Hi I was wondering If someone can check my ratios. I had to do the ratios for two companies for years 2015 and 2014. Can you please check them for me and let me know if there is anything wrong and the right solutions. I have attached each of the company's financials.

Thanks!

\fBaxter Consolidated Balance Sheets Cash and equivalents Accounts and other current receivables, net Inventories Prepaid expenses and other Investment in Baxalta common stock Current assets held for disposition Total current assets Property, plant and equipment, net Other Assets: Goodwill Other intangible assets, net Other Non-current assets held for disposition Total other assets 2015 2014 2,213.00 $ 2,925.00 1,731.00 1,884.00 1,604.00 1,577.00 855.00 478.00 5,148.00 245.00 3,298.00 $ 11,796.00 $ 10,162.00 4,386.00 4,434.00 $ 2,687.00 1,349.00 757.00 4,793.00 2,927.00 1,620.00 930.00 6,065.00 11,542.00 Baxter FY 2014 Liquidity Current Ratio Acid-Test Ratio Collection Period Days to Sell Capital Structure & Solvency Total Debt to Equity Long Term to Debt to Equity Time Interest Earned Return On Investment Retun on Assets Retun on Common Equity Operating Performance Gross Profit Manager Operating Profit Manager Net Profit Margin Asset Utilization Cash Turnover A/R Turnover Inventory Turnover Working Capital Turnover PPE Turnover Total Asset Turnover Market Measure Price-To-Earnigs Earnings-To-Yield Dividend Yield Dividend Yield Payout Rate Price-To-Book Baxter FY 2015 Henry Schein FY 2014 1.68 1.13 94 95 2.05 2.01 98 100 1.64 1.60 1,299 1,108 220% 126% 4.52 137% 72% 3.56 98% 19% 29.73 10% 20% 5% 8% 8% 11% 43% 6% 23% 42% 5% 10% 28% 7% 4% 4.17 5.93 3.86 6.03 4.02 0.11 3.88 5.51 3.66 5.61 3.74 0.11 32.10 8.80 6.33 20.69 7.71 0.41 9.64 10% 5% 44% 9.75 24.97 4% 3% 71% 25.25 31.95 3% 1% 29% 32.47 Henry Schein FY 2015 1.50 1.48 934 1,081 107% 16% 28.22 7% 11% 28% 7% 5% 32.90 9.02 6.46 21.20 7.90 0.42 30.56 3% 1% 27% 31.05 $ 1,000,000.00 Consistent Growth, Reliable Results Twenty Years as a Publicly Traded Company A N N U A L R E P O R T 2 0 15 Henry Schein Financial Highlights 2011-2015 NETSALES ($ in Millions) ADJUSTED OPERATINGINCOME ($ in Millions) $10,630 $769 $10,371 $700 $10,000 CAGR 6%* CAGR 7%* $9,561 $8,000 $8,530 $677 $634 $600 $8,940 $715 $582 $500 $6,000 $400 $300 $4,000 $200 $2,000 $100 15 20 20 14 13 20 20 20 11 15 20 14 20 13 20 12 20 11 20 ADJUSTED EARNINGSPERDILUTEDSHARE OPERATING CASHFLOW ANDCAPITALEXPENDITURES ($ in Millions) $5.96 CAGR 11%* 12 $0 $0 $5.44 $5.00 $700 $4.95 $664 $600 $4.44 $593 $4.00 $3.97 $500 $3.00 $587 $555 $400 $408(1) $300 $2.00 $200 $1.00 $100 $82 $45 $51 $60 $72 15 20 14 20 13 20 12 20 20 15 20 4 20 1 20 13 12 20 1 20 1 11 $0 $0 OPERATING CASHFLOW CAPITALEXPENDITURES *Four-year Compound Annual Growth Rate (1) Net of temporary forward inventory buy-ins of $150MM. NOTE: Operating Income and Earnings Per Diluted Share attributable to Henry Schein, Inc. for 2012, 2013 and 2015 have been adjusted to exclude certain one-time items. Refer to Non-GAAP Disclosures on page 12. Additionally, refer to our annual consolidated financial statements for a complete presentation of our Consolidated Statements of Cash Flows. About Henry Schein Henry Schein, Inc. (NASDAQ:HSIC) is the world's largest provider of health care products and services to office-based dental, animal health, and medical practitioners. Henry Schein, Inc. (NASDAQ:HSIC) is the world's largest provider of health care products and services to office-based dental, animal health, and medical practitioners. The Company also serves dental laboratories, government and institutional health care clinics, and other alternate care sites. A Fortune 500 Company and a member of the S&P 500 and the NASDAQ 100 indexes, Henry Schein employs over 19,000 Team Schein Members and serves more than one million customers. Henry Schein offers a comprehensive selection of products and services, including value-added solutions for operating efficient practices and delivering high-quality care. Henry Schein operates through a centralized and automated distribution network, with a selection of more than 110,000 branded products and Henry Schein private-brand products in stock, as well as more than 150,000 additional products available as special order items. The Company also offers its customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services. Headquartered in Melville, New York, Henry Schein has operations or affiliates in 33 countries. The Company's sales reached a record $10.6 billion in 2015, and have grown at a compound annual rate of approximately 15% since Henry Schein became a public company in 1995. For more information, visit Henry Schein at www.henryschein.com. (As of April 2016) Twenty Years Since Our IPO TEAM SCHEIN MEMBERS 1995 2,600 2015 19,000+ HENRY SCHEIN CUSTOMERS 1995 200,000 2015 1,000,000+ COUNTRIES IN WHICH WE OPERATE 1995 9 2015 33 SALES 1995 $616 million 2015 $10.6 billion ADJUSTED DILUTED EPS 1995 $0.34 2015 $5.96* *See reconciliation of GAAP and Non-GAAP measures on page 12. 1 Henry Schein at a Glance 50% DENTAL 27% ANIMAL HEALTH 20% MEDICAL 3% TECHNOLOGY & VALUE-ADDED SERVICES 2015 global net sales of $10.6 billion DENTAL Only global dental distributor to general practitioners, specialists, and laboratories Growth Opportunities: \u0007Geographic expansion Advancing technology solutions, including practice management Greater penetration of specialty markets 2015 net sales of $5.3 billion Continued focus on large group practices \u0007Digitalization of prosthetic solutions ANIMAL HEALTH Only global animal health distributor Growth Opportunities: Geographic expansion Advancing technology solutions, including practice management Continued focus on large group practices 2015 net sales of $2.9 billion Focus on practice-building products and services MEDICAL A leading U.S. distributor to primary care physicians and specialists, group practices, physician-owned labs, and ambulatory surgery centers Operations in certain European markets Growth Opportunities: Greater penetration of U.S. market 2015 net sales of $2.1 billion Continued focus on large group practices Select international opportunities Focus on specialty segments and solutions TECHNOLOGY & VALUE-ADDED SERVICES Only practice management software solutions provider serving dental, animal health, and medical practitioners Full-service provider of financial services Growth Opportunities: Geographic expansion Ability to serve large practices \u0007Continued focus on facilitating financial services for technology investments and office expansion 2 2015 net sales of $359 million Henry Schein Around the World HENRY SCHEIN HIGHLIGHTS OPERATIONS OR AFFILIATES IN 33 COUNTRIES (As of April 2016) 3,725 34 MILLION CONSULTANTS DIRECT MARKETING PIECES DISTRIBUTED 1,850 199 REPRESENTATIVES & SERVICE CENTERS FIELD SALES EQUIPMENT SALES TELESALES 84 19,000 TEAM SCHEIN MEMBERS OVER 1MILLION CUSTOMERS AVERAGE OF 165,000 CARTONS SHIPPED DAILY YEARS IN BUSINESS SERVING MORE THAN 61 CENTERS DISTRIBUTION MORE THAN 3,000 99% OF ITEMS ORDERED ARE SHIPPED WITHOUT BACKORDERING AND SHIPPED THE SAME BUSINESS DAY THE ORDER IS RECEIVED 110,000 PRODUCTS IN STOCK SUPPLIER 150,000 PARTNERS AS SPECIAL ORDER ITEMS ADDITIONAL PRODUCTS 3 4 A Message from the Chairman of the Board and Chief Executive Officer capitalization. Since our IPO, Henry Schein's share price has outperformed the S&P 500, NASDAQ Composite and NASDAQ 100 indexes, a testament to our ability to drive business execution and deliver value to our shareholders.