Financial Information
Contents
Management's Discussion and Analysis of
Results of Operations and Financial Condition 18
Consolidated Financial Statements 22
Notes to Consolidated Financial Statements 26
Independent Auditors' Report 37
Market and
Dividend Information 40
Management's Discussion and Analysis of Operations and Financial Condition
Selected Financial Data
Year ended December 31,
(in thousands, except ratios and per share data) 1993 1992 1991
Income Statement Data:
Continuing operations:
Net sales $1,396,971 $1,177,298 $1,021,014
Cost of sales 1,249,660 1,052,998 918,304
Gross margin 147,311 124,300 102,710
Selling, general and administrative expenses 106,362 90,027 77,082
Depreciation and amortization 7,593 5,861 4,977
Interest expense, net 2,939 2,472 4,301
Total expenses 116,894 98,360 86,360
Income before income taxes 30,417 25,940 16,350
Provision for income taxes 11,900 10,505 6,681
Net income from continuing operations 18,517 15,435 9,669
Discontinued operations:
Income from discontinued operations,
net of taxes - 77 2,358
Gain on disposals, net of other provisions
and taxes 911 5,610 -
Cumulative effect of change in accounting
principles 706 (730) -
Net income $ 20,134 $ 20,392 $ 12,027
Selected Financial Information:
Net income per share:
Continuing operations $ .90 $ .78 $ .49
Discontinued operations .04 .29 .12
Cumulative effect of change in accounting
principles .03 (.04) -
Net income per share $ .97 $ 1.03 $ .61
Cash dividends per share $ .210 $ .165 $ .132
Weighted average common shares and common
share equivalents 20,675 19,788 19,641
Price Range of Common Stock Per Share:
High $ 23.38 $ 15.17 $ 16.17
Low $ 12.63 $ 11.00 $ 6.25
Selected Ratios:
Gross margin as a percent of net sales* 10.5% 10.6% 10.1%
Selling, general and administrative expenses
as a percent of net sales* 7.6% 7.7% 7.6%
Average receivable days sales outstanding* 34.2 35.7 38.1
Average inventory turnover* 11.5 11.4 11.1
Return on average equity* 14.6% 14.4% 10.6%
Current ratio 2.0 1.8 1.9
Balance Sheet Data:
Working capital $ 139,091 $99,826 $122,675
Total assets 334,322 274,540 311,786
Long-term debt 50,768 24,986 67,675
Capitalization ratio 27.1% 17.6% 41.1%
Stockholders' equity 136,943 116,659 97,091
Stockholders' equity per share outstanding $ 6.75 $ 5.95 $ 5.01
<FN>
*Continuing operations only.
Year ended December 31,
1990 1989 1988 1987 1986 1985 1984 1983
Income Statement Data:
Continuing operations:
Net sales $916,709 $708,089 $500,435 $367,034 $272,222 $199,294 $170,777 $147,640
Cost of sales 827,441 641,011 445,456 326,651 239,170 171,099 145,990 125,040
Gross margin 89,268 67,078 54,979 40,383 33,052 28,195 24,787 22,600
Selling, general and administrative expenses 67,171 57,943 42,668 31,302 26,204 23,196 21,262 20,271
Depreciation and amortization 4,210 2,795 2,416 1,922 1,319 1,050 772 590
Interest expense, net 5,858 5,078 2,230 2,006 1,789 1,303 1,279 1,288
Total expenses 77,239 65,816 47,314 35,230 29,312 25,549 23,313 22,149
Income before income taxes 12,029 1,262 7,665 5,153 3,740 2,646 1,474 451
Provision for income taxes 4,634 628 3,032 2,148 1,806 1,224 652 207
Net income from continuing operations 7,395 634 4,633 3,005 1,934 1,422 822 244
Discontinued operations:
Income from discontinued
operations, net of taxes 1,380 1,855 3,734 3,481 2,968 2,986 2,815 2,766
Gain on disposals, net of other provisions
and taxes - - - - - - - -
Cumulative effect of change in accounting
principles - - - - - - - -
Net Income $ 8,775 $ 2,489 $ 8,367 $ 6,486 $ 4,902 $ 4,408 $ 3,637 $3,010
Selected Financial Information:
Net Income per share:
Continuing operations $ .39 $ .03 $ .24 $ .16 $ .11 $ .09 $ .06 $ .02
Discontinued operations .07 .10 .20 .19 .16 .18 .22 .26
Cumulative effect of change in accounting
principles - - - - - - - -
Net income per share $ .46 $ .13 $ .44 $ .35 $ .27 $ .27 $ .28 $ .28
Cash dividends per share $ .115 $ .115 $ .113 $ .098 $ .089 $ .080 $ .071 $ .058
Weighted average common shares and common
share equivilants 19,170 18,941 18,842 18,791 18,468 16,163 12,839 10,799
Price Range of Common Stock Per Share:
High $ 6.67 $ 7.06 $ 6.78 $ 6.55 $ 6.00 $ 5.41 $ 3.06 $ 3.80
Low $ 4.78 $ 5.06 $ 3.93 $ 3.48 $ 3.93 $ 2.62 $ 2.22 $ 2.52
Selected Ratios:
Gross margin as a percent of net sales* 9.7% 9.5% 11.0% 11.0% 12.1% 14.1% 14.5% 15.3%
Selling, general and administrative expenses
as a percent of net sales* 7.3% 8.2% 8.5% 8.5% 9.6% 11.6% 12.5% 13.7%
Average receivable days sales outstanding* 39.2 41.4 41.0 41.0 40.6 45.9 44.0 44.3
Average inventory turnover* 10.8 8.5 7.6 8.0 8.3 7.9 7.0 5.7
Return on average equity* 9.1% .8% 6.3% 5.4% 5.0% 4.2% 2.7% 1.0%
Current ratio 1.9 2.4 2.7 2.8 2.7 2.6 3.0 2.8
Balance Sheet Data:
Working capital $117,983 $133,309 $106,545 $ 89,056 $71,317 $54,248 $44,840 $35,897
Total assets 290,233 258,683 189,916 154,390 126,779 96,825 74,702 62,130
Long-term debt 71,339 85,324 46,819 33,713 42,562 27,546 20,092 12,658
Capitalization ratio 45.6% 52.4% 37.8% 32.3% 51.0% 43.4% 38.5% 30.2%
Stockholders' equity 85,002 77,560 77,170 70,761 40,878 35,914 32,059 29,320
Stockholders' equity per share outstanding $ 4.49 $ 4.13 $ 4.12 $ 3.78 $ 3.07 $ 2.77 $ 2.53 $ 2.31
<FN>
*Continuing operations only.
