Good morning, ladies and gentlemen, and welcome to the Henry Schein Third Quarter Conference Call. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Susan Vassallo, Henry Schein's Vice President of Corporate Communications. Please go ahead, Susan.

Thank you, operator, and my thanks to each of you for joining us to discuss today's Henry Schein's third quarter results. With me this morning are Stanley Bergman, Chairman and Chief Executive Officer of Henry Schein; and Steven Paladino, Executive Vice President and Chief Financial Officer. Before we begin, I would like to state that certain comments made during this call will include information that is forward-looking. As you know, risks and uncertainties involved in the company’s business may affect the matters referred to in forward-looking statements. As a result, the company's performance may differ from those expressed in or indicated by such forward-looking statements. Also, these forward-looking statements are qualified in their entirety by the cautionary statements contained in Henry Schein's Securities and Exchange Commission filings. The contents of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 7, 2012. Henry Schein undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. [Operator Instructions] With that said, I would like to turn the call over to Mr. Stanley Bergman.

Thank you, Susan. And good morning, everyone, and thank you for joining us for our third quarter conference call. We are very, very pleased to have gained market share in each of our 4 business groups during the third quarter. Each group also reported accelerated internal sales growth, that is in local currencies, compared with the second quarter and after you exclude the impact of seasonal influenza vaccine from our Global Medical business. So adjusting for flu, which we'll talk about separately, and the results there are quite good, too, you'll see that internal growth has been positive in all of our business units and we have gained market share across the board. We are also pleased today to be raising the low end of our 2012 EPS guidance range and to be introducing guidance for the year 2013 that represents growth in EPS of approximately 10% to 12% compared to the midpoint of our 2012 guidance range, and Steven can provide further color on that. Looking at our business operations through 2 strategic acquisitions, we recently enhanced our dental software offering, in particular to dental schools, and expanded our veterinary footprint to include Ireland. These transactions illustrate our commitment to advanced technology and geographic expansion. Of course, these are 2 key initiatives in our 2012 to 2014 Strategic Plan. I'll provide a little bit -- further thoughts on these acquisitions and some commentary on each of the business groups in a moment. So overall, we're quite pleased with our results for the third quarter. We think each of our business units is marching in a very solid way towards implementing our strategic plan, making progress. And so let me now turn the call to Steve to provide further information on our quarterly financial results. Steve?

Okay. Thank you, Stan, and good morning to everyone. I'm also pleased to be reporting overall strong financial results and sales growth for the third quarter of 2012. Our net sales for the quarter ended September 29, 2012 were $2.2 billion, reflecting a 5.7% increase compared with the third quarter of 2011. This consists of 8.9% growth in local currencies and a 3.2% decline related to foreign currency exchange. In local currencies, internally generated sales were up 4.4%, and our acquisition growth was 4.5%. As Stanley mentioned, I'd like to point out that our seasonal influenza vaccine sales were lower this quarter than in the prior year's third quarter, although our profitability was higher. In order to provide more meaningful commentary, I will be discussing sales results including and excluding this impact. So excluding sales of seasonal influenza vaccines from both periods, our net sales increased 6.4% and 9.8% growth in local currencies including a 5.1% internal sales growth rate. You can see the details of our sales growth that are contained in Exhibit A of our earnings news release that was issued today. Our operating margin for the third quarter of 2012 was 6.7% and declined slightly by 8 basis points compared with the third quarter of 2011. However, excluding the impact of current year acquisitions, our operating margin actually expanded by approximately 16 basis points compared with the prior year. And as we have previously discussed, acquisitions, until integrated, typically carry lower margins than our existing businesses and serve to reset our base operating margins. If we look at our operating expenses as a percent of sales, they improved by 44 basis points as we continued to control and leverage our expense structure. This improvement was offset by a decline of 52 basis points in gross margin, and…

