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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2024-02-28 compared with 2023-02-21 · 87 added, 80 removed, 34 unchanged (83% of the section changed)

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks as well as changes in foreign currency exchange rates as measured against the U.S.

We are exposed to market risks, interest rate risks as well as changes in foreign currency exchange rates as

measured against the U.S.

dollar and each other, and changes to the credit markets.

We attempt to minimize these risks by primarily using

foreign currency forward contracts and by maintaining counter-party credit limits.

These hedging activities provide

only limited protection against currency exchange and credit risks.

Factors that could influence the effectiveness of

our hedging programs include currency markets and availability of hedging

instruments and liquidity of the credit

All foreign currency forward contracts that we enter into are components

of hedging programs and are

entered into for the sole purpose of hedging an existing or anticipated

We attempt to minimize these

risks primarily by using foreign currency forward contracts and by

maintaining counter-party credit limits.

hedging activities provide only limited protection against currency exchange

and credit risks.

Factors that could

influence the effectiveness of our hedging programs include currency markets and

availability of hedging

instruments and liquidity of the credit markets.

All foreign currency forward contracts that we enter into are

components of hedging programs and are entered into for the sole purpose

of hedging an existing or anticipated

currency exposure.

We do not enter into such

contracts for speculative purposes and we manage our credit risks by diversifying

our investments, maintaining a

strong balance sheet and having multiple sources of capital.

Foreign Currency Agreements

The value of certain foreign currencies as compared to the U.S.

and the value of certain underlying functional

currencies of the Company, including its foreign subsidiaries, may affect our financial results.

We do not enter into such contracts for speculative purposes and we manage our credit risks by

diversifying our investments, maintaining a strong balance sheet and having

multiple sources of capital.

Foreign Currency

The value of certain foreign currencies compared to the U.S.

affect our financial results.

Fluctuations in

exchange rates may positively or negatively affect our revenues, gross margins, operating expenses

earnings, all of which are

expressed in U.S.

earnings, all of which are expressed in U.S.

Where we deem it prudent, we engage in hedging programs

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foreign currency profits into U.S.

dollars, as we regard this as an accounting

exposure, not an economic

dollars, as we consider foreign

currency translation to be an accounting exposure,

not an economic exposure.

A hypothetical 5% change in the average value of the U.S.

in 2022 compared to foreign currencies

would have changed our 2022 reported Net income attributable to Henry

by approximately $7 million.

As of December 31, 2022, we had forward foreign currency exchange

agreements, which expire through November

16, 2023, with a fair value of $23 million as determined by quoted market

dollar in 2023 compared

foreign currencies would have changed our 2023 reported Net income

attributable to Henry Schein, Inc.

approximately $5 million.

As of December 30, 2023, our forward foreign currency exchange agreements,

which expire through November 3,

2028, had a fair value of $(8) million as determined by quoted market prices.

Included in the forward foreign

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designated EUR/USD forward contracts

with notional values of approximately €200 million, with a reported fair value

of these contracts of $20 million.

5% increase in the value of the Euro to the USD from December 31, 2022,

with all other variables held constant,

would have had an unfavorable effect on the fair value of these forward contracts

by decreasing the value of these

instruments by $10 million.

with notional values of approximately €300 million and reported fair values

of $(7) million.

A 5% increase in the

value of the Euro to the USD from December 30, 2023 would decrease the fair

value of these forward contracts by

On March 20, 2020, we entered into a total return swap for the purpose

of economically hedging our unfunded non-

qualified supplemental retirement plan (“SERP”) and our deferred compensation

plan (“DCP”).

This swap will

offset changes in our SERP and DCP liabilities.

At the inception, the notional value of the investments in these

plans was $43 million.

At December 31, 2022, the notional value of the investments

in these plans was $78

At December 31, 2022, the financing blended rate for

this swap was based on LIBOR of 4.03% plus

0.55%, for a combined rate of 4.58%.