Management's Discussion and Analysis of Operations and Financial Condition
(continued)
Owens & Minor, Inc. and Subsidiaries
Results of Operations
1993 Compared to 1992
Continuing Operations:
Net Sales
Net sales from continuing operations increased 18.7% to $1.4 billion in 1993.
Same store sales
increased 15.0%. The increase is primarily the result of increased account
penetration, the
development of new partnerships with key customers around the country, market
share improvement
due to the continuing consolidation in the industry, the sale of new products
and lines and the
opening or acquisitions of six new distribution centers. Net sales under the VHA
contract
increased by $72.6 million, or 18.8%, to $459.6 million in 1993.
Gross Margin
Gross margin as a percent of net sales decreased
by .1 percentage points to 10.5% in 1993. This decrease is a result of continued
margin pressure
and a greater percentage of business coming from major national accounts. The
margin decrease
was offset through aggressive and strategic buying practices, the development of
revenue-
producing value-added services for our customers and tighter control of price
and contract
adjustments using electronic data interchange (EDI).
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased to 7.6% of net sales in
1993 from 7.7% in
1992. This decrease was primarily the result of the Company's effort to reduce
administrative
expenses to offset the margin decrease. The decrease in administrative expense
was partially
offset with the costs of opening new distribution centers in Birmingham,
Detroit, Boston and
Seattle. The Company also continued its committment to quality through investing
in training and
information system technology development.
Interest Expense, net
Net interest expense increased $.5 million to $2.9 million in 1993. The average
interest rate
decreased from 8.3% in 1992 to 6.5% in 1993. The increase in interest expense
was primarily the
result of increased borrowings to finance the new distribution centers discussed
above, the
acquisitions of Lyons Physician Supply Company in Youngstown, Ohio and A.
Kuhlman & Company in
Detroit, Michigan and increased inventory from product line expansion.
Income Taxes
The effective tax rate decreased by 1.4 percentage points from 40.5% in 1992 to
39.1% in 1993. A
reconciliation of the statutory income tax rate to the Company's effective
income tax rate is
provided in Note 10 of the Notes to Consolidated Financial Statements.
Net Income
Net income increased by $3.1 million to $18.5 million in 1993. Net income per
share increased by
$.12 to $.90 per share in 1993.
Discontinued Operations
The Company's divestitures of the Wholesale Drug and Specialty Packaging
Divisions are discussed
in Note 2 of the Notes to Consolidated Financial Statements.
Change in Accounting Principle
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards No.
109, Accounting for Income Taxes. The cumulative effect of this change in
accounting for income
taxes resulted in
a benefit of $.7 million in 1993.
Results of Operations
1992 Compared to 1991
Continuing Operations:
Net Sales
Net sales from continuing operations increased 15.3% to $1.2 billion in 1992.
The increase is
primarily the result of increased account penetration, the development of new
partnerships with
key customers around the country, market share improvement due to the continuing
consolidation
in the industry and the sale of new products and lines. Net sales under the VHA
contract
increased by $31.4 million, or 8.8%, to $387.0 million in 1992.
Gross Margin
Gross margin as a percent of net sales increased by .5 percentage points to
10.6% in 1992. This
increase reflects more aggressive and strategic buying practices, the
development of revenue-
producing value-added services for our customers and tighter control of price
and contract
adjustments using electronic data interchange (EDI).
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to 7.7% of net sales in
1992 from 7.6% in
1991. This increase reflects a continued investment in our quality process,
training, monetary
incentives for the accomplishment of team and Company goals and increased
information systems
costs.
Interest Expense, net
Net interest expense decreased $1.8 million to
$2.5 million in 1992 and the average interest rate increased from 8.0% in 1991
to 8.3% in 1992.
The decrease in interest expense is primarily the result of paying off debt with
cash proceeds
received from the divestitures of the Wholesale Drug Division and Vangard Labs,
Inc. as
discussed in Note 2 of the Notes to Consolidated Financial Statements. The
increase in the
average interest rate is primarily the result of the repayment of the Company's
variable rate
debt versus higher fixed rate debt.
Income Taxes
The effective tax rate decreased by .4 percentage points from 40.9% in 1991 to
40.5% in 1992. A
reconciliation of the statutory income tax rate to the Company's effective
income tax rate is
provided in Note 10 of the Notes to Consolidated Financial Statements.
Net Income
Net income increased by $5.8 million to $15.4 million in 1992. Net income per
share increased by
$.29 to $.78 per share in 1992. A 3 for 2 stock split was distributed on March
22, 1993, to
shareholders of record as of March 8, 1993.
Discontinued Operations
The Company's divestitures of the Wholesale Drug and Specialty Packaging
Divisions are discussed
in Note 2 of the Notes to Consolidated Financial Statements.
Change in Accounting Principle
In 1992, the Company elected early adoption of the provisions of Statement of
Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other Than
Pensions. In applying this pronouncement, the Company recognized the accumulated
postretirement
benefit obligation as of the beginning of 1992 of $.7 million.
Financial Condition
Liquidity and Capital Resources
The Company uses a number of measurements of liquidity and capital resources for
internal
management purposes and evaluation. These measurements, which relate to asset
management,
working capital and leverage, are summarized below:
Year ended December 31,
1993 1992 1991
Average asset turnover* 4.6 4.5 4.3
Average inventory turnover* 11.5 11.4 11.1
Average receivable days
sales outstanding* 34.2 35.7 38.1
Working capital (000's) $139,091 $99,826 $122,675
Current ratio 2.0 1.8 1.9
Inventory ownership* 15.3% 6.1% 8.6%
Capitalization ratio (long-
term debt to long-term
debt plus equity) 27.1% 17.6% 41.1%
*Continuing operations only.
Asset Management
For continuing operations, average asset turnover increased to 4.6 in 1993 from
4.5 in 1992;
average inventory turnover increased to 11.5 in 1993 from 11.4 in 1992; and
average receivable
days outstanding decreased to 34.2 days in 1993 from 35.7 days in 1992. The
current ratio
improved to 2.0 in 1993 from 1.8 in 1992.
The improvement in average inventory turnover resulted from continued
strengthening of
inventory controls. Average receivable days sales outstanding decreased as a
result of the
continued emphasis placed on accounts receivable controls.