Thank you, Steven. Let me review with you some highlights from the third quarter and recent weeks from our Global Dental, Global Animal Health, Global Medical and Technology and Value-Added Services business groups. So let me start with the dental group. We believe that our dental -- our Global Dental group gained further market share in all of its business despite a challenging environment for the dental equipment in many of our markets. As Steven mentioned, sales of dental equipment declined fairly sharply in Italy during the quarter. And let me remind our shareholders that we're really the only national equipment provider in Italy. And having said that, in the scheme of things, the Italian business is not material to the entire Henry Schein business but is an important part of our European dental business. And we also saw modest decline in equipment sales in Germany versus a tough comparison to the prior year, which benefited of course from the biennial IDS trade show, which takes place again this coming March, this coming 2013 March. So we expect to see positive growth at that time. We remain confident in our dental strategy and look forward to continue to gain market share across the board in our Global Dental business. And as Steve also noted, once again, North American dental equipment sales growth was particularly strong. At Henry Schein, we place considerable focus on advanced technology products. These products help our clients deliver high-quality patient care, while at the same time operating efficient practices. These products are also positioned to allow for the integration of various aspects of the practice, the various areas of practice management, and it's equipment that access to integrator, and it ideally positions -- the equipment and, of course, the software, shall we say -- and ideally…

[Operator Instructions] Your first question comes from the line of Elliot Feldman with Barclays.

Just a couple of quick questions, if I could. Maybe, even Stanley, for you, on the Medical side first. Obviously, a large acquisition taking place in the physician marketplace. Wondering if you have any perspectives broadly about going forward potentially how this transaction could impact you guys and maybe shift the competitive dynamics there, or is it still a little bit too early to tell there?

Yes. Unfortunately, we do have competition, and there will always be competition out there. So I'm not sure whether the direct merger between the 2 companies you mentioned will impact us in any material way. Having said that, about 3 or 4 years ago, Henry Schein spent time undertaking 2 studies. One study was to review the methodology that we expect health care to be delivered in, in the future and how it would evolve. And the second was a study to determine what specialties to be focused on. We started implementing programs, strategies to support the results of those, the findings of that study. And I think we've done very well in focusing on the new entities, on the IDNs, the group practices, different kinds of ambulatory services that are now being used to deliver health care. And we're watching the acceleration of these trends. I think we've done very well with regard to capturing a lot of this business because we have very unique software services. And of course, our logistic capabilities in this regard are excellent. We expect to continue to make progress in this area. I think our results are quite clear -- 8% internal growth if you take out the flu vaccine. And I think you can expect us to continue to do well with these newer entities, as well as with the specialty areas that we've embarked on or focused on. So we remain very excited about our Medical group and are more focused on executing our plan than what our competition is doing and how they're merging. Having said that, I am sure that we will get some telephone calls from customers and others in the marketplace asking us to elaborate on how we are going to be operating, and I think we have a very good answer for the marketplace and very, very focused on executing our strategies in this area. We remain very excited, by the way, about our medical business and expect to invest heavily in that area over the years to come.

Sure. And one quick follow-up on that, maybe around capital allocation. As we look at 2013 and beyond, and you guys have clearly made some acquisitions here, consistent with your prior comments. Is the priority still M&A, particularly overseas as you guys continue to build out that scale that you talk about, Steve and Stanley, to build out your Dental and Animal Health platforms, particularly overseas and in Europe? And again, this is for Steve, really quick. Any share repurchase assumptions we should start building into our models for next year embedded in that guidance?

Okay. So on capital deployment, 2 things. One is similar to recent history, our goals are continue acquisition activity. It's not necessarily focus more outside the U.S. It happens to have been more outside the U.S. because it's a, a more fragmented market; b, there are no pan-European players other than Henry Schein so there's not a lot of additional competition for assets; and c, we have a smaller market share in Europe than we do in the U.S. But our focus is not necessarily outside the U.S. We'd like to do both in and outside the U.S. So ideally, with our free cash flow in the $500 million range, we'd like to spend $200 million to $300 million on an annual basis for acquisitions, cash acquisitions. We'd also like to spend an additional $200 million to $300 million in stock buyback. And as I said in the prepared remarks, for 2012, we'll be at the high end of that range, and we'd expect to continue it on an ongoing basis as a way to return capital to shareholders.

Your next question comes from the line of Kevin Ellich with Piper Jaffray.

Stanley, just wondering if you could give us some color as to what's driving the market share gains in both Dental and Animal Health segments. Are you taking share from some of your larger competitors or are you taking it from the small guys?