** The values established by Henry and Esther have During the past twenty years, we have successfully navigated through changing market dynamics and a global recession, and in many ways, we led the change. At the time of our IPO, we had a presence in nine countries and we served approximately 200,000 customers through what was largely a U.S. catalog-based business supported by telesales representatives. Our customers were mostly dental practices and we had a small foothold in physician practices and veterinary clinics. remained true over all these years and our entrepreneurial culture has adapted as our business has grown. 2015 was a special year for Henry Schein as we celebrated twenty years as a publicly traded company. The anniversary of our initial public offering (IPO) was a remarkable milestone in our evolution from the small pharmacy founded by Henry and Esther Schein in 1932. They had a vision of creating a business that formed deep engagement with their customers, and they recognized that their employees, Team Schein, were at the heart of their success. The values established by Henry and Esther have remained true over all these years and our entrepreneurial culture has adapted as our business has grown. Our success over the past twenty years stems from a deep understanding of industry trends in the markets we serve as well as our ability to capitalize on the opportunities they present. Over that time, Henry Schein has earned a reputation for consistency, reliability and success. We remain steadfast in our focus on a business that is balanced between organic growth and contribution from strategic acquisitions or joint ventures, which has led to a twenty year compound annual growth rate of approximately 15% in net sales and in adjusted diluted earnings per share. In addition, Henry Schein has realized 21% compound annual growth in our market Today, Henry Schein has operations or affiliates in 33 countries on five continents, and we serve more than one million dental, animal health and medical practitioners. We have more than 3,700 field sales consultants, whose role has evolved from taking orders to becoming a trusted business advisor. What differentiates us is our focus on consultative services designed to help health care professionals operate efficient practices so they can focus on delivering the highest quality patient care. These field sales consultants are supported by more than 1,800 telesales representatives worldwide. The number of our distribution centers has increased from eight in 1995 to 61 today, including 40 outside of North America. We would note that the technology used today to keep those centers operating efficiently and with exceptional accuracy did not exist twenty years ago. We are truly a business transformed as a result of our forward thinking, strategic focus and solid execution. 5 A Message from the Chairman of the Board and Chief Executive Officer Perhaps the most fundamental change in our go-to-market strategy over these years has been the evolution of our business model from pure distributor to a value-added solutions provider that clinicians rely on to provide better clinical care and operate more efficient was 8.4%. Indeed, during 2015, about 35% of our sales came from outside the United States. Our expanding business in Europe, Australia, New Zealand and in emerging geographies speaks to our ability to identify growth opportunities and invest in companies uniquely currencies. Medical sales were up 18.9% and up 19.7% in constant currencies to $2.1 billion, while Technology and Value-Added Services sales were $359 million, up 2.8% over 2014 and up 5.3% in constant currencies. This commitment is evident in our 2015 results. Net sales of $10.6 billion represent 2.5% growth compared with 2014. Throughout 2015, the U.S. dollar strengthened against most of the world's major currencies, in particular the euro, and on a constant-currency basis, our sales growth for the year complemented by strategic acquisitions, we believe we gained market share in each of our business groups during 2015. Dental sales reached $5.3 billion, down 1.9% over the previous year, yet up 5.0% in constant currencies. Animal Health sales were $2.9 billion, up 0.8% over 2014 and up 8.4% in constant investment in Maravet; added Animal Health diagnostics expertise with the acquisition of scil animal care company GmbH; and, finally, we complemented our existing North American Medical business following the close of our acquisition of Cardinal Health's physician office business. Acquisitions completed during 2015 continued to open new markets and new geographies, Our goal is to provide an integrated solutions network, which while strengthening our current positions requires strong and trustworthy relationships with our customers. and broadening our product offerings. Henry Schein's acquisition strategy focuses businesses. Our goal is to provide an positioned to benefit from attractive on several key elements. In some integrated solutions network, which demographics such as a growing cases, we seek to further expand our requires strong and trustworthy middle class and increasingly diverse presence geographically, whether in relationships with our customers. populations. This broad international North America, Europe, Australia, New Practitioners know they can Rely on presence sets us apart from our Zealand, Japan or emerging markets. Us as their long-term partner to competition, as we are the only panWe often acquire companies that are understand their needs and to help European distributor in the dental and considered fold-in acquisitions where them grow their practices. animal health markets. we are adding new customers as well Today's health care market is rapidly Record adjusted diluted earnings per as a team of talented sales people with evolving. The passage of the Affordable share in 2015 of $5.96* was up nearly strong local relationships. Finally, we Care Act changed how the health care 10% compared with 2014. Operating acquire companies in order to gain system works and the way clinicians cash flow for the year of $586.8 million access to a key product or service, for practice. Delivering quality care at exceeded adjusted net income by instance, adding a software platform in lower costs requires clinicians to $85.4 million, again achieving one of an area where we do not currently have embrace technological solutions that our financial goals, and free cash flow a technology presence. promote better health outcomes and was $515.2 million. During the year, we Last year, we closed on a number of key deliver more efficient services. Our repurchased $300 million of our common acquisitions, each of which furthered the extensive knowledge of the health stock, or about 2.1 million shares. In success of our worldwide acquisition care market allows us to anticipate recognition of our larger market cap and strategy. Specifically, we built upon our change and develop solutions that help higher cash flow and as testament existing Dental business in Italy with our customers navigate this evolving to confidence in the future in 2015, the acquisition of Dental Trey; entered landscape. As trusted advisors to our our Board of Directors approved an the Nordic region for Animal Health customers, we are committed to being a increased authorization of $400 million in and expanded our product offering valued resource for innovative solutions our stock-repurchase program. with our acquisition of Jorgen Kruuse across the spectrum of products, Continuing our long-standing A/S; expanded our Eastern European services, technology and support. commitment to organic growth presence in Animal Health with our 6 A Message from the Chairman of the Board and Chief Executive Officer In addition to acquiring this business, we also entered into a multi-year supply agreement with Cardinal Health. This strategic agreement was born out of a vision to offer a seamless solution that supports improved care, increased customer satisfaction and lower costs for acute and non-acute sites of care. We remain optimistic about our ability to win new customers, including at large practices where most of today's market growth is generated. We believe we are uniquely positioned to provide broad continuum of care solutions jointly with Cardinal Health. As we mark twenty years as a public company, I'm reminded of a famous quote from the Greek philosopher Heraclitus: \"Change is the only constant in life.