Working Capital
Working capital increased by $39.3 million to $139.1 million in 1993. The
increase in working
capital is primarily due to increased inventory from product line expansion and
increased
accounts receivable from sales volume growth.
Leverage
Long-term debt, including current maturities, increased by $24.4 million in 1993
to $52.3
million.
The capitalization ratio increased from 17.6% in 1992
to 27.1% in 1993. The increase in long-term debt was necessary to finance new
distribution
centers in Birmingham, Detroit, Boston, and Seattle, two acquisitions, Lyons
Physician Supply
Company in Youngstown, Ohio and A. Kuhlman & Company in Detroit and increased
inventory from
product line expansion. In November 1993, the Company repaid the $12.0 million
outstanding
principle balance of the 9.3% Senior Notes. (See Note 6 of the Notes to
Consolidated Financial
Statements.)
Inflation
It is the Company's policy to pass through price increases from suppliers.
However, these
increases are offset where possible with savings in productivity and volume.
The effects of
inflation on inventories are reflected in net income because the Company uses
the LIFO inventory method.
VHA Agreement
The Company entered into a new supply agreement with VHA in November 1993. Under
the provisions
of the new agreement, commencing on April 1, 1994, the Company will sell
products to VHA-member
hospitals and affiliates on a variable cost-plus basis that is generally
dependent upon dollar
volume of purchases and percentage of total products purchased from the Company.
Accordingly, as
the Company's sales to and penetration of VHA-member customers increase, the
cost-plus pricing
charged to such customers decreases. Prior to April 1, 1994, products were sold
on a straight
cost-plus basis. Although the new cost-plus pricing formulation is likely to
reduce the
Company's overall gross margin, any such reduction may be offset in whole or in
part by the
combined effect of increased sales to and penetration of VHA-member customers
resulting from the
new pricing formulation, additional amounts that the Company may charge such
customers for
certain value-added services and operating efficiencies and economies of scale
associated with
increased sales to VHA-member customers.
Stuart Medical Proposal
On December 22, 1993, the Company entered into an agreement with Stuart Medical,
Inc. whereby
the companies will combine their two businesses. See Note 2 of the Notes to
Consolidated
Financial Statements for further discussion of this combination.
Consolidated Statements of Income
Owens & Minor, Inc. and Subsidiaries
Year ended December 31,
(in thousands, except per share data) 1993 1992 1991
Continuing operations:
Net sales $1,396,971 $1,177,298 $1,021,014
Cost of sales 1,249,660 1,052,998 918,304
Gross margin 147,311 124,300 102,710
Selling, general and administrative expenses 106,362 90,027 77,082
Depreciation and amortization 7,593 5,861 4,977
Interest expense, net 2,939 2,472 4,301
Total expenses 116,894 98,360 86,360
Income before income taxes 30,417 25,940 16,350
Provision for income taxes 11,900 10,505 6,681
Net income from continuing operations 18,517 15,435 9,669
Discontinued operations:
Income from discontinued operations,
net of taxes - 77 2,358
Gain on disposals, net of other provisions
and taxes 911 5,610 -
Cumulative effect of change in accounting
principles 706 (730) -
Net income $ 20,134 $ 20,392 $12,027
Net income per share:
Continuing operations $ .90 $ .78 $ .49
Discontinued operations .04 .29 .12
Cumulative effect of change in accounting
principles .03 (.04) -
Net income per share $ .97 $ 1.03 $ .61
Cash dividends per share $ .210 $ .165 $ .132
Weighted average common shares and common
share equivalents 20,675 19,788 19,641
<FN>
See Notes to Consolidated Financial Statements.
Consolidated Balance Sheets
Owens & Minor, Inc. and Subsidiaries
December 31,
(in thousands) 1993 1992
Assets
Current assets
Cash and cash equivalents $ 2,048 $ 7,068
Accounts and notes receivable, less
allowances of $4,678 in 1993
and $4,442 in 1992 144,629 116,984
Merchandise inventories 124,848 92,973
Other current assets 10,638 12,050
Total current assets 282,163 229,075
Property and equipment, net 23,863 22,037
Excess of purchase price over net assets
acquired, net 17,316 14,621
Other assets 10,980 8,807
Total Assets $334,322 $274,540
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term debt $ 1,494 $ 2,882
Accounts payable 120,699 103,235
Accrued payroll and related liabilities 5,768 5,674
Other accrued liabilities 15,111 17,458
Total current liabilities 143,072 129,249
Long-term debt 50,768 24,986
Accrued pension and retirement plan 3,539 3,646
Total liabilities 197,379 157,881
Stockholders' equity
Preferred stock, par value $10.00 per
share; authorized-1,000 shares;
none issued - -
Series A Participating Cumulative
Preferred stock, par value $10.00 per share;
authorized-300 shares; none issued - -
Common stock, par value $2.00 per share;
authorized-30,000 shares;
issued-20,285 shares in 1993 and
19,596 shares in 1992 40,569 39,191
Paid-in capital 9,258 8,007
Retained earnings 87,116 69,461
Total stockholders' equity 136,943 116,659
Commitments and contingencies
Total Liabilities and Stockholders' Equity $334,322 $274,540
See Notes to Consolidated Financial Statements.
Consolidated Statements of Stockholders' Equity
Owens & Minor, Inc. and Subsidiaries
Common
Shares Common Paid-in Retained
(in thousands, except per share data) Outstanding Stock Capital Earnings Total
Balance December 31, 1990 8,422 $16,843 $25,554 $42,605 $ 85,002
Net income - - - 12,027 12,027
Cash dividends ($.132 per share) - - - (2,551) (2,551)
Proceeds from exercised stock options,
including tax benefits realized
of $563 190 380 1,996 - 2,376
Acquisition related payout 26 53 347 - 400
Stock split (three-for-two) 4,286 8,572 (8,578) - (6)
Retirement plan liability adjustment - - - (157) (157)
Balance December 31, 1991 12,924 25,848 19,319 51,924 97,091
Net income - - - 20,392 20,392
Cash dividends ($.165 per share) - - - (3,224) (3,224)
Proceeds from exercised stock options,
including tax benefits realized
of $493 85 170 759 - 929
Common stock issued for incentive plan 15 30 269 - 299
Acquisition related payout 40 79 724 - 803
Stock split (three-for-two) 6,532 13,064 (13,064) - -
Retirement plan liability adjustment - - - 369 369
Balance December 31, 1992 19,596 39,191 8,007 69,461 116,659
Net income - - - 20,134 20,134
Cash dividends ($.210 per share) - - - (4,222) (4,222)
Proceeds from exercised stock options,
including tax benefits realized
of $495 119 239 1,256 - 1,495
Common stock issued for incentive plan 31 62 387 - 449
Pooling of interests with Lyons Physician
Supply Co. 476 951 (1,189) 1,743 1,505
Acquistion related payout 63 126 797 - 923
Balance December 31, 1993 20,285 $40,569 $ 9,258 $ 87,116 $136,943
<FN>
See Notes to Consolidated Financial Statements.