Well, I don't think I can give you specifics on the breakdown between whether it's coming from large competitors or our small competitors. But I would say in all 3 of our global business units, we are quite agnostic as to where the business was coming from. And I would say that our solutions-based sales approach of fielding what I think is today something like 3,400 field sales consultants spread out in the U.S. in Europe, Australia, New Zealand and now in Asia, all with the same goal of helping practitioners operate a better business so that those practitioners can provide better clinical care, train those field sales consultants, giving them the tools to get the job done, ranging from consulting capabilities to software to financial services software, practice management software and other kinds of software, prosthetic solutions in the dental world rather than selling a particular hardware, coming out with solutions. I think all that, the direct mail, the telesales capabilities allowing the field sales consultants to be available for consulting rather than ordertaking, real sales consultants working with key manufacturers, suppliers to introduce new products, all those working across the board and we've invested heavily in these areas for 1.5 decade, maybe 2 decades and it's working. So I don't want to get into any specifics as to which distributor in what country, which location we’re taking business from, but I would think that in practically every one of our markets, we're gaining market share from some big competitors and some small competitors. So I don't think it's any easier or harder to get business from a small versus a large competitor. The small competitor may not have the tools but may have a deeper local community relationship. The bigger ones may have the tools but may have lost a little bit their way. So I would say from sitting here right now thinking of our 3 business units, I would say we're getting little bits of market share across the board.

Got it. That's helpful. And then just a quick question for Steve. Looking at the cash flow, you gave us some detail on the working capital and inventory. So we're looking at possibly north of $300 million of operating cash in Q4, and then I see inventories are building on the balance sheet. Is there anything going on there in terms of special stocking for the Animal Health pharmaceuticals or vaccines or can you give us some color around that front?

You know we did see a little bit of inventory increases in Q3 that may continue in Q4. We just saw some good buying opportunities. It was really on a spot basis, so I can't say it's necessarily something that will continue. But we do have a sophisticated procurement model that when we see opportunities, we do buy in slightly. From an inventory risk perspective, it's virtually 0, I would say, because we're buying in a few weeks’ extra supply, so there's really not an inventory risk and because capital costs are low, it's wise from a financial perspective. But I wouldn't say there's anything that I could point to, 1 or 2 things that would drive that. It's really being opportunistic in the market.

Your next question comes from the line of Glen Santangelo with Crédit Suisse. Glen J. Santangelo - Crédit Suisse AG, Research Division: Stan, I really appreciate all the detail you gave on the different business segments. But as I think about sort of the growth, the internally generated growth numbers you're putting up in your Medical segment in the mid to high single digits, I just want to -- curious if you can elaborate a little further, I mean. Were there any incremental products categories in either of those segments that may have been driving additional growth? Or do you really feel like it's just robust market growth with some market share on top of that? And I guess if you can give us a sense for how fast you think those 2 markets are growing, then we can figure out maybe how much of it is maybe benefiting from market share.

Yes, Glen. That's a good question, so let me bifurcate it. On the Medical side, I don't think there's any one product. I mean, you've got to take out flu, right? I think there are in fact some challenges in that market because there's a shortage of certain pharmaceutical products, namely in the anesthetic area, and that tends to be go lumpy right now because -- and I think we had a little bit of suppression of sales in that area. But overall, I would say that on the Medical side, it's not product-driven. It's more driven from a movement of market share in some of these newer entities towards Henry Schein. And I would say that our core business in the small practitioner arena is quite stable, and so the growth is coming from this investment we started making a few years ago in that area and also I would say from some of the specialty areas that I think we're gaining market share. It's just a matter of focus. But I don't think it's from the introduction of any major product offering per se. On the Animal Health, it's a little different. I think we said this on prior calls. When looking at the Animal Health area, there's a couple of things you have to take into account. First, you've got to x out the large animal side in North America in particular. I don't think it's that important in Europe, but you have to x -- because Europe, we have a little bit of that, but the mix is not as profound as in the U.S. So in the U.S. when you look at the market growth of Animal Health, please take out the large animal health component and look at us from a pure companion animal…

