,458

 

Current maturities of long-term debt .................................................................................................................................................  

 

 

9,117

 

 

8,280

 

Operating lease liabilities..................................................................................................................................................................  

 

 

68,460

 

 

-

 

Liabilities of discontinued operations.................................................................................................................................................  

 

 

-

 

 

577,607

 

Accrued expenses:

 

 

 

 

 

 

 

 

Payroll and related .....................................................................................................................................................................  

 

 

210,016

 

 

242,876

 

 

Taxes ......................................................................................................................................................................................  

 

 

162,483

 

 

154,613

 

 

Other .......................................................................................................................................................................................  

 

 

433,582

 

 

498,237

 

 

 

Total current liabilities ............................................................................................................................................................  

 

 

1,878,776

 

 

3,218,827

Long-term debt .................................................................................................................................................................................  

 

 

973,500

 

 

980,344

Deferred income taxes ........................................................................................................................................................................  

 

 

76,850

 

 

27,218

Operating lease liabilities......................................................................................................................................................................  

 

 

187,308

 

 

-

Other liabilities ..................................................................................................................................................................................  

 

 

327,057

 

 

357,741

Liabilities of discontinued operations.....................................................................................................................................................  

 

 

-

 

 

62,453

 

 

 

Total liabilities ......................................................................................................................................................................  

 

 

3,443,491

 

 

4,646,583

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests .....................................................................................................................................................  

 

 

286,700

 

 

219,724

Redeemable noncontrolling interests from discontinued operations.............................................................................................................  

 

 

-

 

 

92,432

Commitments and contingencies ..........................................................................................................................................................  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Preferred stock, $.01 par value, 1,000,000 shares authorized,

 

 

 

 

 

 

 

 

none outstanding .......................................................................................................................................................................  

 

 

-

 

 

-

 

Common stock, $.01 par value, 480,000,000 shares authorized,

 

 

 

 

 

 

 

 

148,996,092 outstanding on March 30, 2019 and

 

 

 

 

 

 

 

 

151,401,668 outstanding on December 29, 2018 .............................................................................................................................  

 

 

1,490

 

 

1,514

 

Additional paid-in capital ................................................................................................................................................................  

 

 

86,128

 

 

-

 

Retained earnings ..........................................................................................................................................................................  

 

 

2,859,182

 

 

3,208,589

 

Accumulated other comprehensive loss .............................................................................................................................................  

 

 

(149,878)

 

 

(248,771)

 

 

Total Henry Schein, Inc. stockholders' equity ..................................................................................................................................  

 

 

2,796,922

 

 

2,961,332

 

Noncontrolling interests ..................................................................................................................................................................  

 

 

617,751

 

 

580,456

 

 

 

Total stockholders' equity .......................................................................................................................................................  

 

 

3,414,673

 

 

3,541,788

 

 

Total liabilities, redeemable noncontrolling interests and stockholders' equity........................................................................................  

 

$

7,144,864

 

$

8,500,527

See accompanying notes.

 

3


 

HENRY SCHEIN, INC.

 

CONSOLIDATED STATEMENTS OF INCOME

 

(in thousands, except per share data)

 

(unaudited)

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 30,

 

March 31,

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Net sales .....................................................................................................................................................................................  

 

$

2,360,268

 

$

2,273,450

Cost of sales ................................................................................................................................................................................  

 

 

1,608,578

 

 

1,554,321

 

 

Gross profit ...........................................................................................................................................................................  

 

 

751,690

 

 

719,129

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative ................................................................................................................................................  

 

 

574,608

 

 

554,214

 

Restructuring costs .....................................................................................................................................................................  

 

 

4,641

 

 

2,675

 

 

Operating income ...................................................................................................................................................................  

 

 

172,441

 

 

162,240

Other income (expense):

 

 

 

 

 

 

 

Interest income .........................................................................................................................................................................  

 

 

4,771

 

 

3,453

 

Interest expense ........................................................................................................................................................................  

 

 

(16,301)

 

 

(16,904)

 

Other, net .................................................................................................................................................................................  

 

 

(419)

 

 

(750)

 

 

Income from continuing operations before taxes, equity in earnings of affiliates ................................................................................  

