As filed with the Securities and Exchange Commission on February 28, 2001
Registration No. 333-_____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
Henry Schein, Inc.
(Exact name of registrant as specified in its charter)
Delaware 135 Duryea Road 11-3136595
(State or other Melville, New York 11747 (I.R.S. Employer
jurisdiction of (631) 843-5500 Identification Number)
incorporation or organization)
Stanley M. Bergman
Chairman, Chief Executive
Officer and President
Henry Schein, Inc.
135 Duryea Road
Melville, New York 11747
(631) 843-5500
(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices and agent for service)
Copies to:
Robert A. Cantone, Esq. Michael S. Ettinger, Esq.
Proskauer Rose LLP Vice President, General Counsel and Secretary
1585 Broadway Henry Schein, Inc.
New York, New York 10036 135 Duryea Road
(212) 969-3000 Melville, New York 11747
(631) 843-5500
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered in connection with
dividend or interest reinvestment plans, check the following box: |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: |_|
CALCULATION OF REGISTRATION FEE
Amount of
Title of shares to be Amount to be Proposed maximum offering Proposed maximum aggregate registration
registered registered(1) price per share(2) offering price(2) fee
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share. 429,150 shares $32.805 $14,078,266 $3,520
==================================================================================================================================
(1) Also includes an aggregate of 429,150 Common Stock purchase price
rights attached to the shares of Common Stock pursuant to the Rights
Agreement, dated as of November 30, 1998, between Henry Schein, Inc.
and Continental Stock Transfer & Trust Company, as Rights Agent.
(2) Estimated solely for the purpose of calculating the registration fee
and based, pursuant to Rule 457(c) of the Securities Act of 1933, upon
the average of the high and low prices of the Common Stock on the
Nasdaq Stock Market on February 23, 2001.
--------------------------------------------
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Prospectus
HENRY SCHEIN, INC.
-------------------------------
429,150 SHARES OF COMMON STOCK
-------------------------------
The stockholders of Henry Schein, Inc. named in this Prospectus are
offering and selling up to 429,150 shares of HSI's common stock. HSI will
receive none of the proceeds of this offering. The selling stockholders obtained
their shares in connection with acquisitions made by HSI.
The selling stockholders may offer their shares through brokers,
dealers or agents or directly to purchasers. They may sell their shares in the
over-the-counter market or otherwise, and at market prices prevailing at the
time of sale, or at privately negotiated prices. The selling stockholders will
bear all commissions, and other compensation paid to brokers in connection with
the sale of their shares. HSI will bear the expense of registering the shares
for this offering.
The common stock is traded on the Nasdaq Stock Market under the symbol
"HSIC". On February 27, 2001, the closing sale price of the common stock was
$29.75.
Investing in the Offered Shares involves certain risks. See "Risk
Factors" beginning on page 4 for a discussion of certain factors that should be
considered by prospective purchasers of the Offered Shares.
-------------------------------
Neither The Securities And Exchange Commission Nor Any State
Securities Commission Has Approved or Disapproved of These
Securities or Passed Upon The Adequacy or Accuracy of
This Prospectus. Any Representation to The Contrary
Is a Criminal Offense.
-------------------------------
The date of this prospectus is March ___, 2001
WHERE YOU CAN FIND MORE INFORMATION
HSI is subject to the informational requirements of the Securities
Exchange Act of 1934. Thus, we file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document we file at the SEC's public reference room in
Washington, D.C. at 450 Fifth Street, N.W., Washington, D.C. 20549, or in the
public reference rooms located in New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
Website at "http://www.sec.gov".
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act:
1. HSI's Annual Report on Form 10-K for the fiscal year ended
December 25, 1999 (File No. 0-27028);
2. HSI's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 25, 2000;
3. HSI's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 24, 2000;
4. HSI's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 23, 2000;
5. The description of the common stock contained in HSI's
Registration Statement on Form 8-A dated October 27, 1995; and
6. The description of the common stock purchase rights contained in
HSI's Registration Statement on Form 8-A dated December 15, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Henry Schein, Inc.
135 Duryea Road
Melville, New York 11747
(631) 843-5500
Attention: Michael S. Ettinger
HSI has filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933 with respect to the shares offered by this
prospectus. This prospectus does not contain all the information set forth in
the registration statement and the exhibits filed with it, portions of which
have been omitted as permitted by the rules of the SEC. Copies of the
registration statement, including the omitted portions, are available from the
SEC upon payment of prescribed fees. We refer you to the registration statement
and the exhibits filed with it for further information. Statements made in this
prospectus or the registration statement about the contents of any contract or
other document filed as an exhibit to the registration statement may not be
complete, and are qualified by the text of that contract or document.
2
You should rely only on the information or representations provided or
incorporated in this prospectus. We have authorized no one to provide you with
different information. The shares are not being offered in any state where the
offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the cover page.
HSI's principal executive offices are located at 135 Duryea Road,
Melville, New York 11747, and our telephone number is (631) 843-5500.
3
RISK FACTORS
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in the shares. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
forward looking statements. Any forward looking statements contained in this
Prospectus are subject to, among other things, the following factors.
