Henry Schein Announces Fourth Quarter and Year-End Results
Fourth Quarter Dental Sales Grow Over Prior Year, Solid Gains Across All Other Groups
MELVILLE, N.Y.--(BUSINESS WIRE)--February 29, 2000-- Henry Schein, Inc. (Nasdaq: HSIC) today announced financial results for the 1999 fourth quarter and year.
For the three months ended December 25, 1999, net sales increased 22% to $611 million, from $503 million in the fourth quarter last year. Net income was $15.5 million, compared with adjusted net income of $19.4 million in the fourth quarter of 1998. Diluted earnings per share were $0.38 versus an adjusted $0.46 in the 1998 fourth quarter.
For the year ended December 25, 1999, the Company reported net sales up 19% to $2.3 billion, from $1.9 billion in 1998. Adjusted net income grew to $59.8 million, or $1.44 per diluted share, compared with an adjusted net income of $57.8 million, or $1.39 per diluted share, in the prior year.
Commenting on the quarter, Stanley M. Bergman, Chairman, Chief Executive Officer and President of Henry Schein, Inc., stated, "Fourth quarter sales growth was reported across all business groups and earnings per share for the quarter were consistent with the expectations that we communicated last quarter. In particular, Dental sales of $276.6 million exceeded our expectations, rising 1% over the 1998 fourth quarter and up 7% compared with the 1999 third quarter."
The Company stated that its Medical, Veterinary, Technology and International groups continue to grow at impressive rates, as net sales for those groups combined in the fourth quarter of 1999 were 46% higher than last year, with 9% internally generated.
"Last October we set forth specific initiatives for increasing sales and reducing expenses in our Dental business. I am pleased to report that we have successfully begun to execute our plan. First, we have appointed John Chatham, an industry veteran, as Vice President of Field Sales for Sullivan-Schein Dental(TM), our U.S. Dental business. We have also established a fully-dedicated management team for Sullivan-Schein Dental's equipment business with the mission of improving customer service and increasing sales and profitability.
"We have begun to implement our rightsizing plan for the Dental business, which we expect to complete by the end of 2000. Once the plan is fully implemented, we anticipate annual savings of at least $4 million to $6 million. As a result of one-time costs necessary to implement the plan during the current year, we do not expect to see meaningful savings until 2001," said Mr. Bergman. "This expected savings is in addition to the approximately $2 million of incremental costs saved as a result of our decision to cancel the opening of another distribution center, as previously announced."
The Company noted that Michael Racioppi, previously interim President of Henry Schein's Medical Group, has been appointed President. The Medical Group reported a 47% increase in sales compared to last year, of which 12% was internally generated.
"Michael has demonstrated exceptional leadership qualities during his eight-year tenure at Henry Schein," said Mr. Bergman. "I am confident in his ability to continue to increase sales and profitability in our Medical Group."
Mr. Bergman continued, "We are very excited about the success of our e-commerce business, which continued its trend of exceptional growth during the quarter. Sales processed through our ArubA(TM) e-commerce suite of systems more than doubled from the fourth quarter of 1998, reaching an annual run rate of well over $200 million. We are putting additional resources behind this effort and expect to announce additional strategic initiatives in the near-term that will further our Internet presence."
Mr. Bergman concluded, "While 1999 was not without challenge, we ended the year with determination and confidence in our ability to grow sales and grow earnings in the year ahead."
Henry Schein, Inc. is the largest distributor of healthcare products and services 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 300,000 customers worldwide.
Headquartered in Melville, New York, the Company employs over 6,000 people in 16 countries. Sales in 1999 were $2.3 billion. For more information, visit the Henry Schein website at http://www.henryschein.com.
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.
