Henry Schein, Inc. Reports Third Quarter Net Income Increase of 55%
- EPS Rises 46% to $0.38 -
MELVILLE, N.Y., Nov. 2 /PRNewswire/ -- Henry Schein, Inc. (Nasdaq: HSIC), today announced financial results for the third quarter and year-to-date ended September 26, 1998, compared to restated results for 1997.
For the third quarter of 1998, net sales increased 12% to $493 million from $439 million for the third quarter last year. Excluding merger and integration costs and including pro forma adjustments, net income rose 55% to $15.8 million as compared to $10.2 million for last year's third quarter. The Company reported diluted earnings per share, after adjustments, of $0.38 versus $0.26 in the 1997 third quarter, a 46% increase. Average shares outstanding were 41,828,000 for the quarter, 5% greater than the prior year.
Year-to-date, net sales of $1.4 billion represents a 14% increase over the prior year. Excluding merger and integration costs and including pro forma adjustments, net income of $38.5 million reflects 48% growth compared to 1997. Diluted earnings per share, after adjustments, increased by 39% to $.92 compared to $.66 for the prior year. Average shares outstanding were 41,588,000, 6% higher than in 1997.
Commenting on the financial results, Stanley M. Bergman, Chairman, Chief Executive Officer, and President of Henry Schein, stated, "We are very pleased with our strong financial performance for the quarter and year to date period. Our strong sales and earnings growth was driven by solid contributions from all of our business units. The expansion of 160 basis points in operating margin, excluding merger and integration costs, and adjusted net income growth of 55% reflects the successful execution of our long term growth strategies. We expect to see further operating margin improvement as we continue to leverage our core infrastructure, and realize additional synergies from the ongoing Sullivan Dental and Micro Bio-Medics integrations."
Mr. Bergman added, "During the quarter we successfully completed the consolidation of the remaining Sullivan distribution centers into our Henry Schein network, and folded the Port Washington, N.Y., facility, into our new state-of-the-art warehouse in Denver, PA. Our new Texas distribution center began operations in September. In addition, we expect Micro Bio-Medics' Pelham, N.Y., warehouse to be closed by the end of November -- completing this phase of our distribution center consolidation strategy and enabling us to begin the integration of Meer before the end of 1998."
Mr. Bergman continued, "We are very optimistic about our business and believe we have strong momentum entering 1999. Our unique sales and marketing approach, combined with our solid financial condition, places us in an excellent position to capture additional market share and further strengthen our leading position in the office-based healthcare distribution industry."
Henry Schein, Inc. is the largest distributor of healthcare products to office-based healthcare practitioners, including dental practices and laboratories, physician practices and veterinary clinics. The Company, recognized for its excellent customer service and low prices, serves more than 250,000 customers worldwide.
Certain information contained herein includes information that is forward looking. The matters referred to in forward-looking statements may be affected by the risks and uncertainties involved in the company's business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company's Securities and Exchange Commission filings.
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
(restated) (restated)
Net sales $492,634 $439,309 $1,418,968 $1,240,430
Cost of sales 338,935 310,431 978,979 871,810
Gross profit 153,699 128,878 439,989 368,620
Operating expenses:
Selling, general and
administrative 128,631 113,747 377,272 328,420
Merger and integration
costs 20,240 17,718 32,640 22,071
Operating
income (loss) 4,828 (2,587) 30,077 18,129
Other income (expense):
Interest income 1,638 2,328 4,826 5,361
Interest expense (2,606) (2,034) (8,556) (5,079)
Other - net 289 16 850 483
Income (loss) before taxes on income,
minority interest and equity in
earnings of affiliates 4,149 (2,277) 27,197 18,894
Taxes on income 2,572 6,228 12,483 16,343
Minority interest in
net income (loss)
of subsidiaries 86 (311) (57) (437)
Equity in earnings
of affiliates 815 558 1,470 888
Net income (loss) $2,306 $(7,636) $16,241 $3,876
Adjusted net income:
Net income (loss) $2,306 $(7,636) $16,241 $3,876
Adjustments:
Merger and integration
costs 20,240 17,718 32,640 22,071
Tax effect on merger and
integration costs (4,504) (304) (7,835 ) (624)
Proforma tax
adjustment - Meer (2,240) 385 (2,579) 597
Adjusted net income $15,802 $10,163 $38,467 $25,920
Adjusted net income per common share:
Basic $0.40 $0.27 $0.97 $0.69
Diluted $0.38 $0.26 $0.92 $0.66
Weighted average shares:
Basic 39,787 37,560 39,729 37,493
Diluted 41,828 39,649 41,588 39,393
Restated to reflect results of H. Meer Dental Supply Co., which was
accounted for under the pooling of interests method of accounting.
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
September 26, December 27,
1998 1997
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $16,076 $11,813
Accounts receivable, less reserves
of $17,224 and $14,922,
respectively 353,772 284,727
Inventories 264,781 228,005
Deferred income taxes 16,545 13,323
Prepaid expenses
and other 42,803 41,128
Total current assets 693,977 578,996
Property and equipment, net of
accumulated depreciation of
$66,560 and $63,307,
respectively 68,487 63,155
Goodwill and other intangibles,
net of accumulated
amortization of $16,173 and
$10,911, respectively 145,252 130,847
Investments and other 42,684 30,948
$950,400 $803,946
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $183,160 $137,992
Bank credit lines 21,408 32,173
Accruals:
Salaries and
related expenses 29,835 25,021
Merger and
integration costs 13,652 17,056
Other 46,257 42,194
Current maturities
of long-term debt 6,260 9,470
Total current liabilities 300,572 263,906
Long-term debt 182,014 107,042
Other liabilities 8,834 6,550
Total liabilities 491,420 377,498
Minority interest 1,784 2,225
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value, authorized 60,000,000;
issued and outstanding
39,757,374 and 38,120,572,
respectively 398 381
Additional paid-in
capital 347,542 328,644
Retained earnings 113,817 99,588
Treasury stock, at cost
(62,479 shares) (1,156) (1,156)
Accumulated other
comprehensive income (1,780) (1,609)
Deferred compensation (1,625) (1,625)
Total stockholders' equity 457,196 424,223
$950,400 $803,946
Restated to reflect results of H. Meer Dental Supply Co., which was
accounted for under the pooling of interests method of accounting.
SOURCE Henry Schein, Inc.