{"url_path":"/sec/hsic/10-k/2026/item-7a","section_key":"item-7a","section_title":"Item 7A Quantitative and Qualitative Disclosures About Market Risk","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-24","source_url":"https://www.sec.gov/Archives/edgar/data/1000228/0001000228-26-000013-index.html","accession_number":"0001000228-26-000013","cik":"0001000228","ticker":"HSIC","issuer_name":"HENRY SCHEIN INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1000228/0001000228-26-000013-index.html","primary_entity_key":"0001000228","primary_entity_name":"HENRY SCHEIN INC"},"word_count":1110,"has_tables":false,"body_markdown":"ITEM 7A.\n\nQuantitative and Qualitative Disclosures About Market Risk\n\nWe are exposed to market risks, interest rate risks as well as changes in foreign currency exchange rates as\n\nmeasured against the U.S. dollar and each other, and changes to the credit markets.\n\nWe attempt to minimize these\n\nrisks primarily by using foreign currency forward contracts and by\n\nmaintaining counter-party credit limits.\n\nThese\n\nhedging activities provide only limited protection against currency exchange\n\nand credit risks.\n\nFactors that could\n\ninfluence the effectiveness of our hedging programs include currency markets and\n\navailability of hedging\n\ninstruments and liquidity of the credit markets.\n\nAll foreign currency forward contracts that we enter into are\n\ncomponents of hedging programs and are entered into for the sole purpose\n\nof hedging an existing or anticipated\n\ncurrency exposure.\n\nWe do not enter into such contracts for speculative purposes and we manage our credit risks by\n\ndiversifying our investments, maintaining a strong balance sheet and having\n\nmultiple sources of capital.\n\nForeign Currency\n\nThe value of certain foreign currencies compared to the U.S. dollar may\n\naffect our financial results.\n\nFluctuations in\n\nexchange rates may positively or negatively affect our revenues, gross margins, operating expenses\n\nand retained\n\nearnings, all of which are expressed in U.S. dollars.\n\nWhere we deem it prudent, we engage in hedging programs\n\nusing primarily foreign currency forward contracts aimed at limiting\n\nthe impact of foreign currency exchange rate\n\nfluctuations on earnings.\n\nWe purchase short-term (i.e., generally 18 months or less) foreign currency forward\n\ncontracts to protect against currency exchange risks associated with intercompany\n\nloans due from our international\n\nsubsidiaries and the payment of merchandise purchases to foreign\n\nsuppliers.\n\nWe do not hedge the translation of\n\nforeign currency profits into U.S. dollars, as we consider foreign\n\ncurrency translation to be an accounting exposure,\n\nnot an economic exposure.\n\nA hypothetical 5% change in the average value of the U.S. dollar in 2025 compared\n\nto\n\nforeign currencies would have changed our 2025 reported Net income\n\nattributable to Henry Schein, Inc. by\n\napproximately $6 million.\n\nAs of December 27, 2025, our forward foreign currency exchange agreements,\n\nwhich expire through November 3,\n\n2028, had a fair value of $(20) million as determined by quoted\n\nmarket prices.\n\nIncluded in the forward foreign\n\ncurrency exchange agreements, Henry Schein, Inc. had net investment designated\n\nEUR/USD forward contracts\n\nwith notional values of approximately €300 million and reported fair values\n\nof $(20) million.\n\nA 5% increase in the\n\nvalue of the Euro to the USD from December 27, 2025 would decrease the fair\n\nvalue of these forward contracts by\n\n$18 million.\n\nTotal\n\nReturn Swaps\n\nOn March 20, 2020, we entered into a total return swap for the purpose of economically\n\nhedging our unfunded non-\n\nqualified supplemental retirement plan and our deferred compensation plan obligation.\n\nAt inception, the notional value of the investments in these plans was $43\n\nmillion.\n\nAt December 27, 2025, the\n\nnotional value of the investments in these plans was $117 million.