\" While we are most pleased with our accomplishments since becoming a public company, we will not indeed, we cannot rest on our laurels. The pace of innovation at our supplier partners is truly impressive, to say nothing about the evolution and growth of our customers and changes in the delivery and payment of health care. We intend to continue playing a critical role in bringing innovative solutions to our customers and leveraging advances in products and services across geographies. There are many markets where Henry Schein has earned a position of leadership and others where we see tremendous opportunity. It is the combination of geographic expansion, deeper market penetration, an unmatched product offering and an unwavering commitment to our customers that we believe forms the cornerstone of our future success. We have the vision, the talent and the capital so we are well positioned for the future to be We have the vision, the talent and the capital so we are well positioned for the future to be every bit as exciting and potentially as rewarding as the past twenty years have been. I would like to thank our over 19,000 Team Schein Members for their dedication and tireless efforts and our manufacturing partners for their ongoing support. Finally, on behalf of our Board of Directors, I thank you for your continued support of our Company. Sincerely, every bit as exciting and potentially as rewarding as the past twenty years have been. (As of April 2016) Forward-looking statements made in this report are subject to the reservations specified in the Safe Harbor statement noted in the Company's Form 10-K filing. * See reconciliation of GAAP and Non-GAAP measures on page 12. ** Stock performance when normalized to compare securities/indexes by percentage change given the same 100% base level at initial point of measure. Stanley M. Bergman Chairman of the Board and Chief Executive Officer Industry Recognition #287 FORTUNE 500 Ranking of the Largest U.S. Corporations A FORTUNE World's Most Admired Company RANKED #1 In Wholesalers: Health Care Industry 15th consecutive year. An ETHISPHERE INSTITUTE World's Most Ethical Company COMPONENT OF NASDAQ 100 and S&P 500 Indexes 5th consecutive year. 7 Henry Schein Cares-Helping Health Happen Henry Schein founded our company in 1932 based on the belief that our success is inextricably linked to the success of the customers and communities we serve. Ever since, we have pursued the ideal of \"doing well by doing good.\" This spirit of corporate citizenship is exemplified through Henry Schein Cares, our global corporate social responsibility program. Through Henry Schein Cares, we promote oral, medical and animal health care and seek to \"help health happen\" by expanding access to health care for underserved and vulnerable populations around the world. We assist those with limited access to care through three strategic priorities: wellness, prevention, treatment and education; emergency preparedness and relief; and capacity building. Central to our accomplishments is our public-private partnership model through which we mobilize partners including the health care industry, non-governmental organizations (NGOs), professional associations, and Team Schein Members to work together as positive agents for change in communities around the world. Selected Henry Schein Cares Accomplishments in 2015 \u0007Alpha Omega-Henry Schein Cares Holocaust Survivors Oral Health Program. Partnered with Alpha Omega International Dental Fraternity to launch the Alpha Omega-Henry Schein Cares Holocaust Survivors Oral Health Program, a three-year initiative that has provided approximately $500,000 in care to 140 low-income Holocaust survivors to date. \u0007Back to School. Helped more than 5,000 children return to the classroom, ready to succeed through our annual \"Back to School\" program, held at 29 Henry Schein locations in the United States, Canada, Spain, Scotland and Australia. The program provides children with backpacks filled with classroom supplies, books and hygiene products donated by Henry Schein. At many \"Back to School\" locations, children also received first-day of school outfits, personally selected and paid for by Team Schein Members. \u0007Give Kids A Smile. Sponsored the American Dental Association Foundation's \"Give Kids A Smile\" program, which the Company has supported since the initiative's creation in 2003. In 2015, the national program provided more than 350,000 underserved children with free oral health screenings, education and treatment. \u0007Global Supply Network for Pandemic Preparedness and Response. Collaborated with public and private sector organizations over the past year to develop a global supply-chain framework to enhance pandemic preparedness and response. Once successfully launched, the network will address extraordinary public health emergencies of international concern with vital and targeted products and equipment necessary for a public health response; strategic upstream and downstream logistics capacities; and a network information system based on a common approach designed to save lives. 8 \u0007Henry Schein Cares/Canine Companions Puppy Raiser Care Packages. Provided care packages filled with essential products to volunteer puppy raisers who help train assistance dogs for people with physical disabilities. \u0007Henry Schein Cares Medal. Launched the inaugural Henry Schein Cares Medal, which honors excellence in the expansion of access to care to the underserved by dental, medical and animal health professionals. \u0007Holiday Cheer for Children. Spread joy to more than 1,000 children and their families identified through local social service organization partners for participation in Henry Schein's 17th annual \"Holiday Cheer for Children\" program. Participating children attend a special celebration and receive toys, clothing, games and other gifts purchased by Team Schein Members. In addition, families in need receive gift certificates to major supermarket chains. \u0007Mission of Mercy. Committed $250,000 in health care products to America's Dentists Care Foundation in support of 50 dental Mission of Mercy events. \u0007Mission Rabies. Partnered with Mission Rabies to support a canine vaccination campaign to help combat rabies in Malawi through the donation of pharmaceuticals and other health care products valued at more than $60,000. \u0007Nepal Earthquake Relief. Donated $500,000 in health care products to NGO partners AmeriCares, Direct Relief, Heart to Heart International and International Medical Corps to support victims of the devastating earthquake that struck Nepal in April 2015. \u0007World Vision Refugee Relief. Committed $350,000 in health care products to World Vision for refugee relief efforts, including supporting Syrian refugees living in Europe and the Middle East. 9 Executive Officers Front Row, from Left to Right: Walter Siegel Senior Vice President and General Counsel Mark E. Mlotek Executive Vice President and Chief Strategic Officer, Member of the Board of Directors Stanley M. Bergman Chairman of the Board and Chief Executive Officer James P. Breslawski President, Henry Schein, Inc. and Chief Executive Officer, Global Dental Group, Member of the Board of Directors James A. Harding Senior Vice President and Chief Technology Officer Stanley Komaroff Senior Advisor Second Row, from Left to Right: David C. McKinley President, Medical Group Bob Minowitz President, International Dental Group Paul Rose Senior Vice President, Global Supply Chain Steven Paladino Executive Vice President and Chief Financial Officer, Member of the Board of Directors Lonnie Shoff Chief Executive Officer, Global Strategic Portfolio Group Gerald A. Benjamin Executive Vice President and Chief Administrative Officer, Member of the Board of Directors Peter McCarthy President, Global Animal Health Group Michael Racioppi Senior Vice President and Chief Merchandising Officer Michael S. Ettinger Senior Vice President, Corporate & Legal Affairs and Chief of Staff, Secretary Lorelei McGlynn Senior Vice President, Global Human Resources and Financial Operations 10 Board of Directors Center: Stanley M. Bergman Chairman of the Board and Chief Executive Officer From Left to Right: Lawrence S. Bacow, Ph.D.