Good morning, ladies and gentlemen, and welcome to the Henry Schein Fourth 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, Carolynne Borders, Henry Schein's Vice President of Investor Relations. Please go ahead, Carolynne.

Thank you, operator, and my thanks to each of you for joining us to discuss Henry Schein's fourth 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, February 13, 2013. 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, I would like to turn the call over to Stanley Bergman.

Good morning, and thank you, Carolynne. Our fourth quarter financial results were highlighted by strong profitability with growth in diluted earnings per share of approximately 10%. We also are very pleased to be affirming guidance for 2013 that represents earnings per share growth of somewhere between 8% and 11%, in that range, compared with our 2012 results and, of course, excluding restructuring costs. Once again, we believe we've gained market share during the quarter in each of our business groups, driven by strong domestic results across the board and despite some challenges in certain overseas markets. Looking at our financial results for the year, there are a number of highlights worth noting upfront. So sales in 2012 increased 4.8% to just shy of $9 billion, while internal sales in local currencies were up 5.1% on a comparable basis. So 5.1% is at least twice the market growth rate in the markets that we serve. Diluted earnings per share increased nearly 12% to $4.44, excluding the new restructuring costs, so on an apples-to-apples basis. I'd like to point out that earnings per share for the year was $0.10 above the top of the guidance range we originally established back in November of 2011. So clearly, 2012 was an excellent year for Henry Schein and for Team Schein indeed. We also completed a number of strategic acquisitions during 2012 involving each of our 4 global business groups. As well, we are particularly proud of the fact that Henry Schein now serves more than 1 million dental, medical and animal health practitioners around the world. That is a significantly greater number than any other company in our space. I'll speak in greater detail about our fourth quarter and full year accomplishments in a moment. Suffice to say is we are very, very pleased with our performance and we feel very comfortable with where the company is heading. In fact, very excited with the direction. Our strategic plan that we started with for the period January 1, 2012, and ends December 31, 2014, is well under way. Both from an organizational point of view, we are aligned to support the strategic plan goals and also from an operational point of view, we have made significant progress in 2012 advancing the strategic plan. So very, very excited with where we're heading, very comfortable with the direction and with the team. And so Steven, perhaps give us some specifics on the financial side, and then I'll return on later with some more color on the business units.

Okay. Thank you, Stan, and good morning to all. I'm also very pleased to be reporting strong financial results and sales growth for the fourth quarter of 2012. Let me point out that the fourth quarter of last year, 2011, included 1 additional selling week compared with the fourth quarter of the current year. This occurs for Henry Schein once every 6 years, given that we are on a 52/53 weeks fiscal year end, and the year end is the last Saturday of December each year. We previously discussed this impact as it related to our 2011 growth versus 2010 on last year's Q4 call. So we have estimated the impact of the extra week on sales and in order to provide a more meaningful analysis, I will be thus discussing our internal sales growth in local currencies and adjusting for the impact of the extra week in last year's fourth quarter. So turning to our financial performance. Net sales for the quarter ended December 29, 2012, were $2.4 billion, reflecting a 2.9% increase compared with the fourth quarter of 2011. This consisted of internal growth in local currencies of 6.0%, acquisition growth of 5.0% and decreases related to foreign currency exchange and the extra week impact of 0.6% and 7.5%, respectively. Our sales of seasonal influenza vaccines did not have a material impact on our sales growth for the fourth quarter. Please note that we have provided the details of our sales growth in Exhibit A of our earnings news release that was issued earlier this morning. Our operating margin for the fourth quarter of 2012 was 7.5% and increased 55 basis points compared with the fourth quarter of 2011. If we exclude the impact of current year acquisitions, our Q4 operating margin expanded by a greater amount, by…