Unless the context indicates otherwise, the terms "HSI", "we", "us" and
"our" mean Henry Schein, Inc. and its subsidiaries.
The Healthcare Products Distribution Industry Is Intensely Competitive
The healthcare products distribution business is intensely competitive.
HSI competes with numerous other companies, including several major
manufacturers and distributors. Some of these competitors have greater financial
and other resources than HSI. Most of HSI's products are available from several
sources, and our customers tend to have relationships with several distributors.
In addition, competitors could obtain exclusive rights to market particular
products. Manufacturers also could increase their efforts to sell directly to
end-users, thereby by-passing distributors like HSI. Consolidation among
healthcare products distributors could result in existing competitors increasing
their market position through acquisitions or joint ventures, which could
materially adversely affect HSI's operating results. In addition, the emergence
of new competitors could materially adversely affect HSI's operating results.
HSI's Expansion Through Acquisitions and Joint Ventures Involves Several Risks
HSI has expanded in its domestic and international markets in part
through acquisitions and joint ventures, and HSI expects to continue to make
acquisitions and enter into joint ventures in the future. Such transactions
involve numerous risks, including possible adverse short-term effects on HSI's
operating results or the market price of the common stock. Some of HSI's
acquisitions and future acquisitions may also give rise to an obligation by HSI
to make contingent payments or to satisfy certain repurchase obligations, which
payments could have an adverse financial effect on HSI. In addition, integrating
acquired businesses and joint ventures:
o may result in a loss of customers or product lines of the acquired
businesses or joint ventures;
o requires significant management attention; and
o may place significant demands on HSI's operations, information
systems and financial resources.
There can be no assurance that HSI will be effective in making future
acquisitions or joint ventures. HSI's ability to continue to successfully effect
acquisitions and joint ventures will depend upon the following:
o the availability of suitable acquisition or joint venture
candidates at prices acceptable to HSI;
o HSI's ability to consummate such transactions; and
4
o the availability of financing, in the case of non-stock
transactions, on terms acceptable to HSI.
For information regarding recent acquisitions by HSI, see the discussion under
the heading "HSI-- Recent Acquisitions"on pages 10 to 12.
Certain Insiders Have Significant Control over HSI
An agreement among certain stockholders of the Company, which was
entered into in connection with HSI's reorganization, provides that from January
1, 1999 until the earliest of January 1, 2004, the date on which Marvin H.
Schein and his family group no longer beneficially own at least 25% of the
outstanding common stock that they owned immediately after the reorganization,
or the date on which certain changes in the company's management occur, Stanley
M. Bergman has the right to designate the nominees for election to the Board of
Directors. However, if Marvin H. Schein does not approve Mr. Bergman's nominees,
Mr. Bergman and Mr. Schein will each select a number of nominees, one of which
must be an independent nominee, as defined in the agreement, equal to one-half
of the entire Board, rounded down to the nearest whole number, and the remaining
nominee, if there is an odd number of directors, will be elected by the two
independent nominees. The parties to the agreement, who have the right to vote
approximately 14% the of outstanding shares of common stock, are required to
vote for all such nominees. If any director previously nominated pursuant to the
agreement ceases to hold office, the individual who nominated that director
shall have the right to nominate his or her successor. Because of these voting
arrangements, Mr. Bergman has significant influence over matters relating to
HSI's Board of Directors.
HSI Experiences Fluctuations in Quarterly Earnings
HSI's business has been subject to seasonal and other quarterly
fluctuations. Net sales and operating profits generally have been higher in the
fourth quarter due to the timing of sales of software, year-end promotions, and
purchasing patterns of office-based healthcare practitioners. Net sales and
operating profits generally have been lower in the first quarter, primarily due
to increased purchases in the prior quarter. Quarterly results may also be
adversely affected by a variety of other factors, including:
o the timing of acquisitions and related costs;
o the release of software enhancements;
o promotions;
o adverse weather; and
o fluctuations in exchange rates associated with international
operations.
HSI's Technology Segment Depends Upon Continued Product Development, Technical
Support and Marketing
During our 1999 fiscal year, approximately $66.9 million, or 2.9%, of
HSI's net sales, and $45.7 million, or 6.5%, of HSI's gross profit, was derived
from its technology segment's value-added products and services, primarily sales
of HSI's Easy Dental(R) Plus, Dentrix Dental System(R), and AVImark(R) practice
management software and other value added products and services to United States
dental, medical and veterinary office-based healthcare practitioners. During the
first nine months of fiscal 2000, approximately
5
$50.2 million, or 2.9%, of HSI's net sales, and $34.3 million, or 6.4%, of HSI's
gross profit, was derived from such products and services. Competition among
companies supplying practice management software is intense and increasing.
HSI's future sales of practice management software will depend on, among other
factors:
o the effectiveness of our sales and marketing programs;
o our ability to enhance its products; and
o our ability to provide ongoing technical support.