\t\u0007Leader-in-Residence, Center for Public Leadership at Harvard's Kennedy School of Government; Member of the Harvard Corporation, the fiduciary oversight board of Harvard University; Member of the Board of Directors of Liquidnet Holdings, Inc. and Loews Corporation; and Member of the Board of Overseers of TIAA-CREF Carol Raphael\t\u0007Senior Advisor for Manatt Health Solutions; Former President and CEO, Visiting Nurse Service of New York; Board Chair of AARP; and Member of the Board of Directors of the New York eHealth Collaborative Paul Brons Former President of Organon International BV (4) Barry J. Alperin\t\u0007Retired Vice Chairman, Hasbro, Inc.; Member of the Board of Directors of Fiesta Restaurant Group, Inc., Jefferies Group LLC, K'NEX Industries, Inc. and Weeks Marine, Inc. (1) (2) (3) Philip A. Laskawy\t\u0007Retired Chairman, Ernst & Young, LLP (now known as EY LLP) and Member of the Board of Directors of Lazard Ltd. and Loews Corporation (1) (3) (4) Donald J. Kabat\t\u0007Former Chief Financial Officer of Central Park Skaters, Inc.; Former President of D.J.K. Consulting Services, Inc.; Retired Partner, Accenture PLC Ireland and Member of the Board of Directors for several not-for-profit organizations (1) (2) Norman S. Matthews\t\u0007Former President, Federated Department Stores, Inc.; Member of the Board of Directors of Duff & Phelps Corp., Spectrum Brands, Inc., Party City Holdings, Inc. and Chairman of the Board of The Children's Place Retail Stores, Inc. (2) (4) Bradley T. Sheares, Ph.D.\t\u0007Former CEO, Reliant Pharmaceuticals and Former President of U.S. Human Health for Merck & Co.; Member of the Board of Directors of Honeywell International and The Progressive Corporation (4) Steven Paladino Executive Vice President and Chief Financial Officer E. Dianne Rekow, DDS, Ph.D.\t\u0007Dean of the Dental Institute at King's College London and Professor of Orthodontics; Former Professor of Orthodontics, Senior Vice Provost of Engineering Technology and Provost of Polytechnic Institute at New York University Louis W. Sullivan, M.D.\t\u0007Former U.S. Secretary of Health and Human Services; Founding Dean, Director and President Emeritus of the Morehouse School of Medicine; Member of the Board of Directors of United Therapeutics Corporation and Emergent BioSolutions Inc. (3) (4) Mark E. Mlotek Executive Vice President and Chief Strategic Officer Gerald A. Benjamin Executive Vice President and Chief Administrative Officer James P. Breslawski President, Henry Schein, Inc. and Chief Executive Officer, Global Dental Group (1) Member of Audit Committee (2) Member of Compensation Committee (3) Member of Nominating and Governance Committee (4) Member of Strategic Advisory Committee (As of April 2016) 11 COMMON STOCK Henry Schein Common Stock trades on the NASDAQ Stock Market under the symbol \"HSIC.\" ANNUAL MEETING OF STOCKHOLDERS Our Annual Meeting of Stockholders will be held on May 31, 2016 at 10:30 a.m. EDT at The Melville Marriott Long Island, located at 1350 Walt Whitman Road, Melville, New York 11747. STOCKHOLDER REPORTS AND INVESTOR INQUIRIES For stockholder inquiries, including requests for quarterly and annual reports, contact our Investor Relations department at (631) 843-5611, or email your request to investor@henryschein.com. Printed materials can also be requested through the Company's website. FORM 10-K Our Annual Report on Form 10-K for the fiscal year ended December 26, 2015 has been filed with the SEC and is available free of charge through our Internet website, www.henryschein.com. Stockholders may also obtain a copy of the Form 10-K upon written request to Henry Schein, Inc., 135 Duryea Road, Melville, New York 11747, Attn.: Investor Relations, via email at investor@henryschein.com or facsimile at (631) 843-5541. In response to such request, the Company will furnish without charge the Form 10-K including financial statements, financial schedules and a list of exhibits. INDEPENDENT AUDITORS BDO USA, LLP 100 Park Avenue, New York, New York 10017 LEGAL COUNSEL Proskauer Rose, LLP Eleven Times Square, New York, New York 10036 STOCK TRANSFER AGENT For address changes, account cancellation, registration changes and lost stock certificates, please contact: Continental Stock Transfer & Trust Company 17 Battery Place, 8th Floor, New York, New York 10004 (212) 509-4000 Years Ended NON-GAAP DISCLOSURES The following table sets forth, for the applicable periods, a reconciliation of operating income, net income attributable to Henry Schein, Inc., and diluted earnings per share adjusted to reflect the effects of restructuring costs and other adjustments. USE OF NON-GAAP MEASURES: The information (below) includes financial measures that are not calculated and presented in accordance with accounting principles generally accepted in the United States (\"GAAP\"). The table (right) reconciles operating income, income attributable to Henry Schein, Inc., and diluted earnings per share attributable to Henry Schein, Inc., our most directly comparable measure calculated and presented in accordance with GAAP, to comparable amounts as adjusted to eliminate the effect of the items listed below. We eliminated the effect of the items listed below to assist in evaluating the underlying operational performance of our business, excluding such costs, over the periods presented. We believe that this presentation is appropriate and facilitates such an evaluation by us, investors and analysts. These measures should be considered supplemental to, and not a substitute for or superior to, financial measures calculated in accordance with GAAP and are included solely for informational and comparative purposes. NOTES: (1) \u0007During 2015, we recorded restructuring costs of $34.9 million pre-tax ($26.2 million posttax). During 2012, we recorded restructuring costs of $15.2 million pre-tax ($10.5 million post-tax). The effect that these charges had on earnings per diluted share attributable to Henry Schein, Inc. was ($0.32) and ($0.12), respectively. (2) \u0007During 2013, we reduced the remaining valuation allowance of $13.4 million on the deferred tax asset associated with a net operating loss carryforward outside of the United States. The effect that this transaction had on earnings per diluted share attributed to Henry Schein, Inc. was $0.15. (3) \u0007Represents a loss on divestiture in 2013 of a noncontrolling interest in a dental wholesale distributor in the Middle East. The effect that this transaction had on earnings per diluted share attributable to Henry Schein, Inc. was ($0.14). December 26, December 28, 2015 2013 2012 (in thousands, except per share data) Operating income, as reported $ 733,972 $ 677,054 $ 618,961 Operating margin, as reported 6.9% 7.1% 6.9% Adjustments: 34,931 - $ 15,192 Adjusted operating income $ 768,903 $ 677,054 $ 634,153 Adjusted operating margin 7.2% 7.1% 7.1% $ 479,058 $ 431,554 $ 388,076 Restructuring costs (1) $ Net income attributable to Henry Schein, Inc.: As reported Adjustments, net of tax: $ Restructuring costs (1) Foreign tax benefit (2) Loss on sale of equity investment (3) 26,198 - - $ (13,398) - - $ 12,535 - - $ $ 10,537 2,679 - (3,802) - - $ 501,454 $ 433,370 $ 398,613 As reported $ 5.69 $ 4.93 $ Adjusted $ 5.96 $ 4.95 $ Accelerated amortization of deferred financing costs (4) One time tax benefit (5) Adjusted income attributable to Henry Schein, Inc.: $ Diluted earnings per share attributable to Henry Schein, Inc.: Diluted weighted-average common shares outstanding: 84,125 87,622 (4) \u0007In February 2013, we repaid the then outstanding debt related to the Henry Schein Animal Health, formerly Butler Schein Animal Health, transaction. As part of this transaction, we recorded a one-time interest charge of $6.2 million pre-tax ($2.7 million post-tax) related to the accelerated amortization of deferred financing costs. The effect that this transaction had on earnings per diluted share attributed to Henry Schein, Inc. was ($0.03). (5) \u0007Represents a one-time income tax benefit of $6,337 from a favorable tax ruling received during Q3 2015 by a subsidiary, net of noncontrolling interest of $2,535, resulting in a net income effect of $3,802. 12 December 29, 4.32 4.44 89,823 FOLLOW HENRY SCHEIN ON: Facebook: http://www.facebook.com/henryschein Twitter: http://twitter.com/henryschein LinkedIn: http://www.linkedin.com/company/henry-schein You Tube: http://www.youtube.com/user/henryscheininc Google+: http://plus.google.com/+henryschein Instagram: http://instagram.com/henryschein Pinterest: https://www.pinterest.com/henryschein Henry Schein, Inc. 135 Duryea Road Melville, New York 11747 U.S.A. (631) 843-5500 www.henryschein.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 26, 2015 __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-27078 HENRY SCHEIN, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of DELAWARE 135 Duryea Road Melville, New York incorporation or organization) (Address of principal executive offices) 11-3136595 11747 (I.R.S. Employer Identification No.) (Zip Code) (631) 843-5500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value $.01 per share Name of each exchange on which registered The NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES: X NO: __ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES: __ NO: X 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES: X NO: __ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of \"large accelerated filer,\" \"accelerated filer\" and \"smaller reporting company\" in Rule 12b-2 of the Exchange Act. Large accelerated filer: X Accelerated filer: __ Non-accelerated filer: __ Smaller reporting company: __ (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES: __ NO: X The aggregate market value of the registrant's voting stock held by non-affiliates of the registrant, computed by reference to the closing sales price as quoted on the NASDAQ Global Select Market on June 27, 2015, was approximately $12,167,497,000. As of February 5, 2016, there were 81,942,080 shares of registrant's Common Stock, par value $.01 per share, outstanding. Documents Incorporated by Reference: Portions of the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year (December 26, 2015) are incorporated by reference in Part III hereof. TABLE OF CONTENTS Page Number PART I. ITEM 1. ITEM 1A. ITEM 1B. ITEM 2. ITEM 3. ITEM 4. PART II ITEM 5. ITEM 6. ITEM 7. ITEM 7A. ITEM 8. ITEM 9. ITEM 9A. ITEM 9B. PART III ITEM 10. ITEM 11. ITEM 12. ITEM 13. ITEM 14. PART IV ITEM 15. Business ............................................................................................................................................ Risk Factors ...................................................................................................................................... Unresolved Staff Comments ............................................................................................................. Properties .......................................................................................................................................... Legal Proceedings ............................................................................................................................. Mine Safety Disclosures ................................................................................................................... Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .................................................................................... Selected Financial Data .................................................................................................................... Management's Discussion and Analysis of Financial Condition and Results of Operations ............................................................................................................ Quantitative and Qualitative Disclosures About Market Risk .......................................................... Financial Statements and Supplementary Data ................................................................................. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .............................................................................................................. Controls and Procedures ................................................................................................................... Other Information ............................................................................................................................. 3 18 30 30 31 31 32 35 37 62 63 108 108 111 Directors, Executive Officers and Corporate Governance ................................................................ Executive Compensation .................................................................................................................. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ................................................................................................. Certain Relationships and Related Transactions, and Director Independence .................................. Principal Accountant Fees and Services ........................................................................................... 111 111 Exhibits, Financial Statement Schedules .......................................................................................... Signatures ......................................................................................................................................... Exhibit Index .................................................................................................................................... 