The first thing is I want to be very, very, very careful to start a competitive dialogue through Wall Street analysts between one manufacturer and another, so -- because we have seen this in dentistry. It's a very small industry and all sorts of positions can be taken by analysts, and it's not a good thing. It's not good for the dentist and it's not good for our industry. First, let may lay the philosophical background. Henry Schein has been in the solutions business for years and years and years. Over 2 decades ago, we saw that there was an opportunity in the practice solutions in the software area. There were 800 or 900 different systems in the early 90s. Henry Schein backed one, Easy Dental, and whether it was the best software or not, I can't tell you. But what I can tell you it was the best solution and I think we brought automation to the dental office. We then did the same in the electronic record medical arena for dentists with the Windows product of Dentrix. Whether it was the very best software or not, I cannot tell you. But what I can tell you it was the best solution. And supported by Henry Schein, having helped this simplified way of viewing it but a help that’s available to practitioners and making automation of the practice easy. It's the same philosophy we have on the practice solutions area. We implemented. We outlined and installed a practice solutions -- global practice solutions enterprise about a year ago, and we've taken some of our best managers, and I covered that in the last call, and put them into this area. We are more interested in the solution than any one's particular software or any one's particular hardware. At the…

Your next question comes from the line of David Larsen with Leerink Swann.

Steve, the SG&A cost this quarter came in better than what I was looking for and it looks like a pretty decent sequential decline. Can you just comment on that? Is there any streamlining going on between North America and Europe distribution?

Sure. David, there was. Remember, we did some restructuring activities, and we are getting now the benefit of the restructuring activities, so that's, I think, the driver. We're also -- given the economic times, we're also really looking to manage our expenses very tightly. We don't have any hiring freezes or things like that, but we really justify any new hire that comes on board. We really want to make sure that we're not having our expense structure get ahead of market growth and sales growth activity, so it's really a combination of the restructuring and really trying to manage expenses very tightly, so it's both activities. And we're hopeful that we'll continue that into the next year as we do think the economic climate will continue to be choppy and difficult.

Great. And then also, your global technology growth rate, 11.2%, can you just talk about that? Are you seeing any continued benefit from the high-tech act like some of the doc offices? Or is that being driven mainly to practice management solution sales of dental offices. Could you just touch on what drove that growth rate, please?

Sure. It's really not on the medical side related to EMR. We have a small business there, so it's really -- it's not that. It's really driven by our dental business, as well as we included in the value-added service part of the technology our financial services business. Both of them had very strong growth. On the technology side, it's really not driven by new units. It's really driven by additional recurring revenue activities, annual technical support, claims processing, credit card processing, things like that, billing for our customers' patients. So really, we like that because it is on the recurring revenue side and it's both domestic as well as international. And you know, if you look historically, we've had very strong growth in this area for a number of quarters. And we do expect it to continue given our platform of users, where we have really the largest global platform of users in the dental, medical and animal health -- excluding medical. Medical, there’s some bigger ones. But in dental and animal health, we certainly have the largest user base.

Your next question comes from the line of Robert Jones with Goldman Sachs.

So Stanley, it sounds like, if I'm hearing you correctly on this call, maybe a little more focused on M&A in Medical internationally. If I look domestically, the most fragmented market across your businesses to me would seem to be Medical. And obviously, in light of the proposed acquisition in that space, I was wondering if maybe you could just comment on your appetite for consolidation or your view on consolidation of the medical distribution space, particularly in ambulatory here domestically.

Yes. I think we are and have been committed a couple of decades now to continuing to consolidate all 3 markets: dental, medical, animal health and of course, together with value-added services, in this country and abroad. So we will continue with our strategy of acquisitions, I think we do about 20 a year, and we also will continue with our strategy of focusing resources on those areas in these markets that we think lend themselves towards internal growth. We have a very good strategic plan that we started with from January 1, 2012. And at the end of 2014, I think we know exactly what we're going to do. We've got our 3 business groups: Dental, Medical, Animal Health, as well as our practice management -- Value-Added software businesses focused on global agendas. And in that regard, I think you can expect acquisitions across the board in this country and abroad, all in pursuit of advancing the office-based practitioner business and the ambulatory business that we are focused on. I don't think we're going to stray beyond that. We may enter into dialogue and alliances with different people, but that's what we're going to focus on.

That's helpful. And then Steve, if I could maybe just ask one a little bit around the outlook. I just wanted to see if you would be willing to share a little bit more segment-level detail behind the guidance, maybe even qualitatively. As I look at Dental specifically, this year looks like you're on pace for global internal sales growth somewhere around 3%. I was wondering based on what you're seeing today how you're expecting that to trend as we move into 2013.

Sure. Dental, I wouldn't say any major changes in dental, although we are trying to be cautious in our outlook in European dental, especially in some markets like Italy, which are going through some difficult times. I would say, when you look at Dental, Medical and Animal Health businesses, I think you'll see similar growth rates that we're expecting as over the last couple of quarters that we've gotten. There may be some minor upticks and downticks individually, but I think from a trend perspective, very similar to what we've seen over the last couple, few quarters.