Thank you, Steven. Let me review with you some highlights from the quarter and the year for each of our 4 global business groups. So starting with the dental group. We are delighted to report continued strength in our North American Dental equipment with growth of nearly 22%, of course, adjusted for that extra week, and overall growth in North America Dental sales of 7%. As Steven mentioned, while the International Dental merchandise growth was healthy, a decline in equipment sales reflects a cautious spending environment in much of Europe, in particular in Germany and the Netherlands, as well as some weakness in Australia. Having said this, we are quite excited about the IDS meeting, which takes place at the end of this quarter. And as we know from historical purchasing patterns, we tend to have a depressed fourth quarter and first quarter in equipment sales in the year of the IDS. That's the fourth quarter of the year before and the first quarter of the IDS. So, hopefully, and we anticipate a far more robust second quarter European and particularly German equipment sales as a result of the IDS meeting, which again takes place at the end of this quarter. We did kick off 2013 with our Annual Dental Field Management Meeting in the first quarter of January. More than 170 Team Schein dental managers gathered to discuss our dental strategy going forward in 2013. At that meeting, I took the opportunity to introduce some company themes for 2013 and beyond, all based on our strategic plans -- our strategic plan for this period. These include the need for Henry Schein to become even more relevant to our customers, and the necessity of change and reinvention in the dental marketplace. Of course, Henry Schein is committed to being the…

[Operator Instructions] Your first question comes from the line of Glen Santangelo with Credit Suisse. Glen J. Santangelo - Crédit Suisse AG, Research Division: Stan, I just want to -- and Steve, I just want to ask a couple quick questions regarding your Q4 equipment sales in North America. Obviously, very strong, and when I was at the Greater New York dental show in December, it was pretty clear that your sales guys were marketing very aggressively the sunsetting of Section 179 and beating the medical device tax, and so I'm trying to gauge how much of potential 1Q sales might have been pulled into 4Q because, Steve, if I listen to your prepared remarks, it kind of sounds like you're suggesting 1Q should be the slowest growth here and -- the slowest quarter of the year and 4Q should be the most aggressive, if I heard that correctly, because currently the Street has it modeled exactly the opposite.

Yes. So, Glen, that's why I made the comment because we do expect -- and there's a few reasons, one of which you stated, on why we do expect Q1 growth to really be the lowest and to accelerate throughout the year. Let me just go through the 3 or 4 reasons why we believe that. One, if you look at Q1 last year was a very strong quarter so it's a more difficult comparison. Two, we typically make a fair amount of investment spend in new hires beginning in -- at the beginning of the year for activities throughout the year so they don't start paying dividends until later in the year. Three is the point you mentioned, Glen. We think we may have cannibalized a little bit of equipment sales in Q1. Also, on equipment in Europe, as you know, the IDS show is at the end of Q1, and that typically delays equipment purchases in Europe to after the IDS show, so that will have some negative benefit in Q1 and positive benefit in Q2 and Q3. And so those are the 3 or 4 main reasons. Specifically with North American Dental equipment, we just had an outstanding quarter for equipment sales. Yes, we marketed to the tax benefits of buying this year. We do think that helped us. It's really hard to gauge how much it helped as. And again, when I look at the equipment sales growth, it was very broad-based, traditional equipment, CAD/CAM, other areas, but certainly we think we got some benefit because Section 179 was scheduled to expire so we were advising clients of that. As it turned out with a new tax law that's passed, it did not expire. In fact, the U.S. government increased Section 179 benefits to $500,000 so there may be some opportunities late in the year in 2013 to talk about that since they increased it. But clearly, we think we got some benefit because of the tax changes that we anticipated at the end of the year. Glen J. Santangelo - Crédit Suisse AG, Research Division: Steve, maybe if I could just ask you one follow-up question. I mean, historically, we've tended to see some correlation in the direction of equipment sales and consumable sales as traffic sort of ebbs and flows through the dentist office and you kind of look this quarter and you saw your consumable numbers take another step back and we're kind of back to that growth rate in the 2009, early 2010 time frame. And I'm kind of curious to get your take, Stan, if you guys believe you're truly taking market share, what does that say about the growth rate in consumables? And are you surprised at the magnitude of the disconnect, I guess, between your equipment sales, your much stronger-than-expected equipment sales and potentially maybe slightly weaker than expected consumable numbers?