113 114 117 2 112 112 112 PART I ITEM 1. Business General We believe we are the world's largest provider of health care products and services primarily to office-based dental, animal health and medical practitioners. We serve more than 1 million customers worldwide including dental practitioners and laboratories, animal health clinics and physician practices, as well as government, institutional health care clinics and other alternate care clinics. We believe that we have a strong brand identity due to our more than 83 years of experience distributing health care products. We are headquartered in Melville, New York, employ nearly 19,000 people (of which more than 8,500 are based outside the United States) and have operations or affiliates in 33 countries, including the United States, Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, South Africa, Spain, Sweden, Switzerland, Thailand and the United Kingdom. We offer a comprehensive selection of products and services and value-added solutions for operating efficient practices and delivering high quality care. We operate through a centralized and automated distribution network with a selection of more than 110,000 branded products and Henry Schein private brand products in stock, as well as more than 150,000 additional products available as special order items. We also offer our customers exclusive, innovative technology solutions, including practice management software and e-commerce solutions, as well as a broad range of financial services. We have established over four million square feet of space in 61 strategically located distribution centers around the world to enable us to better serve our customers and increase our operating efficiency. This infrastructure, together with broad product and service offerings at competitive prices, and a strong commitment to customer service, enables us to be a single source of supply for our customers' needs. Our infrastructure also allows us to provide convenient ordering and rapid, accurate and complete order fulfillment. We conduct our business through two reportable segments: (i) health care distribution and (ii) technology and value-added services. These segments offer different products and services to the same customer base. The health care distribution reportable segment aggregates our global dental, animal health and medical operating segments. This segment distributes consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. Our global dental group serves office-based dental practitioners, dental laboratories, schools and other institutions. Our global animal health group serves animal health practices and clinics. Our global medical group serves office-based medical practitioners, ambulatory surgery centers, other alternate-care settings and other institutions. Our technology and value-added services group provides software, technology and other value-added services to health care practitioners. Our technology group offerings include practice management software systems for dental and medical practitioners and animal health clinics. Our value-added practice solutions include financial services on a non-recourse basis, e-services, practice technology, network and hardware services, as well as continuing education services for practitioners. Industry The health care products distribution industry, as it relates to office-based health care practitioners, is fragmented and diverse. This industry, which encompasses the dental, animal health and medical markets, was estimated to produce revenues of approximately $45 billion in 2015 in the global markets. The industry ranges from sole practitioners working out of relatively small offices to group practices or service organizations ranging in size from a few practitioners to a large number of practitioners who have combined or otherwise associated their practices. 3 Due in part to the inability of office-based health care practitioners to store and manage large quantities of supplies in their offices, the distribution of health care supplies and small equipment to office-based health care practitioners has been characterized by frequent, small quantity orders, and a need for rapid, reliable and substantially complete order fulfillment. The purchasing decisions within an office-based health care practice are typically made by the practitioner or an administrative assistant. Supplies and small equipment are generally purchased from more than one distributor, with one generally serving as the primary supplier. The health care products distribution industry continues to experience growth due to the aging population, increased health care awareness, the proliferation of medical technology and testing, new pharmacology treatments and expanded third-party insurance coverage, partially offset by the effects of unemployment on insurance coverage. In addition, the physician market continues to benefit from the shift of procedures and diagnostic testing from acute care settings to alternate-care sites, particularly physicians' offices. We believe that consolidation within the industry will continue to result in a number of distributors, particularly those with limited financial, operating and marketing resources, seeking to combine with larger companies that can provide growth opportunities. This consolidation also may continue to result in distributors seeking to acquire companies that can enhance their current product and service offerings or provide opportunities to serve a broader customer base. In recent years, the health care industry has increasingly focused on cost containment. This trend has benefited distributors capable of providing a broad array of products and services at low prices. It also has accelerated the growth of HMOs, group practices, other managed care accounts and collective buying groups, which, in addition to their emphasis on obtaining products at competitive prices, tend to favor distributors capable of providing specialized management information support. We believe that the trend towards cost containment has the potential to favorably affect demand for technology solutions, including software, which can enhance the efficiency and facilitation of practice management. Competition The distribution and manufacture of health care supplies and equipment is highly competitive. Many of the health care distribution products we sell are available to our customers from a number of suppliers. In addition, our competitors could obtain exclusive rights from manufacturers to market particular products. Manufacturers also could seek to sell directly to end-users, and thereby eliminate or reduce our role and that of other distributors. In North America, we compete with other distributors, as well as several manufacturers, of dental, animal health and medical products, primarily on the basis of price, breadth of product line, customer service and valueadded products and services. In the dental market, our primary competitors are the Patterson Dental division of Patterson Companies, Inc. and Benco Dental Supply Company. In addition, we compete against a number of other distributors that operate on a national, regional and local level. In the animal health market, our primary competitors are the MWI Animal Health division of AmerisourceBergen and the Patterson Veterinary division of Patterson Companies, Inc. Our primary competitors in the medical market are McKesson Corporation and Medline Industries, Inc., which are national distributors. We also compete against a number of regional and local animal health and medical distributors, as well as a number of manufacturers that sell directly to veterinarians and physicians. With regard to our dental practice management software, we compete against numerous companies, including Carestream Health, Inc. and the Patterson Dental division of Patterson Companies, Inc. In the animal health practice management market, our primary competitors are IDEXX Laboratories, Inc. and the Patterson Veterinary division of Patterson Companies, Inc. The medical practice management and electronic medical records market is very fragmented and we compete with numerous companies such as the NextGen division of Quality Systems, Inc., eClinicalWorks and Allscripts Healthcare Solutions, Inc. We also face significant competition internationally, where we compete on the basis of price and customer service against several large competitors, including the GACD Group, Pluradent AG & Co., Lifco AB, Planmeca Oy, Billericay Dental Supply Co. Ltd., National Veterinary Services Limited (Patterson Veterinary division of Patterson Companies, Inc.), Centaur Services Limited (MWI Animal Health division of AmerisourceBergen) and Alcyon SA, as well as a large number of dental, animal health and medical product distributors and manufacturers in Australia, Austria, Belgium, Brazil, Canada, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong SAR, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Malaysia, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Slovakia, South Africa, Spain, Sweden, Switzerland, Thailand and the United Kingdom. 