Consolidated Statements of Cash Flows
Owens & Minor, Inc. and Subsidiaries
Year ended December 31,
(in thousands) 1993 1992 1991
Operating Activities
Net income and noncash charges
Net income $20,134 $20,392 $12,027
Noncash charges to income
Gain on disposals of business segments, net (911) (5,610) -
Cumulative effect of change in
accounting principles (706) 730 -
Depreciation and amortization 7,593 5,861 6,070
Provision for losses on accounts and notes
receivable 497 1,351 1,506
Provision for LIFO reserve 661 1,056 3,816
Other, net 897 1,135 554
Cash provided by net income and noncash charges 28,165 24,915 23,973
Changes in working capital
Accounts and notes receivable (23,424) 5 (11,414)
Merchandise inventories (28,232) 359 (3,798)
Accounts payable 13,307 (8,885) 3,635
Net change in other current assets and
current liabilities (258) (10,591) 3,366
Other, net 431 (2,112) 904
Cash provided by (used for) operating activities (10,011) 3,691 16,666
Investing Activities
Proceeds from disposals of business segments - 50,920 -
Business acquisitions, net of cash acquired (2,416) - (3,052)
Additions to property and equipment (6,288) (4,955) (5,947)
Other, net (3,377) (2,535) (257)
Cash provided by (used for) investing activities (12,081) 43,430 (9,256)
Financing Activities
Cash dividends paid (4,222) (3,224) (2,551)
Additions to long-term debt 37,000 - -
Reductions of long-term debt (17,471) (44,619) (7,542)
Other short-term financing 765 6,599 (1,700)
Stock split fractional shares - - (6)
Exercise of options 1,000 436 1,813
Cash provided by (used for) financing activities 17,072 (40,808) (9,986)
Net increase (decrease) in cash and
cash equivalents (5,020) 6,313 (2,576)
Cash and cash equivalents at beginning of year 7,068 755 3,331
Cash and cash equivalents at end of year $ 2,048 $ 7,068 $ 755
<FN>
See Notes to Consolidated Financial Statements.
Notes to Consolidated Financial Statements
Owens & Minor, Inc. and Subsidiaries
Note 1 - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly
owned subsidiaries. All significant intercompany accounts and transactions have
been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include cash and marketable securities with an
original maturity
at the date of purchase of three months or less. The carrying amount of
marketable securities
approximates fair value because of the short maturity of these instruments.
Merchandise Inventories
Merchandise inventories are valued at the lower of cost or market with the
cost of all
inventories determined on a last-in, first-out (LIFO) basis.
Property and Equipment
Additions to property and equipment are recorded at cost. At inception,
capital leases are
recorded at the lesser of fair value of the leased property or the discounted
present value of
the minimum lease payments. The cost of assets sold or retired and the related
amounts of
accumulated depreciation and amortization have been eliminated from the accounts
in the year of
sale or retirement and the resulting gain or loss has been reflected in
operations. Normal
maintenance and repairs are expensed as incurred, and renovations and
betterments are
capitalized.
Depreciation is computed on the straight-line method over the estimated
useful lives of
the various assets. Capital leases and leasehold improvements are amortized by
the straight-line
method over the shorter of their estimated useful lives or the term of the
lease. Accelerated
methods and lives are used for income tax reporting purposes. Estimated useful
lives for
financial reporting purposes are:
Estimated
Assets Useful Life
Buildings and improvements 20-50 years
Furniture, fixtures and equipment 3-10 years
Vehicles 3-6 years
Excess of Purchase Price Over Net Assets Acquired
The excess of purchase price over net assets acquired (goodwill) is being
amortized on a
straight-line basis over 40 years from the dates of acquisition.
Computer Software
Computer software, purchased in connection with major system developments, is
capitalized.
Additionally, certain software development costs are capitalized when incurred
and when
technological feasibility has been established. Amortization of all capitalized
software costs
is computed on a product-by-product basis over the estimated economic life of
the product which
ranges from three to five years. Computer software costs are included in other
assets in the
Consolidated Balance Sheets.
Pension and Retirement Plans
Annual costs of the Company's pension and retirement plans are determined
actuarially in
accordance with Statement of Financial Accounting Standards No. 87, Employers'
Accounting for
Pensions.
Postretirement Benefits Other Than Pensions
Annual costs of the Company's postretirement benefits other than pensions are
determined
actuarially in accordance with Statement of Financial Accounting Standards No.
106, Employers'
Accounting for Postretirement Benefits Other Than Pensions.
Income Taxes
The Company uses the asset and liability method in accounting for income
taxes in
accordance with Statement of Financial Accounting Standards No. 109, Accounting
for Income
Taxes. Deferred income taxes result primarily from the use of different methods
for financial
reporting and tax purposes.
Net Income per Share
Net income per share is computed using the weighted average number of shares
of common
stock and common stock equivalents outstanding during the year. The assumed
conversion of all
convertible debentures has not been included in the computation because the
resulting dilution
is not material.
Note 2 - Business Acquisitions and Divestitures
On December 22, 1993, the Company entered into an agreement with Stuart
Medical, Inc.
(Stuart), whereby the companies will combine their two businesses. Stuart, a
distributor of
medical/surgical supplies, has distribution
centers located primarily in the West, Midwest and Northeast and had sales for
the year ended
December 31, 1993 of $890.5 million (unaudited). In the proposed transaction,
the Company will
form a holding company that will own all of the currently outstanding capital
stock of the
Company and Stuart.
Under the terms of the agreement, the new holding company would exchange
$40,200,000 in
cash and $115,000,000 par value of convertible preferred stock for all of the
capital stock of
Stuart. Each outstanding share of the Company's common stock would be exchanged
for one share of
common stock of the new holding company. The Company intends to account for this
transaction as
a purchase, if consumated.