Yes. Glen, it's really hard to pinpoint this thing precisely into low -- into basis points. There are a couple of things that we need to also, if you want to peel the onion a bit further. The weather was -- played a role in, certainly in the Northeast, on visits. This I think is not only in dental but I think also in animal health. On the medical side, it shifted the other way because of flu. But -- and I think we had some dislocations because of weather and also the rhythm of the year end this year was a bit odd, given the time of Christmas and New Year. So you can imagine our management of the business units has tried to figure this out and spent a lot of time on it. And I think the market is probably a little bit more robust than these numbers indicate and so I think we need to wait for the longer, of course, we lost another day of business in the Northeast because of the snow this week -- what is -- this week, right? Yes, this week. So I think the calendar and the weather played somewhat of a difference -- somewhat of a role in making a difference here, this -- for probably an 8-week period of time. But the mood of dentists is not bad -- they wouldn't be investing if it were bad. I think some of the 20-something percent growth in equipment was the result of people being concerned that the tax laws would change, but you don't only invest in equipment because of that. I think interest rates are low. That's very helpful, but at the end of the day, I do think dentists are feeling quite good about the profession. The lab business seems to be okay. We've seen worse times in the lab industry. So overall -- I think Steven used the word solid. We debated that, whether that was the right word, and I'm actually quite sure that, that is the right word to describe the state of the U.S. visits to dentists. Of course, lots of changes as CAD/CAM picks up so the mix in consumables changes a little bit. Film, by the way, has fallen dramatically in the last year or 2 with the increase in digital X-ray. So there's a lot going on here, but I think we're in a solid state.

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

Stanley, just wondering if you could provide a little bit more color as to what's going on in the international markets. Obviously, there's some good explanations of slower purchases ahead of IDS, but what else are you guys seeing in Australia, for example?

Yes, I think, let's deal with Australia to start with. The market is quite solid. I think we had a couple of challenges on the equipment side. But, overall, I think the market is quite solid. I think the government is supportive of -- are okay. And I'm quite optimistic about Australia actually for 2013. We just reviewed that particular business a few days ago, actually on Monday with our dental team and I think we remain optimistic. By the way, the same is -- can be said on the Animal Health side for Australia and for New Zealand. If you look at Europe, maybe challenges in the U.K. and in France, but from our point of view, we remain quite optimistic. Germany, I think it's -- there's a slight dip compared to perhaps the previous years, but we are expecting, at least at this stage, a very good IDS. There was some anomalies in the Netherlands because of some change in reimbursement. We think that as the year goes by, that will find its way out. I have to say that the 2 challenges are Spain and Italy, but we are doing very well compared to the rest of the market in Spain and are doing quite well in Italy, but that market is significantly challenged. And just like Spain, we saw the marked decrease a few years ago so the comparables became easier. I think we start annualizing out in Italy in the next few quarters. So although the market is not booming, I think from a Henry Schein point of view, the comps will get easier as the year goes by. So overall, I think the U.S. is stronger, but I think Europe from a Henry Schein point of view should be positive this year.

Got it. That's good color. I appreciate it. And then just a quick one for Steve, and I can't remember if you made a comment about this in the prepared remarks, but SG&A was lower than expected. What was behind that? And is 20% a good run rate to use as a projection going forward as a percent of revenue?