 

 

 

 

 

 

 

 

and noncontrolling interests......................................................................................................................................................  

 

 

160,492

 

 

148,039

Income taxes ...............................................................................................................................................................................  

 

 

(39,482)

 

 

(36,142)

Equity in earnings of affiliates ........................................................................................................................................................  

 

 

2,630

 

 

2,820

Net income from continuing operations.............................................................................................................................................  

 

 

123,640

 

 

114,717

Income (loss) from discontinued operations.......................................................................................................................................  

 

 

(8,996)

 

 

33,914

Net Income..................................................................................................................................................................................  

 

 

114,644

 

 

148,631

 

Less: Net income attributable to noncontrolling interests ...................................................................................................................  

 

 

(5,227)

 

 

(3,183)

 

Less: Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

from discontinued operations.................................................................................................................................................  

 

 

366

 

 

(5,230)

Net income attributable to Henry Schein, Inc. ....................................................................................................................................  

 

$

109,783

 

$

140,218

Amounts attributable to Henry Schein Inc:........................................................................................................................................  

 

 

 

 

 

 

Continuing operations....................................................................................................................................................................  

 

$

118,413

 

$

111,534

Discontinued operations.................................................................................................................................................................  

 

 

(8,630)

 

 

28,684

Net income attributable to Henry Schein, Inc......................................................................................................................................  

 

$

109,783

 

$

140,218

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic .......................................................................................................................................................................................  

 

$

0.79

 

$

0.73

 

Diluted ....................................................................................................................................................................................  

 

$

0.78

 

$

0.72

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share from discontinued operations attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic .......................................................................................................................................................................................  

 

$

(0.06)

 

$

0.19

 

Diluted ....................................................................................................................................................................................  

 

$

(0.06)

 

$

0.19

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Henry Schein, Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic .......................................................................................................................................................................................  

 

$

0.73

 

$

0.92

 

Diluted ....................................................................................................................................................................................  

 

$

0.73

 

$

0.91

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic .......................................................................................................................................................................................  

 

 

150,257

 

 

153,106

 

Diluted ....................................................................................................................................................................................  

 

 

151,156

 

 

154,130

See accompanying notes.

 

4


 

HENRY SCHEIN, INC.

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(in thousands)

 

(unaudited)

 

 

 

 

 

Three Months Ended

 

 

 

 

 

March 30,

 

March 31,

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

Net income ...............................................................................................................................................................................  

 

$

114,644

 

$

148,631

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax:

 

 

 

 

 

 

 

Foreign currency translation gain...............................................................................................................................................  

 

 

6,602

 

 

34,224

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss from foreign currency hedging activities ................................................................................................................  

 

 

(1,281)

 

 

(902)

 

 

 

 

 

 

 

 

 

 

 

Unrealized investment gain .....................................................................................................................................................  

 

 

3

 

 

-

 

 

 

 

 

 

 

 

 

 

 

Pension adjustment gain (loss)..................................................................................................................................................  

 

 

717

 

 

(23)

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, net of tax ........................................................................................................................................  

 

 

6,041

 

 

33,299

Comprehensive income ..............................................................................................................................................................  

 

 

120,685

 

 

181,930

 

Comprehensive income attributable to noncontrolling interests:

 

 

 

 

 

 

 

 

Net income .......................................................................................................................................................................  

 

 

(4,861)

 

 

(8,413)

 

 

Foreign currency translation gain...........................................................................................................................................  

 

 

(556)

 

 

(1,120)

 

 

 

Comprehensive income attributable to noncontrolling interests ..............................................................................................  

 

 

(5,417)

 

 

(9,533)

 

 

 

 

 

 

 

 

 

 

Comprehensive income attributable to Henry Schein, Inc. ................................................................................................................  

 

$

115,268

 

$

172,397

See accompanying notes.

 

5


HENRY SCHEIN, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except share and per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

 Other 

 

 

 

 

Total

 

 

 

$.01 Par Value

 

Paid-in

 

Retained

 

Comprehensive

 

Noncontrolling

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 Capital 

 

Earnings

 

 Income/(Loss) 

 

Interests

 

Equity

Balance, December 29, 2018 ............................................................................................................................................................  