4 Significant price reductions by our competitors could result in a similar reduction in our prices. Any of these competitive pressures may materially adversely affect our operating results. Competitive Strengths We have more than 83 years of experience in distributing products to health care practitioners resulting in strong awareness of the Henry Schein brand. Our competitive strengths include: A focus on meeting our customers' unique needs. We are committed to providing customized solutions to our customers that are driven by our understanding of the market and reflect the technology-driven products and services best suited for their practice needs. Direct sales and marketing expertise. Our sales and marketing efforts are designed to establish and solidify customer relationships through personal visits by field sales representatives, frequent direct marketing and telesales contact, emphasizing our broad product lines, including exclusive distribution agreements, competitive prices and ease of order placement. The key elements of our direct sales and marketing efforts are: Field sales consultants. We have approximately 3,725 field sales consultants, including equipment sales specialists, covering major North American, European and other international markets. These consultants complement our direct marketing and telesales efforts and enable us to better market, service and support the sale of more sophisticated products and equipment. Direct marketing. During 2015, we distributed approximately 34.0 million pieces of direct marketing material, including catalogs, flyers, order stuffers and other promotional materials to existing and potential office-based health care customers. Telesales. We support our direct marketing effort with approximately 1,850 inbound and outbound telesales representatives, who facilitate order processing and generate new sales through direct and frequent contact with customers. Electronic commerce solutions. We provide our customers and sales teams with innovative and competitive Internet, PC and mobile e-commerce solutions. Social media. Our operating entities and employees engage our customers and supplier partners through various social media platforms. Broad product and service offerings at competitive prices. We offer a broad range of products and services to our customers, at competitive prices, in the following categories: Consumable supplies and equipment. We offer over 110,000 Stock Keeping Units, or SKUs, to our customers. Of the SKUs offered, approximately 52,000 are offered to our dental customers, approximately 13,000 to our animal health customers and approximately 53,000 to our medical customers. We offer over 150,000 additional SKUs to our customers in the form of special order items. Technology and other value-added products and services. We sell practice management software systems to our dental, animal health and medical customers. Our practice management solutions provide practitioners with electronic medical records, patient treatment history, billing, accounts receivable analyses and management, appointment calendars, electronic claims processing and word processing programs. As of December 26, 2015, we had an active user base of more than 90,000 practices, including users of Dentrix Dental Systems, Dentrix Enterprise, Dentrix Dental Vision, Dentrix Ascend, Easy Dental, OasisTM, Evolution and EXACT, Gesden, JulieSoftware, Power Practice Px, AxiUmTM, EndoVision, PerioVision, OMSVision and Viive for dental practices; Advantage+TM, AVImark, DVM Manager, InfinityTM, SunpointTM, Triple CrownTM, Vetech AdvantageTM, VisionVPMTM and Robovet for animal health practices; and MicroMD for physician practices. Repair services. We have 199 equipment sales and service centers worldwide that provide a variety of repair, installation and technical services for our health care customers. Our technicians provide installation and repair services for: dental handpieces; dental, animal health and medical small equipment; table top sterilizers; and large dental equipment. 5 Financial services. We offer our customers solutions in operating their practices more efficiently by providing access to a number of financial services and products (including non-recourse financing for equipment, technology and software products; non-recourse patient financing; collection services and credit card processing) at rates that we believe are generally lower than what our customers would be able to secure independently. We also provide consulting services, dental practice valuation and brokerage services. Commitment to superior customer service. We maintain a strong commitment to providing superior customer service. We frequently monitor our customer service through customer surveys, focus groups and statistical reports. Our customer service policy primarily focuses on: Exceptional order fulfillment. We ship an average of approximately 165,000 cartons daily. Approximately 99% of items ordered are shipped without back ordering and are shipped on the same business day the order is received. Streamlined ordering process. Customers may place orders 24 hours a day, 7 days a week by mail, fax, telephone, e-mail, Internet and by using our computerized order entry systems. Integrated management information systems. Our information systems generally allow for centralized management of key functions, including accounts receivable, inventory, accounts payable, payroll, purchasing, sales and order fulfillment. These systems allow us to manage our growth, deliver superior customer service, properly target customers, manage financial performance and monitor daily operational statistics. Cost-effective purchasing. We believe that cost-effective purchasing is a key element to maintaining and enhancing our position as a competitive-pricing provider of health care products. We continuously evaluate our purchase requirements and suppliers' offerings and prices in order to obtain products at the lowest possible cost. In 2015, our top 10 health care distribution suppliers and our single largest supplier accounted for approximately 34% and 7%, respectively, of our aggregate purchases. Efficient distribution. We distribute our products from our strategically located distribution centers. We strive to maintain optimal inventory levels in order to satisfy customer demand for prompt delivery and complete order fulfillment. These inventory levels are managed on a daily basis with the aid of our management information systems. Once an order is entered, it is electronically transmitted to the distribution center nearest the customer's location and a packing slip for the entire order is printed for order fulfillment. 6 Products The following table sets forth the percentage of consolidated net sales by principal categories of products offered through our health care distribution and technology reportable segments: 2015 Health care distribution: Dental products (1) ......................................................................... Animal health products (2) ............................................................. Medical products (3) ....................................................................... 2014 2013 49.6 % 27.5 19.5 51.9 % 27.9 16.8 52.3 % 27.2 17.2 Total health care distribution ...................................................... 96.6 96.6 96.7 Technology: Software and related products and other value-added products (4) ........................................... 3.4 3.4 3.3 Total ........................................................................................................ 