The convertible preferred stock will be convertible into approximately
4,650,000 shares of
common stock of the new holding company (or about 17.8 percent of the pro forma
fully diluted
outstanding shares of the new holding company); entitled to an annual cash
dividend of 4.5
percent; and redeemable by the Company under certain circumstances after three
years. The
Company will also refinance Stuart's pro forma debt of $141,000,000 (unaudited).
The Board of Directors of the Company and the requisite shareholders of
Stuart have
unanimously approved this transaction. The Company's shareholders will vote on
the proposed
transaction at the annual shareholders'
meeting with expected closing of the transaction to occur in the second
quarter. Had this acquisition
been completed on January 1, 1993, on a pro forma basis, net sales, net income
and net income
per share for the Company would have been approximately $2,339,000,000,
$24,000,000 and $.93
(all unaudited).
On May 28, 1993, the Company issued 476,190 shares of its common stock for
all the
outstanding common stock of Lyons Physician Supply Company (Lyons) of
Youngstown, Ohio. This
merger has been accounted for as a pooling of interests, and the Company's
fiscal 1993 financial
statements include the activity of Lyons as of January 1, 1993.
On June 25, 1993, the Company acquired all of the outstanding common stock of
A. Kuhlman &
Co. (Kuhlman's) of Detroit, Michigan. The acquisition was accounted for as a
purchase with the
results of Kuhlman's included from the acquisition date. The cost of the
acquisition was
approximately $2,900,000 and exceeded the net book value of the tangible assets
acquired and
liabilities assumed by approximately $1,700,000. Pro forma results of this
acquisition, assuming
it had been made at the beginning of the year, would not be materially different
from the
results reported.
On February 28, 1992, the Company sold substantially all of the net assets of
its
Wholesale Drug Division to Bergen Brunswig Corporation. Accordingly, the
operations of the
Wholesale Drug Division have been classified as discontinued operations for all
years presented
in the accompanying Consolidated Statements of Income. The proceeds from the
sale of
approximately $49,552,000, resulted in a gain of $9,783,000, net of applicable
income tax
expense of $6,408,000 for the year ended December 31, 1992. Net income of this
division was
$2,270,000 in 1991 and is net of applicable income tax expense of $1,439,000.
On May 29, 1992, the Company sold substantially all of the net assets of
Vangard Labs,
Inc., completing the disposition of the Specialty Packaging Segment, to Medical
Technology
Systems, Inc. The proceeds from the sale of approximately $2,000,000, resulted
in a loss of
$2,858,000, net of applicable income tax benefit of $1,257,000, for the year
ended December 31,
1992. On December 31, 1990 the principle operating assets of Harbor Medical,
Inc., a portion of
the Specialty Packaging Segment, were sold to Sterile Concepts, Inc. The
Specialty Packaging
Segment is accounted for as discontinued operations for all years presented in
the accompanying
Consolidated Statements of Income. Net income for this division was $77,000 for
the first four
months of 1992 and $88,000 in 1991 and is net of applicable income tax expense
of $23,000 and
$15,000, respectively.
The Company periodically re-evaluates the adequacy of its accruals associated
with
discontinued operations.
In 1993, the Company decreased its loss provision for discontinued operations by
$911,000 based
on settlement of established liabilities and changes in prior estimates of
expenses. In 1992,
the loss provision was increased by $1,315,000 for such changes in prior
estimates. Changes in
these estimates are included in discontinued operations
in the accompanying Consolidated Statements of Income.
On December 2, 1991, the Company acquired for cash the common stock of
Koley's Medical
Supply, Inc. (Koley's) in a business combination accounted for as a purchase.
The acquisition of
Koley's, a distributor of medical/surgical supplies, provided the Company with
three
distribution centers located in Iowa and Nebraska. The cost of the acquisition
was approximately
$3,593,000 and exceeded the net book value of the tangible assets acquired and
liabilities
assumed by approximately $1,637,000. The purchase price was funded through
normal working
capital.
The purchase agreement for Koley's specified that the purchase price may be
increased in
future years if certain criteria are met. Pursuant to the terms of this
agreement, an additional
$1,177,000 was paid in 1993.
Note 3 - Merchandise Inventories
All inventories are valued using the last-in, first-out (LIFO) method of
inventory
valuation. If LIFO inventories had been valued at current costs (FIFO), they
would have been
greater by the following amounts:
(in thousands)
December 31, 1993 $17,620
December 31, 1992 $16,959
December 31, 1991 $29,196
Note 4 - Property and Equipment
The Company's investment in property and equipment consists of the following:
December 31,
(in thousands) 1993 1992
Land and buildings $ 4,617 $ 2,720
Furniture, fixtures and equipment 27,042 23,615
Transportation equipment 1,093 788
Capitalized leases 7,776 8,150
Leasehold improvements 5,898 4,866
46,426 40,139
Less: Accumulated depreciation 17,304 14,262
Less: Accumulated amortization of
capitalized leases 5,259 3,840
Property and equipment, net $23,863 $22,037
For continuing operations, depreciation expense for property and equipment
for 1993, 1992,
and 1991 was $6,368,000, $5,129,000 and $4,115,000, respectively.
Note 5 - Accounts Payable
The Company's accounts payable consists of the following:
December 31,
(in thousands) 1993 1992
Trade accounts payable $ 99,096 $ 82,397
Drafts payable 21,603 20,838
Total accounts payable $ 120,699 $103,235
Note 6 - Long-Term Debt
Long-term debt consists of the following:
December 31,
(in thousands) 1993 1992
Revolving credit notes $ 37,000 $ -
9.3% Senior Notes - 12,000
0% Subordinated Note 8,214 7,440
6 1/2% Convertible Subordinated Debenture 3,500 3,500
Obligations under capitalized leases 3,548 4,928
52,262 27,868
Current maturities (1,494) (2,882)
Long-term debt $50,768 $24,986
The Company has a revolving credit agreement that provides for a maximum
borrowing of
$40,000,000. The interest rates on the revolving credit notes vary with, but do
not exceed, the
prime rate (6.0% as of December 31, 1993). The agreement expires on May 31, 1996
and any
outstanding balances are payable in full on that date.
On May 31, 1989, the Company issued an $11.5 million 0% Subordinated Note and
a $3.5
million 6 1/2% Convertible Subordinated Debenture to partially finance the
National Healthcare
acquisition. The 0% Subordinated Note due May 31, 1997 was discounted for
financial reporting
purposes at an effective rate of 10.4% to $5,215,000 on the date of issuance.