We do have time for one more question from the line of John Kreger with William Blair. John Kreger - William Blair & Company L.L.C., Research Division: Just expanding on Bob's question. Steve and Stan, if you look across your 3 major segments, other than Italy, are you seeing any other areas where you're noticing there's deterioration or maybe even strengthening, particularly in Dental?

Yes, I think it's sort of mixed bag, John. I don't think there's anything that's really bad other than Italy. And I don't think there's anything that's really, really good other than perhaps China. So the middle is somewhere around flat to slightly positive. So if you look at our European business, you'll see that the consumables were up by 3.4% internal growth. That definitely takes into account that we're gaining market share. Whether the market is growing by 1% or so percent, I can't tell you because the data's not available but it's not growing by 3%. And I don't think its aggregates are going backwards on the consumables side. So I think France is okay. The U.K. has challenges. We covered that before. I think we're gaining market share there. And Germany on the consumable side is okay. I think we should be more or less okay going for the balance of this year. But generally, the market on the equipment side kind of freezes until the IDS and then picks up again. That's just the way the German market works. Of course, Spain is terrible, but it's been terrible for a while, so the comparables are not that bad. There's some odd things going on in the Netherlands relative to reimbursement. I think that should be sorted out. And Australia and New Zealand, it's a funny economy. It's bifurcated. There's a part of the economy that does very well because of the commodities. In that part, we're doing well. The high-end dentists are doing quite well. And then you've got the part of the economy where people are just not keeping up because of whatever it is -- lack of employment, et cetera. And so dentists in those parts of Australia are not doing well. New Zealand is okay. And so as I'm thinking through the world, I don't see any areas that are particularly bad other than, as you pointed out, Italy and Spain. And I don't think there's any booming areas really. Canada's okay. It's been okay throughout the recession period, and so if you look at Animal Health, I think we grew internally. It's something like 6% outside of the U.S. That's definitely a growth in market share. That's definitely not the rate of growth in those markets, again the markets may be growing at 1/2 that number. So overall I think we're gaining market share. And the markets we're in are, I mean, positive territory but not hugely positive. John Kreger - William Blair & Company L.L.C., Research Division: That's really helpful, Stan. One last question. I don't think you've kind of talked about how the specialty dental markets are performing relative to the general dentistry. Are you seeing any interesting changes there?

Yes. So of course, Henry Schein can't be a gauge because our market share is relatively small. But I do think, at least in the third quarter, from what our management is telling us, is that orthodontics and implants did not do well as a market. I’m just referring to Henry Schein, and even the endodontic to some extent. There was some kind of a malaise in that area in the third quarter. At least, that's what our management is telling us. We're not the biggest player. But in aggregate, we started to have several hundred million dollars of business. So I think we can talk with a little bit of authority, but we are by no means a big player in any of those markets. In specific countries like Germany in implants, we are a big player. And in endodontics in the U.S., we're a pretty good player. But generally, I don't think we are impacted that much by the economics in those particular sectors rather than the impact of a relatively small market share gaining market share. So we end up in the positive territory by and large, but having said that, I think the underlying market is not necessarily doing that well. At least, that was in the third quarter, and I think we're a little more optimistic in the fourth quarter from a market point of view. Sorry, we ran out of time. So thank you, all, for your questions. I think Steven's available at (631) 843-5915. I don't call the number that much anymore because you can walk into my office, and Susan at 5562. And of course, as usual, we'd be very pleased to entertain specific questions from those who are interested in our business. We remain optimistic about the business. Hopefully, now that we’ve left the U.S. elections behind us, there will be certainty and it will be perhaps a bit more economically positive environment. Sandy did have, of course, an impact on the business; not material. Our overall sales seems to be holding up, but I think on the one hand, I think patients are going to have a challenge going to see some doctors. But on the other hand, there will be more investment in equipment going forward. So we don't know the full impact. It's not going to be material to Henry Schein as a company, but there will be I think some impact on specific businesses and specific locations. So we're very excited about the company. We're executing well through our strategic plan. The morale is good, and I look forward to seeing some of the people on this call at the greater New York meeting at the end of this month. And if not, have a good balance of the year and a happy holiday season. Thanks.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.