Well, the operating expenses really benefited from the strong primarily dental equipment sales in the U.S. because a fair amount of our expenses on the dental equipment side are relatively fixed. We have a certain amount of service technicians. We have a certain amount of equipment sales and service centers. They don't increase or fluctuate with sales volume. Yes, commissions do, but that's probably the only thing that does. So because of the very strong equipment sales growth in Q4, we got greater leverage on operating expense, that's the primary reason. Our goal again when you're modeling is we do expect to get operating margin expansion on an annual basis. Historically, we've talked about 30 to 50 basis points with the lion's share of that coming on the OpEx side. On the other hand, because of -- depending on how sales growth is, it could be on the lower end of that range. It was for most of 2012 because of lower sales growth, but we still expect to get margin expansion on an annual basis and that's excluding any new acquisitions in the current year, which could increase or decrease margin depending on the acquired company.

Your next question comes from the line of Michael Cherny with ISI Group.

So I just want to dig in a little bit to the competitive dynamics in the medical marketplace. You've had some moving pieces from your competitors there. You obviously point to taking share. Can you talk a bit about, especially over the next 12, 18, 24 months, how you see the competitive dynamics playing out, particularly against the backdrop of health care reform or what that means from an overall growth perspective, if you kind of modeled that already, thinking about it for the [indiscernible]

Yes, I think it's a very good question. So I think from a broad-based point of view, I think it will be more focus on wellness, prevention and therefore, visiting the primary care physician. I think that's the case with respect to health care reform, which will kick in, I think, a year or so down the road, but more importantly from insurance carriers. They're encouraging more of that. So that means there will be more visits to primary care physicians, more preventative visits to specialists as opposed to visits to the emergency room as procedures move out of the emergency room to the office-based environment. So that's one dynamic. The second dynamic is we see a continued acceleration on the consolidation of practices. Small practices becoming big ones, more practices going into IDNs, group practices where the specialty or multi-specialty emerging and so the practices getting bigger. About 5 years ago, we -- for those shareholders that have heard this before, forgive me, we conducted 2 independent strategic studies. One is to determine the best practices that we should be supporting from a Henry Schein product sales point of view. Some practices such as dermatology and gynecology and anesthetics and knees, ankles, braces as we call it internally. Those are the areas we started focusing on as a result of that study. The second was to try to understand the way health care would be delivered in the years to come. And we clearly understood that the practices would get bigger and this is an area we've focused on in the last few years. So our medical group has done well., Of course, some of the growth has come from products in those areas that we are focused on, but a big part of our growth is -- and probably most of it is coming from servicing what we call the upstream part of the market, which is these newer entities, these larger entities, specialties groups, and the IDNs and the large group practices. And we've done well in that area. So we believe in the strategy, we believe, actually, we are the best company to service these needs because we have these very large distribution centers, 5 of them to service the whole country. They are highly leverage-able. The cost in establishing centers is largely spent so the more volume is put through these centers, the lower the cost is, the better the operating margin is, and we believe we have tools, really, that are unique for this marketplace, believe we have better tools than anyone else, and we're very, very excited about our medical business.

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

Steve, I just wanted to revisit the SG&A in the quarter. As you pointed out, this is the lowest percentage we've seen in several years. I was wondering -- it sounds like equipment played a role there, but I was wondering how much synergies from some of your deals, larger deals you've done over the last couple of years might have played into this, specifically thinking about AUV and the like.

So the acquisitions over the last year or 2 have helped. Although it's not as big an impact as the other item I mentioned, which is the strong sales growth and equipment, and a third thing is that we have continued focus on ensuring that we optimize our activities, really, everything that we do, we constantly look at how we can be more efficient. But to be fair, the biggest benefit came from the really strong equipment sales growth.

Got it. And then if I could change gears over to vet. I want to get your perspective around the growth outlook, another strong quarter, particularly in the U.S., so I guess as you're a little bit of a victim of your own success as we move into 2013, some pretty tough comps, just how are you guys thinking about the momentum we saw in '12 as we go into '13 around vet and does the current demand out there support continued similar growth that we've seen?