100.0 % 100.0 % 100.0 % (1) Includes infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental implants, gypsum, acrylics, articulators, abrasives, dental chairs, delivery units and lights, X-ray supplies and equipment, equipment repair and high-tech and digital restoration equipment. (2) Includes branded and generic pharmaceuticals, surgical and consumable products and services and equipment. (3) Includes branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray products, equipment and vitamins. (4) Consists of practice management software and other value-added products, which are distributed primarily to health care providers, and financial services on a non-recourse basis, e-services, continuing education services for practitioners, consulting and other services. Business Strategy Our objective is to continue to expand as a global value-added provider of health care products and services to office-based dental, animal health and medical practitioners. To accomplish this, we will apply our competitive strengths in executing the following strategies: Increase penetration of our existing customer base. We have over 1 million customers worldwide and we intend to increase sales to our existing customer base and enhance our position as their primary supplier. Increase the number of customers we serve. This strategy includes increasing the number and productivity of field sales consultants, as well as using our customer database to focus our marketing efforts in all of our operating segments. In the dental business, we provide products and services to traditional dental practices as well as new emerging segments, such as dental service organizations and community health centers. Leveraging our unique assets and capabilities, we offer solutions to address these new markets. In the medical business, we have expanded to serve customers located in settings outside of the traditional office, such as urgent care clinics, retail and occupational health settings. As settings of health care shift, we remain committed to serving these practitioners and providing them with the products and services they need. Leverage our value-added products and services. We continue to increase cross-selling efforts for key product lines utilizing a consultative selling process. In the dental business, we have significant cross-selling opportunities between our dental practice management software users and our dental distribution customers. In the animal health business, we have opportunities to cross-sell practice management software and other products. In the medical business, we have opportunities to expand our vaccine, injectables and other pharmaceuticals sales to health care practitioners, as well as cross-selling core products and electronic health record and practice management software. Our strategy extends to providing health systems, integrated delivery networks and other large group and multi-site health care organizations, that include physician clinics, these same value added products and services. As physicians and health systems closely align, we have increased access to opportunities for cross-marketing and selling our product and service portfolios. 7 Pursue strategic acquisitions and joint ventures. Our acquisition strategy includes acquiring businesses and entering into joint ventures complementary to ours that will provide, among other things, additional sales to be channeled through our existing distribution infrastructure, access to additional product lines and field sales consultants and an opportunity to further expand into new geographic markets. Markets Served Demographic trends indicate that our markets are growing, as an aging U.S. population is increasingly using health care services. Between 2015 and 2025, the 45 and older population is expected to grow by approximately 12%. Between 2015 and 2035, this age group is expected to grow by approximately 25%. This compares with expected total U.S. population growth rates of approximately 8% between 2015 and 2025 and approximately 15% between 2015 and 2035. In the dental industry, there is predicted to be a rise in oral health care expenditures as the 45 and older segment of the population increases. There is increasing demand for new technologies that allow dentists to increase productivity, and this is being driven in the U.S. by lower insurance reimbursement rates. At the same time, there is an expected increase in dental insurance coverage. We support our dental professionals through the many SKUs that we offer, as well as through important valueadded services, including practice management software, electronic claims processing, financial services and continuing education, all designed to help maximize a practitioner's efficiency. The animal health market, impacted by growing companion pet ownership and care, as well as increased focus on safety and efficiency in livestock production, continues to provide additional growth opportunities for us. We support the animal health practitioners we serve through the distribution of biologicals, pharmaceuticals, supplies and equipment and by actively engaging in the development, sale and distribution of veterinary practice management software. There continues to be a migration of procedures from acute-care settings to physicians' offices, a trend that we believe provides additional opportunities for us. There also is the continuing use of vaccines, injectables and other pharmaceuticals in alternate-care settings. We believe we have established a leading position as a vaccine supplier to the office-based physician practitioner. Additionally, we are expanding our dental full-service model, our animal health presence and our medical offerings in countries where opportunities exist. Through our \"Schein Direct\" program, we also have the capability to provide door-to-door air package delivery to practitioners in over 190 countries around the world. For information on revenues and long-lived assets by geographic area, see Note 15 of \"Notes to Consolidated Financial Statements,\" which is incorporated herein by reference. Seasonality and Other Factors Affecting Our Business and Quarterly Results We experience fluctuations in quarterly earnings. As a result, we may fail to meet or exceed the expectations of securities analysts and investors, which could cause our stock price to decline. Our business is subject to seasonal and other quarterly fluctuations. Revenues and profitability generally have been higher in the third and fourth quarters due to the timing of sales of seasonal products (including influenza vaccine, equipment and software products), purchasing patterns of office-based health care practitioners and yearend promotions. Revenues and profitability generally have been lower in the first quarter, primarily due to increased sales in the prior two quarters. We expect our historical seasonality of sales to continue in the foreseeable future. Quarterly results may also be materially adversely affected by a variety of other factors, including: timing and amount of sales and marketing expenditures; timing of pricing changes offered by our suppliers; timing of the introduction of new products and services by our suppliers; 8 timing of the release of upgrades and enhancements to our technology-related products and services; changes in or availability of supplier contracts or rebate programs; supplier rebates based upon attaining certain growth goals; changes in the way suppliers introduce or deliver products to market; costs of developing new applications and services; our ability to correctly identify customer needs and preferences and predict future needs and preferences; uncertainties regarding potential significant breaches of data security