(TABLES TO FOLLOW)
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------ -------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1999 1998 1999 1998
-------- -------- -------- --------
(unaudited)(unaudited)
Net sales $ 611,261 $ 502,717 $ 2,285,700 $ 1,921,685
Cost of sales 424,336 340,882 1,587,344 1,319,861
------------------------ -----------------------
Gross profit 186,925 161,835 698,356 601,824
Operating expenses:
Selling, general
and administrative 155,902 128,356 579,124 505,628
Merger and
integration costs 0 24,026 13,467 56,666
------------------------ -----------------------
Operating income 31,023 9,453 105,765 39,530
Other income (expense):
Interest income 2,570 2,138 7,777 6,964
Interest expense (7,027) (3,494) (23,593) (12,050)
Other - net 481 720 (166) 1,570
------------------------ -----------------------
Income before taxes on income,
minority interest and equity in
earnings (losses)
of affiliates 26,085 8,817 89,783 36,014
Taxes on income 9,390 7,842 35,589 20,325
Minority interest in net
income of subsidiaries 418 202 1,690 145
Equity in earnings (losses)
of affiliates (738) (687) (2,192) 783
------------------------ -----------------------
------------------------ -----------------------
Net income $ 15,539 $ 86 $ 50,312 $ 16,327
======================== =======================
Adjusted net income:
Net income $ 15,539 $ 86 $ 50,312 $ 16,327
Adjustments:
Merger and integration
costs 0 24,026 13,467 56,666
Tax effect on merger and
integration costs 0 (4,756) (3,983) (12,591)
Pro-forma tax adjustment
- Meer 0 0 0 (2,579)
------------------------ -----------------------
Adjusted net
income $ 15,539 $ 19,356 $ 59,796 $ 57,823
======================== =======================
Adjusted net income per common share:
Basic $ 0.38 $ 0.48 $ 1.47 $ 1.47
======================== =======================
Diluted $ 0.38 $ 0.46 $ 1.44 $ 1.39
======================== =======================
Weighted average shares:
Basic 40,703 39,939 40,585 39,305
======================== =======================
Diluted 41,101 42,058 41,438 41,549
======================== =======================
HENRY SCHEIN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(audited)
Dec. 25, Dec. 26,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 26,019 $ 28,222
Accounts receivable, less reserves
of $20,391 and
$20,136, respectively 388,063 338,121
Inventories 285,590 270,008
Deferred income taxes 15,520 14,532
Prepaid expenses and other 63,617 53,646
------ ------
Total current assets 778,809 704,529
Property and equipment, net of
accumulated depreciation and amortization
of $60,702 and $53,756, respectively 86,627 67,646
Goodwill and other intangibles, net of accumulated
amortization of $31,356 and $18,123,
respectively 295,113 148,428
Investments and other 43,553 41,437
------- --------
$ 1,204,102 $ 962,040
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 198,983 $ 169,860
Bank credit lines 41,527 19,372
Accruals:
Salaries and related expenses 31,188 29,675
Merger and integration costs 10,093 21,992
Other 64,710 50,404
Current maturities of long-term debt 3,879 9,634
Total current liabilities 350,380 300,937
Long-term debt 318,218 180,445
Other liabilities 9,782 11,720
Total liabilities 678,380 493,102
------- -------
Minority interest 7,855 5,904
------- -------
Stockholders' equity:
Common stock, $.01 par value,
authorized 120,000,000;
issued and outstanding
40,768,306 and 40,250,936,
respectively 407 402
Additional paid-in capital 361,757 348,119
Retained earnings 167,809 119,064
Treasury stock, at cost
(62,479 shares) (1,156) (1,156)
Accumulated comprehensive income (10,359) (2,057)
Deferred compensation (591) (1,338)
Total stockholders' equity 517,867 463,034
------- -------
$ 1,204,102 $ 962,040
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CONTACT: Henry Schein, Inc.
Steven Paladino
Executive Vice President and
Chief Financial Officer
(516) 843-5500
or
Susan Vassallo
Manager, Investor and
Public Relations
(516) 843-5562
svassa@henryschein.com