We cannot assure you that HSI will be successful in introducing and
marketing software enhancements or new software, or that such software will be
released on time or accepted by the market. HSI's software products, like
software products generally, may contain undetected errors or bugs when
introduced or as new versions are released. We cannot assure you that future
problems with post-release software errors or bugs will not occur. Any such
defective software may result in increased expenses related to the software and
could adversely affect HSI's relationships with the customers using such
software. We do not have any patents on our software, and rely upon copyright,
trademark and trade secret laws; we cannot assure you that such legal
protections will be available or enforceable to protect our software products.
HSI's Easy Dental(R) Plus software products are generally distributed under
"shrink-wrap" licenses that are not signed by the customer and, therefore, may
be unenforceable in certain jurisdictions.
HSI's International Operations are Subject to Inherent Risks
During fiscal 1999, approximately $404.2 million, or 17.7%, of HSI's
net sales, and $119.9 million, or 17.2%, of HSI's gross profit, was derived from
sales to customers located outside the United States and Canada. During the
first nine months of fiscal 2000, approximately $286.8 million, or 16.6%, of
HSI's net sales, and $83.3 million, or 15.5%, of HSI's gross profit, was derived
from sales to customers located outside the United States and Canada. HSI's
international operations are subject to a number of inherent risks, including:
o difficulties in opening and managing foreign offices and
distribution centers;
o difficulties in establishing channels of distribution;
o fluctuations in the value of foreign currencies;
o import/export duties and quotas; and
o unexpected regulatory, economic and political changes in foreign
markets.
We cannot assure you that these factors will not adversely affect HSI's
operating results.
Eleven of the 15 member countries of the European Union have adopted
the Euro as their common legal currency. The participating countries established
fixed Euro conversion rates between their existing currencies and the Euro. The
Euro now trades on currency exchanges and is available for non-cash
transactions. The participating countries now issue their debt exclusively in
Euros, and have re-denominated their outstanding debt. The authority to direct
monetary policy for the participating countries, including money supply and
official interest rates for the Euro, is exercised by the European Central Bank.
6
HSI has established an euro task force to address its information
systems, product and customer concerns. We expect to achieve timely Euro
information systems and product readiness, so as to conduct transactions in the
Euro, in accordance with implementation schedules as they are established by the
European Commission. We do not anticipate that the costs of the overall effort
will have a material adverse impact on our future results.
E-Commerce
Traditional healthcare supply and distribution relationships are being
challenged by electronic on-line commerce solutions. HSI's distribution business
is characterized by rapid technological developments and intense competition.
The rapid evolution of on-line commerce, including business-to-business
exchanges, will require continuous improvement in performance, features and
reliability of Internet content and technology by HSI, particularly in response
to competitive offerings. In January 2001, we launched a new website for on-line
sales using Microsoft's recently introduced Commerce Server 2000(R) product.
HSI's Future Performance is Materially Dependent Upon its Senior Management
Our future performance will depend, in part, upon the efforts and
abilities of certain members of its existing senior management, particularly
Stanley M. Bergman, Chairman, Chief Executive Officer and President, James P.
Breslawski, Executive Vice President, and Steven Paladino, Executive Vice
President and Chief Financial Officer. The loss of service of one or more of
these persons could have an adverse effect on HSI's business. HSI has entered
into an employment agreement with Mr. Bergman. The success of certain
acquisitions and joint ventures made by HSI may depend, in part, on HSI's
ability to retain key management of the acquired businesses or joint ventures.
The Healthcare Industry Is Experiencing Rapid Change
In recent years, the healthcare industry has undergone significant
change driven by various efforts to reduce costs, including potential national
healthcare reform, trends toward managed care, cuts in Medicare, consolidation
of healthcare distribution companies, e-commerce and collective purchasing
arrangements by office-based healthcare practitioners. If HSI is unable to react
effectively to these and other changes in the healthcare industry, its operating
results could be adversely affected. We cannot predict whether any significant
healthcare reform efforts will be enacted or what effect such reforms might have
on us or our customers and suppliers.
Government Regulation
HSI's business is subject to requirements under various local, state,
Federal and foreign governmental laws and regulations applicable to the
manufacture and distribution of pharmaceuticals and medical devices. Among the
Federal laws with which we must comply are the Federal Food, Drug, and Cosmetic
Act, the Prescription Drug Marketing Act of 1987, and the Controlled Substances
Act.
The Federal Food, Drug, and Cosmetic Act generally regulates the
introduction, manufacture, advertising, labeling, packaging, storage, handling,
marketing and distribution of, and recordkeeping for, pharmaceuticals and
medical devices shipped in interstate commerce.
The Prescription Drug Marketing Act of 1987 established certain
requirements applicable to the wholesale distribution of prescription drugs,
including the requirement that wholesale drug distributors be
7
registered with the Secretary of Health and Human Services or licensed by each
state in which they conduct business in accordance with federally established
guidelines on storage, handling and record maintenance.
Under the Controlled Substances Act, HSI, as a distributor of
controlled substances, is required to obtain annually a registration from the
Attorney General in accordance with specified rules and regulations and is
subject to inspection by the Drug Enforcement Administration acting on behalf of
the Attorney General.
HSI is required to maintain licenses and permits for the distribution
of pharmaceutical products and medical devices under the laws of the states in
which is operates. In addition, HSI's dentist and physician customers are
subject to significant governmental regulation. There can be no assurance that
regulations that impact dentists' or physicians' practices will not have a
material adverse impact on HSI's business.