The 6 1/2%
Convertible Subordinated Debenture due May 31, 1996 is convertible into
approximately 578,250
common shares. Interest is payable semi-annually on May 31 and November 30. The
Company can
redeem all or any portion of the debentures without penalty.
The Company leases certain data processing equipment under capitalized lease
agreements.
These leases require monthly payments and expire at various dates through 1996.
Interest is
imputed on these leases at rates ranging from 6.5% to 10.5%.
The Company entered into capital leases for additional computer equipment in
the amounts
of $1,734,000 and $1,744,000 during 1992 and 1991, respectively. These represent
non-cash
investing and financing activities for purposes of the Consolidated Statements
of Cash Flows.
There were no new capital leases during 1993.
Under certain of the loan agreements, the Company is required to maintain
tangible net
worth at specified levels. Other financial covenants relate to levels of
indebtedness, liquidity
and cash flow.
The Company has four bank lines of credit aggregating $62,000,000. At
December 31, 1993,
there were no borrowings under these lines.
Based on the borrowing rates currently available to the Company for bank
loans with
similar terms and average maturities, except for the convertible debenture which
is valued at
book value because the conversion price was substantially below the current
market price, the
fair value of long-term debt, including current maturities, is approximately
$53,238,000, as of
December 31, 1993.
Cash payments for interest during 1993, 1992 and 1991 were $2,341,000,
$2,126,000 and
$5,106,000, respectively.
Maturities of long-term debt for the five years subsequent to 1993 are: 1994-
$1,494,000;
1995-$1,504,000; 1996-$41,050,000; 1997-$8,214,000; 1998-$0.
Note 7 - Employee Benefit Plans
The Company has a noncontributory pension plan covering substantially all
employees.
Employees become participants in the plan after one year of service and
attainment of age 21.
Pension benefits are based on years of
service and average compensation. The amount funded for this plan is not less
than the minimum
required under federal law nor more than the amount deductible for federal
income tax purposes.
Plan assets consist primarily of equity securities, including 22,963 shares as
of December 31,
1993 of the Company's common stock, and U.S. Government securities.
The Company also has a noncontributory, unfunded retirement plan for certain
officers and
other key
employees. Benefits are based on a percentage of the employees' compensation.
The Company
maintains life
insurance policies on plan participants to act as a financing source for the
plan.
The following table sets forth the plans' financial status and the amounts
recognized in
the Company's Consolidated Balance Sheets at December 31, 1993 and 1992:
Pension Plan Retirement Plan
(in thousands) 1993 1992 1993 1992
Actuarial present value of benefit obligations:
Accumulated benefit obligations
Vested $10,984 $8,970 $1,225 $1,279
Non-vested 528 1,041 780 499
Total benefits 11,512 10,011 2,005 1,778
Additional amounts related to projected salary increases 2,110 1,116 1,226 854
Projected benefit obligations for service rendered
to date 13,622 11,127 3,231 2,632
Plan assets at fair market value 13,603 11,445 - -
Plan assets over (under) projected benefit obligations (19) 318 (3,231) (2,632)
Unrecognized net (gain) loss from past experience (42) (1,032) 1,080 828
Unrecognized prior service cost (benefit) 479 715 (23) (109)
Unrecognized net (asset) obligation being recognized
over 11 and 17 years, respectively (321) (428) 369 410
Adjustment required to recognize minimum liability
under SFAS 87 - - (200) (275)
Accrued pension asset (liability) $ 97 $ (427) $(2,005) $(1,778)
The components of net pension cost for both plans are as follows:
Year ended December 31,
(in thousands) 1993 1992 1991
Service cost-benefits earned during the year $1,146 $ 944 $ 864
Interest cost on projected benefit obligations 1,056 994 865
Actual return on plan assets (1,450) (748) (1,829)
Net amortization and deferral 453 (145) 1,103
Net periodic pension cost $1,205 $1,045 $1,003
The weighted average discount rate and rate of increase in future
compensation levels used
in determining the actuarial present value of the projected benefit obligations
are assumed to
be 7.5% and 5.5% for 1993, respectively and 8% and 6% for 1992, respectively.
The expected long-
term rate of return on plan assets is 9%.
In 1992, a curtailment gain of $123,000 which resulted from the dispositions
of the
business units classified as
discontinued operations, was not reflected in net pension cost in the preceding
table, but was
included in gain on disposals in the Consolidated Statements of Income.
Substantially all employees of the Company may become eligible for certain
medical
benefits if they remain employed until retirement age and fulfill other
eligibility requirements
specified by the plan. The plan is contributory with retiree contributions
adjusted annually.
The Company elected early adoption of the accounting provisions of the
Statement of
Financial Accounting Standards No. 106, Employers' Accounting for Postretirement
Benefits Other
Than Pensions. This new standard requires that the expected cost of retiree
health benefits be
charged to expense during the years that the employees render service rather
than the Company's
past practice of recognizing these costs on a pay-as-you-go basis. As part of
adopting the new
standard, the Company recorded in the first quarter of 1992, a one-time, non-
cash charge against
earnings of $1,200,000 before taxes and $730,000 after taxes, or $.04 per share.
This cumulative
catchup adjustment as of January 1, 1992 represents the discounted present value
of expected
future retiree health benefits attributed to employees' service rendered prior
to that date.
The following table sets forth the plan's financial status and the amount
recognized in
the Company's Consolidated Balance Sheets at December 31, 1993 and 1992:
(in thousands) 1993 1992
Accumulated postretirement benefit obligation:
Retirees $ (251) $ (208)
Fully eligible active plan participants (464) (384)
Other active plan participants (980) (849)
Accumulated postretirement benefit obligation (1,695) (1,441)
Unrecognized loss from past experience 64 -
Accrued postretirement benefit liability $(1,631) $(1,441)
The components of net postretirement benefit cost are as follows:
Year Ended December 31,
(in thousands) 1993 1992
Service cost $142 $137
Interest 122 105
Net periodic postretirement benefit cost $264 $242
For measurement purposes, a 13% annual rate of increase in the per capita
cost of covered
health care benefits was assumed for 1994; the rate was assumed to decrease
gradually to 6.5%
for the year 2001 and remain at that level thereafter. The health care cost
trend rate
assumption has a significant effect on the amounts reported. To illustrate,
increasing the
assumed health care cost trend rates by 1 percentage point in each year would
increase the
accumulated postretirement benefit obligation as of December 31, 1993 by
$104,000 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit
cost for the year then ended by $52,000. The weighted average discount rate used
in determining
the accumulated postretirement benefit obligation was 7.5% for 1993 and 8% for
1992.