Well, we definitely assume or believe that we will see strong growth in our Animal Health business, both in North America and in Europe. But also we do believe it will moderate somewhat. We can't possibly continue growing at the rates that we're growing, so it will moderate although we do expect it to be very strong, probably will be strongest growth -- continue to be our strongest area of growth. And remember, there is some impact in the North American Animal Health business because of changes with flea and tick products that had strong growth this year, so that will moderate. So I don't think we can expect the same growth rates. It will come down a little bit but it's still going to be very, very strong, and we're very happy about the potential there.

Just to add a little bit more color to that, and I think Steven set it up correctly. There were some switches between agency and regular GAAP book sales last year, specifically related to the Novartis FDA challenge. If you peel that out, we grew at somewhere around internal growth 5%, 6%, probably closer to 6.5% internal growth. There was also a very favorable first quarter because of the weather. So I think this needs to be taken into account. Having said that, we believe the market is growing in our sector in the mid-single digits and we will continue to gain market share as we have. And remember our focus is primarily on the companion animal side and so when comparing us to others, you need to take that carefully into account. So we believe we're -- the market is growing in the mid-single digits, we will gain market share and are very, very pleased with the U.S. Butler Schein Animal Health business. It's doing extremely well both from a market position point of view and sales results point of view.

Your next question comes from the line of John Kreger with William Blair. John Kreger - William Blair & Company L.L.C., Research Division: Steve, could you just remind us what of your entities flow through the equity earnings and affiliate line? it seems like that was a pretty big negative swing factor in the quarter year-over-year.

Sure. So it's actually a little bit of a complex answer. There really are 3 factors that impacted the quarterly results for the equity in earnings of affiliates. The first is one of the entities, we increased our ownership and no longer is reported in that line because it's now a consolidated entity. So it comes out of the equity in earnings of affiliates, it's part of consolidated earnings. Second reason is we did have in one of the affiliates, we did have some one-time costs that negatively impacted the quarter. And the third reason is because of certain tax changes on a comparable basis versus last year, where now some taxes are included in the equity and affiliate line versus prior periods where it was not. But I think where you're really going is so what can we expect going forward and maybe I should just give some guidance on that. And we do expect that the equity in earnings of affiliates in 2013 will probably be in the $8 million to $9 million range, seasonality similar to our core business seasonality. So it's going to be a little bit lower than prior years, again mostly because of the entity that slipped out of that line item and now is a consolidated entity. John Kreger - William Blair & Company L.L.C., Research Division: Maybe just a quick follow-up. How are your dental specialty businesses doing relative to dental overall?

So we -- dental specialties, they're doing well. Remember some of those markets, namely implants and orthodontics, are still probably negatively impacted to a greater extent than general dentistry because of economic conditions, especially in Europe. We have somewhere north of $400 million of specialty business on an annual basis. One of the things that we're trying to do because it's not just in the Camlog and the Ortho Organizers businesses, there are specialty products in the core businesses. And one of the things we're looking to do is to give a little bit greater visibility on that going forward for it. But we're definitely gaining market share. I don't have a specific number, John, though, on how much for it versus the general dental market.

Your next question comes from the line of Jeff Johnson with Robert Baird. Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division: Steve, just a couple of clarifying questions. It's all I've got -- all I have left here at this point, but dental equipment, I mean, obviously we don't expect the 22% to continue and you did talk about maybe pulling some into fourth quarter out of first quarter, but we've also heard dental equipment backlog is pretty good this quarter as demand there is still pretty decent. So I would assume you still expect some decent growth in the first quarter even if it's nowhere near that 20% level, is that a fair comment?

No, it's a very fair comment. Specifically, our North American equipment backlog increased a bit from Q -- at the end of Q4 so we did see some increase there, but clearly it's not going to be 21%. It will be lower because we did cannibalize a little bit, we believe. But we're still expecting good growth in dental equipment sales in Q1. Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division: Fair enough. And, Stanley, you brought up the Novartis point, maybe quantify that at, I don't know, 500 to 700 basis points of benefit or so in the year, you could back into that anyway. Is there any chance as Novartis comes back online that the exact opposite happens where if you guys are growing core kind of 5%, 6%, 7% but then you have that headwind of going back to an agency business with Novartis that pulls the reported growth rate down to 1% or 2%.