HSI Relies Upon Third Parties to Ship Products to Customers
Shipping is a significant expense in the operation of HSI's business.
HSI ships almost all of its U.S. orders by UPS and other delivery services, and
typically bears the cost of shipment. Accordingly, any significant increase in
shipping rates could have an adverse effect on HSI's operating results.
Similarly, strikes or other service interruptions by such shippers could cause
HSI's operating expenses to rise and adversely affect HSI's ability to deliver
products on a timely basis.
The Common Stock Has Experienced Market Price Volatility
The stock market historically has experienced volatility that has
particularly affected the market prices of securities of many companies in the
healthcare industry, and which sometimes has been unrelated to the operating
performances of such companies. These market fluctuations may adversely affect
the market price of the common stock. From the end of HSI's 1999 fiscal year on
December 25, 1999, through February 27, 2001, the closing market price of the
common stock as reported on the Nasdaq National Market has ranged from a high of
$36.00 to a low of $12.
HSI's Rights Plan and Certificate of Incorporation and By-Law Provisions May
Discourage Third Party Offers to Acquire HSI
The rights we have issued under our Rights Plan, may make it more
difficult for a third party to acquire HSI, and may discourage or prevent the
consummation of an acquisition of HSI or our common stock at a price that a
majority of HSI's stockholders would be willing to accept.
Provisions of HSI's certificate of incorporation and by-laws may make
it more difficult for a third party to acquire HSI, may discourage acquisition
bids for HSI, and may limit the price that certain investors might be willing to
pay in the future for shares of common stock. These provisions, among other
things:
o require the affirmative vote of the holders of at least 60% of the
shares of common stock entitled to vote to approve a merger or a
sale, lease, transfer or exchange of all or substantially all of
the assets of HSI; and
o require the affirmative vote of the holders of at least 662/3% of
the shares entitled of common stock to vote to:
o remove a director;
8
o amend or repeal certain provisions of HSI's certificate of
incorporation; and
o to amend or repeal the by-laws of HSI, except that the board
of directors may amend by-laws adopted prior to the 1997
annual meeting of stockholders.
In addition, the rights of holders of common stock will be subject to,
and may be adversely affected by, the rights of any holders of preferred stock
of HSI that may be issued with rights senior to the rights of the holders of
common stock.
Under certain conditions, the Delaware General Corporation Law
prohibits HSI from engaging in a business combination with a stockholder owning
15% or more of HSI's outstanding voting stock for a period of three years.
In addition, both HSI's 1994 Stock Option Plan and 1996 Non-Employee
Director Stock Option Plan provide for accelerated vesting of stock options upon
a change in control of HSI, and certain agreements between HSI and its executive
officers provide for increased severance payments if those executive officers
are terminated without cause within two years after a change in control of HSI.
HSI Is Subject to Product Liability and Other Claims in the Ordinary Course of
Business
The manufacture or distribution of certain products by HSI involves a
risk of product liability claims, and from time to time HSI is named as a
defendant in products liability cases as a result of its distribution of
pharmaceutical and other healthcare products. For information regarding certain
pending legal proceedings, see the discussion under the caption "HSI--Certain
Legal Proceedings" on page 11.
HSI has insurance policies, including product liability insurance,
covering risks and in amounts we consider adequate. In many cases HSI is covered
by indemnification from the manufacturer of the product. We cannot assure you
that the coverage maintained by us is sufficient to cover all future claims or
will be available in adequate amounts or at a reasonable cost, or that
indemnification agreements will provide adequate protection for us.
HSI
HSI is the largest distributor of healthcare products and services to
office-based healthcare practitioners in the combined North American and
European markets. HSI has operations in the United States, Canada, Mexico, the
United Kingdom, The Netherlands, Belgium, Germany, France, the Republic of
Ireland, Austria, Spain, Israel, Australia and New Zealand.
HSI conducts its business principally through two segments, healthcare
distribution and technology. These segments, which are operated as individual
business units, offer different products and services, albeit to the same
customer base. HSI's healthcare distribution segment consists of HSI's dental,
med veterinary and international groups. The international group is comprised of
HSI's healthcare distribution business units located primarily in Europe and the
Pacific Rim, and offer products and services to dental, medical and veterinary
customers located in their respective geographic regions. HSI's technology
segment consists primarily of HSI's practice management software business and
certain other value-added products and services which are distributed primarily
to healthcare professionals in the North American market.))
9
HSI sells products and services to over 400,000 customers, primarily
dental practices and dental laboratories, as well as physician practices,
veterinary clinics and institutions. In 1999, HSI's healthcare distribution
segment sold products to over 75% of the estimated 110,000 dental practices in
the United States. HSI believes that there is strong awareness of the "Henry
Schein" name among office-based healthcare practitioners due to its more than 65
years of experience in distributing healthcare products. Through its
comprehensive catalogs and other direct sales and marketing programs, HSI offers
its customers a broad product selection of both branded and private brand
products which includes in excess of 70,000 stockkeeping units in North America,
approximately 60,000 stockkeeping units in Europe and approximately 23,000
stockkeeping units in Australia, at published prices that HSI believes are below
those of many of its competitors.
HSI's technology segment offers various value-added products and
services such as practice management software. As of the end of its 1999 fiscal
year on December 25, 1999, HSI had sold over 33,000 dental practice management
software systems, more than any of its competitors.
During Fiscal 1999, HSI distributed over 14.0 million pieces of direct
marketing materials, including catalogs, flyers and order stuffers, to
approximately 650,000 office-based healthcare practitioners. HSI supports its
direct marketing efforts with approximately 800 telesales representatives who
facilitate order processing and generate sales through direct and frequent
contact with customers and with approximately 1,150 field sales consultants,
including equipment sales specialists. HSI uses database segmentation techniques
to more effectively market its products and services to customers.
In recent years, HSI has continued to expand its management information
systems and has established strategically located distribution centers in the
United States, Europe and Australia to enable it to better serve its customers
and increase its operating efficiency. HSI believes that these investments,
coupled with its broad product offerings, enable HSI to provide its customers
with a single source of supply for substantially all their healthcare product
needs and provide them with convenient ordering and rapid, accurate and complete
order fulfillment. HSI estimates that approximately 99% of all orders in the
United States and Canada received before 5:00 p.m. and 6:00 p.m., respectively,
are shipped on the same day the order is received and approximately 99% of
orders are received by the customer within two days of placing the order. In
addition, HSI estimates that approximately 99% of all items ordered in the
United States and Canada are shipped without back ordering.
Plan of Restructuring
On August 1, 2000, HSI announced a comprehensive restructuring plan
designed to improve customer service and increase profitability by maximizing
the efficiency of HSI's infrastructure. This world wide initiative included the
elimination of approximately 300 positions, including open positions, or about
5% of the total workforce, throughout all levels within the organization. The
restructuring plan was substantially completed by the end of fiscal 2000.
During the three months ended September 23, 2000, HSI incurred one-time
restructuring costs of approximately $5.9 million ($3.4 million after taxes, or
approximately $0.08 per diluted share), of which approximately $3.7 million
related to employee severance pay and benefits, $1.1 million related to facility
closing costs, primarily lease termination and asset write-off costs, and $0.6
million related to outside professional and consulting fees directly related to
the restructuring plan. Approximately $0.4 million related to the Technology
segment of our business. HSI preliminarily estimates that it incurred additional
one-time restructuring costs of approximately $9.0 million, or $5.4 million
after taxes, during the fourth quarter of fiscal 2000.
10
HSI estimates that annual savings derived from the restructuring plan
and the previously announced dental rightsizing plan will be approximately $20.0
million on a pre-tax basis, or $12.0 million after taxes, or approximately $0.29
per diluted share.
Recent Disposition
On October 23, 2000, HSI announced that, in an ongoing effort to
sharpen its focus on its core value-added distribution business, it had sold its
50% interest in dental anesthetic manufacturer HS Pharmaceutical, which owns
Novocol Pharmaceutical of Canada, Inc. HSI preliminarily estimates a
non-recurring loss on the divestiture of approximately $0.05 per diluted share,
in the fourth quarter of fiscal 2000.
Recent Acquisitions
HSI believes that there has been consolidation among healthcare
products distributors serving office based healthcare practitioners and that
this consolidation will continue to create opportunities for HSI to expand
through acquisitions and joint ventures. In recent years, HSI has acquired or
entered into joint ventures with a number of companies engaged in businesses
that are complementary to those of HSI. HSI's acquisition and joint venture
strategies include acquiring additional sales that will be channeled through
HSI's existing infrastructure, acquiring access to additional product lines,
acquiring regional distributors with networks of field sales consultants and
international expansion.
During the fiscal year ended December 30, 2000, HSI completed three
acquisitions, none of which were considered material.
During the fiscal year ended December 25, 1999, HSI completed nine
acquisitions. The completed acquisitions, which had aggregate net sales for 1998
of approximately $324.0 million, included four international companies, four
medical supply companies and one valued-added services company.
HSI completed five acquisitions in its 1998 fiscal year. These 1998
acquisitions, which had aggregate net sales for 1997 of approximately $265.0
million, consisted of two dental supply companies, the most significant of which
was H. Meer Dental Supply Co., two medical supply companies and one
international dental supply company.
Certain Legal Proceedings
The manufacture or distribution of certain products by HSI involves a
risk of product liability claims, and from time to time HSI is named as a
defendant in products liability cases as a result of its distribution of
pharmaceutical and other healthcare products. As of the end of fiscal 2000, HSI
was named a defendant in approximately 69 such cases. Of these product liability
claims, 53 involve claims made by healthcare workers who claim allergic reaction
relating to exposure to latex gloves. In each of these cases, HSI acted as a
distributor of both brand name and "Henry Schein" private brand latex gloves,
which were manufactured by third parties. To date, discovery in these cases has
generally been limited to product identification issues. The manufacturers in
these cases have withheld indemnification of HSI pending product identification;
however, HSI is taking steps to bring those manufacturers into each case in
which HSI is a defendant. HSI is also a named defendant in nine lawsuits
involving the sale of phentermine and fenfluramin. Plaintiffs in the cases
allege injuries from the combined use of the drugs known as "Phen/fen." HSI
expects to obtain indemnification from the manufacturers of these products,
although this is dependent upon, among other things, the financial viability of
the manufacturer and their insurers.