Note 8 - Stockholders' Rights Plan
On June 22, 1988, the Company adopted a stockholders' rights plan and
distributed a
dividend of one right
for each outstanding share of common stock. Each right entitles the holder to
buy one unit of a
newly authorized series of preferred stock at an exercise price of $33.33 per
right. The rights
are exercisable only if a person or group acquires 20% or more of the Company's
common stock or
announces a tender offer for 30% or more of such stock.
If a person or group purchases 30% or more of the common stock, each right will
entitle the
holder (except the acquiring person) to acquire preferred stock or, at the
Company's option,
common stock having a value equal to twice the right's exercise price.
If the Company were acquired in a merger or other business combination, or if
50% of its
earning power
(as defined) or assets were sold in one transaction or a series of transactions,
each right
would entitle the holder (except the acquiring person) to purchase securities of
the surviving
company having a market value equal to twice the exercise price of the right.
If a person or group acquires 20% or more of the Company's common stock, the
Company may
issue a share of common stock in exchange for each outstanding preferred share
purchase right
(except for rights held by the acquiring person). The rights, which expire on
June 22, 1998, may
be redeemed at any time up to 10 days after the announcement that a 20% position
has been
acquired, unless such period has been extended by the Board of Directors.
Note 9 - Stock Option Plans
Under the terms of the Company's stock option plans, 2,383,505 shares of
common stock have
been reserved for future issuance. Options may be designated as either Incentive
Stock Options
(ISO) or non-qualified stock options. Options granted under the Plans have an
exercise price
equal to the fair market value of the stock on the date of grant and can be
exercised up to ten
years from date of grant. As of December 31, 1993, there were 687,038 non-
qualified and no ISO
stock options issued and outstanding under the Plans.
The changes in shares under outstanding options for the three years ended
December 31,
1993 are as follows:
Shares Grant Price
Year ended December 31, 1993
Outstanding at beginning of year 569,748 $5.30 - 14.00
Granted 282,880 12.88 - 14.75
Exercised (120,490) 5.30 - 14.00
Expired/cancelled (45,100) 5.33 - 14.00
Outstanding at end of year 687,038 $5.33 - 14.75
Exercisable 295,586
Shares available for additional grants 1,696,467
Year ended December 31, 1992
Outstanding at beginning of year 570,852 $ 3.55 - 14.00
Granted 156,573 12.00 - 13.08
Exercised (137,990) 3.55 - 8.39
Expired/cancelled (19,687) 5.61 - 14.00
Outstanding at end of year 569,748 $ 5.30 - 14.00
Exercisable 332,950
Shares available for additional grants 284,247
Year ended December 31, 1991
Outstanding at beginning of year 755,933 $ 3.55 - 6.22
Granted 296,625 8.39 - 14.00
Exercised (474,281) 3.55 - 8.39
Expired/cancelled (7,425) 3.55 - 5.61
Outstanding at end of year 570,852 $ 3.55 - 14.00
Exercisable 227,312
Shares available for additional grants 441,374
Stock Appreciation Rights (SARs) may be granted in conjunction with any
option granted
under the Plans, and to the extent either is exercised, the other is cancelled.
SARs are payable
in cash, common stock or a combination of both, equal to the appreciation of the
underlying
shares from the date of grant to date of exercise, and may be exercised from one
up to ten years
from date of grant. As of December 31, 1993, there were no SARs issued and
outstanding.
Note 10 - Income Taxes
The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for
Income Taxes, as
of January 1, 1993. The cumulative effect of this change in accounting for
income taxes is a
favorable adjustment of $706,000 and is reported separately in the Consolidated
Statements of
Income for the year ended December 31, 1993. Prior years' financial statements
have not been
restated to apply the provisions of Statement 109.
The provision for income taxes for continuing operations consists of the
following:
Year ended December 31,
(in thousands) 1993 1992 1991
Current tax provision
Federal $10,405 $9,386 $6,387
State 2,123 2,262 1,435
Total current provision 12,528 11,648 7,822
Deferred tax benefit
Federal (555) (916) (928)
State (73) (227) (213)
Total deferred benefit (628) (1,143) (1,141)
Provision for income taxes $11,900 $10,505 $6,681
A reconciliation of the Federal statutory rate to the Company's effective
income tax rate
for continuing
operations follows:
Year ended December 31,
1993 1992 1991
Federal statutory rate 35.0% 34.0% 34.0%
Increases (reductions) in the rate
resulting from:
State income taxes, net of Federal
income tax benefit 4.4 5.1 5.7
Other, net (.3) 1.4 1.2
Effective rate 39.1% 40.5% 40.9%
The significant components of deferred income tax benefit attributable to
income from
continuing operations for the year ended December 31, 1993 are as follows:
(in thousands)
Deferred tax benefit $(432)
Adjustments to deferred tax assets and
liabilities for enacted changes in tax rates (196)
Total deferred benefit $(628)
The components of deferred income tax expense (benefit) for continuing
operations for the
years ended December 31, 1992 and 1991 are as follows:
Year Ended December 31,
(in thousands) 1992 1991
Inventories $ (135) $ 175
Depreciation 225 (77)
Employee benefit plans (611) (239)
Allowance for doubtful accounts (303) (372)
Real estate sale/leaseback 88 (178)
Reserve for fixed assets 126 (274)
Other, net (533) (176)
Total deferred benefit $(1,143) $(1,141)
The tax effects of temporary differences that give rise to significant
portions of the
deferred tax assets and deferred tax liabilities at December 31, 1993 are
presented below:
(in thousands)
Deferred tax assets:
Allowance for doubtful accounts $ 2,702
Accrued liabilities not deductible until paid 1,998
Employee benefits plans 3,038
Leased assets 3,512
Other 1,641
Total deferred tax assets 12,891
Deferred tax liabilities:
Property and equipment 4,484
Merchandise inventories 920
Other 1,352
Total deferred tax liabilities 6,756
Net deferred tax asset (included in
other current assets and other assets) $ 6,135
Management has determined, based on the Company's carryback availability,
history of
earnings and its
expectation of earnings in future years, that it is more likely than not that
all of the
deferred tax asset will be
realized. Therefore, the Company has not recognized a valuation allowance for
the gross deferred
tax asset recorded
in the accompanying 1993 Consolidated Balance Sheet.