I mean, I can't talk about anything specific with regard to a specific supplier. I'm not even sure -- I think we may even have a nondisclosure agreement there, I don't know. But Novartis is committed to coming back and Novartis, I think, is committed to working closer with us. So I would be shocked if this would impact our profitability and, of course, as it impacts sales, we will discuss the -- any conversion from one methodology of sale recognition to another with shareholders, but I would be shocked if it has an impact on profitability. Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division: Okay. And last question, I promise here, Steve, just on one more below-the-line item, net interest and other was up maybe $1 million more than we were thinking and up kind of at levels we haven't seen for a couple of years. What was the driver there?

I'm sorry, which line were you referring to? Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division: Net interest and other.

It's a combination of things. The interest expense is down because of lower interest rates and lower borrowing levels. We also -- I think that's the main reason, there may be miscellaneous other games in the -- other gains but it's all very small. Jeffrey D. Johnson - Robert W. Baird & Co. Incorporated, Research Division: Should we expect that $4.5 million to kind of continue going forward after -- or I guess, maybe adjusted a little bit for the debt refi that will be coming up?

Yes. We should expect that the interest expense, just to give you a little bit of detail. There's a little over $200 million, something like $220 million of debt that we are refinancing. We don't have a specific rate that will be lower, but it could be as much as 2 percentage points lower interest rate, and so that will have a direct benefit starting probably at the end of Q1 when we expect to complete that.

Your last question comes from the line of Brandon Couillard with Jefferies. S. Brandon Couillard - Jefferies & Company, Inc., Research Division: Steve, just curious if you've got any update on the operating cash flow or free cash flow outlook for next year?

Yes. So as I said in the prepared remarks, our operating cash flow was negatively impacted by about $150 million because of forward inventory buy-ins related to potential price increases for the medical device excise tax. So, really, if you look at our cash flow on a normalized basis, it would be $150 million higher for 2012. We expect that to reverse in 2013 and get back to normalized operating cash flow, plus this reversal. And the second thing that I pointed out, if you're looking at free cash flow, Brandon, we do expect capital expenditures to bump up a little bit. There is a new building planned in the United Kingdom, which is about $15 million, it's not an ongoing CapEx so we do expect CapEx to be in the $60 million to $65 million range this year versus last year, which was over -- a little over $50 million. So again we have a little one-time pop in CapEx because of that new building and then it should resume back to normal CapEx levels going forward. S. Brandon Couillard - Jefferies & Company, Inc., Research Division: All right. I appreciate the color on the equity line outlook for the year. Any chance you could give us a range on the minority interest line as well?

I would say minority interest should increase at a slightly faster growth rate than net income growth rates because it does reflect the underlying growth of the businesses that are consolidated plus the new business that's part of the consolidated entity.

So, thank you, ladies and gentlemen, for your interest. As I said a couple of times during the call today and I think you can tell from Steven's tone as well, we believe the business is in good shape. We believe that we have a good strategic plan that we're executing well against. Of course, we do have a couple of challenges, namely the European economy, and we're not 100% certain about the degree of bounce-back in the U.S. economy and that's why we want to remain relatively conservative with our guidance, although we are enthusiastic internally to continue to make good progress on gaining market share and increasing profitability in all of our business units. So we look forward to speaking to everyone, I think, in about 60 days, right?

That's right.

Because this is the quarter with -- we report just a little later because it's the year end. And thank you very much. Of course, Steven is available to chat at 61-843-5915, Carolynne at...

631-390-8105.

And Susan Vassallo at 631-843-56...

5 5.

5 5 6 2. Thank you, everyone.

This concludes today's conference call. You may now disconnect.