For the years ended December 31, 2022 ended and December

have recorded a gain/(loss), within the selling, general and administrative

line item in our consolidated statement of

income, of approximately $(17) million and $12 million, respectively, net of transaction costs, related to this

undesignated swap.

This swap is expected to be renewed on an annual basis after its current

expiration date of

March 31, 2023, and is expected to result in a neutral impact to our results

of operations.

Short-Term Investments

qualified supplemental retirement plan and our deferred compensation plan obligation.

At inception, the notional value of the investments in these plans was $43

At December 30, 2023, the

notional value of the investments in these plans was $96 million.

At December 30, 2023, the financing blended rate

for this swap was based on the Secured Overnight Financing Rate (“SOFR”)

plus 0.52%, for a combined

rate of 5.85%.

For the years ended December 30, 2023, December 31, 2022, and

December 25, 2021 we have

recorded a gain/(loss), within selling, general and administrative expense,

of approximately $10 million, $(17)

million and $12 million, respectively, net of transaction costs, related to this undesignated swap.

expected to be renewed on an annual basis and is expected to result

in a neutral impact to our results of operations.

Credit Risk Monitoring

We limit our credit risk with respect to our cash equivalents, short-term investments and derivative instruments, by

3 unchanged sentences

numerous investment grade counterparties.

Interest Rate Debt

Interest Rate Risk

As of December 30, 2023, we had variable interest rate exposure for certain

1 unchanged sentence

trade accounts receivable securitization.

Our revolving credit facility which we entered into on August 20, 2021

and expires on August 20, 2026, has an

interest rate that is based on the U.S.

Dollar LIBOR plus a spread based on

our leverage ratio at the end of each

financial reporting quarter.

As of December 31, 2022, there was $0 million outstanding under this

revolving credit

During the year ended December 31, 2022, we had no borrowings under

this revolving credit facility.

Our U.S trade accounts receivable securitization, which we entered

Our revolving credit facility which we entered into on July 11,

2023 and expires on July 11, 2028,

has a variable

interest rate that is based on the SOFR plus a spread based on our leverage

ratio at the end of each financial

reporting quarter.

As of December 30, 2023, there was $200 million outstanding under

this revolving credit

During the year ended December 30, 2023, the average outstanding

balance was approximately $61

Based upon our average outstanding balances, for each hypothetical

increase of 25 basis points, our

interest expense thereunder would have increased by $0.2 million.

trade accounts receivable securitization, which we entered

into on April 17, 2013 and expires on

December 15, 2025, has an interest rate that is based upon the asset-backed

December 15, 2025, has a variable interest rate that is based upon the asset-backed

commercial paper rate.

1 unchanged sentence

for a combined rate of 6.42%,

December 31, 2022 the outstanding balance was $330 million under

this securitization facility.

During the year

ended December 31, 2022, the average outstanding balance under this securitization

facility was approximately

$166 million.

Based upon our average outstanding balance for this securitization

facility, for each hypothetical

increase of 25 basis points, our interest expense thereunder would have

increased by $0.4 million.

outstanding balance under this securitization facility was $210 million.

During the year ended December 30, 2023,

the average outstanding balance was approximately $238 million.

Based upon our average outstanding balances,

for each hypothetical increase of 25 basis points, our interest expense thereunder

would have increased by $1

On July 11, 2023, we entered into interest rate swap agreements to hedge the cash flow of our variable

million floating debt term loan facility, with three years maturity, effectively changing the floating rate portion of

our obligation to a fixed rate.

Under the terms of the interest rate swap agreements, we receive variable

payments based on the one-month Term SOFR rate and pay interest at a fixed rate.

As of December 30, 2023, the

notional value of the interest rate swap agreements was $741

This term loan matures on July 11, 2026.

At December 30, 2023, the interest on this Term Credit Agreement was 5.36% plus 1.35% for a combined rate of

However, we have a hedge in place (see

Note 12 – Derivatives and Hedging Activities

for additional

information) that ultimately creates an effective fixed rate of 5.79%.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk