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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-21 · 1716 added, 1446 removed, 1676 unchanged (65% of the section changed)

3 unchanged sentences

Report of Independent Registered Public Accounting Firm

BDO USA, LLP;

(BDO USA, P.C.;

Consolidated Financial Statements

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Note 1 – Basis of Presentation and Significant Accounting Policies

Note 2 – Cybersecurity Incident

Note 3 – Net Sales from Contracts with Customers

16 unchanged sentences

Note 20 – Comprehensive Income

Note 20 – Discontinued Operations

Note 21 – Earnings Per Share

1 unchanged sentence

Note 23 – Related Party Transactions

All other schedules are omitted because the required information is either

inapplicable or is included in the consolidated

financial statements or the notes thereto.

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

December 30, 2023 and December 31, 2022, the related consolidated statements of income, comprehensive income,

stockholders’ equity,

related notes

(collectively referred to

“consolidated financial statements”).

financial statements

present fairly,

material respects, the

financial position of

December 25, 2021,

results of its

operations and its

cash flows for

period ended December 31,

2022, in conformity with

accounting principles generally accepted in

the United States

changes in stockholders’ equity,

and cash flows for each of

the three years in the period

ended December 30, 2023,

(collectively

“consolidated

statements”).

consolidated financial

statements present

respects, the

financial position

December 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three

ended December

in conformity

with accounting

principles generally

United States of America.

Organizations

expressed an unqualified opinion thereon.

expressed an adverse opinion thereon.

Basis for Opinion

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material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the

presentation of the consolidated financial

believe that our audits provide

a reasonable basis for our

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial

statements, whether

performing procedures

included examining,

evidence regarding

and disclosures

consolidated financial

also included

evaluating the

accounting principles

and significant

estimates made

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that

our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the

current period audit of the consolidated

financial statements that was communicated or required to be communicated

to the audit committee and that:

relates to accounts or disclosures that are material to the consolidated

financial statements and (2) involved our

especially challenging, subjective,

or complex judgments.

The communication of the critical

audit matter does not

alter in any way our opinion on the consolidated financial statements, taken

as a whole, and we are not, by

communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the

communicated below is

the current period

the consolidated

financial statements

communicated or

be communicated to

Committee and that:

disclosures that

financial statements;

especially challenging,

subjective or

complex judgments.

The communication

critical audit

communicating the

critical audit

matter below,

separate opinion

critical audit

accounts or disclosures to which it relates.

Revenue growth rates utilized in

the determination of the fair

value of acquired customer relationships

certain acquisition

As described in

the consolidated financial

statements, the Company

acquired several companies in

current year.

the acquisitions,

management was

determine estimated

identifiable intangible assets.

Management exercised judgment to

develop and select

Business Acquisition

recorded $156 million of identifiable intangible assets related to

customer relationships and lists.

identified management’s

judgements used to

determine the

revenue growth rates

measurement of the fair value of the customer relationships.

determination

relationships

critical audit matter.

The principal considerations

for our determination

were the subjective

judgement required by

management in formulating the

revenue growth rates and

assessing the appropriateness of the

discount rate used in

acquired identifiable

considerations

determination included the

subjectivity and judgment

required to determine

the revenue growth

relationships

growth rates involved especially subjective auditor judgment due to

the nature and extent of audit effort required.

required to address these matters, including the extent of specialized

skill or knowledge needed.

The primary procedures we performed to address this critical audit matter

Evaluating the reasonableness of the revenue growth rates by i)

reviewing the historical performance

of the acquired company using its audited financial statements and

(ii) assessing revenue projections

against industry metrics and peer-group companies.

Evaluating the reasonableness of the revenue growth rates used in the determination

of the fair values of the

relationships

performance of

acquired company

audited financial

statements, and

assessing revenue

projections against industry metrics and peer-group companies.

information underlying

the determination

discount rate,

estimates of discount rates and

comparing those to the discount

rate selected by management in connection

with the determination of the fair value of the acquired customer relationships and lists in

the acquisition of

We have served as the Company's auditor since 1984.

February 28, 2024

See accompanying notes.

HENRY SCHEIN, INC.

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Cash and cash equivalents

Accounts receivable, net of reserves of $

Accounts receivable, net of allowance for credit losses of $

Inventories, net

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interests and stockholders' equity

Amounts presented include balances held by our consolidated variable interest entity (“VIE”).

At December 30, 2023 and

December 31, 2022, includes trade accounts receivable of $

million and $

million, respectively, and long-term debt of $

million and $

million, respectively.

Note 1 – Basis of Presentation and Significant Accounting Policies

See accompanying notes.

HENRY SCHEIN, INC.

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Interest expense

Income from continuing operations before taxes, equity in

Income before taxes, equity in

earnings of affiliates and noncontrolling interests

Equity in earnings of affiliates

Equity in earnings of affiliates, net of tax

Gain on sale of equity investment

Net income from continuing operations

Income from discontinued operations, net of tax

Net income attributable to noncontrolling interests

Net income attributable to Henry Schein, Inc.

Amounts attributable to Henry Schein, Inc.:

Continuing operations

Discontinued operations

Net income attributable to Henry Schein, Inc.

Earnings per share from continuing operations attributable to

Henry Schein, Inc.:

Earnings per share from discontinued operations attributable to Henry

Schein, Inc.:

Earnings per share attributable to Henry Schein, Inc.:

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shares outstanding:

See accompanying notes.

HENRY SCHEIN, INC.

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Foreign currency translation gain (loss)

Unrealized gain (loss) from foreign currency hedging activities

Pension adjustment gain

Unrealized gain (loss) from hedging activities

Pension adjustment gain (loss)

Other comprehensive income (loss), net of tax

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Comprehensive income attributable to noncontrolling interests:

Foreign currency translation loss

Foreign currency translation loss (gain)

Comprehensive income attributable to noncontrolling interests

Comprehensive income attributable to Henry Schein, Inc.

See accompanying notes.

HENRY SCHEIN, INC.

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OF CHANGES IN STOCKHOLDERS' EQUITY

(In millions, except share and per share data)

(in millions,

except share and per share data)

$.01 Par Value

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attributable to Redeemable

noncontrolling interests from continuing operations)

Foreign currency translation gain (excluding loss of $

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

Unrealized loss from foreign currency hedging activities,

net of tax benefit of $

Dividends paid

Purchase of noncontrolling interests

Unrealized gain from hedging activities,

net of tax of $

Pension adjustment gain, including tax of $

Distributions to noncontrolling shareholders

Change in fair value of redeemable securities

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Shares withheld for payroll taxes

Separation of Animal Health business

Transfer of charges in excess of capital

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attributable to Redeemable

noncontrolling interests from continuing operations)

noncontrolling interests)

Foreign currency translation loss (excluding loss of $

attributable to Redeemable noncontrolling interests)

Unrealized gain from foreign currency hedging activities,

Unrealized gain from hedging activities,

net of tax of $

Pension adjustment gain, including tax of $

Dividends paid

Distributions to noncontrolling shareholders

Purchase of noncontrolling interests

Change in fair value of redeemable securities

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( 6,111,676 )

Stock issued upon exercise of stock options

Stock-based compensation expense

Shares withheld for payroll taxes

Settlement of stock-based compensation awards

Transfer of charges in excess of capital

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attributable to Redeemable

noncontrolling interests from continuing operations)

Foreign currency translation loss (excluding loss of $

noncontrolling interests)

Foreign currency translation gain (excluding gain of $

attributable to Redeemable noncontrolling interests)

Unrealized gain from foreign currency hedging activities,

net of tax of $

Pension adjustment gain, including tax of $

Dividends paid

Purchase of noncontrolling interests

Unrealized loss from hedging activities,

including tax benefit of $

Pension adjustment loss, including tax benefit of $

Distributions to noncontrolling shareholders

Change in fair value of redeemable securities

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Balance, December 30, 2023

See accompanying notes.

HENRY SCHEIN, INC.

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Cash flows from operating activities:

Income from discontinued operations

Income from continuing operations

Adjustments to reconcile net income to net cash provided

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Impairment charge on intangible assets

Impairment of capitalized software

Non-cash restructuring charges

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Accounts payable and accrued expenses

Net cash provided by operating activities from continuing

Net cash provided by operating activities from discontinued operations

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of fixed assets

Payments related to equity investments and business

acquisitions, net of cash acquired

Purchases of property and equipment

Payments related to equity investments and business acquisitions,

net of cash acquired

Proceeds from sale of equity investment

Proceeds from (repayments to) loan to affiliate

Proceeds from loan to affiliate

Settlements for net investment hedges

Capitalized software costs

Net cash used in investing activities

Cash flows from financing activities:

Net change in bank borrowings

Net change in bank credit lines

Proceeds from issuance of long-term debt

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Proceeds from issuance of stock upon exercise of stock options

Payments for repurchases of common stock

Payments for repurchases and retirement of common stock

Payments for taxes related to shares withheld for employee

1 unchanged sentence

Acquisitions of noncontrolling interests in subsidiaries

Proceeds from Henry Schein Animal Health Business

Net cash used in financing activities from continuing

Net cash used in financing activities from discontinued

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents from continuing

Net change in cash and cash equivalents from continuing

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of period

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home health, federal and state

governments and large enterprises, such as group practices and integrated delivery networks,

among other providers

governments and large enterprises, such as group practices and integrated delivery

networks, among other providers

across a wide range of specialties.

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Czech Republic, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Japan, Liechtenstein, Luxembourg,

Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Singapore, South

Africa, Spain, Sweden,

Switzerland, Thailand, United Arab Emirates and the United Kingdom.

Malaysia, Mexico, Morocco, the Netherlands, New Zealand, Poland, Portugal,

Singapore, South Africa, Spain,

Sweden, Switzerland, Thailand, United Arab Emirates and the United Kingdom.

Basis of Presentation

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Investments in

unconsolidated affiliates in which we have the ability to influence the operating or

financial decisions are accounted

for under the equity method.

Certain prior period amounts have been reclassified to conform to

the current period

presentation.

These reclassifications, individually and in the aggregate, did

not have a material impact on our

consolidated financial condition, results of operations or cash flows.

unconsolidated affiliates for which we have the ability to influence the operating or

financial decisions are

accounted for under the equity method.

Certain prior period amounts have been reclassified to conform

current period presentation.

These reclassifications, individually and in the aggregate, did not

have a material

impact on our consolidated financial condition, results of operations

or cash flows.

We consolidate the results of operations and financial position of a trade accounts receivable securitization which

we consider a Variable Interest Entity (“VIE”) because we are the primary beneficiary, and we have the power to

direct activities that most significantly affect the economic performance and have

we consider a Variable Interest Entity (“VIE”) because we are its primary beneficiary as we have the power to

direct activities that most significantly affect its economic performance and have

the obligation to absorb the

majority of the losses or benefits.

For this VIE, the trade accounts receivable transferred to the VIE are

majority of its losses or benefits.

For this VIE, the trade accounts receivable transferred

to the VIE are pledged as

collateral to the related debt.

The creditors have recourse to us for losses on these trade accounts receivable.

December 31, 2022 and December 25, 2021, certain trade accounts receivable that

can only be used to settle

The VIE’s creditors have recourse to us for losses on these trade accounts receivable.

At December 30, 2023 and December 31, 2022,

certain trade accounts receivable that can only be used to settle

obligations of this VIE were $

4 unchanged sentences

million, respectively.

Use of Estimates

The preparation of financial statements in conformity with accounting principles

generally accepted in the United

States requires us to make estimates and assumptions that affect the reported amounts of

assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial

statements and the reported amounts of

revenues and expenses during the reporting period.

Actual results could differ from those estimates.

In March 2020, the World Health Organization declared the Novel Coronavirus Disease 2019 (“COVID-19”) a

The COVID-19 pandemic negatively impacted the global economy, disrupted global supply chains and

created significant volatility and disruption

of global financial markets.

In response, many countries implemented

business closures and restrictions, stay-at-home and social distancing ordinances

and similar measures to combat

the pandemic, which significantly impacted global business and dramatically

reduced demand for dental products

and certain medical products in the second quarter of 2020.

Demand for these non-PPE products increased in the

second half of 2020 and continued throughout the years ended December 25,

2021 and December 31, 2022,

resulting in growth over the prior years.

Demand for PPE products declined during the year ended

Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

(1) market participant assumptions developed based on market data obtained

from independent sources (observable

inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best

information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the

highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1) and the lowest priority

to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described as follows:

Level 1— Unadjusted quoted prices in active markets for identical assets

or liabilities that are accessible at the

measurement date.

Level 2— Inputs other than quoted prices included within Level 1 that are

observable for the asset or liability,

either directly or indirectly.

Level 2 inputs include:

quoted prices for similar assets or liabilities

in active markets;

HENRY SCHEIN, INC.

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(in millions, except share and per share data)

quoted prices for identical or similar assets or liabilities in markets

that are not active;

inputs other than quoted

prices that are observable for the asset or liability;

and inputs that are

derived principally from or corroborated by

observable market data by correlation or other means.

Level 3— Inputs that are unobservable for the asset or liability.

Note 10 – Fair Value Measurements

for additional information.

Use of Estimates

The preparation of consolidated financial statements in conformity with

accounting principles generally accepted in

the United States requires us to make estimates and assumptions that

affect the reported amounts of assets and

liabilities and disclosure of contingent assets and liabilities at the date of

the financial statements and the reported

amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Our consolidated financial statements reflect estimates and assumptions

8 unchanged sentences

the allowance for doubtful accounts;

redeemable noncontrolling

hedging activity;

measurement of

compensation cost for certain share-based performance awards and cash bonus

and pension plan

Due to the significant uncertainty surrounding the future impact of

COVID-19, our judgments

regarding estimates and impairments could change in the future.

There is an ongoing risk that the COVID-19

pandemic may again have a material adverse effect on our business, results of operations

and cash flows and may

result in a material adverse effect on our financial condition and liquidity.

However, the extent of the potential

impact cannot be reasonably estimated at this time.

measurement of compensation cost for certain share-based

performance awards and cash bonus plans;

pension plan assumptions.

We report our results of operations and cash flows on a

week basis ending on the last Saturday of December.

weeks per fiscal year basis ending on the last

Saturday of December.

The year ended December 30, 2023 consisted of

weeks, and the years ended, December 25, 2021 and December

26, 2020 consisted of

weeks, and the years ended December

31, 2022 and December 25, 2021 consisted of

weeks, respectively.

Revenue Recognition

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consideration that we expect to receive for those goods or services.

To recognize revenue, we do the following:

To recognize revenue, we:

identify the contract(s) with a customer;

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allocate the transaction price to the performance obligations in the contract;

recognize revenue when, or as, the entity satisfies a performance obligation.

recognize revenue when, or as, we satisfy a performance obligation.

We generate revenue from the sale of dental and medical consumable products, equipment (Health care distribution

5 unchanged sentences

estimates and are provided for in the period in which the related sales are

Revenue derived from the sale of consumable products is recognized at a point

in time when control transfers to the

Such sales typically entail high-volume, low-dollar orders shipped

using third-party common carriers.

We believe that the shipment date is the most appropriate point in time indicating control has transferred to the

customer because we have no post-shipment obligations and this is when

Revenue derived from the sale of consumable products is recognized at the

point in time when control transfers to

the customer.

Such sales typically entail high-volume, low-dollar orders

shipped using third-party common

We believe that the shipment date is the most appropriate point in time indicating control has transferred

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

to the customer.

On the shipment date, we have no post-shipment obligations,

legal title and risks and rewards of

ownership transfer to the customer and the point at which we have an

enforceable right to payment.

ownership transfer to the customer and we have an enforceable right

Revenue derived from the sale of equipment is recognized when control

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Our product generally carries standard warranty terms provided

by the manufacturer, however, in

by the manufacturer;

instances where we provide warranty labor services, the warranty costs

are accrued in accordance with Accounting

Standards Codification (“ASC”) 460 “Guarantees”.

Standards Codification (“ASC”) Topic 460 Guarantees.

At December 30, 2023 and December 31, 2022, we had

2 unchanged sentences

million, respectively, for warranty costs.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Revenue derived from the sale of software products is recognized when

1 unchanged sentence

made available electronically.

Such software is generally installed by customers and does not

require extensive

training due to the nature of its design.

Such software is generally installed by customers and does

not require extensive

Revenue derived from post-contract customer support for software,

including annual support and/or training, is generally recognized over

time using time elapsed as the input method

that best depicts the transfer of control to the customer.

Revenue derived from software sold on Software-as-a -

Service basis is recognized ratably over the subscription period as

control is transferred to the customer.

Revenue derived from other sources, including freight charges, equipment repairs

and financial services, is

including annual support and/or

training, is generally recognized over time using time elapsed as the input method

that best depicts the transfer of

control to the customer.

Revenue derived from software sold on a Software-as-a-Service

basis is recognized ratably

over the subscription period as control is transferred to the customer.

Revenue derived from other sources, including freight charges, equipment repairs and financial

recognized when the related product revenue is recognized or when

the services are provided.

practical expedient to treat shipping and handling activities performed after the

customer obtains control as

practical expedient to treat shipping and handling activities performed after

the customer obtains control as

fulfillment activities, rather than a separate performance obligation in the

1 unchanged sentence

activities are excluded from

Certain of our revenue is derived from bundled arrangements that include

Some of our revenue is derived from bundled arrangements that include

multiple distinct performance obligations,

1 unchanged sentence

When we sell software products together with related services (i.e.,

and technical support), we allocate revenue to software using the residual

method, using an estimate of the

standalone selling price to estimate the fair value of the undelivered

Bundled arrangements that include

elements that are not considered software consist primarily of equipment

and the related installation service.

allocate revenue for such arrangements based on the relative selling

prices of the goods or services.

observable selling price is not available (i.e., we do not sell the goods or

and technical support), we allocate revenue to software by the residual

method, using an estimate of the standalone

selling price to estimate the fair value of the undelivered elements.

Bundled arrangements that include elements

that are not considered software consist primarily of equipment and the related

installation service.

revenue for such arrangements based on the relative selling prices of the goods

If an observable selling

price is not available (i.e., because we or others do not sell the goods or

services separately), we use one of the

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of expected returns and are recorded as refund

liability within current liabilities.

We estimate the amount of revenue expected to be reversed to calculate the sales

return liability based on historical data for specific products, adjusted

as necessary for new products.

allowance for returns is presented gross as a refund liability and we

record an inventory asset (and a corresponding

adjustment to cost of sales) for any products that we expect to be returned.

liability within accrued expenses-other within our consolidated balance sheets.

We estimate the sales return

liability based on historical data for specific products, adjusted as necessary

for new products.

The allowance for

returns is presented gross as a refund liability and we record an inventory

asset (and a corresponding adjustment to

cost of sales) for any products that we expect to be returned

and resaleable.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Cost of Sales

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chargebacks and rebates) and inbound and outbound freight charges.

Costs related to purchasing, receiving, inspections, warehousing, internal

inventory transfers and other costs of our

Costs related to purchasing, receiving, inspections, warehousing,

internal inventory transfers and other costs of our

distribution network are included in selling, general and administrative

3 unchanged sentences

million for the years ended December 30,

2022, December 25, 2021 and December 26, 2020.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2023, December 31, 2022 and December 25, 2021, respectively.

Supplier Rebates

2 unchanged sentences

factors we consider in estimating supplier rebate accruals include forecasted

inventory purchases and sales, in

conjunction with supplier rebate contract terms, which generally provide

for increasing rebates based on either

increased purchase or sales volume.

inventory purchases,

sales, supplier

rebate contract terms, which generally provide for increasing rebates based

on either increased purchase or sales

Direct Shipping and Handling Costs

7 unchanged sentences

million for the years ended December 30, 2023, December 31, 2022

December 26, 2020.

December 25, 2021, respectively.

Advertising and Promotional Costs

We generally expense advertising and promotional costs as incurred.

Total advertising and promotional expenses

We expense advertising and promotional costs as incurred.

Total advertising and promotional expenses were $

million and $

million for the years ended December 31, 2022, December 25, 2021

December 26, 2020.

Stock Compensation Costs

million for the years ended December 30, 2023, December 31, 2022 and

25, 2021, respectively.

Stock-Based Compensation Costs

measure stock-based compensation at the grant date, based on the estimated

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Employment Benefit Plans and other Postretirement Benefit Plans

Certain of our employees in our international markets participate

Some of our employees in our international markets participate

in various noncontributory defined benefit plans.

We recognize the funded status, measured as the difference between the fair value of plan assets and the benefit

obligation, of each applicable plan, within accumulated other comprehensive

income in the consolidated balance

sheets, whereby each unfunded plan is recognized as a liability and

each funded plan is recognized as either an

We recognize the funded status, measured as the difference between the fair value of plan assets and the projected

benefit obligation.

Each unfunded plan is recognized as a liability and each funded

plan is recognized as either an

asset or liability based on its funded status.

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our consolidated statements of income.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Gains and losses that result from changes in actuarial assumptions or

from actual experience that differs from

actuarial assumptions are recognized in and then amortized from Accumulated

other comprehensive income (loss).

Cash and Cash Equivalents

6 unchanged sentences

payments for inventory, were classified as accounts payable as of December 30, 2023 and December 31, 2022.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Contract Balances

Contract balances represent amounts presented in our consolidated balance

sheets when either we have transferred

goods or services to the customer or the customer has paid consideration to us

under the contract.

These contract

balances include accounts receivable,

contract assets and contract liabilities.

Accounts Receivable and Allowance for Credit Losses

2 unchanged sentences

services revenues are recognized.

In accordance with

the “expected credit loss” model, the carrying amount of

In accordance with the “expected credit loss” model, the carrying amount

accounts receivable is reduced by a valuation allowance that reflects

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allowance when we deem them uncollectible.

Our allowance for doubtful accounts was $

Our net accounts receivable balance was $

million, and $

million as of December 31, 2022,

million at December 30, 2023,

December 31, 2022, and December 25, 2021, respectively.

Additions to the allowance for the years ended

December 31, 2022, December 25, 2021 and December 26, 2020 were $

Our allowance for credit losses was $

million, and $

Deductions to the allowance for the years ended December 31, 2022, December

25, 2021 and December 26, 2020

million as of December 30, 2023, December 31, 2022, December 25, 2021,

December 26, 2020, respectively.

Additions to the allowance for the years ended December 30, 2023,

31, 2022 and December 25, 2021 were $

million and $

million, respectively.

Deductions to the

allowance for the years ended December 30, 2023, December 31, 2022

and December 25, 2021, were $

million and $

, respectively.

Contract Assets

1 unchanged sentence

for work completed but not billed

as of the reporting date, and generally represent amounts owed to us by

customers, but not yet billed.

assets are transferred to accounts receivable when the right becomes unconditional.

The contract assets primarily

relate to our bundled arrangements for the sale of equipment and consumables

and sales of term software licenses.

Current contract assets are included in Prepaid expenses and other and the non-current

contract assets are included

in investments and other within our consolidated balance sheets.

Current and non-current contract asset balances as

of December 31, 2022 and December 25, 2021 were not material.

as of the reporting date.

Contract assets are transferred to accounts receivable when

the right becomes

unconditional.

The contract assets primarily relate to our bundled arrangements for

the sale of equipment and

consumables and sales of term software licenses.

Current contract assets are included in Prepaid expenses and

other and the non-current contract assets are included in investments and other

within our consolidated balance

Current and non-current contract asset balances as of December 30,

2023 and December 31, 2022 were not

Contract Liabilities

7 unchanged sentences

within our consolidated balance sheets.

December 25, 2021, the current portion of contract liabilities of $

million was reported in accrued expenses:

million related to non-current contract liabilities was reported

in other liabilities.

During the year

ended December 31, 2022,

we recognized substantially all of the current contract liability amounts

previously deferred at December 25, 2021.

At December 31, 2022, the current and non-current portion of contract

December 30, 2023 and December 31, 2022, the current and non-current contract

liabilities were $

million, and $

million and $

million, respectively.

During the year ended December 30, 2023, we recognized

substantially all of the current contract liability amounts that were previously

deferred at December 31, 2022.

HENRY SCHEIN, INC.

2 unchanged sentences

(in millions, except share and per share data)

December 25, 2021, the current and non-current contract liabilities were

million and $

year ended December 31, 2022, we recognized substantially all of the current

contract liability amounts that were

previously deferred at December 25, 2021.

Current contract liabilities at December 30, 2023 included

million related to business acquisitions completed in 2023.

Acquisition-related contract liability amounts at

December 31, 2022 and December 25, 2021 were immaterial.

Inventories and Reserves

Inventories consist primarily of finished goods and are valued at the

lower of cost or net realizable value.

determined by the first-in, first-out method for merchandise or actual cost

for large equipment and high tech

In accordance with our policy for inventory valuation, we

consider many factors including the

condition and salability of the inventory, historical sales, forecasted sales and market and economic trends.

time to time, we adjust our assumptions for anticipated changes in any

of these or other factors expected to affect

the value of inventory.

Inventories consist primarily of finished goods and are valued at

the lower of cost or net realizable value.

determined by the weighted-average first-in, first-out method for merchandise

and by actual cost for large

equipment and high tech equipment.

In accordance with our policy for inventory valuation, we consider

factors including the condition and salability of the inventory, historical sales, forecasted sales and market and

economic trends.

From time to time, we adjust our assumptions for anticipated

changes in any of these or other

factors expected to affect the value of inventory.

Property and Equipment

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Depreciation is

computed primarily under the straight-line method

computed under the straight-line method

using estimated useful lives (See

Note 6 – Property and Equipment, Net

for estimated useful

Amortization of leasehold improvements is computed using

the straight-line method over the lesser of the

useful life of the assets or the lease term.

for estimated useful lives).

Amortization of leasehold improvements is computed using the straight-line

over the lesser of the useful life of the assets or the remaining lease term.

Capitalized Software Development Costs

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For software to be used

solely to meet internal needs and cloud-based applications used to deliver

our services, we capitalize costs incurred

during the application development stage and include such costs within

property and equipment, net within our

consolidated balance sheets.

For software to be sold, leased, or marketed to external users, we capitalize

development costs when technological feasibility is reached and

include such costs in Investments and other within

solely to meet internal needs and for cloud-based applications used to deliver

our services, we capitalize costs

incurred during the application development stage and include such costs within

property and equipment, net within

our consolidated balance sheets.

For software to be sold, leased, or marketed to external users, we capitalize

software development costs when technological feasibility is reached and

include such costs within investments and

other within our consolidated balance sheets.

determine if an arrangement contains a lease at inception.

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consolidated balance sheets.

leases are included in property and equipment, current maturities

of long-term debt, and long-term debt in our

leases are included in property and equipment, current maturities of

long-term debt, and long-term debt in our

consolidated balance sheets.

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are included in selling, general

and administrative”

and “interest expense”, respectively within our consolidated statement

and administrative and interest expense, respectively within our consolidated

statement of income.

leases with a term of 12 months or less are not capitalized.

During the years ended December 31, 2022, December

25, 2021 and December 26, 2020, such short-term lease expense was

million, and $

respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

have lease agreements with lease and non-lease components, which are

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standalone selling price.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Goodwill represents the excess of the purchase price over the estimated fair

value of the net assets acquired,

including the amount assigned to identifiable intangible assets.

Goodwill is subject to impairment analysis annually

or more frequently if needed.

Such impairment analyses for goodwill requires a comparison of the

fair value to the

carrying value of reporting units.

Business Acquisitions

We account for business acquisitions under the acquisition method of accounting, under which

the net assets of

acquired businesses are recorded at their fair value at the acquisition

date and our consolidated financial statements

include the acquired businesses’ results of operations from that date.

Some prior owners of acquired subsidiaries are eligible to receive additional

purchase price cash consideration, or

we may be entitled to recoup a portion of purchase price cash consideration

if certain financial targets are met.

have accrued liabilities for the estimated fair value of additional purchase

price consideration at the time of the

acquisition, using the income approach, including a probability-weighted

discounted cash flow method or an option

pricing method, where applicable.

Any adjustments to these accrual amounts are recorded

in selling, general and

administrative within our consolidated statements of income.

While we use our best estimates and assumptions to accurately value

assets acquired and liabilities assumed at the

acquisition date, our estimates are inherently uncertain and subject

to refinement.

As a result, within

following the date of acquisition, or the measurement period, we

may record adjustments to the assets acquired and

liabilities assumed with the corresponding offset to goodwill within our consolidated balance

At the end of

the measurement period or final determination of the values of such assets

acquired or liabilities assumed,

whichever comes first, any subsequent adjustments are recognized

in our consolidated statements of operations.

Any excess of acquisition consideration over the fair value of identifiable

net assets acquired is recorded as

Goodwill is an asset representing the future economic benefits

arising from other assets acquired in a

business combination that are not individually identified and separately

recognized, such as future customers and

technology, as well as the assembled workforce.

Goodwill represents, for acquired business, the excess of the purchase price

over the estimated fair value of the net

assets acquired, including the amount assigned to identifiable intangible

Goodwill is subject to impairment

analysis annually or more frequently if needed.

Such impairment analyses for goodwill requires a comparison

the fair value to the carrying value of reporting units.

We regard our reporting units to be our operating segments:

global dental;

global medical;

and technology and value-added services.

Goodwill was allocated to such reporting units, for the

purposes of preparing our impairment analyses, based on a specific identification

Goodwill was allocated to such reporting

units, for the purposes of preparing our impairment analyses, based on

a specific identification basis.

For the years ended December 30, 2023 and December 31, 2022, we tested goodwill

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day of the fourth quarter, using a quantitative analysis comparing the carrying value of our reporting

including goodwill, to the estimated fair value of our reporting units using

a discounted cash flow methodology.

the fair value of a reporting unit exceeds its carrying amount, goodwill

of the reporting unit is considered not

Conversely, impairment loss would be equivalent to the excess of a reporting unit’s carrying value over

its fair value limited to the total amount of goodwill allocated to that

reporting unit.

including goodwill, to their estimated fair values using a discounted

cash flow methodology.

When the estimated

fair value of a reporting unit exceeds its carrying amount, goodwill of the

reporting unit is considered not

Conversely, when a reporting unit’s carrying value exceeds its fair value, an impairment charge against

goodwill, limited to the total amount of goodwill allocated to that

reporting unit, is recognized.

Application of the goodwill impairment test requires judgment, including

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in applying them to this analysis.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

significant inputs include estimation of future cash flows based on budget

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reporting unit.

For the year ended December 30, 2023 and December 25, 2021, the results of

our goodwill impairment analysis did

t result in any impairments.

For the year ended December 31, 2022 we recorded a $

million impairment of goodwill relating to the disposal

of an unprofitable business whose estimated fair value was lower than

its carrying value.

The disposal of this

business is part of our restructuring initiative as more fully discussed

Note 14 – Plans of Restructuring and

Integration Costs

For the year ended December 25, 2021, the results of our goodwill

impairment analysis did

result in any impairments.

million impairment of

goodwill relating to the disposal of an unprofitable business whose

estimated fair value was lower than its carrying

The disposal of this business is part of our restructuring initiative

as more fully discussed in

Note 15 – Plans

of Restructuring and Integration Costs

Intangible Assets

In connection with our business acquisitions, the major classes of

assets and liabilities to which we generally

allocate acquisition consideration to, excluding goodwill, include

identifiable intangible assets (i.e., customer

relationships and lists, trademarks and trade names, product development

and non-compete agreements), inventory

and accounts receivable.

The estimated fair value of identifiable intangible assets

is based on critical judgments

and assumptions derived from analysis of market conditions, including

discount rates, projected revenue growth

rates (which are based on historical trends and assessment of financial projections),

estimated customer attrition and

projected cash flows.

We have calculated the value of these intangible assets using the multi-period excess

earnings method, the relief-from-royalty method, and the with and without

method, where applicable.

assumptions are forward-looking and could be affected by future economic and

market conditions.

Intangible assets, other than goodwill, are evaluated for impairment whenever

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indicate that the carrying amount of the assets may not be recoverable

through the estimated undiscounted future

cash flows to be derived from such assets.

through the undiscounted future cash flows

expected to be derived from such asset or asset group.

Definite-lived intangible assets primarily consist of non-compete agreements,

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For long-lived assets used in operations, impairment losses

are only recorded if the asset’s

carrying amount is not recoverable through its undiscounted, probability-weighted

future cash flows.

are only recorded if the asset or asset groups carrying amount is not recoverable

through its undiscounted future

We measure the impairment loss based on the difference between the carrying amount and the

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and December 25, 2021, we recorded total

impairment charges on intangible assets of $

impairment charges, within the selling, general and administrative line of our consolidated statements

of income, on

intangible assets of $

million and $

million, respectively, as more fully

Note 7 – Goodwill and Other Intangibles, Net

million, respectively, as more fully discussed in

Goodwill and Other Intangibles, Net

We account for income taxes under an asset and liability approach that requires the recognition of deferred income

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In estimating future tax consequences, we generally consider all expected

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

events other than enactments of changes in tax laws or rates.

events other than expected enactments of changes in tax laws or rates.

The effect on deferred income tax assets and

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The redemption amounts have been estimated based on expected future

earnings and cash flow and, if such

earnings and cash flow are not achieved, the value of the redeemable noncontrolling

earnings and cash flows and, if such

earnings and cash flows are not achieved, the value of the redeemable noncontrolling

interests might be impacted.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Changes in the estimated redemption amounts of the noncontrolling

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Adjustments to the carrying amount of noncontrolling interests

reflect a fair value redemption feature do not impact the calculation of earnings

reflect a fair value redemption feature do not impact the calculation of

earnings per share.

Our net income is

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Noncontrolling Interests

Non-controlling interest represents the ownership interests of certain

Noncontrolling interest represents the ownership interests of certain

minority owners of our consolidated

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foreign currency

translation gain (loss), unrealized gain (loss) from foreign currency

hedging activities and pension adjustment gain.

translation gain (loss), unrealized gain (loss) from hedging activities

and unrealized pension adjustment gain.

Risk Management and Derivative Financial Instruments

We use derivative instruments to minimize our exposure to fluctuations in foreign currency exchange rates.

objective is to manage the impact that foreign currency exchange rate fluctuations

could have on recognized asset

and liability fair values, earnings and cash flows, as well as our net

investments in foreign subsidiaries.

We use derivative instruments to minimize our exposure to fluctuations in foreign currency exchange rates, interest

rates, and our unfunded non-qualified supplemental retirement plan (“SERP”)

and our deferred compensation plan

Our objective is to manage the impact that foreign currency

exchange rate fluctuations could have on

recognized asset and liability fair values, earnings and cash flows, as well

as our net investments in foreign

subsidiaries, the interest rate risk on variable rate debt, and the returns on

our SERP and DCP.

management policy requires that derivative contracts used as hedges be

effective at reducing the risks associated

with the exposure being hedged and be designated as a hedge at the inception

of the contract.

with the exposure being hedged and be designated hedges at inception

of the contracts.

We do not enter into

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Our derivative instruments primarily include foreign currency

forward agreements related to certain intercompany loans, certain forecasted

inventory purchase commitments with

foreign suppliers and foreign currency forward contracts to hedge a portion of

our euro-denominated foreign

operations which are designated as net investment hedges.

forward contracts, total return swaps, and interest rate swaps.

Foreign currency forward agreements related to forecasted inventory

purchase commitments with foreign suppliers,

and foreign currency swaps related to foreign currency denominated debt are designated

as cash flow hedges.

derivatives that are designated and qualify as cash flow hedges, the changes

in the fair value of the derivative is

recorded as a component of Accumulated other comprehensive income

in stockholders’ equity and subsequently

reclassified into earnings in the period(s) during which the hedged transaction

affects earnings.

We classify the

cash flows related to our hedging activities in the same category on our consolidated

statements of cash flows as the

cash flows related to the hedged item.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

foreign currency swaps related to foreign currency denominated debt, and

interest rate swaps related to variable rate

debt are designated as cash flow hedges.

For derivatives that are designated and qualify as cash flow hedges,

changes in the fair value of the derivatives are recorded as a

component of Accumulated other comprehensive

income in stockholders’ equity and subsequently reclassified into

earnings in the period(s) during which the hedged

transactions affect earnings.

We classify the cash flows related to our hedging activities in the same category in our

consolidated statements of cash flows as the cash flows related

to the hedged item.

Foreign currency forward contracts related to our euro-denominated

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For derivatives that are designated and qualify as net investment

hedges, the changes in the fair

value of the derivative is recorded in the foreign currency translation

gain (loss) component of Accumulated other

comprehensive income in stockholders’ equity until the net investment

is sold or substantially liquidated.

hedges, changes in the fair

value of the derivatives are recorded in the foreign currency translation gain

(loss) component of Accumulated

other comprehensive income in stockholders’ equity until the net

investment is sold or substantially liquidated.

Interest swap agreements are entered into for the purpose of hedging

the cash flow of our variable interest rate term

Our foreign currency forward agreements related to foreign currency

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hedges but are not designated as hedges for accounting purposes.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

For agreements not designated as hedges, changes in the value of the derivative,

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loss on the hedged item, are recorded in other, net, within our consolidated statements of income.

Total return swaps are entered into for the purpose of economically hedging our unfunded non-qualified

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

This swap will offset

changes in our SERP and DCP liabilities.

This swap is expected to be renewed on an annual basis and is

in selling, general, and administrative expenses within our consolidated

statements of income.

Total return swaps are entered into for the purpose of economically hedging our SERP and DCP.

These swaps are

expected to be renewed on an annual basis.

Changes in the fair values of these total return swaps are recorded in

selling, general, and administrative expenses within our consolidated

statements of income and offset recognized

changes in the fair values of our SERP and DCP liabilities.

Foreign Currency Translation

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The financial position and results of operations of our foreign subsidiaries

are determined using local currency as

the functional currency.

Assets and liabilities of these subsidiaries are translated at the exchange

are determined using local currencies as

the functional currencies.

Assets and liabilities of foreign subsidiaries are translated at the exchange

rate in effect at

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Accounting Pronouncements Adopted

During the year ended December 30, 2023, we adopted ASC Topic 848,

“Reference Rate Reform” (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

which provides optional expedients

and exceptions for applying GAAP to contracts, hedging relationships and

other transactions affected by the

discontinuation of the London Interbank Offered Rate or by another reference rate

expected to be discontinued

because of reference rate reform.

The adoption of Topic 848 did not have a material impact on our consolidated

financial statements.

On December 26, 2021 we adopted Accounting Standards Update

“Accounting for

Contract Assets and Contract Liabilities from Contracts with Customers”

(Subtopic 805).

Contract Assets and Contract Liabilities from Contracts with Customers” (Subtopic 805).

ASU 2021 – 08 requires

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Simplifying the Accounting

for Income Taxes (“ASU 2019-12”).

for Income Taxes

(“ASU 2019-12”).

ASU 2019-12 simplifies the accounting for income taxes by

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Recently Issued Accounting Standards

In September 2022, the FASB issued ASU No.

2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-

Disclosure of Supplier Finance Program Obligations” which will

increase transparency of supplier finance

programs by requiring entities that use such programs in connection with

the purchase of goods and services to

disclose certain qualitative and quantitative information about such

ASU 2022-04 is effective for fiscal

years beginning after December 15, 2022, including interim periods within

those fiscal years, except for amended

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, “

Improvements to

Income Tax Disclosures

,” which requires public business entities to disclose

additional information in specified categories with respect to

the reconciliation of the effective tax rate to the

statutory rate for federal, state, and foreign income taxes.

It also requires greater detail about individual reconciling

items in the rate reconciliation to the extent the impact of those items

exceeds a specified threshold.

In addition to

new disclosures associated with the rate reconciliation, the ASU requires

information pertaining to taxes paid (net

of refunds received) to be disaggregated for federal, state, and foreign

taxes and further disaggregated for specific

HENRY SCHEIN, INC.

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(in millions, except share and per share data)

rollforward information, which is effective for fiscal years beginning after December

We do not expect

that the requirements of this guidance will have a material impact on our consolidated

financial statements.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the

Effects of Reference Rate Reform on Financial Reporting” which provides optional expedients

and exceptions for

applying GAAP to contracts, hedging relationships and other transactions affected

by the discontinuation of the

London Interbank Offered Rate (“LIBOR”) or by another reference rate expected

to be discontinued because of

reference rate reform.

The guidance was effective beginning March 12, 2020 and can be applied prospectively

through December 31, 2022.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic

Scope (“ASU 2021-01”).

ASU 2021-01 provides temporary optional expedients and exceptions

guidance in U.S.

GAAP to ease the financial reporting burdens related

to the expected market transition from

LIBOR and other interbank offered rates to alternative reference rates, such as

the Secured Overnight Financing

The guidance became effective upon issuance, on January 7, 2021, and can

be applied through December 31,

In December 2022, the FASB issued ASU No.

2022-06, “Reference Rate Reform (Topic 848):

the Sunset Date of Topic 848,” which extends the period of application of temporary optional expedients from

December 21, 2022 to December 31, 2024.

We do not expect that the requirements of this guidance will have a

material impact on our consolidated financial statements.

jurisdictions to the extent the related amounts exceed a quantitative threshold.

The ASU also describes items that

need to be disaggregated based on their nature, which is determined by

reference to the item’s fundamental or

essential characteristics, such as the transaction or event that triggered

the establishment of the reconciling item and

the activity with which the reconciling item is associated.

The ASU eliminates the historic requirement that entities

disclose information concerning unrecognized tax benefits having a reasonable

possibility of significantly

increasing or decreasing in the 12 months following the reporting date.

This ASU is effective for annual periods

beginning after December 15, 2024.

Early adoption is permitted for annual financial statements

that have not yet

been issued or made available for issuance.

This ASU should be applied on a prospective basis;

retrospective application is permitted.

We are currently evaluating the impact that ASU 2023 – 09 will have on our

consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “

Segment Reporting (Topic 280):

Improvements to Reportable

,” which aims to improve financial reporting by requiring disclosure

of incremental segment information

on an annual and interim basis for all public entities to enable investors to

develop more decision-useful financial

Currently, Topic

280 requires that a public entity disclose certain information about its

For example, a public entity is required to report a measure of

segment profit or loss that the CODM

uses to assess segment performance and make decisions about allocating

Topic 280 also requires other

specified segment items and amounts, such as depreciation, amortization,

and depletion expense, to be disclosed

under certain circumstances.

The amendments in this ASU do not change or remove those disclosure

and do not change how a public entity identifies its operating segments,

aggregates those operating segments, or

applies the quantitative thresholds to determine its reportable segments.

This ASU is effective for fiscal years

beginning after December 15, 2023, and interim periods within fiscal years

beginning after December 15, 2024.

Early adoption is permitted.

We do not expect that the requirements of ASU 2023 – 07 will have a material impact

on our consolidated financial statements.

Note 2 – Cybersecurity Incident

In October 2023 Henry Schein experienced a cybersecurity incident that

primarily affected the operations of our

North American and European dental and medical distribution businesses.

Henry Schein One, our practice

management software, revenue cycle management and patient relationship

management solutions business, was not

affected, and our manufacturing businesses were mostly unaffected.

We reported the incident to law enforcement

authorities, restored affected systems and applications, our distribution operations

resumed and we reactivated our

ecommerce platform.

Subsequently, on or about November 8, 2023, we determined that the threat actor obtained

personal and sensitive information maintained on our systems belonging

to certain third parties and since that date

we have notified affected and potentially affected parties as appropriate.

The scope of personal and sensitive data

impacted is still under investigation.

On November 22, 2023, we experienced a disruption

of our ecommerce

platform and related applications, which has since been remediated.

The incident adversely impacted our financial

results for the fourth quarter and full year 2023.

During the year ended December 30, 2023, we incurred $

million of expenses directly related to the

cybersecurity incident, mostly consisting of professional fees.

We maintain cybersecurity insurance, subject to

certain retentions and policy limitations.

With respect to the October 2023 cybersecurity incident, we have a $

million insurance policy, following a $

million retention.

HENRY SCHEIN, INC.

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Note 3 – Net Sales from Contracts with Customers

Net sales is recognized in accordance with policies disclosed in

Net sales are recognized in accordance with policies disclosed

Note 1 – Basis of Presentation and Significant

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Disaggregation of Net sales

The following table disaggregates our Net sales by reportable segment and

geographic area:

The following table disaggregates our net sales by reportable and operating segment

and geographic area:

December 30, 2023

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and value-added services

Total net sales

December 31, 2022

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and value-added services

Total net sales

December 25, 2021

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and value-added services

Total excluding

Corporate TSA net sales

Corporate TSA net sales represents sales of certain animal health products to Covetrus under the transition services agreement

entered into in connection with the Animal Health Spin-off, which ended in December 2020.

Total net sales

HENRY SCHEIN, INC.

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across a wide range of specialties.

global dental and medical groups serve practitioners in

dental and medical groups serve practitioners in

countries worldwide.

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vaccines, surgical products, diagnostic

tests, infection-control products, PPE and vitamins.

tests, infection-control products, personal protective equipment products (“PPE”)

and vitamins.

Our global technology and value-added services reportable segment provides

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and value-added services

Total excluding

Corporate TSA net sales

Consists of consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and

generic pharmaceuticals, vaccines, surgical products, dental specialty products (including implant, orthodontic and endodontic

products), diagnostic tests, infection-control products, PPE and vitamins.

Consists of consumable products, dental specialty products (including implant, orthodontic and endodontic products), small

equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical

products, diagnostic tests, infection-control products, PPE products and vitamins.

Consists of practice management software and other value-added products, which are distributed primarily to health care providers,

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education services for practitioners, consulting and other services.

Corporate TSA net sales represents sales of certain products to Covetrus under the transition services agreement entered into in

connection with the Animal Health Spin-off, which ended in December 2020.

Note-23 Related Party Transactions

HENRY SCHEIN, INC.

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and value-added services

Income from continuing operations before

and equity in earnings of affiliates:

Income before taxes and equity in earnings of affiliates:

Health care distribution

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Health care distribution

and value-added services

Health care distribution

and value-added services

Purchases of Fixed Assets:

Equity in Earnings of Affiliates:

Health care distribution

and value-added services

Purchases of Property and Equipment:

Health care distribution

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(in millions, except share and per share data)

Health care distribution

and value-added services

The following table presents information about our operations by geographic

area as of and for the three years

ended December 31, 2022.

Net sales by geographic area are based on the respective locations

of our subsidiaries.

area as of and for the years ended

December 30, 2023, December 31, 2022 and December 25, 2021.

Net sales by geographic area are based on the

respective locations of our subsidiaries.

No country, except for the United States, generated net sales greater than

% of consolidated net sales.

were no material amounts of sales or transfers among geographic areas

and there were no material amounts of

export sales.

There were no material amounts of sales or transfers among geographic

there were no material amounts of export sales.

United States

Consolidated total

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 5 – Business Acquisitions and Divestiture

We account for business acquisitions and combinations under the acquisition method of accounting, where the net

assets of acquired businesses are recorded at their fair value at the acquisition

date and our consolidated financial

statements include their results of operations from that date.

Any excess of acquisition consideration over the fair

value of identifiable net assets acquired is recorded as goodwill.

Goodwill is an asset representing the future

economic benefits arising from other assets acquired in a business combination

that are not individually identified

and separately recognized, such as future customers and technology, as well as the assembled workforce.

Excluding goodwill, the major classes of assets and liabilities to which

we generally allocate acquisition

consideration include identifiable intangible assets (i.e., customer

relationships and lists, trademarks and trade

names, product development, and non-compete agreements), inventory

and accounts receivable.

The estimated fair

value of identifiable intangible assets is based on critical judgments and

assumptions derived from analysis of

market conditions, including discount rates, projected revenue growth rates

(which are based on historical trends

and assessment of financial projections), estimated customer attrition and projected

These assumptions

are forward-looking and could be affected by future economic and market conditions.

Some prior owners of acquired subsidiaries are eligible to receive additional

purchase price cash consideration, or

we may be entitled to recoup a portion of purchase price cash consideration

if certain financial targets are met.

have accrued liabilities for the estimated fair value of additional purchase

price consideration at the time of the

acquisition, using the income approach, including a probability-weighted

discounted cash flow method or an option

pricing method, where applicable.

Any adjustments to these accrual amounts are recorded

in selling, general and

administrative expenses within our consolidated statements of income.

While we use our best estimates and assumptions to accurately value

assets acquired and liabilities assumed at the

acquisition date as well as contingent consideration, where applicable,

our estimates are inherently uncertain and

subject to refinement.

As a result, within 12 months following the date of acquisition,

or the measurement period,

we may record adjustments to the assets acquired and liabilities assumed

with the corresponding offset to goodwill

within our consolidated balance sheets.

At the end of the measurement period or final determination

of the values

of such assets acquired or liabilities assumed, whichever comes first,

any subsequent adjustments are recognized in

our consolidated statements of operations.

Our acquisition strategy is focused on investments in companies that

add new customers and sales teams, increase

our geographic footprint (whether entering a new country, such as emerging markets, or building scale where we

have already invested in businesses), and finally, those that enable us to access new products and technologies

Acquisition of Shield Healthcare

On October 2, 2023 we acquired a

% voting equity interest in Shield Healthcare, Inc.

(“Shield”), a supplier

homecare medical products delivered directly to patients in their homes.

Based in California, Shield expands our

existing medical business by delivering a diverse range of products,

including items such as incontinence, urology,

ostomy, enteral nutrition, advanced wound care, and diabetes supplies.

Additionally, Shield offers continuous

glucose monitoring devices directly to patients in their homes.

The following table aggregates

the preliminary estimated fair value, as of the date of acquisition, of

consideration

paid and net assets acquired in the Shield acquisition:

Acquisition consideration:

Deferred consideration

Redeemable noncontrolling interest

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

Deferred income taxes

Other noncurrent liabilities

Total identifiable

Total net assets acquired

Goodwill is a result of expected synergies that are expected to originate from the

acquisition as well as the expected

growth potential of Shield.

The acquired goodwill is not deductible for tax purposes.

The following table summarizes the preliminary identifiable intangible assets

acquired as part of the acquisition of

Weighted Average

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

HENRY SCHEIN, INC.

2 unchanged sentences

(in millions, except share and per share data)

The accounting for the acquisition of Shield has not been completed

in several respects, including but not limited to

finalizing valuation assessments of accounts receivable, inventory, accrued liabilities and income and non-income

To assist in the allocation of consideration,

we engaged valuation specialists to determine the fair

value of intangible and tangible assets acquired and liabilities assumed.

will finalize the amounts recognized as

the information necessary to complete the analysis is obtained.

We expect to finalize these amounts as soon as

possible but no later than one year from the acquisition date.

The pro forma financial information has not been

presented because the impact of the Shield acquisition during the year ended

December 30, 2023 was immaterial to

our consolidated financial statements.

Acquisition of S.I.N.

Implant System

On July 5, 2023, we acquired a

% voting equity interest in S.I.N.

Implant System (“S.I.N.”).

Paulo, S.I.N.

manufactures an extensive line of products to perform dental

implant procedures and is focused on

advancing the development of value-priced dental implants.

recently expanded the distribution of its

products into the United States and other international markets.

The following table aggregates the preliminary estimated fair value, as of

the date of acquisition, of consideration

paid and net assets acquired in the S.I.N., including measurement period

adjustments recorded through December

Allocation as

Acquisition consideration:

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

Long-term debt

Deferred income taxes

Other noncurrent liabilities

Total identifiable

Total net assets acquired

Goodwill is a result of expected synergies that are expected to originate from the

acquisition as well as the expected

growth potential of S.I.N.

The acquired goodwill is not deductible for tax purposes.

Measurement period

adjustments recorded in the year ended December 30, 2023 were primarily

a result of finalization of net working

capital adjustments and third party intangible valuations.

The following table summarizes the preliminary identifiable intangible assets

acquired as part of the acquisition of

Weighted Average

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Product development

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The accounting for the acquisition of S.I.N.

has not been completed

in several respects, including but not limited to

finalizing valuation assessments of accounts receivable, inventory, accrued liabilities and income and non-income

To assist in the allocation of consideration,

we engaged valuation specialists to determine the fair

value of intangible and tangible assets acquired and liabilities assumed.

will finalize the amounts recognized as

the information necessary to complete the analysis is obtained.

We expect to finalize these amounts as soon as

possible but no later than one year from the acquisition date.

The pro forma financial information has not been

presented because the impact of the S.I.N.

acquisition during the year ended

December 30, 2023 was immaterial to

our consolidated financial statements.

Acquisition of Biotech Dental

On April 5, 2023, we acquired a

% voting equity interest in Biotech Dental (“Biotech Dental”), which

provider of dental implants, clear aligners, individualized prosthetics,

and innovative digital dental software based

Biotech Dental has several important solutions for dental practices

and dental labs, including Nemotec, a

comprehensive, integrated suite of planning and diagnostic software

using open architecture that connects disparate

medical devices to create a digital view of the patient, offering greater diagnostic

accuracy and an improved patient

The integration of Biotech Dental’s software with Henry Schein One’s industry-leading practice

management software solutions will help customers streamline their

clinical as well as administrative workflow for

the ultimate benefit of patients.

The following table aggregates the preliminary estimated fair value, as

of the date of acquisition, of consideration

paid and net assets acquired in the Biotech Dental acquisition, including

measurement period adjustments recorded

through December 30, 2023:

Allocation as

of July 1, 2023

Allocation as

Acquisition consideration:

Fair value of contributed equity share in a controlled subsidiary

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

Long-term debt

Deferred income taxes

Other noncurrent liabilities

Total identifiable

Total net assets acquired

Goodwill is a result of expected synergies that are expected to originate from the

acquisition as well as the expected

growth potential of Biotech Dental.

The acquired goodwill is deductible for tax purposes.

Measurement period

adjustments recorded in the year ended December 30, 2023 were primarily

a result of preliminary third party

intangible valuation and various other adjustments.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table summarizes the preliminary identifiable intangible assets

acquired as part of the acquisition of

Biotech Dental:

Weighted Average

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Product development

The accounting for the acquisition of Biotech Dental has

not been completed in several areas, including but not

limited to pending assessments of accounts receivable, inventory, intangible assets, accrued liabilities and income

and non-income based taxes.

To assist in the allocation of consideration, we engaged valuation specialists to

determine the fair value of intangible and tangible assets acquired and liabilities

We will finalize the

amounts recognized as the information necessary to complete the

analysis is obtained.

We expect to finalize these

amounts as soon as possible but no later than one year from the acquisition

The pro forma financial

information has not been presented because the impact of the Biotech Dental

acquisition during the year ended

December 30, 2023 was immaterial to our consolidated financial statements.

Other 2023 Acquisitions

During the year ended December 30, 2023, we acquired companies within

the health care distribution and

technology and value-added services segments.

Our acquired ownership interest ranged between

The following table aggregates

the preliminary estimated fair value, as of the date of acquisition, of

consideration

paid and net assets acquired for these acquisitions during the year ended

December 30, 2023:

Acquisition consideration:

Deferred consideration

Estimated fair value of contingent consideration payable

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

Deferred income taxes

Long-term debt

Other noncurrent liabilities

Total identifiable

Total net assets acquired

Goodwill is a result of the expected synergies and cross-selling opportunities that

these acquisitions are expected to

provide for us, as well as the expected growth potential.

Approximately half of the acquired goodwill is deductible

for tax purposes.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

In connection with an acquisition of a controlling interest of an

affiliate, we recognized a gain of approximately $

million related to the remeasurement to fair value of our previously held

equity investment, using a discounted cash

flow model based on Level 3 inputs, as defined in

Note 10 – Fair Value Measurements

The following table summarizes the preliminary identifiable intangible

assets acquired during the year ended

December 30, 2023 and their estimated useful lives as of the date of the acquisition:

Weighted Average

Lives (in years)

Customer relationships and lists

Trademarks / Tradenames

Non-compete agreements

Product development

The pro forma financial information has not been presented because the

impact of the acquisitions during the year

ended December 30, 2023 was immaterial to our consolidated financial

2022 Acquisitions

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consolidated financial statements.

Our acquired ownership interest ranged between

within our health care distribution segment included companies that

specialize in the distribution of dental products.

Our acquired ownership interests ranged from between

Acquisitions in our health care distribution segment included companies

that specialize in the distribution of dental

Within our technology and value-added services segment, we acquired a company that educates and

dental office managers, practice administrators and dental business leaders across

North America.

connects dental office managers, practice administrators and dental business leaders

across North America.

The following table aggregates the estimated fair value, as of the

17 unchanged sentences

Total net assets acquired

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table summarizes the identifiable intangible assets acquired during

2 unchanged sentences

Customer relationships and lists

Trademark / Tradename

Trademarks / Tradenames

Non-compete agreements

The accounting for certain of our acquisitions during the year ended December

31, 2022 had not been completed in

several areas, including but not limited to pending assessments of accounts

receivable, inventory, intangible assets,

right-of-use lease assets,

accrued liabilities and income and non-income based taxes.

The pro forma financial information has not been presented because the impact

of the acquisitions during the year

ended December 31, 2022 to our consolidated financial statements was immaterial.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

2021 Acquisitions

30 unchanged sentences

Total net assets acquired

The following table summarizes the identifiable intangible assets acquired during

the year ended December 25,

2021 and their estimated useful lives as of the date of the acquisition:

Customer relationships and lists

Trademark / Tradename

Product development

Non-compete agreements

HENRY SCHEIN, INC.

2 unchanged sentences

(in millions, except share and per share data)

2020 Acquisitions

We completed several acquisitions during the year ended December 26, 2020, which were immaterial to our

financial statements.

Our acquired ownership interests ranged from between approximately

Acquisitions within our health care distribution segment included companies

that manufacture endodontic files and

companies that distribute dental supplies.

Within our technology and value-added services segment, we acquired

companies that focus on practice management software and provide software

as a solution for dental practices.

Approximately half of the acquired goodwill is deductible for tax purposes.

The following table aggregates the estimated fair value, as of the

date of acquisition, of consideration paid and net

assets acquired for acquisitions during the year ended December 26, 2020:

Acquisition consideration:

Deferred consideration

Fair value of previously held equity method investment

Redeemable noncontrolling interests

Total consideration

Identifiable assets acquired and liabilities assumed:

Current assets

Intangible assets

Other noncurrent assets

Current liabilities

Deferred income taxes

Other noncurrent liabilities

Total identifiable

Total net assets acquired

The following table summarizes the identifiable intangible assets acquired during

2 unchanged sentences

Customer relationships and lists

Trademarks / Tradenames

Product development

Trademark / Tradename

Non-compete agreements

1 unchanged sentence

25, 2021, there were no material

adjustments recorded in our consolidated balance sheets relating to

accounting for acquisitions incomplete in prior

At December 25, 2021 we recorded an estimated contingent

consideration receivable of $

million, which

was subsequently increased by additional $

million during 2022 based on delays in timing of government approval

of a certain product.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

adjustments recorded in our financial statements relating to acquisitions

for which provisional amounts were

recorded in prior periods.

At December 25, 2021 we recorded an estimated contingent consideration

receivable of

million, which was subsequently increased by an additional $

million during 2022, by crediting income from

operations, based on delays in timing of government approval of a certain

During the years ended December 30, 2023, December 31, 2022

1 unchanged sentence

million and $

million in acquisition costs reported within income from continuing

million in acquisition costs, which are included in “selling, general

and administrative” within

our consolidated statements of income.

In the third quarter of 2021 we received contingent proceeds of $

million from the 2019 sale of Hu-Friedy,

resulting in the recognition of an additional after-tax gain of $

During the fourth quarter of 2020 we

received contingent proceeds of $

million from the 2019 sale of Hu-Friedy, resulting in the recognition of an

additional after-tax gain of $

We do expect to receive any additional proceeds from the sale of Hu-Friedy.

resulting in the recognition of an after-tax gain of $

During the fourth quarter of 2020 we received

contingent proceeds of $

million from the 2019 sale of Hu-Friedy, resulting in the recognition of an after-tax gain

We do not expect to receive any additional proceeds from the sale of Hu-Friedy.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 6 – Property and Equipment, Net

Property and equipment, including related estimated useful lives, consisted

of the following:

of the following as of:

Buildings and permanent improvements

3 unchanged sentences

Computer equipment and software

Less accumulated depreciation

Less accumulated depreciation and amortization

Property and equipment, net

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Computer equipment and software

Amortization of leasehold improvements is computed using the straight-line

method over the lesser of the useful

life of the assets or the lease term.

Leasehold improvements are amortized on a straight-line basis over

the lesser of the useful life of the assets or the

remaining lease term.

Property and equipment related depreciation expense for the years

1 unchanged sentence

and December 25, 2021, was $

million and $

million, respectively.

2 unchanged sentences

consolidated balance sheets.

During the year ended December 30, 2023 we recorded a $

million impairment of capitalized costs, within our

healthcare distribution segment.

HENRY SCHEIN, INC.

11 unchanged sentences

Operating lease cost:

Amortization of right-of-use assets

Total finance

Includes variable lease expenses.

Operating lease cost for the years ended December 31, 2022, December 25, 2021, and December 26, 2020, include accelerated

amortization of right-of-use assets of $

Short-term lease cost

Total operating lease cost

Finance lease cost

Total lease cost

Total operating lease cost for the years ended December 30, 2023, December 31, 2022 and December 25, 2021, included costs of

million and $

million, respectively, related to facility leases recorded in

“Restructuring and integration costs” within our consolidated statements of income.

million, respectively, related to facility leases recorded in "Restructuring and integration costs"

within our consolidated statements of income.

Further, for the years ended December 30, 2023,

December 25, 2021 and December 26, 2020, we recognized

impairment of right-of-use assets of $

December 31, 2022 and December 25, 2021, we recognized an

impairment of operating lease right-of-use assets of $

million, and $

million respectively, related to facility leases

recorded in “Restructuring and integration costs” within our consolidated

million respectively, related to

facility leases recorded in “Restructuring and integration costs” within our consolidated

statement of income.

17 unchanged sentences

Finance leases

Average Discount

Weighted Average

Discount Rate:

Operating leases

15 unchanged sentences

Less imputed interest

As of December 31, 2022, we have additional operating leases with

total lease payments of $

million for buildings

and vehicles that have not yet commenced.

These operating leases will commence subsequent to December 31,

As of December 30, 2023, we have additional operating leases that have

not yet commenced with total lease

payments of $

million for buildings and vehicles.

These operating leases will commence after December 30,

2023, with lease terms of

2 unchanged sentences

leases are classified as operating leases and have a remaining lease term

December 31, 2022, current and non-current liabilities associated with

of December 30, 2023, current and non-current liabilities associated with

related party operating leases were $

1 unchanged sentence

million, respectively.

Related party leases represented

% of the total current and non-

current operating lease liabilities, respectively.

The present value of lease payments under these related party

is not material to our consolidated financial statements.

At December 30, 2023 related party leases represented

total current and non-current operating lease liabilities, respectively.

As of December 31, 2022, current and non-

current liabilities associated with related party operating leases were

million and $

million, respectively.

December 31, 2022 related party leases represented

% of the total current and non-current operating

lease liabilities, respectively.

HENRY SCHEIN, INC.

3 unchanged sentences

Note 8 – Goodwill and Other Intangibles, Net

The changes in the carrying amount of goodwill for the years ended December

31, 2022 and December 25, 2021

were as follows:

Changes in the carrying amounts

of goodwill for the years ended December 30, 2023 and December

31, 2022 were

Balance as of December 25, 2021

5 unchanged sentences

Balance as of December 30, 2023

ended December 31,

2022, we recorded

million impairment of

goodwill relating to

restructuring

For the year ended December 31, 2022, we recorded a $

million impairment of goodwill relating to the disposal

of an unprofitable business whose estimated fair value was lower than

its carrying value.

The disposal of this

business is part of our restructuring initiative as more fully discussed

Note 15 – Plans of Restructuring and

2 unchanged sentences

December 30, 2023

Weighted Average

Remaining Life

Customer relationships and lists

Trademarks / Tradenames

Product development

Non-compete agreements

December 31, 2022

Customer lists and relationships

Trademarks / trade names - definite lived

Weighted Average

Remaining Life

Customer relationships and lists

Trademarks / Tradenames

Product development

2 unchanged sentences

business acquisitions

Definite-lived trademarks and trade names are amortized on a straight-line

basis over a weighted-average period of

approximately

years as of December 31, 2022.

Customer lists and customer relationships are definite-lived

intangible assets that are amortized on a straight-line basis over a weighted-average

period of approximately

years as of December 31, 2022.

Product development is a definite-lived intangible asset that is amortized

straight-line basis over a weighted-average period of approximately

years as of December 31, 2022.

Non-compete agreements represent amounts paid primarily to prior owners of

acquired businesses, as well as

certain sales persons, in exchange for placing restrictions on their ability

to pose a competitive risk to us.

amounts are amortized, on a straight-line basis over the respective non-compete

period, which generally

commences upon termination of employment or separation from us.

The weighted-average non-compete period for

agreements currently being amortized was approximately

years as of December 31, 2022.

and are amortized on a straight-line basis over their respective asset life.

Non-compete agreements represent

amounts paid primarily to prior owners of acquired businesses and certain

sales persons, in exchange for placing

restrictions on their ability to pose a competitive risk to us.

Such amounts are amortized, on a straight-line basis

over the respective non-compete period, which generally commences upon

termination of employment or

separation from us.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Amortization expense, excluding impairment charges, related to definite-lived intangible assets

3 unchanged sentences

During the year ended December 30, 2023 we recorded $

million of impairment charges related to businesses

within our health care distribution segment, represented by an intangible asset

impairment of $

million related to

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

the disposal of an unprofitable business and a $

million impairment of customer lists and relationships

attributable to customer attrition rates being higher than expected in certain other

Our impairment loss

was calculated as the difference between the carrying value and the estimated

fair value of the intangible assets,

using a discounted estimate of future cash flows.

million of impairment charges related to businesses in

our health care distribution segment, the components of which were

million primarily related to customer lists

and relationships attributable to lower than anticipated operating

margins in certain businesses, and a $

charge related to the planned exit of a business.

These impairment charges were calculated as the differences

between the carrying values and the estimated fair values

of the impaired intangible assets, using a discounted

estimate of future cash flows.

Note 15 – Plans of Restructuring and Integration Costs

for additional

During the year ended December 31, 2022 we recorded $

million of impairment charges related to businesses in

our health care distribution segment, the components of which were

million charge related to the disposal of

an unprofitable business and a $

million charge related to customer lists and relationships attributable to

customer attrition rates being higher than expected in certain other health

care distribution businesses.

impairment charges were calculated as the differences between the carrying values and the estimated

the impaired intangible assets, using a discounted estimate of future

Note 15 – Plans of

Restructuring and Integration Costs

for additional details.

3 unchanged sentences

our technology and value-added services

During the year ended December 26, 2020, we recorded a $

million impairment charge related to businesses

within our technology and value-added services segment due to customer

attrition rates being higher than expected.

The above intangible asset impairment charges were recorded within selling, general

and administrative expenses

and restructuring and integration charges in our consolidated statement of income.

and in restructuring and integration charges in our consolidated statement of income.

The annual amortization expense expected to be recorded for existing

1 unchanged sentence

million and $

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 9 – Investments and Other

Investments and other consisted of the following:

Investment in unconsolidated affiliates

Investments in unconsolidated affiliates

Non-current deferred foreign, state and local income taxes

7 unchanged sentences

% and are due in varying installments through

November 21, 2028

Amortization expense, primarily related to capitalized costs for software to

3 unchanged sentences

million and $

million, respectively.

million, respectively, and is included in the selling, general and administrative line within our

consolidated statements of income.

HENRY SCHEIN, INC.

3 unchanged sentences

Note 10 – Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or

paid to transfer a liability in an orderly

transaction between market participants at the measurement date.

The fair value hierarchy distinguishes between

(1) market participant assumptions developed based on market data obtained

from independent sources (observable

inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best

information available in the circumstances (unobservable inputs).

The fair value hierarchy consists of three broad levels, which gives the

highest priority to unadjusted quoted prices

in active markets for identical assets or liabilities (Level 1) and the lowest priority

to unobservable inputs (Level 3).

The three levels of the fair value hierarchy are described as follows:

Level 1— Unadjusted quoted prices in active markets for identical assets

or liabilities that are accessible at the

measurement date.

Level 2— Inputs other than quoted prices included within Level 1 that are observable

for the asset or liability,

either directly or indirectly.

Level 2 inputs include:

quoted prices for similar assets or liabilities

in active markets;

quoted prices for identical or similar assets or liabilities in markets that are

inputs other than quoted

prices that are observable for the asset or liability;

and inputs that are

derived principally from or corroborated by

observable market data by correlation or other means.

Level 3— Inputs that are unobservable for the asset or liability.

The following section describes the fair values of our financial instruments

7 unchanged sentences

estimate of fair value based on the interest rates in the applicable markets.

Our investments and notes receivable

fair value is based on Level 3 inputs within the fair value hierarchy.

The fair value of our debt (including bank credit lines, current maturities

of long-term debt and long-term debt) is

classified as Level 3 within the fair value hierarchy, and as of December 31, 2022 and December 25, 2021 was

based on Level 3 inputs within the fair value hierarchy, and as of December 30, 2023 and December 31, 2022 was

estimated at $

6 unchanged sentences

significant other observable inputs.

derivative instruments to minimize our exposure to fluctuations in foreign

currency exchange rates.

Our derivative

instruments primarily include foreign currency forward agreements related

to certain intercompany loans, certain

forecasted inventory purchase commitments with foreign suppliers,

foreign currency forward contracts to hedge a

portion of our euro-denominated foreign operations which are designated

as net investment hedges and a total

return swap for the purpose of economically hedging our unfunded

non-qualified SERP and our DCP.

instruments primarily include foreign currency forward agreements, forecasted

inventory purchase commitments,

foreign currency forward contracts, interest rate swaps, and total return

The fair values for the majority of our foreign currency derivative contracts

1 unchanged sentence

rate to a published forward price of the underlying market rates, which

is based on market rates for comparable

transactions and are classified within Level 2 of the fair value hierarchy.

Note 11-Derivatives and Hedging

for further information.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The fair value for the Total Return Swap is measured by valuing the underlying ETFs of the swap using market-on-

close pricing by industry providers as of the valuation date and are

classified within Level 2 of the fair value

are based on market rates for comparable

transactions that are classified within Level 2 of the fair value hierarchy.

The fair value of the interest rate swap, which is classified within Level 2

of the fair value hierarchy, is determined

by comparing our contract rate to a forward market rate as of the

valuation date.

The fair value of total return swaps is determined by valuing the underlying

exchange traded funds of the swap

using market-on-close pricing by industry providers as of the valuation

date that are classified within Level 2 of the

fair value hierarchy.

Redeemable noncontrolling interests

The values for Redeemable noncontrolling interests are classified within

Level 3 of the fair value hierarchy and are

based on recent transactions and/or implied multiples of earnings.

The values for redeemable noncontrolling interests are based on recent

transactions and/or implied multiples of

earnings that are classified within Level 3 of the fair value hierarchy.

Note 19 – Redeemable Noncontrolling

for additional information.

Assets measured on a non-recurring basis at fair value include Goodwill

and Other intangibles, net, and are

Assets measured on a non-recurring basis at fair value include intangibles.

Inputs for measuring intangibles are

classified as Level 3 within the fair value hierarchy.

2 unchanged sentences

for additional information.

The following table presents

our assets and liabilities that are measured and recognized at fair value on

a recurring basis classified under the

appropriate level of the fair value hierarchy as of December 31, 2022 and

December 25, 2021:

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The following table presents our assets and liabilities that are measured and

recognized at fair value on a recurring

basis classified under the appropriate level of the fair value hierarchy as of

December 30, 2023 and December 31,

December 30, 2023

31 unchanged sentences

financial instruments subject to credit risk, except for long-term notes receivable.

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

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

instruments, by monitoring the credit worthiness of the financial institutions

3 unchanged sentences

utilizing numerous investment grade counter-parties.

With respect to our trade receivables, our credit risk is somewhat limited due to a relatively large customer base

its dispersion across different types of health care professionals and geographic areas.

No single customer

accounted for more than

% of our net sales in 2022 or 2021.

With respect to our sources of supply, our top 10

health care distribution suppliers and our single largest supplier accounted for approximately

respectively, of our aggregate purchases in each of the years ended December 31, 2022 and December 25, 2021.

With respect to our trade receivables, credit risk is somewhat limited due to a relatively large customer base

dispersion across different types of health care professionals and geographic areas.

No single customer accounted

for more than

% of our net sales in either of the years ended December 30, 2023

or December 31, 2022.

respect to our sources of supply, our top 10 health care distribution suppliers and our single largest supplier

accounted for approximately

%, respectively, of our aggregate purchases for the year ended December

30, 2023 and approximately

%, respectively, of our aggregate purchases for the year ended December

Our long-term notes receivable primarily represent strategic financing arrangements

2 unchanged sentences

however, in most cases our security is

subordinate to other commercial financial institutions.

While we have exposure to credit loss in the event of non-

performance by these counter-parties, we conduct ongoing assessments

of their financial and operational

subordinate to the rights of other commercial financial institutions.

While we have exposure to credit loss in the

event of non-performance by these counter-parties, we conduct ongoing

assessments of their financial and

operational performance.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 12 – Derivatives and Hedging Activities

We are exposed to market 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 risk of the derivative counterparties.

We attempt to minimize these

risks by primarily 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 counterparties, maintaining a strong balance sheet and

having multiple sources of capital.

During 2019 we entered into foreign currency forward contracts to hedge

a portion of our euro-denominated

foreign operations which are designated as net investment hedges.

These net investment hedges offset the change

dollar value of our investment in certain euro-functional currency

subsidiaries due to fluctuating foreign

exchange rates.

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

dollar and each

other, and changes to the credit risk of the derivative counterparties.

We attempt to minimize these risks using

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

Our 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 are for the sole

purpose of hedging an existing or

anticipated currency exposure.

We do not enter into foreign currency forward contracts for speculative purposes

and we manage our credit risks by diversifying our counterparties,

maintaining a strong balance sheet and having

multiple sources of capital.

Our derivative instruments primarily include foreign currency forward contracts,

return swaps, and interest rate swaps.

During 2019 we entered foreign currency forward contracts that we

designated as net investment hedges to hedge a

portion of our euro-denominated foreign operations.

These net investment hedges offset changes in the U.S.

value of our investments in certain euro-functional currency subsidiaries due

to fluctuating foreign exchange rates.

Gains and losses related to these net investment hedges are recorded

in accumulated other

comprehensive loss within our consolidated balance sheets.

Amounts excluded from the assessment of hedge

effectiveness are included in interest expense within our consolidated statements

The aggregate

notional value of this net investment hedge, which matures on

in accumulated other comprehensive loss

within our consolidated balance sheets.

Amounts excluded from the assessment of hedge effectiveness are

in interest expense within our consolidated statements of income.

The aggregate notional value of these net

investment hedges, which matured on

November 16, 2023

, was approximately €

On November 3,

2023 we entered into new foreign currency forward contracts to

hedge a portion of our euro-denominated foreign

operations which are designated as net investment hedges.

The aggregate notional value of these net investment

hedges, which matured on

November 16, 2023

, was approximately €

The aggregate notional value of

this net investment hedge, which matures on

November 3, 2028

, is approximately €

During the years ended December 31, 2022 and December 25, 2021, we

recorded losses of $

During the years

ended December 30, 2023, December 31, 2022, and December 25, 2021,

we recorded an increase/(decrease) of

million, and $

million, respectively, within other comprehensive income related to these foreign currency forward contracts.

million, respectively, within other comprehensive income related to these foreign

currency forward contracts.

Note 10 – Fair Value Measurements

for additional information.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

March 20, 2020

, we entered into a total return swap for the purpose of economically hedging

our unfunded non-

qualified SERP and our DCP.

, we entered a total return swap to economically hedge our unfunded

non-qualified SERP and

This swap will offset changes in our SERP and DCP liabilities.

At the inception, the

notional value of the investments in these plans was $

At the swap’s inception, the notional

value of the investments in these plans was $

At December 30, 2023, the notional value of the

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%, for a combined rate of

the years ended December 31, 2022 and December 25, 2021, we have

recorded a gain/(loss), within selling, general

and administrative in our consolidated statement of income, of approximately

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

and December 25, 2021, we recorded within selling,

general and administrative expenses in our consolidated statement of income,

a gain (loss ) of $

million, and $

respectively, net of transaction costs, related to this undesignated swap.

During the years ended December 31, 2022

and December 25, 2021, the swap resulted in a neutral impact to our

results of operations.

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.

Note 17 – Employee Benefit Plans

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

Employee Benefit Plans

for additional information.

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

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 $

For the year ended December 30, 2023, we

recorded, within accumulated other comprehensive loss within our consolidated

balance sheets, a loss of $

million related to the change in the fair value of these interest rate

swap agreements, since we have designated these

swaps agreements as cash flow hedges.

Fluctuations in the value of certain foreign currencies as compared

7 unchanged sentences

to protect against currency

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

exchange risks associated with intercompany loans due from our international

2 unchanged sentences

We do not hedge the translation of foreign currency profits into

dollars, as we regard this as an accounting exposure, not an economic

Amounts related to our

hedging activities are recorded in prepaid expenses and other and/or accrued

other within our

consolidated balance sheets.

Our hedging activities have historically not had a material impact on our consolidated

financial statements.

Accordingly, additional disclosures related to derivatives and hedging activities required by

ASC 815 have been omitted.

dollars, as we consider foreign currency translation to be an accounting

exposure, not an economic

Amounts related to our hedging activities are recorded in prepaid

expenses and other and/or accrued

other within our consolidated balance sheets.

The following table summarizes the terms and fair value of our outstanding derivative

financial instruments as of

December 30, 2023 and December 31, 2022:

December 30, 2023

Classification

Maturity Date

Derivatives used in cash flow hedges:

Foreign currency forward contracts

Accrued expenses, other

November 21, 2024

Interest rate swaps

Accrued expenses, other

July 13, 2026

Derivatives used in net investment hedges:

Foreign currency forward contracts

Accrued expenses, other

November 3, 2028

Undesignated hedging relationships:

Prepaid expenses and other

January 3, 2024

December 31, 2022

Classification

Maturity Date

Derivatives used in cash flow hedges:

Foreign currency forward contracts

Prepaid expenses and other

December 28, 2023

Derivatives used in net investment hedges:

Foreign currency forward contracts

Prepaid expenses and other

November 16, 2023

Undesignated hedging relationships:

Accrued expenses, other

January 4, 2023

The following table summarizes the effect of cash flow hedges and net investment hedges

on our consolidated

statements of income for the years ended

December 30, 2023, December 31, 2022 and December

Derivatives used in cash flow hedges:

Foreign currency forward contracts

Interest rate swaps

Derivatives used in net investment hedges:

Foreign currency forward contracts

The amount of gains or losses reclassified from accumulated other comprehensive

loss into income were not

material for the years ended December 30, 2023, December 31, 2022,

and December 25, 2021.

HENRY SCHEIN, INC.

9 unchanged sentences

August 20, 2021

, we entered into a $

billion revolving credit agreement (the “Credit Agreement”).

facility which matures on

, we entered a $

billion revolving credit agreement (the “Revolving Credit Agreement”)

which was scheduled to mature on

August 20, 2026

replaced our $

million revolving credit facility which was scheduled

to mature in April 2022.

The interest rate is based on the USD LIBOR plus a spread based

on our leverage ratio at

the end of each financial reporting quarter.

Most LIBOR rates have been discontinued after December 31,

while the remaining LIBOR rates will be discontinued immediately after

June 30, 2023.

We do not expect the

discontinuation of LIBOR as a reference rate in our debt agreements

to have a material adverse effect on our

financial position or to materially affect our interest expense.

The Credit Agreement requires, among other things,

that we maintain certain maximum leverage ratios.

Additionally, the Credit Agreement contains customary

representations, warranties and affirmative covenants as well as customary negative

covenants, subject to

negotiated exceptions, on liens, indebtedness, significant corporate changes

(including mergers), dispositions and

certain restrictive agreements.

July 11, 2023

, we amended and restated the Revolving

Credit Agreement to, among other things, extend the maturity date

July 11, 2028

and update the interest rate

provisions to reflect the current market approach for a multicurrency

The interest rate on this revolving

credit facility is based on Term Secured Overnight Financing Rate (“Term SOFR”) plus a spread based on our

leverage ratio at the end of each financial reporting quarter.

The Revolving Credit Agreement requires, among

other things, that we maintain certain maximum leverage ratios.

Additionally, the Revolving Credit Agreement

contains customary representations, warranties and affirmative covenants as well

as customary negative covenants,

subject to negotiated exceptions, on liens, indebtedness, significant corporate

changes (including mergers),

dispositions and certain restrictive agreements.

As of December 30, 2023 and December 31, 2022, we had $

borrowings under this

revolving credit facility.

As of December 31, 2022 and December 25, 2021, there

million and $

of letters of credit, respectively, provided to third parties under the credit facility.

million in borrowings, respectively under this revolving credit facility.

During the year ended

December 30, 2023, the average outstanding balance under the Revolving Credit

Agreement was approximately

As of December 30, 2023 and December 31, 2022, there were $

million and $

million of letters of

credit, respectively, provided to third parties under this Revolving Credit Agreement.

Other Short-Term Bank Credit

As of December 31, 2022 and December 25, 2021, we had various other short-term

bank credit lines available, with

a maximum borrowing capacity of $

million as of December 31, 2022, of which $

As of December 30, 2023 and December 31, 2022, we had various other

short-term bank credit lines available, in

various currencies, with a maximum borrowing capacity of $

million and $

respectively, were outstanding.

million, respectively.

December 30, 2023 and December 31, 2022, $

million and $

million, respectively, were outstanding.

the year ended December 30, 2023, the average outstanding balances under our

various other short-term bank credit

lines was approximately $

At December 30, 2023 and December 31, 2022, borrowings under

credit lines had a weighted average interest rate of

short-term bank credit lines had weighted average interest rates of

%, respectively.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Long-term debt

9 unchanged sentences

Total long-term debt

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

As of December 30, 2023,

the aggregate amounts of long-term debt, including finance lease obligations

deferred debt issuance costs of $

million, maturing in each of the next five years and thereafter

are as follows:

Private Placement Facilities

Our private placement facilities were amended on

October 20, 2021

to include four (previously three) insurance

companies, have a total facility amount of $

billion (previously $

billion), and are available on an

uncommitted basis at fixed rate economic terms to be agreed upon at the

time of issuance, from time to time

Our private placement facilities include four insurance companies, have

a total facility amount of $

are available on an uncommitted basis at fixed rate economic

terms to be agreed upon at the time of issuance, from

time to time through

October 20, 2026

June 23, 2023

The facilities allow us to issue senior promissory notes to

the lenders at a fixed rate based on an agreed upon spread over applicable

treasury notes at the time of

The term of each possible issuance will be selected by us and

can range from

average life no longer than

The proceeds of any issuances under the facilities will be used for

corporate purposes, including working capital and capital expenditures,

to refinance existing indebtedness, and/or

to fund potential acquisitions.

The facilities allow us to issue senior promissory notes to the

fixed rate based on an agreed upon spread over applicable treasury notes

at the time of issuance.

The term of each

possible issuance will be selected by us and can range from

(with an average life no longer than

The proceeds of any issuances under the facilities will be used

for general corporate purposes, including

working capital and capital expenditures, to refinance existing indebtedness,

and/or to fund potential acquisitions.

The agreements provide, among other things, that we maintain

certain maximum

leverage ratios, and contain restrictions relating to subsidiary indebtedness,

liens, affiliate transactions, disposal of

assets and certain changes in ownership.

certain maximum leverage ratios, and contain

restrictions relating to subsidiary indebtedness, liens, affiliate transactions, disposal

of assets and certain changes in

These facilities contain make-whole provisions in the event that we

off the facilities prior to the applicable due dates.

On March 5, 2021, we amended the private placement facilities to,

among other things, (a) modify the financial

covenant from being based on a net leverage ratio to a total leverage

ratio and (b) restore the maximum

maintenance total leverage ratio to

x and remove the

% interest rate increase triggered if the net leverage

ratio were to exceed

pay off the facilities prior to the

applicable due dates.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

The components of our private placement facility borrowings, which

15 unchanged sentences

Trade Accounts Receivable Securitization

We have a facility agreement based on the securitization of our U.S.

trade accounts receivable that is structured as

an asset-backed securitization program with pricing committed for up

On December 15, 2022, we

extended the expiration date of this facility agreement to

We have a facility agreement based on our U.S.

trade accounts receivable that is structured as an asset-backed

securitization program with pricing committed for up to

This facility agreement has a purchase limit of

banks as agents, and expires on

December 15, 2025

(the previous maturity date was

October 18, 2024

) and maintained the purchase limit under the facility as

banks as agents.

As of December 30, 2023 and December 31, 2022, the borrowings outstanding

9 unchanged sentences

%, for a combined rate of

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

If our accounts receivable collection pattern changes due to customers

3 unchanged sentences

basis points depending upon program utilization.

As of December 31, 2022,

the aggregate amounts of long-term debt, including finance lease obligations

deferred debt issuance costs of $

million, maturing in each of the next five years and thereafter

are as follows:

On December 20, 2023 and February 23, 2024, we amended this facility

to temporarily adjust certain covenant

HENRY SCHEIN, INC.

2 unchanged sentences

(in millions, except share and per share data)

On July 11, 2023, we entered into a

million term loan credit agreement (the “Term Credit

The interest rate on this term loan is based on the Term SOFR plus a spread based on our leverage

ratio at the end of each financial reporting quarter.

This term loan matures on July 11, 2026.

We are required to make quarterly payments of $

million from September 2023 through June 2024 and quarterly

payments of $

million from September 2024 through June 2026, with the remaining balance

due in July 2026.

of December 30, 2023, the borrowings outstanding under this term

At December 30, 2023,

the interest on this Term Credit Agreement was

% for a combined rate of

have a hedge in place (see

Note 12 – Derivatives and Hedging Activities

for additional information) that ultimately

creates an effective fixed rate of

The Term Credit Agreement requires, among other things, that we

maintain certain maximum leverage ratios.

Additionally, the Term

Credit Agreement contains customary

representations, warranties and affirmative covenants as well as customary negative

covenants, subject to

negotiated exceptions, on liens, indebtedness, significant corporate changes

(including mergers), dispositions and

certain restrictive agreements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 14 – Income Taxes

14 unchanged sentences

Deferred income tax asset:

Net operating losses and other carryforwards

Net operating losses

Other carryforwards

Inventory, premium

1 unchanged sentence

valuation allowances

Stock-based compensation

Uniform capitalization adjustment to inventories

Operating lease liability

13 unchanged sentences

the applicable accounting rules is

We are required to consider all available positive and negative evidence in evaluating the likelihood

are required to consider all available positive and negative evidence

in evaluating the likelihood

that we will be able to realize the benefit of our deferred tax assets in the future.

36 unchanged sentences

Interest expense related to loans

Tax benefit related

to legal entity reorganization outside the U.S.

Tax on global

intangible low-taxed income ("GILTI")

tax provision

9 unchanged sentences

%, the difference between our effective tax rate and the federal statutory tax rate was

primarily due to an Advance Pricing Agreement with the U.S Internal Revenue

Service (the “IRS”) in the U.S.,

other audit resolutions, state and foreign income taxes and interest expense.

On August 16, 2022, the Inflation Reduction Act (H.R.

5376) (“IRA”) was

signed into law in the United States.

Among other things, the IRA imposes a 15% corporate alternative minimum

tax for tax years beginning after

December 31, 2022 and levies a 1% excise tax on net stock repurchases after

December 31, 2022.

We are still in

the process of analyzing the provisions of the IRA.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES

Act”) was enacted in

response to the COVID-19 pandemic.

The CARES Act includes, but is not limited to, certain income tax

provisions that modify the Section 163(j) limitation of business interest and

net operating loss carryover and

carryback rules.

The modifications to Section 163(j) increase the allowable business

interest deduction from

of adjusted taxable income to

% of adjusted taxable income for years beginning in 2019 and 2020.

Act eliminated the NOL income limitation for years beginning before 2021

and it extended the carryback period to

five years for losses incurred in 2018, 2019 and 2020.

have analyzed the income tax provisions of the CARES

Act and have accounted for the impact in the year ended December 26, 2020,

which did not have a material impact

on our consolidated financial statements.

There are certain other non-income tax benefits available to us under

CARES Act that require further clarification or interpretation that

may affect our consolidated financial statements

in the future.

On December 27, 2020, the Consolidated Appropriations Act was

enacted into law and extended

certain non-income tax benefits under the CARES Act.

On July 20, 2020, the IRS issued final regulations related to the Tax Cuts and Jobs Act enacted in 2017 (the “Tax

The final regulations concern the global intangible low-taxed income

(“GILTI”) and subpart F income

provisions of the Tax Act.

To provide flexibility to taxpayers, the IRS is permitting the application of these final

regulations to prior tax years, if the taxpayer elects to do so.

We have analyzed the final regulations, which do not

have a material impact to our consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

primarily due to state and foreign income taxes and interest expense.

On December 22, 2017, the U.S.

government passed the Tax Act, which requires U.S.

companies to pay a

mandatory one-time transition tax on historical offshore earnings that have not been

repatriated to the U.S.

transition tax is payable over eight years.

government passed the Tax Cuts and Jobs Act, which requires U.S.

pay a mandatory one-time transition tax on historical offshore earnings that have not

been repatriated to the U.S.

The transition tax is payable over eight years.

Within our consolidated balance sheets, transition tax of $

9 unchanged sentences

liability with respect to such earnings is not practicable.

ASC 740 prescribes the accounting for uncertainty in income taxes recognized

in the financial statements in

accordance with other provisions contained within this guidance.

This topic prescribes a recognition threshold and

a measurement attribute for the financial statement recognition and measurement

of tax positions taken or expected

to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely

than not to be

sustained upon examination by the taxing authorities.

The amount recognized is measured as the largest amount of

benefit that has a greater than 50% likely of being realized upon ultimate

audit settlement.

In the normal course of

business, our tax returns are subject to examination by various taxing

Such examinations may result in

future tax and interest assessments by these taxing authorities for uncertain

tax positions taken in respect of certain

The Organization of Economic Co-Operation and Development (OECD) issued

technical and administrative

guidance on Pillar Two Model Rules in December 2021, which provides for a global minimum tax rate on the

earnings of large multinational businesses, on a country-by-country basis.

Effective January 1, 2024, the minimum

global tax rate is 15% for various jurisdictions pursuant to the Pillar Two framework.

Future tax reform resulting

from these developments may result in changes to long-standing tax principles,

which may adversely impact our

effective tax rate going forward or result in higher cash tax liabilities.

As we operate in jurisdictions which have

adopted Pillar 2, we are continuing to analyze the implications to effectively manage

the impact for 2024 and

ASC Topic 740 prescribes the accounting for uncertainty in income taxes recognized in accordance with other

provisions contained within its guidance.

This topic prescribes a recognition threshold and a measurement

for the financial statement recognition and measurement of tax positions taken or

expected to be taken in a tax

For those benefits to be recognized, a tax position must be

more likely than not to be sustained upon

examination by the taxing authorities.

The amount recognized is measured as the largest amount of benefit that has

a greater than 50% likelihood of being realized upon ultimate audit settlement.

In the normal course of business,

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

our tax returns are subject to examination by various taxing authorities.

Such examinations may result in future tax

and interest assessments by these taxing authorities for uncertain tax positions

taken in respect of certain tax

The total amount of unrecognized tax benefits, which are included in “other

liabilities” within our consolidated

balance sheets, as of December 31, 2022 and December 25, 2021 was approximately

balance sheets, as of December 30, 2023 and December 31, 2022, was $

million and $

respectively, of which $

million, respectively,

million and $

million, respectively, would affect the effective tax rate if recognized.

is possible that the amount of unrecognized tax benefits will change in

the next 12 months, which may result in a

material impact on our consolidated statements of income.

It is possible

that the amount of unrecognized tax benefits will change in the next 12

months, which may result in a material

impact on our consolidated statements of income.

All tax returns audited by the IRS are officially closed through 2019.

2 unchanged sentences

In addition, limited positions reported in the 2017 tax year are subject

During the quarter ended December 25, 2021, we were notified by

the IRS that tax year 2019 was

selected for examination.

During the quarter ended June 26, 2021 we reached a resolution with

the Appellate

Division for all remaining outstanding issues for 2012 and 2013.

During the quarter ended September 26, 2020 we reached an agreement with

the Advanced Pricing Division on an

appropriate transfer pricing methodology for the years 2014-2025.

The objective of this resolution was to mitigate

future transfer pricing audit adjustments.

In the fourth quarter of 2020, we reached a resolution with the IRS for the

2014-2016 audit cycle.

The total amounts of interest and penalties are classified as a component of

the provision for income taxes.

amount of tax interest expense (credit) was approximately $

million and $(

) million in 2022, 2021

and 2020, respectively.

The total amount of accrued interest is included in “other liabilities”,

approximately $

The amount of tax interest expense included as a component of the provision

for taxes was $

million in 2023, 2022 and 2021, respectively.

The total amount of accrued interest is included in “other

liabilities,” and was $

million as of December 30, 2023 and $

million as of December 31, 2022.

The amount of

penalties accrued for during the periods presented were not material

to our consolidated financial statements.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

of penalties accrued for during the periods presented were not material to

our consolidated financial statements.

The following table provides a reconciliation of unrecognized tax benefits:

6 unchanged sentences

Balance, end of period

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 15 – Plans of Restructuring

1 unchanged sentence

On August 1, 2022, we committed to a restructuring plan focused on

funding the priorities of the strategic plan and

streamlining operations and other initiatives to increase efficiency.

We expect this initiative to extend through

We are currently unable in good faith to make a determination of an estimate of the amount or range of

amounts expected to be incurred in connection with these activities, both with

respect to each major type of cost

associated therewith and with respect to the total cost, or an estimate of the

amount or range of amounts that will

result in future cash expenditures.

During the year ended December 31, 2022, we recorded restructuring charges of $

million primarily related to

severance and employee-related costs, accelerated amortization of right-of-use

lease assets, impairment of other

long-lived assets and lease exit costs.

During the three months ended December 31, 2022, in connection with our

funding the priorities of the BOLD+1 strategic

plan, streamlining operations and other initiatives to increase efficiency.

We revised our previous expectations of

completion and we have extended this initiative through the end of 2024.

We are currently unable in good faith to

make a determination of an estimate of the amount or range of amounts

expected to be incurred in connection with

these activities, both with respect to each major type of cost associated

therewith and to the total cost, or an

estimate of the amount or range of amounts that will result in future

cash expenditures.

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

25, 2021, we recorded

restructuring costs of $

million, and $

million, respectively.

The restructuring costs for these

periods primarily related to severance and employee-related costs,

impairment of intangible assets, accelerated

amortization of right-of-use lease assets and fixed assets, other lease exit

costs, and certain business exit costs

discussed below.

During the year ended December 30, 2023, in connection with our restructuring

plan, we recorded an impairment of

an intangible asset of $

million related to a planned disposal of a non-U.S.

The disposal is expected to

be completed in 2024.

This impairment is included in the $

million of restructuring charges discussed above.

During the year ended December 31, 2022, in connection with our

restructuring plan, we vacated

the buildings at our corporate headquarters in Melville NY, which resulted in an accelerated amortization of right-

of-use lease asset of $

We also initiated the disposal of a non-profitable US business and recorded

related costs of $

million which primarily consisted of impairment of intangible assets

and goodwill, inventory

impairment, and severance and employee-related costs.

buildings at our corporate headquarters in Melville, New York, which resulted in an accelerated amortization of a

right-of-use lease asset of $

We also initiated the disposal of a non-profitable U.S.

recorded related costs of $

million, which primarily consisted of impairment of intangible

assets and goodwill,

inventory impairment, and severance and employee-related costs.

These expenses are included in the $

restructuring charges discussed above.

The disposal is expected to be completed in the first quarter of 2023.

of restructuring charges discussed above.

The disposal was completed during the first quarter of 2023.

On August 26, 2022, we acquired Midway Dental Supply.

33 unchanged sentences

Loss on disposal of a business

Integration employee-related and other costs

Total restructuring and integration costs

5 unchanged sentences

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and

other long-lived assets

Exit and other related costs

Loss on disposal of a business

Integration employee-related and other costs

Total restructuring and integration costs

5 unchanged sentences

Severance and employee-related costs

Impairment and accelerated depreciation and

amortization of right-of-use lease assets and

other long-lived assets

Exit and other related costs

Total restructuring and integration costs

7 unchanged sentences

The remaining accrued balance of restructuring

costs as of December 31, 2022 is included in accrued expenses:

costs as of December 30, 2023, which primarily relates to severance and

employee-related costs, is included in

accrued expenses:

other within our consolidated balance sheets.

Liabilities related to exited leased facilities are

recorded within our current and non-current operating lease liabilities within

our condensed consolidated balance

Balance, December 25, 2021

Restructuring charges

Restructuring and integration costs

Non-cash asset impairment and accelerated depreciation and

amortization of right-of-use lease assets and other long-lived

amortization of right-of-use lease assets and other long-lived assets

Non-cash impairment on disposal of a business

1 unchanged sentence

Balance, December 31, 2022

Restructuring and integration costs

Non-cash asset impairment and accelerated depreciation and

amortization of right-of-use lease assets and other long-lived assets

Non-cash impairment on disposal of a business

Cash payments and other adjustments

Balance, December 30, 2023

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 16 – Commitments and Contingencies

13 unchanged sentences

We also have lifetime consulting agreements that provide for current

compensation of

four-hundred thousand

dollars per year, increasing

twenty-five thousand

dollars every fifth year

with the next increase in 2026.

compensation of four-hundred thousand dollars per year, with small scheduled increases every fifth year with the

next increase in 2027.

In addition, some agreements have provisions for additional

incentives and

compensation.

Henry Schein, Inc.

has been named as a defendant in multiple opioid

related lawsuits (currently less than one-

hundred and fifty (

in approximately half of those cases one or more of Henry Schein, Inc.’s subsidiaries is

also named as a defendant).

Generally, the lawsuits allege that the manufacturers of prescription opioid drugs

engaged in a false advertising campaign to expand the market for such drugs and

their own market share and that

the entities in the supply chain (including Henry Schein, Inc.

its affiliated companies) reaped financial rewards

by refusing or otherwise failing to monitor appropriately and restrict

the improper distribution of those drugs.

These actions consist of some that have been consolidated within the

MultiDistrict Litigation (“MDL”) proceeding

incentives and compensation.

Legal Proceedings

Henry Schein, Inc.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

In Re National Prescription Opiate Litigation (MDL No.

17-md-2804) and are currently stayed, and

others which remain pending in state courts and are proceeding independently

and outside of the MDL.

time, the following cases are set for trial:

the action filed by DCH Health

Care Authority, et al.

in Alabama state

court, which has been designated a bellwether with

plaintiffs set for a jury trial on July 24,

and the action filed by Florida Health Sciences Center, Inc.

other hospitals located throughout the

State of Florida) in Florida state court, which is currently scheduled for a jury

trial in October 2024.

2022, we settled

cases filed in Utah (plus one case in which we were not yet

named a defendant) by

plaintiffs for a total amount of

sixty thousand

cases have been dismissed.

Of Henry Schein’s

2022 net sales of approximately $

billion from continuing operations, sales of opioids represented

two-tenths of 1 percent

Opioids represent a negligible part of our business.

We intend to defend ourselves

vigorously against these actions.

has been named as a defendant in multiple opioid related

lawsuits (currently less than one-

hundred and seventy-five (

one or more of Henry Schein, Inc.’s subsidiaries is also named as a defendant in a

number of those cases).

Generally, the lawsuits allege that the manufacturers of prescription opioid drugs engaged

in a false advertising campaign to expand the market for such drugs and

their own market share and that the entities

in the supply chain (including Henry Schein, Inc.

and its subsidiaries) reaped

financial rewards by refusing or

otherwise failing to monitor appropriately and restrict the improper distribution

of those drugs.

These actions

consist of some that have been consolidated within the MultiDistrict Litigation

(“MDL”) proceeding In Re National

Prescription Opiate Litigation (MDL No.

and are currently stayed, and others which

remain pending in state courts and are proceeding independently and outside

At this time, the

following cases are set for trial:

the action filed by DCH Health Care Authority, et al.

in Alabama state court, which

is currently set for a jury trial on July 8, 2024;

the action filed by Mobile

County Board of Health, et al.

state court, which has been set for a jury trial on August 12, 2024;

and the action filed by Florida Health Sciences

other hospitals located throughout the State of Florida) in Florida state court,

which is currently

scheduled for a jury trial in September 2025.

Of Henry Schein’s 2023 net sales of approximately $

sales of opioids represented less than four-tenths of 1 percent.

Opioids represent a negligible part of our

We intend to defend ourselves vigorously against these actions.

In August 2022, Henry Schein received a Grand Jury Subpoena from the United

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to certain customers.

October 2022, Henry Schein received a second Grand Jury Subpoena from

the United States Attorney’s Office for

October 2022, Henry Schein received a second Grand Jury Subpoena

from the United States Attorney’s Office for

the Western District of Virginia.

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Butler was spun off into a separate company and became a

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

subsidiary of Covetrus in 2019 and is no longer owned by Henry Schein.

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investigation.

On January 18, 2024, a putative class action was filed against the Company

District Court for the

Eastern District of New York (“EDNY”), Case No.

24-cv-387 (the “Cruz-Bermudez Action”), based on the

October 2023 cybersecurity incident described above.

On January 26, 2024, a second putative class action was

filed against the Company based on the cybersecurity incident, also in

24-cv-550 (the

“Depperschmidt Action”).

On February 12, 2024, the Depperschmidt Action was voluntarily dismissed

On February 16, 2024, an amended complaint was filed in

the Cruz-Bermudez Action with additional

plaintiffs’ counsel from the Depperschmidt Action and an additional new plaintiff.

Plaintiffs in the Cruz-Bermudez Action seek to represent a class of all individuals

whose personally identifying

information and personal health information was compromised by

the incident.

Plaintiffs generally claim to have

been harmed by alleged actions and/or omissions by the Company

in connection with the incident and that the

Company made deceptive public statements regarding privacy and data protection.

Plaintiffs assert a variety of

common law and statutory claims seeking monetary damages, injunctive

relief, costs and attorneys’ fees, and other

related relief.

The case remains pending.

We intend to defend ourselves vigorously against this action.

From time to time, we may become a party to other legal proceedings,

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Note 17 – Stock-Based Compensation

Stock-based awards are provided to certain employees under the terms of our

2020 Stock Incentive Plan and to

non-employee directors under the terms of our 2015 Non-Employee Director

Stock Incentive Plan (together, the

The Plans are administered by the Compensation Committee of the Board

of Directors (the

“Compensation Committee”).

Historically, equity-based awards to our employees have been granted solely in the

form of time-based and performance-based restricted stock units

However, for our 2021 fiscal year, in

light of the COVID-19 pandemic, the Compensation Committee determined

it would be difficult for management

to set a meaningful three-year cumulative earnings per share target as the goal applicable

to performance-based

RSU awards as it had done in prior years.

Instead, the Compensation Committee set our equity-based awards

employees for fiscal 2021 in the form of time-based RSUs and non-qualified

stock options which focus on stock

value appreciation and retention instead of pre-established performance goals.

Our non-employee directors

continued to receive equity-based awards for fiscal 2021 solely in the form of time-based

In March 2022,

the Compensation Committee reinstated performance-based RSUs

for equity-based awards to employees for fiscal

2022 and awarded grants in the form of performance-based RSUs,

time-based RSUs and non-qualified stock

Stock-based awards are provided to certain employees under our 2020 Stock Incentive

Plan and to non-employee

directors under our 2023 Non-Employee Director Stock Incentive Plan

(formerly known as the 2015 Non-

Employee Director Stock Incentive Plan) (together, the “Plans”).

The Plans are administered by the Compensation

Committee of the Board (the “Compensation Committee”).

Historically, equity-based awards to our employees

have been granted solely in the form of time-based and performance-based

restricted stock units (“RSUs”) with the

exception of our 2021 plan year in which non-qualified stock options were

issued in place of performance-based

RSUs and in 2022, when we granted time-based and performance-based

RSUs, as well as non-qualified stock

For our 2023 plan year, we returned to granting our employees equity-based awards solely

in the form of

time-based and performance-based RSUs.

Our non-employee directors receive equity-based awards solely

form of time-based RSUs.

As of December 30, 2023, there were

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-year cliff vesting.

RSUs granted under the 2015 Non-Employee Director Stock Incentive

Plan primarily

are granted with

RSUs granted to our non-employee directors primarily include

-month cliff vesting.

For these RSUs, we recognize the cost as compensation expense on

straight-line basis.

respect to time-based RSUs, we estimate the fair value on the date

of grant based on our closing stock price at

the time of grant.

With respect to performance-based RSUs, the number of shares that ultimately vest

received by the recipient is based upon our performance as measured against

specified targets over a specified

period, as determined by the Compensation Committee.

Although there is no guarantee that performance targets

will be achieved, we estimate the fair value of performance-based RSUs based

on our closing stock price at time of

For these RSUs, we recognize the cost as compensation expense on a straight-line

For all RSUs, we estimate the fair value based on our closing stock

price on the grant date.

With respect to

performance-based RSUs, the number of shares that ultimately vest and

are received by the recipient is based upon

our performance as measured against specified targets over a specified period, as

determined by the Compensation

Although there is no guarantee that performance targets will be achieved, we

estimate the fair value of

performance-based RSUs based on our closing stock price at time of grant.

Each of the Plans provide for certain adjustments to the performance

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markets, foreign exchange fluctuations, the

financial impact of certain products and unforeseen events or circumstances affecting us.

Over the performance period, the number of shares of common stock that will

ultimately vest and be issued and the

related compensation expense is adjusted upward or downward based upon

our estimation of achieving such

performance targets.

The ultimate number of shares delivered to recipients and the

related compensation cost

recognized as an expense will be based on our actual performance metrics

as defined under the Plans.

financial impact either positive or negative, of the difference in projected earnings

generated by COVID-19 test kits

(solely with respect to performance-based RSUs granted in the 2022 and

2023 plan years) and impairment charges

(solely with respect to performance-based RSUs granted in the 2023 plan

year), and unforeseen events or

circumstances affecting us.

Over the performance period, the number of RSUs that will ultimately vest

and be issued and the related

compensation expense is adjusted upward or downward based upon our

estimation of achieving such performance

The ultimate number of shares delivered to recipients and the related compensation

cost recognized as an

expense is based on our actual performance metrics as defined under

the 2020 Stock Incentive Plan.

HENRY SCHEIN, INC.

3 unchanged sentences

Stock options are awards that allow the recipient to purchase shares of our

common stock at a fixed price following

vesting of the stock options.

Stock options are granted at an exercise price equal to our closing stock

common stock after vesting at a fixed

price set at the time of grant.

Stock options were granted at an exercise price equal to our

closing stock price on the

date of grant.

Stock options issued beginning in 2021 vest

per year based on the recipient’s continued

Stock options issued in 2021 and 2022 vest one-third per year based

on the recipient’s continued

service, subject to the terms and conditions of the 2020 Stock Incentive Plan,

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grant date and have a contractual term of

from the grant date, subject to earlier termination of the term

upon certain events.

Compensation expense for these stock options is recognized

using a graded vesting method.

We estimate the fair value of stock options using the Black-Scholes valuation model.

from the grant date, subject to earlier termination of term and

term acceleration upon certain events.

Compensation expense for stock options is recognized using

vesting method.

We estimate grant date fair value of stock options using the Black-Scholes valuation model.

During the year ended December 30, 2023, we did

t grant any stock options.

In addition to equity-based awards granted in fiscal 2021 under the long-term

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Given the significance of the impact of the pandemic on our

year EPS goal under such equity awards and the contributions made by our employees

(including those who

year EPS goal under such equity awards and the contributions made by our

employees (including those who

received such awards), on March 3, 2021, the Compensation Committee granted

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the grant date of the Special Pandemic Recognition Award.

These time-based RSU awards vest

These time-based RSU awards vested

% on the first

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continued service and subject to the terms and conditions of the 2020 Stock Incentive

Plan, and are recorded as

Plan, and were recorded as

compensation expense using a graded vesting method.

1 unchanged sentence

% payout based on actual

performance of the 2018 LTIP and the one-time Special Pandemic Recognition Award granted in 2021 will

generate a cumulative payout of

% of each recipient’s original number of performance-based restricted stock

units awarded in 2018 if the recipient satisfies the

performance of the 2018 LTIP and the one-time Special Pandemic Recognition Award granted in 2021 generated a

cumulative payout of

% of each recipient’s original number of performance-based restricted stock units awarded

in 2018 if the recipient satisfied the

-year vesting schedule commencing on the grant date.

Our accompanying consolidated statements of income reflect pre-tax share-based

compensation expense of $

million after-tax), $

million after-tax) and $

million after-tax) for the years

ended December 31, 2022, December 25, 2021 and December 26, 2020.

Total unrecognized compensation cost related to non-vested awards as of December 31, 2022 was $

which is expected to be recognized over a weighted-average period of

approximately

The weighted-average grant date fair value of stock-based awards granted

before forfeitures was $

per share during the years ended December 31, 2022, December 25,

Our consolidated statements of income reflect pre-tax share-based compensation

million and $

million for the years ended December 30, 2023, December 31, 2022

and December 25, 2021.

Certain stock-based compensation granted may require us to settle in

the form of a cash payment.

During the year

ended December 31, 2022, we recorded a liability of $

million relating to the grant date fair value of stock-based

compensation to be settled in cash.

Total unrecognized compensation cost related to unvested awards as of December 30, 2023 was $

million, which

is expected to be recognized over a weighted-average period of approximately

The weighted-average grant date fair value of stock-based awards granted

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

Certain stock-based compensation is required to be settled in cash.

During the year ended December 30, 2023, we

recorded a liability of $

million for stock-based compensation to be settled in cash.

record deferred income tax assets for awards that will result in

future deductions on our income tax returns

based on the amount of compensation cost recognized and our statutory tax

rate in the jurisdiction in which we will

receive a deduction.

Our accompanying consolidated statements of cash flows present our stock-based

compensation expense as an

adjustment to reconcile net income to net cash provided by operating

future income tax deductions based on the

amount of compensation cost recognized and our statutory tax rate in the

jurisdiction in which we will receive a

Our consolidated statements of cash flows present our stock-based compensation

expense as a reconciling

adjustment between net income and net cash provided by operating

activities for all periods presented.

accompanying consolidated statements of cash flows, there were no benefits

associated with tax deductions in

excess of recognized compensation as a cash inflow from financing

activities for the years ended December 31,

2022, December 25, 2021 and December 26, 2020.

no cash benefits associated with tax deductions in excess of recognized

compensation for the years ended

December 30, 2023, December 31, 2022 and December 25, 2021.

HENRY SCHEIN, INC.

8 unchanged sentences

Risk-free interest rate

Expected life of options (years)

Expected life of options (in years)

We have not declared cash dividends on our stock in the past and we do not anticipate declaring cash dividends in

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The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the time of grant in conjunction with considering the expected life of options.

Treasury yield curve in effect at the time of grant that most closely aligns to the expected life of options.

year expected life of the options was determined using the simplified

method for estimating the expected term

as permitted under SAB Topic 14.

Estimates of fair value are not intended to predict actual future events or

value ultimately realized by recipients of stock options, and subsequent

events are not indicative of the

reasonableness of the original estimates of fair value made by us.

method for estimating the expected term as

permitted under Staff Accounting Bulletin Topic 14.

The following table summarizes the stock option activity for the year

2 unchanged sentences

Weighted Average

Remaining Contractual

Exercise Price

Life (in years)

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Weighted Average

Remaining Contractual

Exercise Price

Life (in years)

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during the years ended

December 31, 2022, December 25, 2021 and December 26, 2020.

December 30, 2023, December 31, 2022 and December 25, 2021, respectively.

HENRY SCHEIN, INC.

13 unchanged sentences

The following table presents the changes in projected benefit

obligations, plan assets, and the funded status of our defined benefit pension

obligations, plan assets, and the funded status of our defined benefit

pension plans:

Obligation and funded status:

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Past service cost

Actuarial loss

Actuarial gain (loss)

Benefits paid

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Accumulated other comprehensive loss, pre-tax

The following table provides the net periodic pension cost for our

defined benefit plans:

The following table provides the components of net periodic pension cost

for our defined benefit plans:

Interest cost

22 unchanged sentences

December 30, 2023:

qualified 401(k) plans to substantially all our domestic full-time

qualified 401(k) plans to substantially all domestic full-time employees.

As determined by our Board,

of Directors, matching contributions to these plans generally do not

% of the participants’ contributions

% of their base compensation, subject to applicable legal limits.

Matching contributions consist of cash and

were allocated entirely to the participants’ investment elections on file,

matching contributions to these plans generally do not exceed

% of the participants’ contributions up to

their base compensation, subject to applicable legal limits.

Matching contributions are made in cash and are

allocated consistent with the participants’ investment elections on file, subject

% allocation limit to the

Henry Schein Stock Fund.

Due to the impact of COVID-19, as part of our initiative to generate cash savings,

suspended the matching contribution for the second half of 2020.

The matching contribution was reinstated in

Forfeitures attributable to participants whose employment terminates prior

to becoming fully vested are used

to reduce our matching contributions and offset administrative expenses of the 401(k)

Forfeitures attributable to participants whose employment terminates

prior to becoming

fully vested are reallocated as part of our ongoing matching contributions

and to offset administrative expenses of

the 401(k) plans.

Assets of the 401(k) and other defined contribution plans are held

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Within our consolidated statements of income, $

million is included

in selling, general and administrative expenses;

million is included in cost of goods sold.

Supplemental Executive Retirement Plan (“SERP”)

million, is included in selling, general and administrative;

million, and $

included in cost of goods sold for the years ended December 30, 2023, December

31, 2022, and December 25,

2021, respectively.

Supplemental Executive Retirement Plan

an unfunded, non-qualified SERP to eligible employees.

2 unchanged sentences

IRS allowed pre-tax 401(k) contribution

Our contributions to this plan are equal to the 401(k)

employee-elected contribution percentage applied to

Our contributions to this plan are equal to the 401(k) employee-elected

contribution percentage applied to

base compensation for the portion of the year in which such employees are

1 unchanged sentence

contributions to the 401(k) plan.

Due to the impact of COVID-19, as part of our initiative

to generate cash savings,

we suspended contributions under the SERP for the second half of

Contributions to the SERP were restored

The amounts charged to operations during the years ended December 30, 2023,

2022, December 25, 2021 and

December 26, 2020 amounted to $

December 31, 2022 and December 25, 2021 amounted to $

million and $

million, respectively.

The charges are included in

selling, general and administrative expenses line item within our consolidated

charges are included in selling, general and administrative within our consolidated

statements of income.

1 unchanged sentence

for additional information.

Deferred Compensation Plan (“DCP”)

Deferred Compensation Plan

During 2011, we began to offer DCP to a select group of management or highly compensated employees of

2 unchanged sentences

commission compensation by eligible employees.

The amounts charged to operations during the years ended

December 31, 2022, December 25, 2021 and December 26, 2020 were approximately

The amounts (credited)/charged to operations during the years

ended December 30, 2023, December 31, 2022 and December 25, 2021

were approximately $

million and $

million, respectively.

The charges are included in selling, general and administrative expenses line

our consolidated statements of income.

The charges are included in selling, general and administrative within our

consolidated statements of income.

Note 12 – Derivatives and Hedging Activities

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their ownership interest in those entities at fair value.

ASC 480-10 is applicable for noncontrolling interests where

we are or may be required to purchase all or a portion of the outstanding

interest in a consolidated subsidiary from

the noncontrolling interest holder under the terms of a put option

contained in contractual agreements.

ASC Topic 480-10 is applicable for noncontrolling interests

where we are or may be required to purchase all or a portion of the

outstanding interest in a consolidated subsidiary

from the noncontrolling interest holder under the terms of a put option contained

in contractual agreements.

components of the change in the redeemable noncontrolling interests for the

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Net income attributable to redeemable noncontrolling interests

Dividends declared

Effect of foreign currency translation loss attributable to redeemable

noncontrolling interests

Distributions declared, net of capital contributions

Effect of foreign currency translation gain (loss)

attributable to

redeemable noncontrolling interests

Change in fair value of redeemable securities

2 unchanged sentences

Comprehensive income includes certain gains and losses that, under U.S.

are excluded from net income as

such amounts are recorded directly as an adjustment to stockholders’

The following table summarizes our Accumulated other comprehensive loss, net of

applicable taxes as of:

are excluded from net income and

are recorded directly to stockholders’ equity.

The following table summarizes our Accumulated other comprehensive loss, net

of applicable taxes as of:

Attributable to redeemable noncontrolling interests:

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Foreign currency translation adjustment

Unrealized gain (loss) from foreign currency hedging activities

Unrealized gain (loss) from hedging activities

Pension adjustment loss

6 unchanged sentences

(in millions, except share and per share data)

The following table summarizes the components of comprehensive income, net of

applicable taxes as follows:

The following table summarizes the components of comprehensive income, net

of applicable taxes as follows:

Foreign currency translation gain (loss)

Unrealized gain (loss) from foreign currency hedging activities

Pension adjustment gain

Unrealized gain (loss) from hedging activities

Pension adjustment gain (loss)

Comprehensive income

Our financial statements are denominated in the U.S.

Dollar currency.

Fluctuations in the value of foreign

currencies as compared to the U.S.

Our financial statements are denominated in U.S.

Fluctuations in the value of foreign currencies as

compared to the U.S.

Dollar may have a significant impact on our

comprehensive income.

foreign currency translation gain (loss) during the years ended December

31, 2022, December 25, 2021 and

December 26, 2020 was primarily due to changes in foreign currency exchange

rates of the Euro, British Pound,

Australian Dollar, Brazilian Real, New Zealand Dollar and Canadian Dollar.

The foreign currency translation gain

(loss) during the years ended December 31, 2022, December 25, 2021

and December 26, 2020 was primarily

attributable to a net investment hedge that was entered into during 2019.

Note 11-Derivatives and Hedging

for further information.

The foreign currency

translation gain (loss) during the years ended December 30, 2023, December 31,

2022 and December 25, 2021 was

primarily due to changes in foreign currency exchange rates of the Euro,

Brazilian Real, British Pound, Swiss

Franc, and Canadian Dollar.

The hedging gain (loss) during the years ended December 30, 2023 , December

31, 2022, and December 25, 2021

was attributable to a net investment hedge.

Note 11 – Derivatives and Hedging Activities

The following table summarizes our total comprehensive income, net of

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(in millions, except share and per share data)

Note 20 – Discontinued Operations

Animal Health Spin-off

On February 7, 2019 (the “Distribution Date”), we completed the separation

(the “Separation”) and subsequent

merger (“Merger”) of our animal health business (the “Henry Schein Animal Health Business”) with Direct

Marketing, Inc.

(d/b/a Vets First Choice, “Vets

First Choice”).

This was accomplished by a series of transactions

among us, Vets

First Choice, Covetrus, Inc.

(f/k/a HS Spinco, Inc.

“Covetrus”), a

wholly owned subsidiary of ours

prior to the Distribution Date, and HS Merger Sub, Inc., a wholly owned subsidiary

of Covetrus (“Merger

In connection with the Separation, we contributed, assigned

and transferred to Covetrus certain applicable

assets, liabilities and capital stock or other ownership interests relating

to the Henry Schein Animal Health

On the Distribution Date, we received a tax-free distribution of $

million from Covetrus pursuant to

certain debt financing incurred by Covetrus.

On the Distribution Date and prior to the Animal Health Spin-off,

Covetrus issued shares of Covetrus common stock to certain institutional

accredited investors (the “Share Sale

Investors”) for $

million (the “Share Sale”).

The proceeds of the Share Sale were paid to Covetrus and

distributed to us.

Subsequent to the Share Sale, we distributed, on a pro rata basis,

all of the shares of the common

stock of Covetrus held by us to our stockholders of record as of the close of

business on January 17, 2019 (the

“Animal Health Spin-off”).

After the Share Sale and Animal Health Spin-off, Merger Sub consummated the

Merger whereby it merged with and into Vets

First Choice, with Vets First Choice surviving the Merger as a

wholly owned subsidiary of Covetrus.

Immediately following the consummation of the Merger, on a fully diluted

basis, (i) approximately

% of the shares of Covetrus common stock were (a) owned by our stockholders

Share Sale Investors, and (b) held by certain employees of the Henry Schein

Animal Health Business (in the form

of certain equity awards), and (ii) approximately

% of the shares of Covetrus common stock were (a) owned by

stockholders of Vets

First Choice immediately prior to the Merger, and (b) held by certain employees of Vets First

Choice (in the form of certain equity awards).

After the Separation and the Merger, we no longer beneficially

owned any shares of Covetrus common stock and, following the Distribution

Date, will not consolidate the

financial results of Covetrus for the purpose of our financial reporting.

Following the Separation and the Merger,

Covetrus was an independent, publicly traded company on the Nasdaq Global Select

In connection with the completion of the Animal Health Spin-off, we entered into

a transition services agreement,

which ended in December 2020, with Covetrus under which we agreed to provide

certain transition services for up

twenty-four months

in areas such as information technology, finance and accounting, human resources, supply

chain, and real estate and facility services.

As a result of the Separation, the financial position and results of operations

of the Henry Schein Animal Health

Business are presented as discontinued operations and have been excluded

from continuing operations and segment

results for all periods presented.

The accompanying notes to the consolidated financial

statements have been

revised to reflect the effect of the Separation and all prior year balances have been

revised accordingly to reflect

continuing operations only.

The historical statements of Comprehensive Income (Loss) and Shareholders'

have not been revised to reflect the Separation and instead reflect the Separation

as an adjustment to the balances at

December 26, 2020.

In February 2019, we completed the Animal Health Spin-off.

During the year ended December 26, 2020, we

million in transaction costs associated with this transaction.

All transaction costs related to the Animal

Health Spin-off have been included in results from discontinued operations.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Summarized financial information for our discontinued operations

is as follows:

Selling, general and administrative

Operating loss

Income tax benefit

Income from discontinued operations

Net income from discontinued operations attributable to Henry Schein,

The operating loss from discontinued operations for the year ended

December 26, 2020 was primarily attributable

to costs directly related to the Animal Health Spin-off.

Note 23 – Related Party Transactions

for additional

The net income from discontinued operations for the year ended December

26, 2020 was primarily attributable to a

reduction in a liability for tax indemnification and a tax refund received

during 2020 by a holding company

previously part of our Animal Health legal structure and other

favorable tax resolutions.

Note 21 – Earnings Per Share

5 unchanged sentences

to basic earnings per share, except that it reflects the effect of common shares issuable

for presently unvested RSUs

and upon exercise of stock options using the treasury stock method

in periods in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and diluted

share follows:

for unvested RSUs and upon

exercise of stock options using the treasury stock method in periods

in which they have a dilutive effect.

A reconciliation of shares used in calculating earnings per basic and

diluted share follows:

Effect of dilutive securities:

6 unchanged sentences

Total anti-dilutive

securities excluded from EPS computation

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

securities excluded from earnings per share

Note 22 – Supplemental Cash Flow Information

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million and $

million of non-cash net unrealized gains (losses) related to foreign

currency hedging activities,

respectively.

million of non-cash net unrealized gains (losses) related to hedging

activities, respectively.

Note 12 – Derivatives and Hedging Activities

for additional information related to our total return swap and

interest rate swap agreements.

There was approximately $

million of debt assumed as part of the acquisitions for the year ended

Debt assumed during the year ended December 30, 2023 primarily

relates to the acquisitions of Biotech

Dental and S.I.N.

HENRY SCHEIN, INC.

NOTES TO CONSOLIDATED

FINANCIAL STATEMENTS

(in millions, except share and per share data)

Note 23 – Related Party Transactions

In connection with the completion of the Animal Health Spin-off during our 2019

fiscal year, we entered into a

transition services agreement with Covetrus under which we agreed to provide

certain transition services for up to

twenty-four months

in areas such as information technology, finance and accounting, human resources, supply

chain, and real estate and facility services.

Note 20 – Discontinued Operations

for additional details).

For the year ended December 26, 2020, we recorded approximately $

million of fees for these services.

to the transition services agreement, Covetrus purchased

certain products from us.

During the year December 26,

2020, net sales to Covetrus under the transition services agreement were

approximately $

Covetrus under the transition services agreement ended in December 2020.

In connection with the formation of Henry Schein One, LLC, our joint venture

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ended December 30, 2023, December 31, 2022 and December 25, 2021, we recorded

million, respectively in connection with costs related to this royalty

million, respectively, in connection with costs related to this royalty agreement.

As of December 30, 2023 and

December 25, 2021, Henry Schein One, LLC had a net receivable (payable)

balance from (to) Internet Brands of

December 31, 2022, Henry Schein One, LLC had a net payable balance

to Internet Brands of $

million and $

million, respectively, comprised of amounts related to results of operations and the royalty

The components of this receivable and payable are recorded within

prepaid expenses and other;

accrued expenses:

other, respectively, within our consolidated balance sheets.

During our normal course of business, we have interests in entities that we

account for under the equity accounting

During the years ended December 31, 2022, December

million, respectively, comprised of amounts related to results of operations and the royalty agreement.

components of this payable are recorded within accrued expenses:

other, respectively, within our consolidated

balance sheets.

have interests in entities that we account for under the equity accounting

In our normal course of

business, during the years ended December 30, 2023, December 31, 2022

and December 25, 2021, we recorded net

million, and $

respectively, to such entities.

During our fiscal years ended 2022, 2021

and 2020, we purchased $

million and $

million respectively, from such entities.

At December 31,

2022 and December 25, 2021, we had in aggregate $

million respectively, to such entities.

During the years ended December

30, 2023, December 31, 2022 and December 25, 2021, we purchased

million and $

million, due from our equity affiliates, and

respectively, from such entities.

At December 30, 2023 and December 31, 2022, we had an aggregate

million, respectively, due from our equity affiliates, and $

million and $

million due to our equity affiliates, respectively.

million, respectively, due to our

equity affiliates.

Certain of our facilities related to our acquisitions are leased from employees

5 unchanged sentences

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 8. Financial Statements and Supplementary Data