Cash payments for income taxes, including taxes on discontinued operations,
for 1993, 1992
and 1991 were $12,153,000, $21,672,000 and $6,756,000, respectively.
For income tax purposes, the Company has unused operating loss carryforwards
expiring in
2004 of approximately $640,000 which are available to offset future federal
taxable income.
The tax benefit relating to discontinued operations for the year ended
December 31, 1993,
was $333,000.
Note 11 - Commitments and Contingencies
The Company has entered into noncancellable lease agreements for certain
office and
warehouse facilities and data processing and delivery equipment with remaining
lease terms
ranging from one to twelve years. Certain leases include renewal options,
generally for five
year increments. At December 31, 1993, future minimum annual payments under
noncancellable
leases with original terms in excess of one year are as follows:
Capital Operating
(in thousands) Leases Leases
1994 $1,760 $10,305
1995 1,629 9,647
1996 561 7,214
1997 - 5,403
1998 - 4,738
Later years - 9,039
Total minimum lease payments 3,950 $46,346
Less imputed interest 402
Present value of minimum lease payments $3,548
Minimum lease payments have not been reduced by minimum sublease rentals
aggregating
$3,160,000 due in the future under noncancellable subleases.
Rent expense for continuing operations for the years ended December 31, 1993,
1992 and
1991 was $12,857,000, $11,329,000 and $10,468,000, respectively.
The Company has limited concentrations of credit risk with respect to
financial
instruments. Temporary cash investments are placed with high credit quality
institutions and
concentrations within accounts and notes receivable are limited due to their
geographic
dispersion. Additionally, no single customer accounted for 10% or more of the
Company's sales
during 1993, except for sales under contract to member hospitals of the VHA,
which amounted to
$459.6 million or 32.9% of the Company's total net sales from continuing
operations.
Note 12 - Quarterly Financial Data (Unaudited)
The following table presents the summarized quarterly financial data for
1993, 1992 and
1991:
(in thousands, except per share data)
Year 1993
Quarter 1st 2nd 3rd 4th
Net sales from continuing operations $317,812 $341,221 $361,959 $375,979
Gross margin 33,634 35,654 38,151 39,872
Net income from continuing operations 3,826 4,265 4,790 5,636
Gain on disposals, net of other provisions and taxes - - - 911
Cumulative effect of change in accounting principle 706 - - -
Net income $ 4,532 $ 4,265 $ 4,790 $ 6,547
Net income per share:
Continuing operations $ .19 $ .21 $ .23 $ .27
Discontinued operations - - - .04
Cumulative effect of change in accounting principle .03 - - -
Net income per share $ .22 $ .21 $ .23 $ .31
Year 1992
Quarter 1st 2nd 3rd 4th
Net sales from continuing operations $282,481 $289,705 $300,018 $305,094
Gross margin 28,514 29,778 31,450 34,558
Net income from continuing operations 3,085 3,613 3,952 4,785
Discontinued operations:
Income (loss) from discontinued operations,
net of taxes 123 (46) - -
Gain (loss) on disposals, net of other provisions
and taxes 9,933 (3,080) - (1,243)
Cumulative effect of change in accounting principle (730) - - -
Net income $ 12,411 $ 487 $ 3,952 $ 3,542
Net income (loss) per share:
Continuing operations $ .16 $ .18 $ .20 $ .24
Discontinued operations .51 (.16) - (.06)
Cumulative effect of change in accounting principle (.04) - - -
Net income per share $ .63 $ .02 $ .20 $ .18
Year 1991
Quarter 1st 2nd 3rd 4th
Net sales from continuing operations $239,378 $247,441 $260,382 $273,813
Gross margin 23,384 24,493 25,962 28,871
Net income from continuing operations 1,800 2,227 2,699 2,943
Income from discontinued operations, net of taxes 533 510 757 558
Net income $2,333 $ 2,737 $ 3,456 $ 3,501
Net income per share:
Continuing operations $ .09 $ .11 $ .14 $ .15
Discontinued operations .03 .03 .03 .03
Net income per share $ .12 $ .14 $ .17 $ .18
KPMG Peat Marwick
Certified Public Accountants
Suite 1900
1021 East Cary Street
Richmond, Virginia 23219-4023
Independent Auditors' Report
To the Board of Directors and Stockholders
Owens & Minor, Inc.:
We have audited the accompanying consolidated balance sheets of Owens &
Minor, Inc. and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of
income, stockholders' equity and cash flows for each of the years in the three-
year period ended
December 31, 1993. These consolidated financial statements are the
responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those
standards require that we plan and perform the audits to obtain reasonable
assurance about
whether the financial statements are free of material misstatement. An audit
includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in
all material respects, the financial position of Owens & Minor, Inc. and
subsidiaries as of
December 31, 1993 and 1992 and the results of their operations and their cash
flows for each of
the years in the three-year period ended December 31, 1993 in conformity with
generally accepted
accounting principles.
As discussed in Note 10 to the Consolidated Financial Statements, as of
January 1, 1993,
the Company changed its method of accounting for income taxes.
KPMG Peat Marwick
February 4, 1994
Market and Dividend Information
On January 29, 1988, Owens & Minor, Inc.'s
common stock began trading on the New York Stock Exchange under the symbol OMI.
The following
table indicates the range of high and low sales prices per share of the
Company's common shares
as reported on the New York Stock Exchange and the quarterly cash dividends paid
by the Company:
Year 1993
Quarter 1st 2nd 3rd 4th
Market Price
High $17.38 $21.00 $23.25 $23.38
Low $12.63 $12.63 $18.25 $18.00
Dividends per share $.0525 $.0525 $.0525 $.0525
Year 1992
Quarter 1st 2nd 3rd 4th
Market Price
High $14.50 $12.50 $13.33 $15.17
Low $11.25 $ 11.00 $11.33 $11.83
Dividends per share $.0350 $.0433 $.0433 $.0433
Year 1991
Quarter 1st 2nd 3rd 4th
Market Price
High $ 9.25 $10.67 $12.50 $16.17
Low $ 6.25 $ 8.09 $10.33 $12.33
Dividends per share $.0289 $.0333 $.0350 $.0350
At December 31, 1993, there were approximately 11,600 shareholders.