 

151,401,668

 

$

1,514

 

$

-

 

$

3,208,589

 

$

(248,771)

 

$

580,456

 

$

3,541,788

Net income (excluding $3,378 attributable to Redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests from continuing operations .................................................................................................................................  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and ($366) from discontinued operations) ...........................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

109,783

 

 

-

 

 

1,849

 

 

111,632

Foreign currency translation gain (excluding loss of $191

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

attributable to Redeemable noncontrolling interests ..................................................................................................................................  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

and $592 gain from discontinued operations) ........................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

6,046

 

 

155

 

 

6,201

Unrealized loss from foreign currency hedging activities,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

net of tax benefit of $322...........................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

(1,281)

 

 

-

 

 

(1,281)

Unrealized investment gain, net of tax of $1..............................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

3

 

 

-

 

 

3

Pension adjustment gain, net of tax of $224..............................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

717

 

 

-

 

 

717

Dividends paid ........................................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(69)

 

 

(69)

Other adjustments .....................................................................................................................................................................  

 

-

 

 

-

 

 

(2)

 

 

-

 

 

-

 

 

-

 

 

(2)

Change in fair value of redeemable securities .............................................................................................................................................  

 

-

 

 

-

 

 

(2,492)

 

 

-

 

 

-

 

 

-

 

 

(2,492)

Initial noncontrolling interests and adjustments related to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

business acquisitions...............................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

35,360

 

 

35,360

Adjustment for Animal Health Spin-off..................................................................................................................................................  

 

87,629

 

 

1

 

 

-

 

 

-

 

 

-

 

 

-

 

 

1

Repurchase and retirement of common stock .............................................................................................................................................  

 

(2,523,137)

 

 

(25)

 

 

(32,486)

 

 

(117,489)

 

 

-

 

 

-

 

 

(150,000)

Stock issued upon exercise of stock options .............................................................................................................................................  

 

2,526

 

 

-

 

 

34

 

 

-

 

 

-

 

 

-

 

 

34

Stock-based compensation expense .....................................................................................................................................................  

 

200,877

 

 

2

 

 

7,433

 

 

-

 

 

-

 

 

-

 

 

7,435

Shares withheld for payroll taxes .......................................................................................................................................................  

 

(173,471)

 

 

(2)

 

 

(10,443)

 

 

-

 

 

-

 

 

-

 

 

(10,445)

Settlement of stock-based compensation awards..........................................................................................................................................  

 

-

 

 

-

 

 

356

 

 

-

 

 

-

 

 

-

 

 

356

Share Sale related to Animal Health business.............................................................................................................................................  

 

-

 

 

-

 

 

361,090

 

 

-

 

 

-

 

 

-

 

 

361,090

Separation of Animal Health business...................................................................................................................................................  

 

-

 

 

-

 

 

(35,905)

 

 

(543,158)

 

 

93,408

 

 

-

 

 

(485,655)

Transfer of charges in excess of capital...................................................................................................................................................  

 

-

 

 

-

 

 

(201,457)

 

 

201,457

 

 

-

 

 

-

 

 

-

Balance, March 30, 2019 ................................................................................................................................................................  

 

148,996,092

 

$

1,490

 

$

86,128

 

$

2,859,182

 

$

(149,878)

 

$

617,751

 

$

3,414,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Common Stock

 

Additional

 

 

 

 

 Other 

 

 

 

 

Total

 

 

 

$.01 Par Value

 

Paid-in

 

Retained

 

Comprehensive

 

Noncontrolling

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 Capital 

 

Earnings

 

 Income/(Loss) 

 

Interests

 

Equity

Balance, December 30, 2017.............................................................................................................................................................  

 

153,690,146

 

$

1,537

 

$

-

 

$

2,940,029

 

$

(130,067)

 

$

12,911

 

$

2,824,410

Cumulative impact of adopting new accounting standards.................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

2,594

 

 

-

 

 

-

 

 

2,594

Net income (excluding $8,324 attributable to Redeemable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interests) ...........................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

140,218

 

 

-

 

 

89

 

 

140,307

Foreign currency translation gain (excluding $897

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

attributable to Redeemable noncontrolling interests) .................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

33,104

 

 

223

 

 

33,327

Unrealized loss from foreign currency hedging activities,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

net of tax benefit of $182...........................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

(902)

 

 

-

 

 

(902)

Pension adjustment loss, including tax benefit of $0......................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

(23)

 

 

-

 

 

(23)

Dividends paid ........................................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(161)

 

 

(161)

Other adjustments .....................................................................................................................................................................  