11
In addition, HSI is subject to other claims, suits and complaints
arising in the course of HSI's business. In Texas District Court, Travis County,
HSI and one of its subsidiaries are defendants in a matter entitled Shelly E.
Stromboe & Jeanne N. Taylor, on Behalf of Themselves and All Other Similarly
Situated vs. Henry Schein, Inc., Easy Dental Systems, Inc. and Dentisoft, Inc.,
Case No. 98-00886. This complaint alleges among other things, negligence, breach
of contract, fraud and violations of certain Texas commercial statutes involving
the sale of certain practice management software products sold prior to 1998
under the Easy Dental name. In October 1999, the Court, on motion, certified
both a Windows Sub-Class and a DOS Sub-Class to proceed as a class action
pursuant to Tex. R.Civ. P.42. It is estimated that 5,000 Windows customers and
15,000 DOS customers could be covered by the judge's ruling. In November of
1999, HSI filed an interlocutory appeal of the District Court's determination to
the Texas Court of Appeals on the issue of whether this case was properly
certified as a class action. On September 14, 2000, the Court of Appeals
affirmed the District Court's certification order. On January 5, 2001, HSI filed
a petition for review with the Texas Supreme Court asking the court to review
the District Court's certification order. That appeal is pending. During the
appeal of the class certification, a trial on the merits cannot begin. HSI
intends to vigorously defend itself against this claim, as well as all other
claims, suits and complaints.
HSI has various insurance policies, including product liability
insurance, covering risks and in amounts it considers adequate. In many cases
HSI is provided indemnification by the manufacturer of the product. There can be
no assurance that the coverage maintained by HSI is sufficient to cover all
future claims or will be available in adequate amounts or at a reasonable cost,
or that indemnification agreements will provide adequate protection for HSI. In
the opinion of HSI, all pending claims are covered by insurance or will not
otherwise have a material adverse effect on HSI's financial condition.
SELLING STOCKHOLDERS
The following table lists the names and business addresses of each
selling stockholder, the number of shares of common stock beneficially owned by
each selling stockholder as of January 15, 2001, and the number of shares being
offered by each selling stockholder. Each of the selling stockholders owns less
than 1% of the outstanding shares of common stock. Except as noted below, each
selling stockholder has sole voting and investment power as to shares shown as
being owned by that selling stockholder.
Number of Shares Number of Shares to
Beneficially Owned Number of Shares be Beneficially Owned
Name and Address Prior to the Offering (1) Offered After the Offering (1)
- ----------------------------------- ------------------------- ---------------- ----------------------
Joseph C. Robertson 195,300 195,300 0
c/o Henry Schein Arcona, Inc.
17 Keefer Road
St. Catharines, Ontario L2M 6K4
Anita Robertson 195,300 195,300 0
c/o Henry Schein Arcona, Inc.
17 Keefer Road
St. Catharines, Ontario L2M 6K4
Carman Adair 56,756 38,550 18,206
c/o Henry Schein Arcona, Inc.
Western Division
1454 Cliveden Avenue
Delta, British Columbia V3M 6S7
12
- -------------------------
(1) The shares shown as beneficially owned represent shares of common stock that
the selling stockholder is entitled to receive at the selling stockholder's
election in exchange for shares that the selling stockholder received in a
Canadian subsidiary of HSI. Each selling stockholder intends to make such
exchange promptly with respect to these shares.
13
PLAN OF DISTRIBUTION
This Prospectus, as amended or supplemented, may be used from time to
time by the selling stockholders to offer and sell shares in transactions in
which they and any broker-dealer through whom such shares are sold may be deemed
to be underwriters within the meaning of the Securities Act. There are no
arrangements or understandings, formal or informal, relating to the distribution
of the shares. If HSI is notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares of
common stock bought through a block trade, special offering, exchange
distribution or secondary distribution, HSI will file a supplemented prospectus
setting forth the name of each Selling Stockholder and the participating
broker-dealer(s), the number of shares involved, the price at which the shares
were sold, the commissions paid or the discounts allowed to such
broker-dealer(s), where applicable, that such broker-dealer(s) did not conduct
any investigation to verify the information set out in this Prospectus and other
facts material to the transaction.
Selling stockholders may sell the shares being offered by this
prospectus from time to time in transactions, which may involve crosses and
block transactions, through the Nasdaq National Market, in negotiated
transactions or otherwise, at market prices prevailing at the time of the sale
or at negotiated prices. Selling stockholders may sell some or all of the shares
in transactions involving broker-dealers, who may act solely as an agent or may
acquire shares as principal. Broker-dealers participating in these transactions
as an agent may receive commissions from selling stockholders, and, if they act
as an agent for the purchaser of such shares, from such purchaser. Participating
broker-dealers may agree with selling a stockholder to sell a specified number
of shares at a stipulated price per share and, to the extent the broker-dealer
is unable to do so acting as an agent for the selling stockholder, to purchase
the unsold shares at the price required to fulfill the broker-dealer's
commitment to the selling stockholder. Broker-dealers who acquire shares may
thereafter resell shares from time to time in transactions, which may involve
crosses and block transactions and may involve sales to or through other broker
dealers, including transactions of the nature described in the preceding two
sentences, through the Nasdaq National Market, in negotiated transactions or
otherwise, at market prices prevailing at the time of sale or at negotiated
prices, and in connection with those resales may pay commissions to, or receive
commissions from, the purchaser of the shares.
HSI has agreed to indemnify each selling stockholder against certain
liabilities, including liabilities arising under the Securities Act.
14
EXPERTS
The consolidated financial statements and schedule included in HSI's
Annual Report on Form 10-K for the fiscal year ended December 25, 1999, which
are incorporated by reference in this prospectus, have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their reports incorporated herein by reference.
Those financial statements audited by BDO Seidman, LLP are incorporated by
reference in reliance upon the report given the authority of that firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of Offered Shares of common stock has been passed upon for
HSI by Proskauer Rose LLP, counsel to HSI.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The expenses in connection with the distribution of the securities
being registered hereunder (all of which are already outstanding) are:
Securities and Exchange Commission registration fee........................... $ 3,250
Accounting fees and expenses.................................................. $10,000
Legal fees and expenses (other than Blue Sky fees and expenses)............... $10,000
Miscellaneous................................................................. $ 2,000
--------
Total................................................................ $25,250
All amounts except the Securities and Exchange Commission registration
fee are estimated.
Item 15. Indemnification of Directors and Officers
Article TENTH of HSI's amended and restated certificate of
incorporation provides that HSI shall indemnify and hold harmless, to the
fullest extent authorized by the Delaware General Corporation Law, its officers
and directors against all expenses, liability and loss actually and reasonably
incurred in connection with any civil, criminal, administrative or investigative
action, suit or proceeding. The amended and restated certificate of
incorporation also extends indemnification to those serving at the request of
HSI as directors, officers, employees or agents of other enterprises.
In addition, Article NINTH of HSI's amended and restated certificate of
incorporation, as amended, provides that no director shall be personally liable
for any breach of fiduciary duty. Article NINTH does not eliminate a director's
liability (o) for a breach of his or her duty of loyalty to HSI or its
stockholders, (o) for acts or omissions of intentional misconduct, (o) under
Section 174 of the Delaware General Corporation Law for unlawful declarations of
dividends or unlawful stock purchases or redemptions, or (o) for any
transactions from which the director derived an improper personal benefit.
Section 145 of the Delaware General Corporation Law permits a
corporation to indemnify its directors and officers against expenses (including
attorney's fees), judgments, fines and amounts paid in settlements actually and
reasonably incurred by them in connection with any action, suit or proceeding
brought by third parties, if such directors or officers acted in good faith and
in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reason to believe their conduct was unlawful. In a derivative
action, i.e., one by or in the right of the corporation, indemnification may be
made only for expenses actually and reasonably incurred by directors and
officers in connection with the defense or settlement of an action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant officers or directors are
reasonably entitled to indemnity for such expenses despite such adjudication of
liability.
II-1
Section 102(b)(7) of the Delaware General Corporation Law provides that
a corporation may eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director (o) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (o) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law, (o)
for liabilities arising under Section 174 of the Delaware General Corporation
Law, or (o) for any transaction from which the director derived an improper
personal benefit. No such provision shall eliminate or limit the liability of a
director for any act or omission occurring prior to the date when such provision
becomes effective.
Item 16. Exhibits and Financial Statements
The exhibits required by Item 601 of Regulation S-K and filed herewith
are listed on the Exhibit Index immediately preceding the exhibits. All
schedules are omitted as the required information is presented in the financial
statements or related notes incorporated by reference in the Prospectus or are
not applicable.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any Prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of Prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered
II-2
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suite or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Melville, State of New York on February 28, 2001.
Henry Schein, Inc.