\n\nAt December 27, 2025, the financing blended\n\nrate for this swap was based on the Secured Overnight Financing Rate\n\n(“SOFR”) of 3.79% plus 0.75%, for a\n\ncombined rate of 4.54%.\n\nFor the years ended December 27, 2025, December 28, 2024, and December\n\n30, 2023 we\n\nhave recorded a gain within selling, general and administrative expense, of approximately\n\n$11 million, $8 million\n\nand $10 million, respectively, net of transaction costs, related to this undesignated swap.\n\nThis swap is expected to\n\nbe renewed on an annual basis and is expected to result in a neutral impact to our\n\nresults of operations.\n\nCredit Risk Monitoring\n\nWe limit our credit risk with respect to our cash equivalents, short-term investments and derivative instruments by\n\nmonitoring the credit worthiness of the financial institutions who are\n\nthe counterparties to such financial\n\ninstruments.\n\nAs a risk management policy, we limit the amount of credit exposure by diversifying and utilizing\n\nnumerous investment grade counterparties.\n\n[Table of Contents](#a296)\n\n[Index to Financial Statements](#a33909)\n\n68\n\nInterest Rate Risk\n\nAs of December 27, 2025, we had variable interest rate exposure for certain\n\nof our revolving credit facilities and\n\nour U.S. trade accounts receivable securitization.\n\nOur revolving credit facility,\n\nwhich we entered into on July 11,\n\n2023 and expires on July 11, 2028,\n\nhas a variable\n\ninterest rate that is based on the SOFR plus a spread based on our leverage\n\nratio at the end of each financial\n\nreporting quarter.\n\nAs of December 27, 2025, there was $100 million outstanding under\n\nthis revolving credit\n\nfacility.\n\nDuring the year ended December 27, 2025, the average outstanding\n\nbalance was approximately $203\n\nmillion.\n\nBased upon our average outstanding balances, for each hypothetical\n\nincrease of 25 basis points, our\n\ninterest expense thereunder would have increased by $0.5 million.\n\nOur U.S. trade accounts receivable securitization, which we entered\n\ninto on April 17, 2013 and expires on\n\nDecember 6, 2027, has a variable interest rate that is based upon the asset-backed\n\ncommercial paper rate.\n\nAs of\n\nDecember 27, 2025, the commercial paper rate was 4.06% plus 0.75%,\n\nfor a combined rate of 4.81%,\n\nand the\n\noutstanding balance under this securitization facility was $390 million.\n\nDuring the year ended December 27, 2025,\n\nthe average outstanding balance was approximately $363 million.\n\nBased upon our average outstanding balances,\n\nfor each hypothetical increase of 25 basis points, our interest expense thereunder\n\nwould have increased by $1\n\nmillion.\n\nOn July 11, 2023, we entered into a three-year $750 million term loan credit agreement (the “Term Credit\n\nAgreement”),\n\nwhich was originally scheduled to mature on July 11, 2026.\n\nOn June 6, 2025, this agreement was\n\namended and restated to, among other things, (i) extend the maturity date\n\nto June 6, 2030, and (ii) modify certain\n\nfinancial definitions and covenants.\n\nThe interest rate on this term loan is based on the Term SOFR plus a spread\n\nbased on our leverage ratio at the end of each financial reporting quarter.\n\nAfter renewing the Term Credit\n\nAgreement in June of 2025, our hedged portion of the Term Credit Agreement was approximately 90% of the\n\nnotional total.\n\nAs of December 27, 2025, the effective fixed rate was 5.69% and the floating\n\nrate was 5.01%,\n\nresulting in a weighted average rate of 5.62%.\n\nOn July 11, 2023, we entered into interest rate swap agreements to hedge the cash flow of our variable\n\nrate $750\n\nmillion floating debt term loan facility, with three years maturity, effectively changing the floating rate portion of\n\nour obligation to a fixed rate.\n\nUnder the terms of the interest rate swap agreements, we receive variable\n\ninterest\n\npayments based on the one-month Term SOFR rate and pay interest at a fixed rate.\n\nAs of December 27, 2025, the\n\nnotional value of the interest rate swap agreements was $675 million.\n\n[Table of Contents](#a296)\n\n69"}