 

-

 

 

-

 

 

7

 

 

-

 

 

-

 

 

779

 

 

786

Change in fair value of redeemable securities .............................................................................................................................................  

 

-

 

 

-

 

 

(82,361)

 

 

-

 

 

-

 

 

-

 

 

(82,361)

Initial noncontrolling interests and adjustments related to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

business acquisitions...............................................................................................................................................................  

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(3,905)

 

 

(3,905)

Stock issued upon exercise of stock options .............................................................................................................................................  

 

151,516

 

 

2

 

 

3,020

 

 

-

 

 

-

 

 

-

 

 

3,022

Stock-based compensation expense .....................................................................................................................................................  

 

430,330

 

 

4

 

 

8,750

 

 

-

 

 

-

 

 

-

 

 

8,754

Shares withheld for payroll taxes .......................................................................................................................................................  

 

(246,989)

 

 

(3)

 

 

(16,391)

 

 

-

 

 

-

 

 

-

 

 

(16,394)

Settlement of stock-based compensation awards

 

-

 

 

-

 

 

(182)

 

 

-

 

 

-

 

 

-

 

 

(182)

Deferred tax benefit arising from acquisition of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

noncontrolling interest in partnership...............................................................................................................................................  

 

-

 

 

-

 

 

2,644

 

 

-

 

 

-

 

 

-

 

 

2,644

Transfer of charges in excess of capital...................................................................................................................................................  

 

-

 

 

-

 

 

84,513

 

 

(84,513)

 

 

-

 

 

-

 

 

-

Balance, March 31, 2018................................................................................................................................................................  

 

154,025,003

 

$

1,540

 

$

-

 

$

2,998,328

 

$

(97,888)

 

$

9,936

 

$

2,911,916

See accompanying notes.

 

6


HENRY SCHEIN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

March 30,

 

March 31,

 

 

 

 

 

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income .......................................................................................................................................................................................  

 

$

114,644

 

$

148,631

 

Income (loss) from discontinued operations............................................................................................................................................  

 

 

(8,996)

 

 

33,914

 

Income from continuing operations.......................................................................................................................................................  

 

 

123,640

 

 

114,717

 

Adjustments to reconcile net income to net cash provided by (used in)

 

 

 

 

 

 

 

 

operating activities:

 

 

 

 

 

 

 

 

 

Depreciation and amortization .....................................................................................................................................................  

 

 

40,300

 

 

35,706

 

 

 

Stock-based compensation expense ..............................................................................................................................................  

 

 

7,110

 

 

7,699

 

 

 

Provision for losses on trade and other accounts receivable ...............................................................................................................  

 

 

1,784

 

 

2,783

 

 

 

Provision for deferred income taxes ..............................................................................................................................................  

 

 

7,932

 

 

4,666

 

 

 

Equity in earnings of affiliates .....................................................................................................................................................  

 

 

(2,630)

 

 

(2,820)

 

 

 

Distributions from equity affiliates ................................................................................................................................................  

 

 

52,301

 

 

3,548

 

 

 

Changes in unrecognized tax benefits ............................................................................................................................................  

 

 

3,214

 

 

2,413

 

 

 

Other .......................................................................................................................................................................................  

 

 

1,239

 

 

(5,087)

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

 

 

 

 

 

Accounts receivable ...............................................................................................................................................................  

 

 

(11,580)

 

 

(11,688)

 

 

 

 

Inventories ...........................................................................................................................................................................  

 

 

77,881

 

 

(61,210)

 

 

 

 

Other current assets ................................................................................................................................................................  

 

 

(17,782)

 

 

9,688

 

 

 

 

Accounts payable and accrued expenses ...................................................................................................................................  

 

 

(150,075)

 

 

(165,023)

Net cash provided by (used in) operating activities from continuing operations..............................................................................................  

 

 

133,334