By: /s/Stanley M. Bergman
-------------------------
Stanley M. Bergman
Chairman, Chief Executive Officer
and President
KNOW ALL MEN BY THESE PRESENTS, that each director and officer whose
signature appears below hereby constitutes and appoints Stanley M. Bergman,
Steven Paladino and Mark Mlotek, and each of them acting alone without the
others, as his true and lawful attorney-in-fact and agent, with full power of
substitution, to sign on his behalf individually and in any and all capacities
(until revoked in writing), any and all amendments (including post-effective
amendments) to this Registration Statement on Form S-3, and any registration
statement relating to the same offering as this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) and the Securities Act of
1933, to file the same with all exhibits thereto and all other documents in
connection therewith with the Securities and Exchange Commission, granting to
such attorney-in-fact and agent, and each of them acting alone without the
others, full power and authority to do all such other acts and things requisite
or necessary to be done, and to execute all such other documents as he may deem
necessary or desirable in connection with the foregoing, as fully as the
undersigned might or could do in person, hereby ratifying and confirming all
that such attorney-in-fact and agent may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Capacity Date
/S/ STANLEY M. BERGMAN Chairman, Chief Executive Officer, February 28, 2001
- ----------------------- President and Director (principal
Stanley M. Bergman executive officer)
/S/ STEVEN PALADINO Executive Vice President, Chief February 28, 2001
- ----------------------- Financial Officer and Director (principal
Steven Paladino financial and accounting officer)
/S/ JAMES P. BRESLAWSKI Executive Vice President, Director February 28, 2001
- -----------------------
James P. Breslawski
II-4
/S/ GERALD A. BENJAMIN Senior Vice President-Administration February 28, 2001
- ----------------------- and Director
Gerald A. Benjamin
/S/ LEONARD A. DAVID Vice President-Human Resources, February 28, 2001
- ----------------------- Special Counsel and Director
Leonard A. David
/S/ MARK E. MLOTEK Senior Vice President and Director February 28, 2001
- -----------------------
Mark E. Mlotek
II-5
EXHIBIT INDEX
Exhibit No. Description Page No.
3.1 Form of Amended and Restated Articles of Incorporation. (Incorporated by --
reference to Exhibit 3.1 to Henry Schein, Inc.'s Registration Statement on
Form S-1, Reg. No. 33-96528)
3.2 Amendments dated November 12, 1997 to Amended and Restated Articles of --
Incorporation (Incorporated by reference to Exhibit 3.3 to HSI's Annual
Report on From 10-K for the fiscal year ended December 27, 1997)
3.3 Amendment dated June 16, 1998 to Amended and Restated Articles of --
Incorporation (Incorporated by reference to Exhibit 3.3 to Henry Schein, Inc.'s
Registration on Form S-3, Reg. No. 333-59793)
3.4 Form of Amended and Restated Bylaws. (Incorporated by reference to --
Exhibit 3.2 to Henry Schein, Inc.'s Registration Statement on Form S-1, Reg.
No. 33-96528)
3.5 Amendments to Amended and Restated By-laws adopted July 15, 1997. --
(Incorporated by reference to Exhibit 3.3 to Henry Schein, Inc.'s Registration
Statement on Form S-4, Reg. No. 333-36081)
5 Opinion of Proskauer Rose LLP regarding legality. II-7
23.1 Consent of BDO Seidman, LLP II-8
23.2 Consent of Proskauer Rose LLP (included in Exhibit 5) --
24.1 Powers of Attorney (included as part of the signature pages on page II-4 of --
the Registration Statement).
II-6
Exhibit 5
PROSKAUER ROSE LLP
1585 Broadway
New York, New York 10036
February 28, 2001
Henry Schein, Inc.
135 Duryea Road
Melville, New York 11747
Ladies and Gentlemen:
We are acting as counsel to Henry Schein, Inc., a Delaware corporation
(the "Company"), in connection with the Registration Statement on Form S-3 (the
"Registration Statement") filed by the Company under the Securities Act of 1933
with respect to 429,150 shares (the "Shares") of the common stock, par value
$.01 (the "common stock"), of the Company. The Registration Statement relates to
the offer and sale of the Shares by certain selling stockholders.
We have examined and relied upon originals or copies, certified or
otherwise authenticated to our satisfaction, of all such corporate records,
documents, agreements and instruments relating to the Company, and certificates
of public officials and of representatives of the Company, and have made such
investigations of law, and have discussed with representatives of the Company
and such other persons such questions of fact, as we have deemed proper or
necessary as a basis for rendering this opinion.
Based upon and subject to the foregoing, we are of the opinion that the
Shares are legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving the foregoing consent, we do not admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
PROSKAUER ROSE LLP
By: /S/ ROBERT A. CANTONE
-----------------------------
A Member of the Firm
II-7
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Henry Schein, Inc.
Melville, New York
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of Henry Schein, Inc. (the
"Company") on Form S-3 of our reports dated February 25, 2000 relating to the
consolidated financial statements and schedule of the Company appearing in the
Company's Annual Report on Form 10-K for the year ended December 25, 1999.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/S/ BDO SEIDMAN, LLP
- ---------------------
BDO Seidman, LLP
New York, New York
February 28, 2001
II-8
[Letterhead of Proskauer Rose LLP]
February 28, 2001
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Henry Schein, Inc. (File No. 0-27078)
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
On behalf of our client, Henry Schein, Inc. (the "Company"), we herewith
transmit for filing pursuant to the Securities Act of 1933 the Company's
Registration Statement on Form S-3 for the registration under the Securities Act
of 1933 of the offer and sale of up to 429,150 shares of the common stock, par
value $.01 per share, of the Company (the "Common Stock") by certain selling
stockholders.
An aggregate of $3,520 has been sent by Federal Reserve wires to the U.S.
Treasury designated lockbox at Mellon Bank, Pittsburgh in payment of the
registration fee.
If the Staff has any questions or requires additional information, please do not
hesitate to call the undersigned at 212.969.3248.
Respectfully,
/s/ Edward W. Scheuermann
Edward W. Scheuermann
cc: Michael Ettinger, Esq.
General Counsel
II-9